10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                  to                           

Commission file number 0-9722

INTERGRAPH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware	63-0573222
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
Huntsville, Alabama (Address of Principal Executive Offices)	35894-0001 (Zip Code)
(256) 730-2000
(Registrant's Telephone Number, Including Area Code)

Securities to be registered pursuant to Section 12(b) of the Act:  None
Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.10 per share
(Title of Class)

	Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   X    No
	Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  (  )
	Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes   X   No
	The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2003, the last business day of the
registrant's most recently completed second fiscal quarter, was approximately $972,477,000 based on the closing sale price of such stock as reported by The NASDAQ® Stock Market on June 30, 2003, assuming that all shares beneficially held by executive officers and members of the registrant's Board of Directors are shares owned by "affiliates," a status which each of the executive officers and directors may individually disclaim.
As of January 31, 2004, there were 36,154,019 shares of Intergraph Corporation Common Stock $0.10 par value outstanding.  The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $871,993,000 based on the closing sale price of such stock as reported by The NASDAQ® Stock Market on January 31, 2004, assuming that all shares beneficially held by executive officers and members of the registrant's Board of Directors are shares owned by "affiliates," a status which each of the executive officers and directors may individually disclaim.
DOCUMENTS INCORPORATED BY REFERENCE
		Documents	Form 10-K Reference
		Portions of the Annual Report to Shareholders for the year ended December 31, 2003	Part I, Part II, Part III
		Portions of the Proxy Statement for the May 13, 2004, Annual Meeting of Shareholders	Part III

PART I

ITEM 1.  BUSINESS

Overview

Intergraph Corporation (the "Company" or "Intergraph") is a pioneer of computer graphics software and services in the commercial and government sectors.  Founded in 1969, the Company has delivered numerous innovations in interactive graphics solutions.  Today, Intergraph's core mission is to enable businesses and governments to make better and faster operational decisions, and through software and services, help its customers organize vast amounts of complex data into understandable visual representations.  Intergraph's technology enables our customers to create intelligent maps, manage assets and infrastructure, build and operate better plants and ships, and dispatch emergency services to those in need.

Background

Over the past six years, the Company has taken significant measures to reduce its losses and return to profitability, including extensive reductions in its workforce and the sale of several non-core business units and assets.  In fourth quarter 1999, the Company exited the personal computer and generic server businesses, and in third quarter 2000 it exited the development and design of most of its remaining hardware products.  These actions allowed the Company to return to profitability in 2001.  The Company was profitable again in 2002 and 2003.  For further information regarding these actions, see Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contained in the Company's 2003 Annual Report.

The Company's business segments offer software solutions based on the Microsoft Corporation ("Microsoft") Windows operating systems designed to satisfy engineering, design, modeling, analysis, mapping, and information technology ("IT") needs.  This open technology foundation enables the Company's software products to interoperate with thousands of third-party Windows-based technical and business applications. The Company's business segments also offer related professional services to satisfy these needs.  Products and services are sold through industry-focused direct and indirect channels worldwide, with the United States and Europe representing approximately 83% of total revenues for 2003.

In addition, the Company has intellectual property that resulted from its hardware design and manufacturing operations that the Company exited in 2000.  The intellectual property is used in a variety of industries, including computers, consumer electronics, telecommunications, and electronics design.  The Company defends the value of its intellectual property ("IP") portfolio through licensing and litigation.   The Company remains actively engaged in licensing discussions, as well as patent litigation with several companies.  See Item 1. Licenses, Copyrights, Trademarks, Patents, and Proprietary Information and Item 3. Legal Proceedings for further information.

Business Segments

The Company's current operations are divided into four business segments along with a Corporate oversight function ("Corporate").  The Company's business segments are Intergraph Process, Power & Offshore ("PPO"); Intergraph Mapping and Geospatial Solutions ("IMGS"); Intergraph Solutions Group ("ISG"); and Intergraph Public Safety, Inc. ("IPS").  Each business is discussed in further detail below.  For additional information regarding the Company's business segments, including financial information for 2003, see MD&A and Note 15 of Notes to Consolidated Financial Statements contained in the Company's 2003 Annual Report ("Notes to Consolidated Financial Statements").

PPO:  PPO supplies software and services to the process, power, offshore petroleum, and marine industries, including shipbuilding.  The segment focuses on integrated lifecycle engineering software and services for design and information management, with emphasis on engineering information as well as materials and procurement management, and on the linkage of engineering and business systems.

For more than 25 years, engineering, procurement, and construction contractors and facility owner/operators have used the segment's software and services to design, construct, operate, and maintain facilities for petrochemical, chemical, pharmaceutical, food and beverage, oil and gas, power generation, pulp and paper, and mining industries.  The segment's most prominent brands include PDS™ (Plant Design System), SmartPlant^®, MARIAN^®, and INtools^®.  SmartPlant^®3D and IntelliShip™ products were released in 2003.

IMGS:  IMGS has been a leading provider of mapping, GIS, and cartographic software and solutions for more than 25 years.  An acknowledged pioneer in the industry, IMGS supplies products, services, open technology, data integration, and people to help customers implement successful solutions to meet everyday business challenges.

IMGS offers industry-specific solutions for geospatial resource management, land information management, earth imaging, mobile resource management, geospatial infrastructure management, geospatial intelligence, cartographic production, and geospatial data management.  With proven technology and comprehensive professional services, IMGS supports local, regional, and national government entities; transportation and mapping agencies; utilities and communications companies; commercial remote sensing and photogrammetry organizations; military and intelligence agencies; educational institutions; and more.

ISG:  ISG is a professional services and solutions provider of management consulting, technology, and integrated solutions in the government and commercial sectors.  ISG partners with clients to achieve their vision, mission, and goals through intelligent deployment of best practices and IT.  ISG combines experience in dozens of technical fields with offerings covering a breadth of services capabilities and products:  IT integration, systems and networking, installation management, homeland security and force protection, logistics and supply chain management, IT-managed services, management consulting, ruggedized hardware solutions, video analysis systems and services, and integrated ship design and production software.  The majority of ISG business is within the U.S. Department of Defense, primarily the U.S. Air Force and U.S. Navy.

IPS:  IPS provides complete, integrated solutions for command and control, resource deployment and tracking, information gathering and analysis, and records management.  These systems are designed for public safety agencies (law enforcement, fire, and emergency medical services), commercial fleet operations, and security forces at airports, military bases, and other campus environments.

IPS provides complete solutions for public safety agencies, and was the first vendor to offer map-based computer-aided dispatching.  Subsequently, the product offerings have expanded to include records and jail management systems, mobile solutions, and Web-based access to command and control information.  Together, these products represent an integrated solution for dealing with the life cycle of public safety information.

Corporate:  The Corporate segment includes Teranetix (a provider of commercial repair and logistics services); international hardware maintenance; residual activity relating to exiting the hardware business, including management of warranty reserves and a repair depot; oversight activities associated with the offices of Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Treasurer, Strategic Planning, General Counsel, Corporate Marketing, the Board of Directors ("Board"), and internal and external audit.

Product Development

The Company believes a strong commitment to ongoing product development is critical to success in the markets in which it competes.

Product development expenditures include all costs related to designing new or improving existing products.  During the year ended December 31, 2003, the Company expensed $59 million (11% of revenues) for product development activities compared to $50.7 million (10% of revenues) in 2002, and $53.9 million (10% of revenues) in 2001.  See MD&A for further discussion of product development expenses, including amounts capitalized and their recoverability.

The markets in which the Company's business units compete continue to be characterized by rapid technological change, resulting in shorter product cycles, higher-performance and lower-priced product offerings, intense price and performance competition, and development and support of software standards that result in less specific hardware and software dependencies by customers.  The operating results of the Company and its competitors will continue to depend on the ability to accurately anticipate customer requirements and technological trends, and to rapidly and continuously develop and deliver new products that are competitively priced, offer enhanced performance, and meet customers' requirements for standardization and interoperability.

Manufacturing and Sources of Supply

The Company maintains inventories to meet its hardware warranty and service obligations, and two of the Company's business segments continue light manufacturing and assembly operations.  All other business segments purchase hardware and some software from third parties for resale to customers.  The Company is not required to carry extraordinary amounts of inventory to meet customer demands.

Sales and Support

Sales:  The Company's products are sold through a combination of direct and indirect channels worldwide.  Most of the Company's revenues are generated by the Company's direct sales force through sales offices in over 30 countries.  The efforts of the direct sales force are augmented by sales through indirect channels, value-added resellers, distributors, and systems integrators.

Each of the Company's business units maintains its own sales force.  The Company believes an industry focus better enables it to meet the specialized needs of customers.  In general, the direct sales forces are compensated through a combination of base salary and commission.  Sales quotas are established along with certain incentives for exceeding quota.  Additional specific incentive programs may be established periodically.

Customer Support:  The Company believes that a high level of customer support is important to the sale of its technical solutions and integration services.  Customer support includes pre-installation guidance, customer training, on-site installation, project management, hardware preventive maintenance, repair services, software help desk, and technical support services.  Maintenance and support are covered by standard warranties and by maintenance agreements to which most users subscribe.  The Company believes that its hardware maintenance revenue will continue to decline as a result of its exit from the hardware business; however, the decline in maintenance revenues may be partially offset by growth in the Company's professional services business.  The Company is endeavoring to grow its services business, but revenues from these services typically fluctuate significantly from year to year and produce lower gross margins than systems or software maintenance revenues.

International Operations

International markets, particularly Europe and Asia, are important to each of the Company's operating segments.  Sales outside the United States represented approximately 47%, 43%, and 47% of total revenues in 2003, 2002, and 2001, respectively.  Europe and Asia Pacific represented approximately 30% and 9%, respectively, of total revenues in 2003, compared to 26% and 10%, respectively, in 2002, and 28% and 9%, respectively, in 2001.  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.

Outside the United States, the Company's products are sold and supported through a combination of subsidiaries and distributorships.  At December 31, 2003, the Company had approximately 750 employees in Europe, 300 employees in the Asia Pacific region, and 460 employees in other international locations.

Fluctuations in the value of the U.S. dollar in international markets can have a significant impact on the Company's results of operations.  The Company conducts business in many major markets outside the United States, but the most significant of these operations with respect to currency risk are located in Europe and Asia.  Local currencies are the functional currencies for the Company's Canadian subsidiaries, a Japanese subsidiary, and all but one of the Company's European subsidiaries.  The U.S. dollar is the functional currency for all other international subsidiaries.  See Note 1 of Notes to Consolidated Financial Statements for a description of the Company's policy for managing the currency risks associated with its international operations.

For further discussion of the Company's international operations, see MD&A and Note 15 of Notes to Consolidated Financial Statements.

U.S. Government Business

Total revenue from the U.S. government was approximately $137.1 million in 2003, $136.9 million in 2002, and $143 million in 2001, representing approximately 26% of total revenue in 2003, and 27% of revenue in 2002 and 2001.  The majority of these revenues are attributed to the ISG business segment.

The Company sells to the U.S. government under long-term contractual arrangements, primarily indefinite delivery, indefinite quantity, and cost-based contracts, and through sales of commercial products not covered by long-term contracts.  Approximately 83% of the Company's 2003 federal government revenue was earned under long-term contracts.  The Company believes its relationship with the federal government to be good.   While it is anticipated that these contracts will remain in effect through their stated expiration, the contracts are subject to termination at the election of the government.  Any loss of a significant government contract would have an adverse impact on the results of operations of ISG and the Company as a whole.

The Company has historically experienced slower collection periods for its U.S. government accounts receivable than for its commercial customers.  At December 31, 2003, and 2002, accounts receivable from the U.S. government totaled approximately $23.5 million and $26.7 million, respectively.

Backlog

An order is entered into backlog only when the Company receives a purchase order or a signed contract from a customer.  The Company's systems and services backlog of unfilled orders at December 31, 2003, and 2002, was $192 million and $193.8 million, respectively.  Substantially all the December 2003 backlog of orders is expected to be earned and recognized as revenue in 2004.  The Company does not ordinarily provide return of merchandise or extended payment terms to its customers.

The Company does not consider its business to be seasonal, however, first quarter revenue is usually less than the previous fourth quarter's revenue.

Competition

The markets in which the Company competes continue to be characterized by price and performance competition.  To compete successfully, the Company and others serving these markets must accurately anticipate customer requirements and technological trends, and rapidly and continuously develop products with enhanced performance that can be offered at competitive prices.  The Company and its competitors engage in the practice of price discounting to meet competitive industry conditions.  Other important competitive factors include quality, reliability, customer service and support, and training.  Company management believes that competition will remain intense, particularly in product pricing.  The Company's competition varies among its business segments.

PPO competes with the software products and services of AVEVA Group plc (formerly Cadcentre), Bentley Systems, Inc. ("BSI") (an approximately 32%-owned affiliate of the Company), Dassault Systemes, Tribon (shipbuilding), and several smaller companies.  In 2003, PPO attained its eleventh consecutive year of market revenue leadership as estimated from available industry information. PPO ranked first in the overall plant creation software and services market and the overall plant-specific applications market.  Positive factors potentially affecting competition in 2004 include continuing acceptance of SmartPlant^® software, the commercial introduction of SmartPlant^® 3D and IntelliShip™, continuing software lease revenue (particularly for PDS), and increasing strong demand for SmartPlant^® Foundation (commercial off-the-shelf software for plant information management), instrumentation engineering, and materials and procurement management.  Potential negative factors include worldwide uncertainties arising from the sustainability of economic recovery and growth, as well as industry conditions affecting funding of customers' capital projects, and fluctuations in oil, gas, and chemical prices.

IMGS competes and is a leader in the GIS and earth imaging markets.  According to available industry information, IMGS is a market leader in specific GIS market segments such as telecommunications and architecture/engineering/construction, with Environmental Systems Research Institute ("ESRI^®") being the overall market leader.  In the Utilities sector, another global competitor is GE Network Solutions.  IMGS is a market leader in the earth imaging market with its Z/I Imaging business believed to lead the photogrammetric industry.  Z/I Imaging's largest competitor is Leica Geosystems ("Leica").   Z/I Imaging and Leica offer end-to-end solutions and together provide solutions to over 60% of the market.  Although no industry reports are available for the photogrammetry market, IMGS determines its market placement by comparing overall market revenues to revenues reported by Leica and other competitors.

ISG competes in the U.S. federal government, state and local government, and commercial IT services markets. In 2003, VARBusiness ranked Intergraph as one of the top 100 North American IT solutions providers, and Washington Technology  placed Intergraph as the 83rd largest federal prime contractor.  INPUT, a Virginia-based government IT market research firm, estimates there are more than 3,000 companies conducting more than $100,000 of IT business with the U.S. government.  According to Gartner Dataquest, a Connecticut-based technology research and advisory firm, more than 15,000 companies compete in the commercial IT services market.  However, many of our competitors are substantially larger than the Company and have significantly greater financial and other resources.

IPS' primary market is comprised of system sales of greater than $1 million, and it estimates its ranking at first or second in its markets.  Competitors in this segment include Motorola Integrated Solutions, Northrop Grumman, CompuDyne, and Tritech Software Systems.  In 2004, IPS will launch an initiative to sell into the mid-size market segment with system sales of less than $1 million.  IPS believes this market segment lacks a dominant vendor.  IPS' primary competitors in this market are OSSI, New World, VisionAIR, InterAct, Positron, and HTE.  Other vendors in the $1 million and greater market could also move into the mid-size market.

Several companies with greater financial and other resources than the Company are active in the markets it serves, particularly those served by its ISG and IPS business segments.  The Company believes that its experience and ability to provide total solutions and services gives it an advantage over vendors who provide only software, hardware, or services.

Environmental Affairs

The Company's facilities are subject to numerous laws and regulations designed to protect the environment.  In the opinion of the Company, compliance with these laws and regulations has not had, and should not have, a material effect on the capital expenditures, earnings, or competitive position of the Company.

Licenses, Copyrights, Trademarks, Patents, and Proprietary Information

The Company owns and maintains a number of registered patents and registered and unregistered copyrights, trademarks, and service marks.  The patents and copyrights held by the Company are the principal means by which the Company preserves and protects the intellectual property rights embodied in the Company's products.  Similarly, trademark rights held by the Company are used to preserve and protect the reputation of the Company's registered and unregistered trademarks.  See Item 3. Legal Proceedings for information regarding the Company's patent protection efforts.

As industry standards proliferate, there is a possibility that the patents of others may become a significant factor in the Company's business.  Computer software technology is increasingly being protected by patents, and many companies, including Intergraph, are developing patent positions for software innovations.  It is unknown at the present time whether various patented software technology will be made generally available under licenses, or whether specific innovations will be held by their inventors and not made available to others.  In many cases, it may be possible to employ software techniques that avoid the patents of others, but the possibility exists that some features needed to compete successfully in a particular segment of the software market may be unavailable or may require an unacceptably high cost via royalty arrangements.  Patented software techniques that become de facto industry standards are among those that may raise costs or may prevent the Company from competing successfully in particular markets.

An inability to protect the Company's copyrights, trademarks, and patents, or to obtain current technical information or any required patent rights of others through licensing or purchase, all of which are important to success in the markets in which the Company competes, could significantly reduce the Company's revenues and adversely affect its results of operations.

The Company has intellectual property that is used in a variety of industries, including computers, consumer electronics, telecommunications, and electronics design.  The Company defends the value of its IP portfolio through licensing and litigation.  The Company remains actively engaged in licensing discussions, as well as patent litigation with several companies.

In January 2003, the Company entered into a cross-licensing agreement with International Business Machines Corporation ("IBM") that will extend for ten years.  The agreement settled all patent infringement claims between IBM and the Company.  Under the terms of this agreement, IBM transferred ownership of various IBM patents to the Company and made a balancing payment of $10 million during 2003.

In September 2003, the Company and Texas Instruments Incorporated ("TI") settled their respective patent disputes.  As a result of this settlement, the parties dismissed all claims and suits against each other, and TI agreed to take a license to three Intergraph patents, which define key aspects of parallel instruction computing ("PIC").  The license establishes a royalty rate to be paid by TI for the use of Intergraph's PIC technology in its TMS320C6000™ family of processors. However, pursuant to the terms of the license, TI elected to prepay the royalty as a one-time, $18 million lump sum payment, which was received in fourth quarter 2003.

Risks and Uncertainties

In addition to those described above and in Item 3. Legal Proceedings, the Company has risks and uncertainties related to its business and operating environment.  See Cautionary Note Regarding Forward-Looking Statements in MD&A for further discussion of these risks and uncertainties.

Employees

At December 31, 2003, the Company had approximately 3,700 employees.  Of these, approximately 1,500 were employed outside the United States.  The Company's employees are not subject to collective bargaining agreements, and there have been no work stoppages due to labor difficulties.  Management of the Company believes its relations with employees to be good.

Available Information

The Company files reports with the Securities and Exchange Commission ("SEC"), including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, and other reports from time to time.  The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549.  The public may obtain information about the operation of the Public Reference Room online at www.sec.gov/info/edgar/prrrules.htm or by calling the SEC at 1-800-SEC-0330.  The Company is an electronic filer, and the SEC maintains an Internet site at www.sec.gov that contains the Company's reports, proxy and information statements, and other information filed electronically.  The Company's website address is www.intergraph.com.  These website addresses are provided as inactive textual references only.  The Company makes available free of charge through its website Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.  The information provided on the Company's website is not part of this report, and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.

ITEM 2.  PROPERTIES

The Company's Corporate offices and primary product development centers are located in Huntsville, Alabama.  All the Company's business segments have headquarters located within the Huntsville facilities.  The business segments also maintain sales, support, and research and development facilities throughout the world.

The Company owns approximately 1,400,000 square feet of space in Huntsville, of which approximately 1,000,000 square feet are utilized for product development, sales and support, and administration.  The remaining 400,000 square feet are leased or available for lease.  The Company also owns approximately 200 acres of unoccupied land adjacent to its Huntsville facilities.  The Company maintains sales and support locations in major U.S. cities outside of Huntsville through operating leases.

Outside the United States, the Company owns 90,000 square feet of office space in the United Kingdom.  Sales and support facilities are leased in the Company's other international locations.

The Company considers some of its facilities to be in excess of its requirements, and efforts are underway to lease or sell excess facilities.

ITEM 3.  LEGAL PROCEEDINGS

The Company continues to pursue its patent litigation and licensing efforts.  These matters are subject to known and unknown risks and uncertainties.  Adverse developments with respect to these matters could materially adversely affect the Company's financial condition, results of operations, or prospects.  See the information appearing under Cautionary Note Regarding Forward-Looking Statements in MD&A for further discussion of these risks and uncertainties. 

Intel Litigation:  As further described in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, the Company has had ongoing litigation with Intel Corporation ("Intel") since 1997.  In April 2002, the Company and Intel reached an agreement during the course of court-ordered mediation that settled the Alabama litigation involving the Company's Clipper memory management patents ("Clipper patents").  Under the terms of the April 2002 settlement agreement, Intel paid $300 million to the Company in May 2002, the lawsuit pending in Alabama was dismissed, the companies signed a highly restricted cross-license agreement, and the Company assigned certain unrelated patents to Intel.  The April 2002 settlement agreement does not require the Company to take any future actions or make any future payments, and specifically reserves the Company's right to enforce its Clipper patents against computer system companies, including customers of Intel.  The settlement also addressed damages for the then pending patent infringement suit in Texas. 

The Texas trial was held in July 2002 with final closing arguments in August 2002.  On October 10, 2002, the Texas District Court (the "District Court") ruled that Intergraph's PIC patents were valid, enforceable, and infringed by Intel's Itanium and Itanium 2 products.  The District Court also ruled that the Company was entitled to an injunction on the sale, manufacture, and use of Intel's Itanium and Itanium 2 processors.  On October 30, 2002, the District Court entered a "Final Judgment and Permanent Injunction" against Intel.  Based on the findings of the District Court and the terms of the April 2002 settlement agreement, Intel paid $150 million to the Company in November 2002.  Intel also appealed the District Court's findings to the U.S. Court of Appeals for the Federal Circuit (the "Federal Circuit").

The parties' appellate argument occurred before a three-judge panel of the Federal Circuit on December 1, 2003.  On February 11, 2004, the Federal Circuit vacated the District Court's decision and remanded the case back to the District Court for further findings.  The Federal Circuit ruled that the District Court erred in its construction of the patent claim term "pipeline identifier."  In summary, the Federal Circuit concluded that a "pipeline identifier" must identify the specific processing pipeline – not just a type of processing pipeline – to which a computer instruction will be routed.    

The Company believes that the $150 million payment received in November 2002 is non-refundable and that its efforts to protect its intellectual property are consistent with the terms of the April 2002 settlement agreement.  The Company intends to pursue its infringement claims against Intel and its rights under the April 2002 settlement agreement.  On February 23, 2004, the Company filed a motion requesting the District Court to set a case management conference.  Thereafter, the District Court set a case management conference for March 17, 2004.

The Company recorded the $300 million settlement and the $150 million award (net of applicable legal fees and other associated litigation costs) as "Intellectual property income (expense), net" in the other income (expense) section of the 2002 consolidated statement of income. 

Original Equipment Manufacturers ("OEM") Litigation:  In 1997, the Company placed a number of computer system vendors on notice that it believed their products infringed the Clipper system patents.  The Company continued to offer to negotiate a patent license with these system vendors, but such discussions were suspended as a result of the Company's litigation against Intel.  The Company's lawsuit against Intel was filed in 1997 and settled in April 2002; however, the Intel settlement agreement did not include licenses for Intel's customers (the system vendors who combined an Intel processor with certain other non-Intel components).  Rather, the Intel settlement agreement expressly excludes any license regarding the system vendors' sale of infringing computer systems and specifically records the Company's intention to seek payment for patent licenses from the system vendors.  On December 16, 2002, the Company filed a patent infringement action against Dell Inc.™ ("Dell"), Gateway Inc.™, and Hewlett-Packard Co.™ ("HP") (including the former Compaq Computer Corporation™) in the U.S. District Court for the Eastern District of Texas ("OEM case") claiming that products from these computer vendors infringe three Clipper system patents owned by the Company (U.S. Patent Numbers 4,899,275, 4,933,835, and 5,091,846).  These patents relate to computer system memory management technology.

The OEM case seeks unspecified damages for past infringement (including enhanced damages), a statutory patent injunction, prejudgment interest, costs, and attorneys' fees.  The Company delayed serving the defendants with the lawsuit and engaged each defendant in licensing discussions.  These licensing discussions were not successful, and the defendants were served on April 1, 2003.  The case has been set for trial on August 2, 2004.

On May 28, 2003, HP filed a patent countersuit against the Company in the Northern District of California.  HP also asked the Texas District Court to transfer the OEM case to the Northern District of California for consolidation with HP's countersuit.  The Texas court denied HP's motion to transfer the Texas OEM case to California.  HP's countersuit did not specify any accused infringing products or resulting damages, and was initially dismissed as legally defective.  HP has since filed a corrected amended complaint asserting four separate patents against a variety of Intergraph products, including SmartPlant^® 3D, IntelliShip™, SmartPlant^®, SmartSketch, I/Mobile TC, and IntelliWhere.  The Company filed a motion to have HP's California countersuit transferred to the Northern District of Alabama, which was subsequently denied.  The Company has also filed third-party complaints against Microsoft, BSI, and Graphic Technologies Inc., adding them as co-defendants to the HP patent assertions.  The Company has not determined what impact, if any, HP's countersuit may have on the Company's operations and cash flows.  The Company will vigorously defend against HP's countersuit.

HP has also filed an amended answer and counterclaim in the OEM case, which alleges that Intergraph's patent assertions are a violation of the Sherman Antitrust Act.  The Company has filed a motion to dismiss HP's antitrust counterclaims as a matter of law.  The District Court has not yet ruled on Intergraph's motion to dismiss.  The Company believes HP's antitrust counterclaim to be without merit, and will vigorously defend the same.

On June 21, 2003, Dell filed a counterclaim against Intel Corporation, adding them as a party to the OEM case.  Intel filed a general denial to Dell's counterclaim.  Dell also filed a motion to have its "Intel implied license" defense tried separately from the infringement case.  Dell's motion to bifurcate was subsequently denied.

On January 28, 2004, Dell filed a motion for summary judgment alleging that the Company's Clipper patents system claims were prohibited by "patent exhaustion," as a result of the Company's settlement agreement with Intel.  Subsequently, on February 26, 2004, Gateway filed a similar motion for summary judgment on the principle of "patent exhaustion."  The principle of "patent exhaustion" prohibits a patent holder from receiving a double recovery for the use of an invention.  Dell's and Gateway's motions allege that the Company fully recovered from Intel for their respective use of the Clipper system patents.  The District Court has not ruled on Dell's or Gateway's motion, and the Company will vigorously defend against said motions.

On February 11, 2004, Intel filed a motion for partial summary judgment requesting the Court to determine whether computer systems including an Intel motherboard, chipset, and processor, were excluded from suit pursuant to Section 4.21 of the parties' settlement agreement.  The Company has responded to Intel's motion.  The District Court has not ruled on Intel's motion.

Texas Instruments Litigation:  On January 30, 2003, the Company filed a patent infringement action against TI in the U.S. District Court for the Eastern District of Texas ("TI case").  The TI case pertained to the Company's PIC patents, United States Patent Numbers 5,560,028, 5,794,003, and 6,360,313 B1, and states that such patents are infringed by TI's family of Digital Signal Processors marketed under the name TMS320C6000™.  These devices are used as high-performance embedded controllers in consumer products.  Their applications include audio and video encoders and decoders, broadband solutions, optical networking, telephony, voice processing, and wireless communications.  TI subsequently asserted counterclaim patents in two separate legal actions.  In September 2003, the Company and TI settled their respective patent disputes.  As a result of this settlement, the parties dismissed all claims and suits against each other, and TI agreed to take a license to three Intergraph patents, which define key aspects of PIC.  The license established a royalty rate to be paid by TI for the use of Intergraph's PIC technology in its TMS320C6000™ family of processors.  Pursuant to the terms of the license, TI elected to prepay the royalty as a one-time, $18 million lump sum payment, which the Company received in fourth quarter 2003.

Advanced Micro Devices Litigation:  On January 15, 2004, Advanced Micro Devices ("AMD") filed a Declaratory Judgment Act ("DJA") patent action against the Company in the Northern District of California.  AMD asserted that the Company's family of Clipper patents (U.S. Patent Nos. 4,860,192, 4,884,197, 4,899,275, 4,933,835 and 5,091,846) are either invalid, or not infringed by AMD's microprocessor products.  The Company had previously engaged in patent licensing discussions with AMD without success.   AMD's complaint alleges that a subpoena received from the Company's OEM case led them to believe that they were going to be sued and that the DJA was filed in response.  No monetary damages are being sought by AMD. 

BSI Litigation:  In December 2002, the Company filed a declaratory judgment action against BSI in Madison County, Alabama.  The action requests the Court to interpret the parties' asset purchase agreement and promissory note, and to require BSI to specifically perform the repayment of the same.  The asset purchase agreement and note were executed in conjunction with the sale of the Company's civil, plotting, and raster software product lines to BSI in 2000.  BSI subsequently filed an initial action against the Company in Philadelphia, Pennsylvania, and thereafter filed a second action in Delaware alleging that the Company breached certain terms of the asset purchase agreement.  BSI's Pennsylvania action was dismissed in March 2003, and BSI's Delaware action has effectively been stayed pending the Alabama action.  In response, BSI has now asserted certain counterclaims against the Company in the pending Alabama action.  These counterclaims are substantially the same as those claims asserted in its Delaware action.  As with its prior actions, BSI did not specify an amount of damages in its Alabama counterclaims.  The Company intends to vigorously pursue its claims against BSI and defend the claims asserted by BSI.  The case is currently set for trial on April 12, 2004.

Other Litigation:   The Company has other ongoing litigation, none of which is considered to represent a material contingency for the Company at this time; however, any unanticipated adverse developments in any of these proceedings could materially adversely affect the Company's results of operations, financial condition, or cash flows.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information appearing under Dividend Policy and Price Range of Common Stock in the Intergraph Corporation 2003 Annual Report to Shareholders is incorporated by reference in this Annual Report on Form 10-K.

ITEM 6.  SELECTED FINANCIAL DATA

Selected financial data for the five years ended December 31, 2003, appearing under Five-Year Financial Summary on the inside front cover of the Intergraph Corporation 2003 Annual Report to Shareholders is incorporated by reference in this Annual Report on Form 10-K.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information appearing under Management's Discussion and Analysis of Financial Condition and Results of Operations in the Intergraph Corporation 2003 Annual Report to Shareholders is incorporated by reference in this Annual Report on Form 10-K.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information relating to the Company's market risks appearing under Liquidity and Capital Resources and Impact of Currency Fluctuations and Currency Risk in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Intergraph Corporation 2003 Annual Report to Shareholders is incorporated by reference in this Annual Report on Form 10-K.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and report of independent auditors in the Intergraph Corporation 2003 Annual Report to Shareholders are incorporated by reference in this Annual Report on Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.  The CEO and CFO of the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report.   Based on the evaluation of these disclosure controls and procedures, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.  It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.  In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.  Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the fourth quarter 2003 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information appearing under Election of Directors and Section 16(a) Beneficial Ownership Reporting Compliance of the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference.  Directors are elected for terms of one year at the annual meeting of the Company's shareholders.

EXECUTIVE OFFICERS OF THE COMPANY

Certain information with respect to the executive officers of the Company is set forth below.  Officers serve at the discretion of the Board.

Name	Age	Position	Officer Since
R. Halsey Wise	38	President, Chief Executive Officer, and Director	2003
Larry J. Laster	52	Executive Vice President, Chief Financial Officer, and Director	1987*
R. Reid French, Jr.	32	Executive Vice President of Strategic Planning and Corporate Development	2003
Roger O. Coupland	57	President, IPS	1991
Preetha R. Pulusani	44	President, IMGS	1997
Gerhard Sallinger	51	President, PPO	2001
William E. Salter	62	President, ISG	1984
David Vance Lucas	42	Vice President, Secretary, and General Counsel	2000
Charlotte S. Thompson	42	Vice President and Chief Accounting Officer	2002
Eugene H. Wrobel	61	Vice President and Treasurer	1998
__________________

*      Except for the period from February 1998 through August 2001

R. Halsey Wise joined the Company in July 2003 as President and CEO and was elected to the Board at that time in accordance with the Articles of Incorporation and Bylaws of the Company.  Prior to joining Intergraph, he served as CEO, North America of Solution 6 Holdings, Ltd., the largest software company in Australia.  Prior to that, Mr. Wise was President and COO of Computer Management Sciences, Inc., an information technology services company that was later acquired by Computer Associates International.  At Computer Associates, he was General Manager, North America for Global Professional Services.  Prior to that, Mr. Wise was an investment banker specializing in software and technology services with The Robinson-Humphrey Company.  Mr. Wise holds a Masters degree in finance and marketing from the J.L. Kellogg Graduate School of Management at Northwestern University and a B.A. degree in History from the University of Virginia.

Larry J. Laster joined the Company in 1981 and served as Executive Vice President and CFO from February 1987 through February 1998, at which time he resigned from the Company to serve as CFO of a privately owned company specializing in the development, sale, and support of business systems for the petroleum distribution and convenience store industries.  He rejoined the Company in June 1998 as CFO of IPS.  In September 2001, Mr. Laster was elected Executive Vice President and CFO of Intergraph Corporation.  Mr. Laster holds a bachelor's degree in accounting.

R. Reid French, Jr. joined the Company in September 2003 as EVP of Strategic Planning and Corporate Development.  Prior to joining Intergraph, Mr. French served as Chief Operating Officer, North America for Solution 6 Group, Ltd., Australia's largest software company, directing all regional operations including sales & marketing, product development, services and support.  Prior to Solution 6, Mr. French served as a strategic planner in the Business Planning & Development group for Walt Disney World, a business unit of The Walt Disney Company.  Prior to Disney, Mr. French worked in investment banking with The Robinson-Humphrey Company, managing various transactions within the technology sector.  Mr. French began his career as a Fellow of the Thomas J. Watson Foundation.  Mr. French holds an MBA degree from the Harvard Business School, where he was a Baker Scholar.   He also holds a BA degree in Economics from Davidson College, where he was Valedictorian.

Dr. Roger O. Coupland joined the Company in 1983 as project manager for the Australian Army AUTOMAP 2 project.  Since that time, he has served as manager of the Company's Mapping and Utilities division and subsequently as the Company's Federal Sales Director.  Dr. Coupland was elected Vice President of Intergraph Corporation in 1991, with responsibility for the Company's Dispatch Management division.  In January 2001, he was elected Executive Vice President of Intergraph Corporation.  He currently serves as President of IPS.  Dr. Coupland holds a First Class Honors degree in Physics and a Ph.D. in Theoretical Physics from The University of Nottingham, England.

Preetha R. Pulusani joined the Company in 1980 as a software engineer, and since that time has held several positions in the areas of marketing and development of mapping technology for the Company.  She was elected Vice President in 1997 and has served as Executive Vice President, with responsibility for the Mapping and Geographic Information Systems business of Intergraph, since August 1998.  Ms. Pulusani was appointed President of IMGS in November 2001.  As of October 2002, this business segment includes the Mapping and GIS, Utilities and Communications, and Z/I Imaging divisions.  Ms. Pulusani holds a master's degree in computer science.

Gerhard Sallinger joined the Company in 1985 as a district sales manager in Germany and since then held several positions in the area of sales management.  He was elected Vice President Europe of PPO in 1999 and Executive Vice President Sales and Marketing of PPO worldwide in 2001.  Mr. Sallinger was appointed President of PPO in October 2001.  Mr. Sallinger holds a degree in chemical engineering.

Dr. William E. Salter joined the Company in April 1973.  Since that time, he has served in several managerial positions in the Company's Federal Systems business and as Director of Marketing Communications.  Dr. Salter was elected Vice President in August 1984 and is currently an Executive Vice President of the Company and President of ISG.  He holds a doctorate in electrical engineering.

David Vance Lucas joined the Company in 1994 as staff attorney responsible for corporate, commercial, and intellectual property representation.  He was promoted to Senior Counsel in 1997, elected Vice President and General Counsel in 2000, and elected Secretary in 2002.  Mr. Lucas continues to represent the Company in the areas noted above, in addition to managing the Company's litigation.  Prior to joining the Company, Mr. Lucas was a partner with the law firm of Johnson, Johnson & Moore.  He is admitted to practice before the United States Supreme Court, United States Court of Appeals for the Federal Circuit and the Eleventh Circuit, as well as both Federal and State Courts in Alabama and Texas.  Mr. Lucas holds a bachelor's degree in corporate finance and economics and a juris doctor in law.

Charlotte S. Thompson joined the Company in March 2001 as CFO of PPO and was appointed Vice President and Chief Accounting Officer of the Company in November 2002.  Before joining Intergraph, Ms. Thompson served as Vice President and Controller of NuVox Communications, a telecommunications company, from September 1999 to February 2001 and as Assistant Vice President and Controller of Ace Cash Express, Inc., a publicly traded retail check cashing company, from December 1996 to September 1999.  Prior to that, Ms. Thompson worked in public accounting with PricewaterhouseCoopers LLP for eight years.  She holds a master's degree in business administration and a bachelor's degree in accounting, and is a certified public accountant, certified management accountant, and certified internal auditor.

Eugene H. Wrobel joined the Company in 1982 as Finance Director for Europe.  He returned to the United States in August 1985 as Director of International Finance, and in January 1990 was appointed Director of Business Operations for the Americas (the United States, Canada, and Latin America).  He transferred into the Treasury Department in April 1998 and was elected Vice President and Treasurer in November 1998.  Before joining Intergraph, Mr. Wrobel was Vice President and Controller for DYATRON, a publicly traded computer services company, and prior to that he worked in public accounting for six years.  He holds a bachelor's degree in accounting and is a certified public accountant.

CODE OF BUSINESS CONDUCT AND ETHICS

The Company has adopted a code of business conduct and ethics for its employees, including its CEO, CFO, and other executives.  A copy of this code is included as Exhibit 14 with this Annual Report on Form 10-K, and is available on the Investor Relations section of the Company's website at www.intergraph.com.  The Company intends to post amendments to or waivers from its code of business conduct and ethics at this location on its website.

AUDIT COMMITTEE FINANCIAL EXPERT

The information appearing under Board Committees and Attendance in the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference. 

ITEM 11.  EXECUTIVE COMPENSATION

The information appearing under Executive Compensation in the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference. 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information appearing under Common Stock Outstanding and Principal Shareholders in the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference.

Equity Compensation Plan Information

Information regarding the Company's equity compensation plans approved by shareholders as of December 31, 2003, is summarized below.  The Company has no equity compensation plans not previously approved by shareholders.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans    approved by security holders	2,737,022	$9.17	1,712,000
Equity compensation plans not     approved by security holders	---	---	---
Total	2,737,022		1,712,000

For additional information regarding the Company's equity compensation plans, see Note 12 of Notes to Consolidated Financial Statements.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information appearing under Certain Relationships and Related Transactions in the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information appearing under Ratification of Appointment of Auditors in the Intergraph Corporation proxy statement relative to the annual meeting of shareholders to be held May 13, 2004, is incorporated herein by reference.

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

					Page in Annual Report*
(a)	1)		The following consolidated financial statements of Intergraph Corporation and subsidiaries and the report of independent auditors thereon are incorporated by reference from the Intergraph Corporation 2003 Annual Report to Shareholders:
				Consolidated Balance Sheets at December 31, 2003, and 2002	50
				Consolidated Statements of Income for the three years ended December 31, 2003	51
				Consolidated Statements of Cash Flows for the three years ended December 31, 2003	52
				Consolidated Statements of Shareholders' Equity for the three years ended December 31, 2003	53
				Notes to Consolidated Financial Statements	54-82
				Report of Independent Auditors	83
	* Incorporated by reference from the indicated pages of the 2003 Annual Report to Shareholders.
					Page in Form 10-K
	2)		Financial Statement Schedule:
				Schedule II - Valuation and Qualifying Accounts and Reserves for the three years ended December 31, 2003	21
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
		3)	Exhibits
			Number	Description
			3(a)	Electronically Restated Certificate of Incorporation (1)
			3(b)	Amended and Restated Bylaws (2)
			4	Amended and Restated Rights Agreement, dated March 5, 2002, between Intergraph Corporation and Computershare Investor Services, LLC (3)
			10(a)	Settlement, Sale of Technology and License Agreement, dated April 4, 2002, by and among Intergraph Corporation, Intergraph Hardware Corporation and Intel Corporation (4) (11)
			10(c) *	Intergraph Corporation 1997 Stock Option Plan (7) and amendment dated January 11, 1999 (8)
			10(d)	Form of Indemnification Agreement between Intergraph Corporation and each executive officer and each member of the Board of Directors of the Company (2)
			10(e) *	Intergraph Corporation Nonemployee Director Stock Option Plan (9)
			10(g) *	Employment Contract of R. Halsey Wise dated June 12, 2003, as amended
			10(h) *	Employment Contract of Graeme J. Farrell dated July 1, 2003 (13)
			10(i) *	Employment Agreement with R. Reid French, Jr. dated September 16, 2003 (14)
			10(l) *	Intergraph Corporation Amended and Restated 2002 Stock Option Plan (10)
			10(m) *	Employment Contract dated October 24, 1985, of Gerhard Sallinger (5)
			10(n) *	Employment Agreement of Dr. Terry Keating dated October 1, 2002 (6)
			10(o)(i)	Agreement to Resolve Patent Infringement Claims by and between Intergraph Corporation and International Business Machines Corporation dated January 30, 2003 (12)
			10(o)(ii)	Patent Cross License Agreement by and between Intergraph Corporation and International Business Machines Corporation dated January 30, 2003 (11) (12)
			10(p)	Texas Instruments Patent Litigation Settlement and License Agreement dated September 9, 2003 (14)
			13	Portions of the Intergraph Corporation 2003 Annual Report to Shareholders incorporated by reference in this Form 10-K Annual Report
			14	Code of Business Conduct and Ethics
			21	Subsidiaries of the Company
			23	Consent of Ernst & Young LLP, Independent Auditors
			31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by R. Halsey Wise dated March 10, 2004
			31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Larry J. Laster dated March 10, 2004
			32.1	Certification pursuant to 18 U.S.C. Section 1350 by R. Halsey Wise dated March 10, 2004
			32.2	Certification pursuant to 18 U.S.C. Section 1350 by Larry J. Laster dated March 10, 2004

           *   Denotes management contract or compensatory plan, contract, or arrangement required to be filed as an Exhibit to this Form 10-K

		(1)	Incorporated by reference to exhibits filed with the Company's Form 8-A12G/A filed on October 29, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(2)	Incorporated by reference to exhibits filed with the Company's Current Report on Form 8-K dated April 8, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(3)	Incorporated by reference to exhibits filed with the Company's Current Report on Form 8-K dated March 8, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(4)	Incorporated by reference to exhibits filed with the Company's Current Report on Form 8-K/A dated April 30, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(5)	Incorporated by reference to exhibits filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2001, under the Securities Exchange Act of 1934, File No. 0-9722.
		(6)	Incorporated by reference to exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(7)	Incorporated by reference to exhibits filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1996, under the Securities Exchange Act of 1934, File No. 0-9722.
		(8)	Incorporated by reference to exhibit filed with the Company's Registration Statement on Form S-8 dated May 24, 1999, under the Securities Exchange Act of 1933, File No. 333-79137.
		(9)	Incorporated by reference to exhibits filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1997, under the Securities Exchange Act of 1934, File No. 0-9722.
		(10)	Incorporated by reference to exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(11)	Certain information has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
		(12)	Incorporated by reference to exhibits filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2002, under the Securities Exchange Act of 1934, File No. 0-9722.
		(13)	Incorporated by reference to exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, under the Securities Exchange Act of 1934, File No. 0-9722.
		(14)	Incorporated by reference to exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, under the Securities Exchange Act of 1934, File No. 0-9722.
(b)	Reports on Form 8-K:
	•	Form 8-K dated October 30, 2003, reporting the Company's third quarter earnings
(c)	Exhibits - the response to this portion of Item 15 is submitted as a separate section of this report.
(d)	Financial statements of 50%-or-less-owned companies have been omitted because the registrant's proportionate share of income before income taxes of the companies is less than 20% of consolidated income before income taxes, and the investments in and advances to the companies are less than 20% of consolidated total assets.

Information contained in this Annual Report on Form 10-K includes statements that are forward-looking as defined in Section 21E of the Securities Exchange Act of 1934.  Actual results could differ materially from those projected in the forward-looking statements.  Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company's 2003 Annual Report to Shareholders, portions of which are incorporated by reference in this Annual Report on Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTERGRAPH CORPORATION
By:  /s/ R. Halsey Wise
    R. Halsey Wise
President, Chief Executive Officer, and Director Date:   March 11, 2004           

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

		Date
/s/ Sidney L. McDonald	Chairman of the Board and Director	March 11, 2004
Sidney L. McDonald
/s/ R. Halsey Wise	President, Chief Executive Officer, and	March 11, 2004
R. Halsey Wise	Director
/s/ Larry J. Laster	Executive Vice President, Chief Financial	March 11, 2004
Larry J. Laster	Officer, and Director (Principal Financial and Accounting Officer)
/s/ Lawrence R. Greenwood	Director	March 11, 2004
Lawrence R. Greenwood
/s/ Thomas J. Lee	Director	March 11, 2004
Thomas J. Lee
/s/ Joseph C. Moquin	Director	March 11, 2004
Joseph C. Moquin
/s/ Linda L. Green	Director	March 11, 2004
Linda L. Green
/s/ Richard W. Cardin	Director	March 11, 2004
Richard W. Cardin
/s/ Michael D. Bills	Director	March 11, 2004
Michael D. Bills

INTERGRAPH CORPORATION AND SUBSIDIARIES
SCHEDULE II ---- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Description		Balance at beginning of period	Additions charged to costs and expenses	Deductions	Balance at end of period
(in thousands)
Allowance for doubtful accounts deducted from accounts receivable in the balance sheet	2003 2002 2001	$15,436 $12,976 $18,169	$2,662 $3,851 $1,348	$ 4,285  (1) $ 1,391   (1) $ 6,541   (1)	$13,813 $15,436 $12,976
Allowance for obsolete inventory deducted from inventories in the balance sheet	2003 2002 2001	$16,306 $18,506 $28,556	$3,621 $1,224 $2,375	$  9,231  (2) $  3,424  (2) $12,425  (2)	$10,696 $16,306 $18,506
(1)  Uncollectible accounts written off, net of recoveries
(2)  Obsolete inventories reduced to net realizable value

Exhibit 21

INTERGRAPH CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT

Name	State or Other Jurisdiction of Incorporation	Percentage of Voting Securities Owned by Parent
Intergraph Asia Pacific, Inc.	Delaware	100
Intergraph Benelux B.V.	Netherlands	100
Intergraph BEST (Vic) Pty. Ltd.	Australia	100
Intergraph Canada, Ltd.	Canada	100
Intergraph China, Inc.	Delaware	100
Intergraph Computer (Shenzhen) Co. Ltd.	China	100
Intergraph Consulting Inc.	Delaware	100
Intergraph Consulting Private Ltd.	India	100
Intergraph Corporation (N.Z.) Limited	New Zealand	100
Intergraph Corporation	Delaware	100
Intergraph Corporation Pty. Ltd.	Australia	100
Intergraph Corporation Taiwan	Taiwan, R.O.C.	100
Intergraph CR spol. s r.o.	Czech Republic	100
Intergraph Danmark A/S	Denmark	100
Intergraph de Mexico, S.A. de C.V.	Mexico	100
Intergraph Deutschland GmbH	Germany	100
Intergraph Espana, S.A.	Spain	100
Intergraph Europe (Polska) Sp. z o.o.	Poland	100
Intergraph European Manufacturing, L.L.C.	Delaware	100
Intergraph Finance Australia, Pty., Ltd.	Australia	100
Intergraph Finland Oy	Finland	100
Intergraph France SA	France	100
Intergraph GmbH (Osterreich)	Austria	100
Intergraph Greater China, Ltd.	Hong Kong	100
Intergraph Hardware Technologies Company	Nevada	100
Intergraph Hong Kong Limited	Hong Kong	100
Intergraph Israel Software Development Center, Ltd.	Israel	100
Intergraph Italia, L.L.C.	Delaware	100
Intergraph Japan K.K.	Japan	100
Intergraph Korea, Ltd.	Korea	100
Intergraph Norge A/S	Norway	100
Intergraph Portugal Sistemas de Computacao Grafica,  S.A.	Portugal	100
Intergraph Process & Building (M)  SDN. BHD.	Malaysia	100
Intergraph Process & Building Solutions Philippines, Inc.	Philippines	100
Intergraph Process Power and Offshore Pte Ltd.	Singapore	100
Intergraph Properties Company	Nevada	100
Intergraph Public Safety (New Zealand) Limited	New Zealand	100
Intergraph Public Safety Belgium S.A.	Belgium	100
Intergraph Public Safety Deutschland, GmbH	Germany	100
Intergraph Public Safety Pty. Ltd.	Australia	100
Intergraph Public Safety U.K., Ltd.	United Kingdom	100
Intergraph Public Safety, Inc.	Delaware	100
Intergraph Services Company, Inc.	Delaware	100
Intergraph Servicios de Venezuela C.A.	Venezuela	100
Intergraph Software Technologies Company	Nevada	100
Intergraph Sverige AB	Sweden	100
Intergraph Switzerland A.G.	Switzerland	100
Intergraph UK, Ltd.	United Kingdom	100
Intergraph Virgin Islands, Inc.	Virgin Islands	100
Intergraph Wholesale Pty., Ltd.	Australia	100
M&S Computing Investments	Delaware	100
Pelican Forge Software Corporation	Canada	100
Public Safety France, SA	France	100
Teranetix Europe B.V.	Netherlands	100
Teranetix Germany GmbH	Germany	100
Terra Map Server GmbH	Germany	100
Worldwide Services, Inc.	Delaware	100
Z/I Imaging (UK) Limited	United Kingdom	100
Z/I Imaging Corporation	Delaware	100
Z/I Imaging GmbH	Germany	100
Z/I Imaging Hellas, S.A	Greece	100
Z/I Imaging Japan K.K.	Japan	100
Z/I Imaging Limited	Ireland	100
Z/I Imaging Manufacturing GmbH	Germany	100

Exhibit 23

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Intergraph Corporation and subsidiaries of our report dated January 28, 2004, except for Note 18 as to which the date is February 26, 2004, included in the 2003 Annual Report to Shareholders of Intergraph Corporation.

Our audits also included the financial statement schedule of Intergraph Corporation listed in Item 15(a)(2).  This schedule is the responsibility of the Company's management.  Our responsibility is to express an opinion based on our audits.  In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration Statements of Intergraph Corporation listed below of our report dated January 28, 2004, except for Note 18 as to which the date is February 26, 2004, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Intergraph Corporation.

Form S-3	Registration Statement No.	33-25880
Form S-8	Registration Statement No.	33-53849
Form S-8	Registration Statement No.	33-57211
Form S-8	Registration Statement No.	33-59621
Form S-8	Registration Statement No.	333-79129
Form S-8	Registration Statement No.	333-79137
Form S-8	Registration Statement No.	333-100923

/s/ Ernst & Young

Birmingham, Alabama
March 9, 2004

EX-10.G

                                                                                        EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 12, 2003, is by and between Intergraph Corporation, a Delaware corporation (the "Company"), and R. Halsey Wise (the "Executive").

            WHEREAS, the Company desires that the Executive serve as Chief Executive Officer and President of the Company and the Executive desires to hold such positions under the terms and conditions of this Agreement; and

            WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions of the employment relationship of the Executive with the Company.

            NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows:

            1.         Employment.  The Company hereby employs the Executive and the Executive hereby accepts employment with the Company, upon the terms and subject to the conditions set forth herein.

            2.         Term.

                         (a)        Subject to termination pursuant to Section 10 hereof, the term of the employment by the Company of the Executive pursuant to this Agreement (as the same may be extended, the "Term") shall commence on July 28, 2003 (the "Effective Date"), and terminate on July 31, 2005 (which, for purposes of this Agreement, shall be considered the second anniversary of the Effective Date).

                         (b)        Commencing on the second anniversary of the Effective Date and on each subsequent anniversary thereof, the Term shall automatically be extended for a period of one (1) additional year following the expiration of the otherwise applicable Term unless, not later than ninety days (90) prior to any such anniversary date, either party hereto shall have notified the other party hereto in writing that such extension shall not take effect.

            3.         Position.  During the Term, the Executive shall serve as Chief Executive Officer and President of the Company performing duties commensurate with the position of Chief Executive Officer and such additional duties as the Board of Directors of the Company (the "Board") shall determine, which duties shall not be materially inconsistent with the duties to be performed by executives holding similar offices in similarly-sized software corporations.  The Executive shall report directly to the Board.  Following the Effective Date, the Board shall promptly cause a vacancy on the Board and shall appoint Executive to fill such vacancy.  Executive agrees to serve, without any additional compensation, as a director on the Board and the board of directors of any subsidiary of the Company, and/or in one or more chief executive officer positions with any subsidiary of the Company.  If the Executive's employment is terminated for any reason, whether such termination is voluntary or involuntary, the Executive shall resign as a director of the Company (and any of its subsidiaries), such resignation to be effective no later than the date of termination of Executive's employment with the Company.

            4.         Duties.  During the Term, the Executive shall devote his full time and attention during normal business hours to the business and affairs of the Company (the "Business"); provided, however, that it shall not be a violation of this Agreement for the Executive to (i) devote reasonable periods of time to charitable and community activities and, with the approval of the Company, industry or professional activities, and/or (ii) manage personal business interests and investments, so long as such activities do not interfere with the performance of the Executive's responsibilities under this Agreement.

            5.         Salary and Bonus.

                         (a)        For purposes of this Agreement, a "Contract Year" shall mean a one-year period commencing on the Effective Date or any anniversary thereof; provided, however, that July 31, 2005 shall be considered the second anniversary of the Effective Date and that subsequent anniversaries, if any, shall be determined using July 31 as the applicable date.  During the initial Contract Year, the Company shall pay Executive a base salary of $525,000 per year.  Commencing on or before the first anniversary of the Effective Date, the Board (or a committee of the Board) shall review Executive's base salary and may increase such amount as it may deem advisable (such salary, as the same may be increased, the "Base Salary").  The Base Salary shall be payable to the Executive in substantially equal installments in accordance with the Company's normal payroll practices.  During the second Contract Year, the Company shall pay executive a Base Salary of not less than $577,500.  Executive's Base Salary in subsequent years shall not be reduced by the Company.

                         (b)        Executive shall be eligible to receive a cash signing bonus in the amount of $175,000 payable within ten (10) days following the Effective Date.

                         (c)        Executive shall receive a minimum cash bonus of $250,000 with respect to his services during 2003, payable in accordance with the Company's customary practices and policies. 

                         (d)        Executive shall receive a target cash bonus opportunity in the amount of up to $577,500 subject to the Board's (or a committee of the Board's) determination that Executive achieved during the second Contract Year the applicablemutually agreed upon target performance objectives to be agreed upon in writing by Executive and the Company on or prior to December 31, 2003.  The entitlement to such target cash bonus, if any, shall be determined by the Board (or a committee of the Board) no later than ten (10) days following the filing of the Company's financial statements for the year ended December 31, 2004 with the Securities and Exchange Commission.  The target cash bonus, if any, will be paid to the Executive at the end of the Company's immediately succeeding payroll cycle following the determination of the Board (or a committee of the Board).  In the event that this Agreement is extended beyond the second anniversary of the Effective Date, Executive shall be entitled to receive an annual target cash bonus opportunity in an amount equal to his then current Base Salary subject to the Board's (or a committee of the Board's) determination that the Executive achieved during such subsequent year(s) the applicable mutually agreed upon performance objectives to be agreed upon by Executive and the Company; such bonus (or bonuses), if any, shall be paid in accordance with the procedures and time frames set out above for payment of the second Contract Year bonus, if any.

            6.         Awards Granted Under Stock Option Plan.  Reference is made to the Intergraph Corporation 2002 Stock Option Plan, in the form filed with the Securities and Exchange Commission as of the Effective Date (the "Stock Option Plan"). 

                         (a)        Promptly following the Effective Date, the Company shall grant the Executive non-qualified stock options, with a ten (10) year term, under the Stock Option Plan to purchase 150,000 shares of common stock of the Company at an exercise price equal to the fair market value on the date of grant, vesting ratably over four (4) years, twenty-five percent (25%) per year beginning on the first anniversary of such grant, in substantially the form as attached hereto as Exhibit 1, which shall not be inconsistent with the provisions of the Stock Option Plan; provided, however, that the non-qualified stock options shall become 100% vested upon the occurrence of a Change in Control (as defined below) of the Company.  Subject to the terms of the Stock Option Plan and applicable law, including but not limited to the Internal Revenue Code of 1986, as amended, and the regulations thereunder, to the extent practicable, such options shall be granted in the form of non-qualified stock options.  In the event that Executive's employment under this Agreement is terminated, such options may be exercised, to the extent then vested and not previously exercised, in accordance with the provisions of the Stock Option Plan.

                         (b)        Promptly following the Effective Date, the Company shall grant the Executive an restricted stock award under the Stock Option Plan in respect of 50,000 shares of common stock of the Company, which restrictions shall lapse ratably over four (4)years or immediately upon a Change in Control (as defined below) in substantially the form as attached hereto as Exhibit 2, which shall not be inconsistent with the provisions of the Stock Option Plan.

                         (c)        Promptly following the first anniversary of the Effective Date, the Company shall grant the Executive non-qualified stock options, with a ten (10) year term, under the Stock Option Plan to purchase 200,000 shares of common stock of the Company at an exercise price equal to the fair market value on the date of grant, vesting ratably over four (4) years, twenty-five percent (25%) per year beginning on the first anniversary of such grant, in substantially the form as attached hereto as Exhibit 1, which shall not be inconsistent with the provisions of the Stock Option Plan; provided, however, that the non-qualified stock options shall become 100% vested upon the occurrence of a Change in Control (as defined below) of the Company.  Subject to the terms of the Stock Option Plan and applicable law, including but not limited to the Internal Revenue Code of 1986, as amended, and the regulations thereunder, to the extent practicable, such options shall be granted in the form of non-qualified stock options.  In the event that Executive's employment under this Agreement is terminated, such options may be exercised, to the extent then vested and not previously exercised, in accordance with the provisions of the Stock Option Plan.

For the purposes of this Agreement, a "Change in Control" shall mean any of the following events:

            (i)         An acquisition of any securities of the Company entitled to vote generally in the election of directors (the "Voting Securities") by any "Person" (as the term Person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%) or more of the combined voting power of the then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control.  A "Non-Control Acquisition" shall mean (i) an acquisition by an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (ii) any acquisition by or directly from the Company or any Subsidiary, or (iii) an acquisition pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) below); or

            (ii)        Executive is terminated by the Company without Cause or Executive terminates his employment with the Company for Good Reason within 1 year of the date that  individuals who, on the Effective Date, constitute the Board of Directors of the Company (the "Incumbent Directors") cease for any reason to constitute at least a majority of such Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board of Directors shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors ("Election Contest") or other actual or threatened solicitation of proxies or consents by or on behalf of any "person" (such term for purposes of this definition being as defined in Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) and 14(d)(2) of the 1934 Act) other than the Board of Directors ("Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

            (iii)       Consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a Subsidiary (a "Reorganization"), or the sale or other disposition of all or substantially all of the Company's assets (a "Sale") or the acquisition of assets or stock of another corporation (an "Acquisition"), unless immediately following such Reorganization, Sale or Acquisition:

                                     (A)       The stockholders of the Company immediately before such Reorganization, Sale or Acquisition, beneficially own, directly or indirectly, immediately following such Reorganization, Sale or Acquisition, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from such Reorganization, Sale or Acquisition (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets or stock either directly or through one or more subsidiaries, the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such Reorganization, Sale or Acquisition;

                                     (B)       The individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Reorganization, Sale or Acquisition constitute at least a majority of the members of the board of directors of the Surviving Corporation; and

                                     (C)       No Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such Reorganization, Sale or Acquisition, had Beneficial Ownership of twenty percent (20%) or more of the then outstanding Voting Securities), has Beneficial Ownership of twenty percent (20%) or more of the combined voting power of the Surviving Corporation's then outstanding Voting Securities;

            Any Reorganization, or Sale or Acquisition which satisfies all of the criteria specified in (A), (B) and (C) of paragraph (iii) above shall be deemed to be a "Non-Qualifying Transaction."

            (iv)       Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

            Notwithstanding the foregoing, a "Change in Control" shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership, of more than the permitted amount of the outstanding Voting Securities of the Company as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increased the proportional number of shares Beneficially Owned by the Subject Person, provided that if a "Change in Control" would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a "Change in Control" shall occur.

            7.         Vacation, Holidays and Sick Leave.  During the Term, Executive shall be entitled to paid vacation in accordance with the Company's standard vacation accrual policies for its senior executive officers as may be in effect from time to time; provided that Executive shall during each Contract Year be entitled to at least four (4) weeks of such vacation.  During the Term, Executive shall also be entitled to participate in all applicable Company employee benefits set forth in the Company's Employee Benefits Plan Summary as may be in effect from time to time.

            8.         Business Expenses.  The Executive shall be reimbursed for all reasonable and necessary business expenses incurred by him in connection with his employment (including, without limitation, expenses for travel and entertainment incurred in conducting or promoting business for the Company, which shall include regular travel to and from Jacksonville, Florida until such time as the Executive permanently relocates to Huntsville, Alabama) upon timely submission by the Executive of receipts and other documentation in accordance with the Company's normal expense reimbursement policies.

            9.         Relocation Expenses.  The Company will promptly reimburse Executive for any expenses incurred in connection with Executive's relocation to Huntsville/Madison County, Alabama, consistent with Intergraph Policy #603, and applicable legal or regulatory restrictions, including, but not limited to statutory allowable moving costs, temporary housing, reasonable storage expenses and sale commissions relating to the sale of Executive's primary residence.  The amount of any such reimbursement shall be increased to offset any income taxes which may be payable by Executive as a result of the Company's reimbursement of such expenses. 

            10.       Termination of Agreement.  The Executive's employment by the Company pursuant to this Agreement shall not be terminated prior to the end of the Term hereof except as set forth in this Section 10.

                        (a)        By Mutual Consent.  The Executive's employment pursuant to this Agreement may be terminated at any time by the mutual written agreement of the Company and the Executive.

                        (b)        Death.  The Executive's employment pursuant to this Agreement shall be terminated upon the death of the Executive, in which event the Executive's spouse or heirs shall receive, when the same would have been paid to the Executive (whether or not the Term shall have expired during such period), all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination (as defined in Section 10(h) hereof), and any other unpaid benefits (including death benefits) to which they are entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.  In addition, the Executive's surviving spouse and dependents shall receive fully-paid up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination.

                        (c)        Disability.  The Executive's employment pursuant to this Agreement may be terminated by written notice to the Executive by the Company or to the Company by the Executive (i) in the event that Executive suffers a physical or mental disability entitling Executive to long-term disability benefits under the Company's long-term disability plan, if any, or (ii) in the absence of a Company long-term disability plan, in the event that Executive is unable, as determined by the Board, to perform the essential functions of his regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.  In the event the Executive's employment is terminated pursuant to this Section 10(c), the Executive shall be entitled to receive, when the same would have been paid to the Executive (whether or not the Term shall have expired during such period), all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, and any other unpaid benefits (including disability benefits) to which he is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.  In addition, Executive shall receive fully-paid up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination.

                        (d)        By the Company for Cause.  The Executive's employment pursuant to this Agreement may be terminated by written notice to the Executive ("Notice of Termination") upon the occurrence of any of the following events (each of which shall constitute "Cause" for termination):  (i) the willful and continued failure by Executive to substantially perform his duties after demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes he has not substantially performed his duties, or (ii) the willful engaging in misconduct which is materially injurious to the Company, monetarily or otherwise. The termination of employment of the Executive shall not be deemed to be for Cause unless the Executive is given notice and an opportunity, together with counsel, to be heard before the Board, and thereafter Executive is determined by the Board to be guilty of the conduct described in subparagraph (i) or (ii) above.  In the event the Executive's employment is terminated pursuant to this Section 10(d), the Executive shall be entitled to receive all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, and any other unpaid benefits to which he is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination   and no more.

                        (e)        By the Company Without Cause.  The Executive's employment pursuant to this Agreement may be terminated by the Company at any time without Cause (which shall specifically exclude a decision by the Company not to extend this Agreement beyond the second anniversary of the Effective Date) by delivery of a Notice of Termination to the Executive.  In the event that the Executive's employment is terminated pursuant to this Section 10(e) during the initial Contract Year, the Executive shall be entitled to receive (i) on or prior to the Date of Termination, all Base Salary and benefits to be provided to the Executive under this Agreement through the Date of Termination, (ii) a lump sum payment of $525,000 payable at the times and in the manner set forth below, (iii) a pro rata portion of his bonus payable under Section 5(c) or 5(d), as applicable, paid in accordance with the provisions set forth in Section 5(c) or 5(d), as applicable, (iv) fully paid-up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination, and (v) any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.   In the event that the Executive's employment is terminated pursuant to this Section 10(e) after the first anniversary of the Effective Date, the Executive shall be entitled to receive (A) on or prior to the Date of Termination, all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, (B) a pro rata portion of his bonus payable under Section 5(d) paid in accordance with the provisions of Section 5(d), (C) an amount equal to two hundred percent (200%) of the Executive's Base Salary at the then-current rate of Base Salary payable at the times and in the manner set forth below, (D) fully paid-up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination, and (E) any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.   The amounts referred to in clauses (ii) and (C) above shall individually be referred to as the "Severance Amount" (and, for greater certainty, Executive shall under no circumstances be entitled to both amounts).  The Severance Amount shall be paid to the Executive in a lump sum no later than ten (10) days following the Date of Termination.  As a condition to receiving the Severance Amount, Executive agrees to sign, at the time of termination of his employment, a release in favor of the Company of all employment-law related claims.

                        (f)         By the Executive for Good Reason.  The Executive's employment pursuant to this Agreement may be terminated by the Executive by written notice of his resignation ("Notice of Resignation") delivered within twelve (12) months after the occurrence of any of the following events (each of which shall constitute "Good Reason" for resignation):  (i) a material reduction in Executive's position, authority, duties or responsibilities, (ii) a reduction in Executive's Base Salary or bonuses payable pursuant to Sections 5(b), 5(c) or 5(d), or (iii) a failure by the Company to require a successor corporation of the Company to honor the terms of this Agreement; provided, however, that "Good Reason" shall exclude the death or Disability of the Executive, or a decision by the Company not to extend this Agreement beyond the second anniversary of the Effective Date.  Notwithstanding the provisions of clause (i) above, in the event the Executive is elected to serve as the president, chief executive officer and/or a member of the board of directors of any entity which acquires control of more than 50% of the Voting Securities of the Company or, if such entity is a subsidiary of another entity, the ultimate parent of such subsidiary, and is provided with a written employment agreement by the entity or, if such entity is a subsidiary of another entity, the ultimate parent of such subsidiary, on substantially the same terms as those contained in this Agreement, the appointment to such position shall not constitute Good Reason for purposes of this Agreement.  In the event that the Executive resigns for Good Reason pursuant to this Section 10(f) during the initial Contract Year, the Executive shall be entitled to receive (i) on or prior to the Date of Termination, all Base Salary and benefits to be provided to the Executive under this Agreement through the Date of Termination, (ii) the Severance Amount referred to in Section 10(e)(ii) payable at the times and in the manner set forth in Section 10(e) above, provided that applicable references therein to the date of delivery of Notice of Termination shall mean reference to the date of delivery of Notice of Resignation, (iii) a pro rata portion of his bonus payable under Section 5(c) or 5(d), as applicable, paid in accordance with the provisions set forth in Section 5(c) or 5(d), as applicable, (iv) fully paid-up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination and (v) any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.  In the event that the Executive resigns for Good Reason pursuant to this Section 10(f) after the initial Contract Year, the Executive shall be entitled to receive (A) on or prior to the Date of Termination, all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, (B) a pro rata portion of his bonus payable under Section 5(d) paid in accordance with the provisions of Section 5(d), (C) the Severance Amount referred to in Section 10(e)(C) payable at the times and in the manner set forth in Section 10(e) above, provided that applicable references therein to the date of delivery of Notice of Termination shall mean reference to the date of delivery of Notice of Resignation, (D) fully paid-up health insurance benefits commensurate with the Company's standard health insurance benefits for one (1) year following the Date of Termination, and (E) any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination.  As a condition to receiving the Severance Amount, Executive agrees to sign, at the time of termination of his employment, a release in favor of the Company of all employment-law related claims.

                        (g)        By the Executive Without Good Reason.  The Executive's employment pursuant to this Agreement may be terminated by the Executive at any time by delivery of a Notice of Resignation to the Company.  In the event that the Executive's employment is terminated pursuant to this Section 10(g), the Executive shall receive all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company applicable to the Executive as of the Date of Termination, and no more.

                        (h)        Date of Termination.  The Executive's Date of Termination shall be (i) if the Executive's employment is terminated pursuant to Section 10(b), the date of his death, (ii) if the Executive's employment is terminated pursuant to Section 10(c), the date on which a Notice of Termination is given, (iii) if the Executive's employment is terminated pursuant to Section 10(d), the date on which a Notice of Termination is given, (iv) if the Executive's employment is terminated pursuant to Section 10(e), thirty (30) days after the date the Notice of Termination is given; provided, however, that the Executive may waive such notice in the event of a termination pursuant to Section 10(e) in which event, the Executive's Date of Termination shall be five (5) days after the Notice of Termination, (v) if the Executive's employment is terminated pursuant to Section 10(f), thirty (30) days after the date the Notice of Termination is given; provided, however, that the Company may waive such notice in the event of a termination pursuant to Section 10(f) in which event, the Executive's Date of Termination shall be five (5) days after the date the Notice of Resignation is given and (vi) if the Executive's employment is terminated pursuant to Section 10(g), sixty (60) days after the date the Notice of Resignation is given or such shorter period as may be determined by the Company.

                        (i)         Non-Renewal Payment.  In the event that the Company elects not to extend this Agreement beyond the second anniversary of the Effective Date, then the Company shall pay Executive, provided Executive has relocated to Huntsville, Alabama prior to the second anniversary of the Effective Date, a special termination payment equal to one hundred percent (100%) of the Executive's Base Salary at the then current rate of Base Salary.  For purposes of this Section 10(j), a "relocation" to Huntsville, Alabama shall mean that (i) Executive shall have established a permanent primary residence in Huntsville/Madison County, Alabama in which Executive and his immediate family reside on a primary basis, and for which Executive has sought a homestead exemption for applicable ad valorem taxes, (ii) Executive is subject to Alabama personal income tax, and (iii) Executive is qualified to register to vote in general elections in the State of Alabama.  Aside from the payment referred to in this Section 10(j), if applicable, and applicable Base Salary and bonuses which may be payable pursuant to Section 5, no other payments shall be made by the Company to Executive as a result of the Company's election not to extend this Agreement beyond the second anniversary of the Effective Date.

            11.       Representations.

The Company represents and warrants that this Agreement has been authorized by all necessary corporate action of the Company and is a valid and binding agreement of the Company enforceable against both in accordance with its terms.

The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from entering into or performing his duties in any way under this Agreement.

            12.       Assignment; Binding Agreement.  This Agreement is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by the provisions of this Agreement.  This Agreement shall inure to the benefit of and be enforceable by the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to him hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee, to his estate.

            13.       Confidentiality; Non-Competition; Ownership of Works.

                        (a)        The Executive acknowledges that: (i) the Business is intensely competitive and that the Executive's employment by the Company will require that the Executive have access to and knowledge of confidential information of the Company relating to the Business and other trade secrets, in each case other than as and to the extent such information is generally known or publicly available through no violation of this Section 13 by the Executive, (ii) the use or disclosure of such information other than in furtherance of the Business may place the Company at a competitive disadvantage and may do damage, monetary or otherwise, to the Business; and (iii) the engaging by the Executive in any of the activities prohibited by this Section 13 or by the Company's Proprietary Rights Agreement (which Executive shall execute and deliver to the Company on or before the Effective Date) may constitute improper appropriation and/or use of such information.  The Executive expressly acknowledges the trade secret status of the Company's confidential information and that the confidential information constitutes a protectable business interest in the Company.  Accordingly, the Company and the Executive agree as follows:

                        (b)        For purposes of this Section 13, the Company shall be construed to include the Company, its subsidiaries and their respective affiliates.

                        (c)        For a period of one (1) year after the Date of Termination if Executive receives a payment under Section 10(e)(ii), 10(f)(ii) or 10(i), or for a period of two (2) years after the Date of Termination if Executive receives a payment under Section 10(e)(C) or 10(f)(C), the Executive shall not engage in Competition, as defined below, with the Company or its subsidiaries within any market where the Company is conducting Competitive Services, as defined below, at the time of termination of Executive's employment hereunder.  For purposes of this Agreement, "Competition" by the Executive shall mean the Executive's engaging in significant activities relating to, or otherwise directly or indirectly being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting his name to be used in connection with the activities of any entity engaged in significant activities relating to, Competitive Services, including without limitation the following the companies:  Autodesk, Inc., ANSYS, Inc., Aspen Technology, Inc., ERSI, Inc., Mapinfo Corporation, Parametric Technology Corporation, and Trimble Navigation, Ltd.; provided that, it shall not be a violation of this sub-paragraph for the Executive to become the registered or beneficial owner of less than five percent (5%) of any class of the capital stock of any one or more competing corporations registered under the Securities Exchange Act of 1934, as amended, provided that, the Executive does not actively participate in the business of such corporation until such time as this covenant expires.  For purposes of this Agreement, the term "Competitive Services" means the development, marketing, or provision of location--based software, geospatial mapping software and geographic information systems software to or for public safety or engineering firms.

                        (d)        For a period of one (1) year after the Date of Termination if Executive receives a payment under Section 10(e)(ii), 10(f)(ii) or 10(i), or for a period of two (2) years after the Date of Termination if Executive receives a payment under Section 10(e)(C) or 10(f)(C), the Executive agrees that he will not, directly or indirectly, for his benefit or for the benefit of any other person, firm or entity, do any of the following:

                                    (i)         solicit from any customer doing business with the Company as of the Executive's termination, business of the same or of a similar nature to the business of the Company with such customer;

                                    (ii)        solicit from any known potential customer of the Company business of the same or of a similar nature to that which, to the knowledge of the Executive, has been the subject of a written or oral bid, offer or proposal by the Company, or of substantial preparation with a view to making such a bid, proposal or offer, within six (6) months prior to the Executive's termination; or

                                    (iii)       recruit or solicit the employment or services of any person who was employed by the Company upon termination of the Executive's employment and is employed by the Company at the time of such recruitment or solicitation.

                        (e)        The Executive acknowledges that the services to be rendered by him to the Company are of a special and unique character, which gives this Agreement a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and that a breach or threatened breach by him of any of the provisions contained in this Section 13 may cause the Company irreparable injury.  The Executive therefore agrees that the Company may be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining the Executive from any such violation or threatened violations.

                        (f)         If any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the fullest extent permitted by law.

            14.       Certain Additional Payments by the Company.

                        (a)        Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 14) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, and taking account of any withholding obligation on the part of the Company, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 

                        (b)        Subject to the provisions of Section 14(c), all determinations required to be made under this Section 14, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by the Company's regular certified public accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.   Any Gross-Up Payment, as determined pursuant to this Section 14, shall be paid by the Company to Executive, net of any of the Company's federal or state withholding obligations with respect to such Payment, within five days of the receipt of the Accounting Firm's determination.  Any determination by the Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder.  In the event that the Company exhausts its remedies pursuant to Section 14(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

                        (c)        Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of a Gross-Up Payment (or an additional Gross-Up Payment).  Such notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

                                    (i)  give the Company any information reasonably requested by the Company relating to such claim,

                                    (ii)  take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

                                    (iii)  cooperate with the Company in good faith in order effectively to contest such claim, and

                                    (iv)  permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.  Without limitation of the foregoing provisions of this Section 14(c), the Company shall control all proceedings taken in connection with such contest (to the extent applicable to the Excise Tax and the Gross-Up Payment) and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

                        (d)        If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 14(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company's complying with the requirements of Section 14(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 14(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

            15.       Entire Agreement.  This Agreement contains all the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes any other undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto.  The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter or effect of this Agreement or otherwise and that Executive has been represented by counsel selected by Executive.

            16.       Amendment or Modification Waiver.  No provision of this Agreement may be amended or waived, unless such amendment or waiver is agreed to in writing, signed by the Executive and by a duly authorized officer of the Company.  No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

            17.       Notices.  Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier or facsimile or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice hereunder in writing:

            To the Executive at:                                       With copies to:

            R. Halsey Wise                                                 Laura Thatcher

            328 Ponte Vedra Boulevard                             Alston & Bird

            Ponte Vedra Beach, FL. 32082                        One Atlantic Center

                                                                                    1201 West Peachtree Street

                                                                                    Atlanta, Georgia, 30309-3424

            To the Company at:                                        With copies to:

            Intergraph Corporation                                     Sidney McDonald

            Mail Stop IW2008                                           215 Timberlake Drive

            Huntsville, Alabama 35894-0001                      Union Grove, Al. 35175

            Attention:  General Counsel                              

            Facsimile:  (256) 730-2247                             

            Any notice delivered personally or by courier under this Section 16 shall be deemed given on the date delivered and any notice sent by facsimile or registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date transmitted by facsimile or mailed.

            18.       Severability.  If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

            19.       Survivorship.  The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

            20.       Governing Law; Venue.  This Agreement will be governed by and construed in accordance with the laws of the State of Alabama, without regard to the principles of conflicts of law thereof.

            21.       Headings.  All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

            22.       Withholding.  All payments to the Executive under this Agreement shall be reduced by all applicable withholding required by federal, state or local law.

            23.       Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[remainder of page intentionally left blank -- signature page follows]

                        IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement effective as of date set forth above.

                                                                        INTERGRAPH CORPORATION

                                                                        By: /s/ David Vance Lucas                               

                                                                        Name: David Vance Lucas                              

                                                                        Title: Vice President, General Counsel              

                                                                        EXECUTIVE

                                                                        /s/ R. Halsey Wise                                           

                                                                        R. Halsey Wise

Exhibit 1

Intergraph Corporation

Non-Statutory Stock Option

Grant To

R. Halsey Wise

Notice Of Grant Of Stock Option

July 28, 2003

            At the direction of the Compensation Committee of the Board of Directors of Intergraph Corporation (the "Committee"), you are hereby notified that the Committee has granted to you an option, pursuant to the Amended and Restated 2002 Stock Option Plan (the "Plan"). The stock option granted to you is a Non-Statutory Option.

Shares and Amount

            The option granted to you is to purchase _________ shares of the $.10 par value common stock of Intergraph Corporation at the price of $________ per share. The date of grant of this option is the date of this Notice, which is set forth at the end of this document.  It is the determination of the Committee that on this date the fair market value of Intergraph Corporation's $.10 par value common stock was $________ per share.

Conditions Affecting Option

            Additional information concerning your stock option is set forth in the enclosed Summary of the Intergraph Corporation Amended and Restated 2002 Stock Option Plan. You will observe that the Plan does not require that you exercise this option as to any particular number of shares at one time, but this option must be exercised, if at all and to the extent exercised, by no later than ten (10) years (or five (5) years if you own more than ten percent (10%) of the voting power of all classes of stock of the Company) from the date of this Notice.

            Your stock option is in all respects limited and conditioned by the provisions of the Plan and the following:

           a.         Your option may be exercised only by you during your lifetime, or your guardian or legal representative if one has been appointed, to the extent it has become exercisable or "vested."  Subject to the right of accretion provided for in paragraph f. below, your option is scheduled to become exercisable in four (4) installments as follows:  25% after 12 months, 25% after 24 months, 25% after 36 months, and 25% after 48 months. The option automatically expires after ten (10) years from the date of this Notice.

           b.         If you die while employed, your option may be exercised by your estate or the person to whom such option passes by reason of your death at any time within one (1) year after your death or ten (10) years after the date of this Notice, whichever date first arrives.

           c.         If your employment with the Company is terminated by reason other than your death, you, or your representative or guardian, may exercise your option at any time within three (3) months after your Disability or Retirement, or ten (10) years after the date of this Notice, whichever date occurs first.

           d.         Your option is nontransferable, otherwise than as may be occasioned by your death, and then only to your estate or according to the terms of your will or the provision of applicable laws of descent and distribution.

           e.         In the event that the right to exercise the vested shares of your option is passed to your estate, or to a person to whom such right devolves by reason of your death, then the vested shares of your option shall be nontransferable in the hands of your executor or administrator or of such person, except that the vested shares of your option may be distributed by your executor or administrator to the distributees of your estate as a part of your estate.

           f.          Notwithstanding anything to the contrary, after the initial twelve (12) month period, each outstanding option covered by this Notice shall vest and become exercisable upon your death, Disability or Retirement. For purposes of this Agreement, "Disability" means that you are unable to perform the essential duties of your occupation with the Company. For purposes of this Agreement, "Retirement" means your voluntary termination of employment with the Company after attaining 65 years of age or your voluntary termination of employment with the Company after ten (10) years of service with the Company and after attaining 55 years of age.

Exercise of Option

            At the time or times when you wish to exercise the vested portion of this option, in whole or in part, please refer to the provisions of the Plan dealing with methods and formalities of exercise of your option. Forms and information may be obtained from the Human Resources Department of the Corporation.  Please contact:

                        Intergraph Corporation

                        Human Resources Department

                        Mail Stop IW2000

                        Huntsville, AL 35894-0001

                        Telephone: 256-730-6019

                        Facsimile: 256-730-7252

Tax Information

            The shares purchased under the Non-Statutory provisions of the Plan are subject to tax treatment under Section 83 of the United States Internal Revenue Code of 1986, as amended. Generally, these rules may be summarized as follows:

           1.         There will be no tax consequence to you when the Non-Statutory Stock Option is granted.

           2.         You will be taxed when the Non-Statutory Stock Option is exercised on the difference between the exercised price per share and the fair market value per share as of the date of exercise. This income will be subject to tax at ordinary income tax rates and the Corporation will withhold an amount for income and payroll taxes based upon this difference.

           3.         You will be taxed when the stock is sold on the difference between a) the cost of the stock, increased by the taxable income realized upon exercise of the option and b) the sale price realized upon sale of the stock. If the stock is sold after having been held more than one year after exercise of the option, the amount realized will be subject to long-term capital gain or loss treatment. The maximum federal income tax rate at which such gains will be taxed is 20%.  Short-term capital gains, however, are taxed at the same rates as ordinary income.

            This is merely a summary of some of the tax consequences of the grant, exercise and disposition of the Non-Statutory Stock Option. You should consult with your tax adviser regarding the option granted to you for more specific information. Your income tax liability is your responsibility. Your tax consequences may be subject to change if new tax laws are enacted after the date of this option. In order to provide the Company with the opportunity to claim the benefit of any income tax deductions which may be available to it upon the exercise of an option or upon a disqualifying disposition, and in order to comply with all applicable federal or state tax laws or regulations, the Company may take such action, including withholding additional amounts from your regular wages or salary, as it deems appropriate to insure that, if necessary, all applicable federal, state or other taxes are withheld or collected from you.

            The date of this Notice is July 28, 2003.

                                                                        Intergraph Corporation

                                                                        By:                                                                  

                                                                              David Vance Lucas

            I hereby acknowledge receipt of this option and state that I have read the option and the attached Summary.

                                                                        R. Halsey Wise

Exhibit 2

Intergraph Corporation

Restricted Share Award Agreement

            THIS RESTRICTED SHARE AWARD AGREEMENT (this "Agreement") is made and entered into as of the 28^th day of July, 2003 (the "Grant Date"), between Intergraph Corporation, a Delaware corporation (the "Company" and, together with its subsidiaries, "Intergraph"), and R. Halsey Wise (the "Grantee").  Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Intergraph Corporation Amended and Restated 2002 Stock Option Plan (the "Plan").

            WHEREAS, the Company has adopted the Plan, which permits the issuance of restricted shares of the Company's common stock, par value $0.10 per share (the "Common Stock"); and

            WHEREAS, pursuant to the Plan, the Committee responsible for administering the Plan has granted an award of restricted shares to the Grantee as provided herein;

            NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

           1.         Grant of Restricted Shares.

                      (a)       The Company hereby grants to the Grantee an award (the "Award") of 50,000 shares of Common Stock (the "Shares" or the "Restricted Shares") on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan.

                      (b)       The Grantee's rights with respect to the Award shall remain forfeitable at all times prior to the dates on which the restrictions shall lapse in accordance with Sections 2 and 3 hereof.

           2.         Terms and Rights as a Stockholder.

                      (a)       Except as provided herein and subject to such other exceptions as may be determined by the Committee in its discretion, the "Restricted Period" for 25% of the Restricted Shares granted herein shall expire on the first anniversary of the date hereof, the "Restricted Period" for an additional 25% of the Restricted Shares granted herein shall expire on the second anniversary of the date hereof, the "Restricted Period" for an additional 25% of the Restricted Shares granted herein shall expire on the third anniversary of the date hereof, and the "Restricted Period" for the final 25% of the Restricted Shares granted herein shall expire on the fourth anniversary of the date hereof (as such numbers may be adjusted in accordance with Section 7 hereof).  Notwithstanding the above, the "Restricted Period" for all remaining unvested Restricted Shares granted herein shall expire upon the occurrence of a Change in Control (as defined in Grantee's Employment Agreement) of the Company.

                      (b)       The Grantee shall have all rights of a stockholder with respect to the Restricted Shares, including the right to receive dividends and the right to vote such Shares, subject to the following restrictions:

                                 (i)         the Grantee shall not be entitled to delivery of the stock certificate for any Shares until the expiration of the Restricted Period as to
                                             such Shares;

                                 (ii)        none of the Restricted Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of
                                             during the Restricted Period as to such Shares; and

                                 (iii)       except as otherwise determined by the Committee at or after the grant of the Award hereunder, any Restricted Shares as to which the
                                             applicable "Restricted Period" has not expired shall be forfeited, and all rights of the Grantee to such Shares shall terminate, without
                                             further obligation on the part of the Company, unless the Grantee remains in the continuous employment of the Company for the entire
                                             Restricted Period.

                      Any Shares, any other securities of the Company and any other property (except for cash dividends) distributed with respect to the Restricted Shares shall be subject to the same restrictions, terms and conditions as such Restricted Shares.

           3.         Termination of Restrictions.  At the end of the Restricted Period as to any portion of the Restricted Shares (or at such earlier time as may be determined by the Committee) or in the event of a Change in Control (as defined in Grantee's Employment Agreement) of the Company as to all of the Restricted Shares, all restrictions set forth in this Agreement or in the Plan relating to such portion or all, as applicable, of the Restricted Shares shall lapse as to such portion or all, as applicable, of the Restricted Shares, and a stock certificate for the appropriate number of Shares, free of the restrictions and restrictive stock legend, shall be delivered to the Grantee pursuant to the terms of this Agreement.

           4.         Delivery of Shares.

                      (a)       As of the date hereof, certificates representing the Restricted Shares shall be registered in the name of the Grantee and held by the Company or transferred to a custodian appointed by the Company for the account of the Grantee subject to the terms and conditions of the Plan and shall remain in the custody of the Company or such custodian until their delivery to the Grantee as set forth in Section 4(b) hereof or their reversion to the Company as set forth in Section 2(b) hereof.

                      (b)       Certificates representing Restricted Shares in respect of which the applicable Restricted Period has lapsed pursuant to this Agreement shall be delivered to the Grantee as soon as practicable following the date on which the restrictions on such Restricted Shares lapse.

                      (c)        Each certificate representing Restricted Shares shall bear a legend in substantially the following form:

THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE INTERGRAPH CORPORATION AMENDED AND RESTATED 2002 STOCK OPTION PLAN (THE "PLAN") AND THE RESTRICTED SHARE AWARD AGREEMENT (THE "AGREEMENT") BETWEEN THE OWNER OF THE RESTRICTED SHARES REPRESENTED HEREBY AND INTERGRAPH CORPORATION (THE "COMPANY"). THE RELEASE OF SUCH SHARES FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE PLAN AND THE AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE COMPANY.

           5.         Effect of Lapse of Restrictions.  To the extent that the Restricted Period applicable to any Restricted Shares shall have lapsed, the Grantee may receive, hold, sell or otherwise dispose of such Shares free and clear of the restrictions imposed under the Plan and this Agreement.

           6.         No Right to Continued Employment.  This Agreement shall not be construed as giving Grantee the right to be retained in the employ of Intergraph, and Intergraph may at any time dismiss Grantee from employment, free from any liability or any claim under the Plan but subject to the terms of the Grantee's Employment Agreement.

           7.         Adjustments.  The Committee may make adjustments in the terms and conditions of, and the criteria included in, this Award in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 6(g) of the Plan) affecting Intergraph, or the financial statements of Intergraph, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

           8.         Amendment to Award.  Subject to the restrictions contained in Sections 4 and 5 of the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, the Award, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would adversely affect the rights of the Grantee or any holder or beneficiary of the Award shall not to that extent be effective without the consent of the Grantee, holder or beneficiary affected.

           9.         Withholding of Taxes.  If the Grantee makes an election under Section 83(b) of the Code with respect to the Award, the Award made pursuant to this Agreement shall be conditioned upon the prompt payment to the Company of any applicable withholding obligations or withholding taxes by the Grantee ("Withholding Taxes").  Failure by the Grantee to pay such Withholding Taxes will render this Agreement and the Award granted hereunder null and void ab initio and the Restricted Shares granted hereunder will be immediately cancelled.  If the Grantee does not make an election under Section 83(b) of the Code with respect to the Award, upon the lapse of the Restricted Period with respect to any portion of Restricted Shares (or property distributed with respect thereto), the Company shall satisfy the required Withholding Taxes as set forth by Internal Revenue Service guidelines for the employer's minimum statutory withholding with respect to Grantee and issue vested shares to the Grantee without Restriction.

           10.       Plan Governs.  The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.  The terms of this Agreement are governed by the terms of the Plan, and in the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern.

           11.       Severability.  If any provision of this Agreement is, or becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or the Award, or would disqualify the Plan or Award under any laws deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and Award shall remain in full force and effect.

           12.       Notices.  All notices required to be given under this Grant shall be deemed to be received if delivered or mailed as provided for herein, to the parties at the following addresses, or to such other address as either party may provide in writing from time to time.

            To the Company:                   Intergraph Corporation

                                                         One Madison Industrial Park IW2000

                                                         Huntsville, Alabama 35894-0001

                                                         Attn:  General Counsel

           To the Grantee:                      The address then maintained with respect to the Grantee in the Company's records.

           13.       Governing Law.  The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

           14.       Successors in Interest.  This Agreement shall inure to the benefit of and be binding upon any successor to the Company.   This Agreement shall inure to the benefit of the Grantee's legal representatives.  All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs, executors, administrators and successors.

           15.       Resolution of Disputes.  Any dispute or disagreement which may arise under, or as a result of, or in any way related to, the interpretation, construction or application of this Agreement shall be determined by the Committee.  Any determination made hereunder shall be final, binding and conclusive on the Grantee and the Company for all purposes.

(Remainder of Page Intentionally Left Blank.)

            IN WITNESS WHEREOF, the parties have caused this Restricted Share Award Agreement to be duly executed effective as of the day and year first above written.

                                                                        INTERGRAPH CORPORATION

                                                                        By: _____________________________

                                                                        Grantee:

                                                                        ________________________________

                                                                        Please Print

                                                                       Grantee:

                                                                        ________________________________

                                                                        Signature

March 1, 2004

Intergraph Corporation
One Madison Industrial Park
Mail Stop:  IW2008
Huntsville, Alabama 35894-0001

Attention:  Compensation Committee

            Re:       Restricted Stock Award

To the Members of the Compensation Committee:

            As you are aware, my Employment Agreement provides for the Company to grant me options to purchase 200,000 shares of the Company’s common stock on or about July 28, 2004.  This letter confirms that the award of 85,000 shares of restricted stock pursuant to the 2002 Stock Option Plan and the form of agreement approved by the Committee will be in lieu of such option grants under my Employment Agreement.

                                                                                    Sincerely,

                                                                                    /s/ R. Halsey Wise

                                                                                    R. Halsey Wise

Approved

By: /s/ David Vance Lucas
David Vance Lucas
Vice President

EX-13

INTERGRAPH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements (all statements other than those made solely with respect to historical fact) within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, the business outlook of Intergraph Corporation (the "Company" or "Intergraph"), projections about revenue, operating income levels, margins, and market conditions and their anticipated impact on the Company and its vertical business segments; expectations regarding Intergraph's various ongoing litigation proceedings; expectations regarding future results and cash flows; information regarding the development, timing of introduction, and performance of new products; and any statements of the plans, strategies, and objectives of management for future operations.  These forward-looking statements are subject to known and unknown risks and uncertainties (some of which are beyond the Company's control) that could cause actual results to differ materially and adversely from those anticipated in the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, potential adverse outcomes in our ongoing efforts to protect our intellectual property, (including, with respect to the Company's efforts to prove Intel Corporation ("Intel") infringed the Company's parallel instruction computing patents in the trial court and in any resulting appeal, retain amounts previously paid to the Company, pursue the specified "appeal damages," or otherwise enforce the April 2002 settlement agreement with Intel in light of the February 2004 appellate court decision, the Company's claims against certain original equipment manufacturers, including Dell Inc.™, Gateway Inc.™ and Hewlett-Packard Co.™, and other ongoing and potential litigation and patent enforcement efforts), potential adverse outcomes in our efforts to improve our operating performance (including uncertainties with respect to the timing and magnitude of any expected improvements); material changes with respect to our business, litigation prospects, or the securities markets (including the market for Intergraph common stock); risks associated with doing business internationally (including foreign currency fluctuations); worldwide political and economic conditions and changes; the ability to attract or retain key personnel; increased competition; rapid technological change; unanticipated changes in customer requirements; the ability, timing, and costs associated with the Company's effects to enforce and protect Intergraph's intellectual property rights; the ability to access the technology necessary to compete in the markets served; risks associated with various ongoing litigation proceedings; and other risks detailed in our press releases or in our annual, quarterly, or other filings with the Securities and Exchange Commission.

OVERVIEW

Intergraph is a pioneer of computer graphics software and services in the commercial and government sectors.  Founded in 1969, the Company has delivered numerous innovations in interactive graphics solutions.  Today, Intergraph's core mission is to enable businesses and governments to make better and faster operational decisions, and through software and services, help its customers organize vast amounts of complex data into understandable visual representations.  Intergraph's technology enables our customers to create intelligent maps, manage assets and infrastructure, build and operate better plants and ships, and dispatch emergency services to those in need.

Over the past six years, the Company has taken significant measures to reduce its losses and return to profitability, including extensive reductions in its workforce and the sale of several non-core business units and assets.  In fourth quarter 1999, the Company exited the personal computer and generic server businesses, and in third quarter 2000 it exited the development and design of most of its remaining hardware products.  These actions allowed the Company to return to profitability in 2001.  The Company was profitable again in 2002 and 2003.  While profitable, income from operations as a percentage of revenues was less than 3% in each of these years.  Most of the Company's income before taxes in the last three years originated from $436.2 million intellectual property income, $31.9 million gains on sales of non-core assets, and $20.9 million interest income.  The Company carries no debt and has repurchased 16.3 million shares of its common stock for approximately $378 million over the last three years.

Mr. Taylor, the Company's former Chief Executive Officer ("CEO"), announced plans to retire in late 2002 and the Company's Board of Directors ("Board") conducted a search for a new CEO.  In July 2003, the Board hired a new CEO from outside Intergraph to lead the Company forward.  Since July, the Company has introduced new vision, mission and culture statements, changed its capital structure by repurchasing 10.9 million shares of the Company's common stock for approximately $283.2 million, added a new independent director, formed a Corporate Governance Committee comprised solely of independent directors, and adopted new Corporate governance guidelines. 

Management is focused on improving the Company's operating margins.  The overall strategic goal in the next two to three years is the expansion of operating margin percentages (income from operations divided by revenue) to be more in line with our peers.  While primarily focused on operating margins, management also monitors revenue, gross margins, and operating expenses for each business unit and the Company as a whole.  The Company anticipates low revenue growth for 2004.  The Company believes any improvement in income from operations for 2004 will primarily be due to expense reductions as a result of the recent restructuring initiatives and anticipated slight improvements in gross margins.  In addition, management is evaluating each of the Company's businesses to determine the size of the markets served, growth prospects for each market, potential strategies to grow each business, and the risks versus available risk-adjusted returns of each of the businesses.  This initial review should be completed in 2004. 

Fluctuations of the U.S. dollar in international markets had a significant impact on the Company's results of operations in 2003.  The Company estimates that the weakening of the U.S. dollar in the Company's international markets, primarily in Europe, positively impacted revenue by approximately 5.5%, negatively impacted operating expenses by approximately 4.9%, and improved the Company's operating results by approximately $0.16 per share (diluted) in comparison to 2002.  A strengthening U.S. dollar could materially adversely affect the Company's future results of operations.

The Company's business segments offer software solutions to satisfy engineering, design, modeling, analysis, mapping, and information technology needs.  The Company's business segments also offer related professional services to satisfy these needs.  Products and services are sold through industry-focused direct and indirect channels worldwide, with the United States and Europe representing approximately 83% of total revenues for 2003.

In addition, the Company has intellectual property that resulted from its hardware design and manufacturing operations that the Company exited in 2000.  The intellectual property is used in a variety of industries, including computers, consumer electronics, telecommunications, and electronics design.  The Company defends the value of its intellectual property ("IP") portfolio through licensing and litigation.  The Company remains actively engaged in licensing discussions, as well as patent litigation with several companies. 

The Company's current operations are divided into four business segments along with a Corporate oversight function ("Corporate").  The Company's business segments are Intergraph Process, Power & Offshore ("PPO"); Intergraph Mapping and Geospatial Solutions ("IMGS"); Intergraph Solutions Group ("ISG"); and Intergraph Public Safety, Inc. ("IPS").

RESULTS OF OPERATIONS

The following financial data sets forth the results of operations of the Company for each year in the three-year period ended December 31, 2003. 

	2003	2002	2001
(in thousands)
Revenues	$527,262	$501,077	$532,061
Cost of revenues	274,077	267,237	298,735
Gross profit	253,185	233,840	233,326
Operating expenses	234,681	217,303	221,617
Restructuring charges (credits)	3,952	2,106	(384)
Income from operations	14,552	14,431	12,093
Intellectual property income (expense), net	5,784	434,471	(4,006)
Gains on sales of assets	3,421	17,214	11,243
Interest income	6,588	6,886	7,427
Other income (expense), net	(2,128)	(3,830)	2,161
Income before income taxes and minority interest	28,217	469,172	28,918
Income tax expense	(5,010)	(91,135)	(8,500)
Income before minority interest	23,207	378,037	20,418
Minority interest	---	(285)	(476)
Net income	$  23,207	$377,752	$ 19,942

Revenues 

Total revenue for 2003 was $527.3 million, up 5% from 2002 after declining 6% in 2002 from 2001.  The increase in 2003 revenues is primarily the result of a weaker U.S. dollar against the currencies of the Company's foreign subsidiaries.  Exclusive of the currency impact, revenue levels were flat with 2002 levels.  The 2002 decline is attributable to weak economic conditions worldwide, the 2001 sale of the Company's Middle East operations, and a significant reduction in hardware maintenance revenue, partially offset by increased software maintenance revenues.

Total U.S. revenues, including sales to the federal government, were $277.4 million in 2003, down 3% from the 2002 level of $285.9 million.  Revenues in the U.S. for 2002 were flat with the 2001 level.  European sales were up 25% in 2003, after declining 12% in 2002.  The increase in sales in Europe is primarily due to the weakening U.S. dollar against European currencies.  Sales in Asia were down 6% for 2003, primarily due to the completion in 2002 of a large services contract in Australia, and up for 2002 from 2001 levels by 1%, as a result of new contracts in Australia.  Revenue in 2003 for other international subsidiaries ($42.1 million) increased 15% due to progress on a large project in the Caribbean.  In 2002, other international revenue ($36.7 million) declined 33%, due mainly to the 2001 sale of the Company's Middle East operations. 

Total revenue from the U.S. government was approximately $137.1 million in 2003, $136.9 million in 2002, and $143 million in 2001, representing approximately 26% of total revenue in 2003, and 27% of revenue in 2002 and 2001.  The majority of these revenues are attributed to the ISG business segment.  The Company sells to the U.S. government under long-term contractual arrangements, primarily indefinite delivery, indefinite quantity, and cost-based contracts, and through sales of commercial products not covered by long-term contracts.  Approximately 83% of the Company's 2003 federal government revenue was earned under long-term contracts.  The Company believes its relationship with the federal government to be good.  While it is anticipated that these contracts will remain in effect through their stated expiration, the contracts are subject to termination at the election of the government.  Any loss of a significant government contract would have an adverse impact on the results of operations of ISG and the Company as a whole.

The Company reports revenues in three categories, consisting of systems, maintenance, and services revenues.  The following discussions detail each of these revenue categories.

Systems:  Systems revenue, consisting primarily of revenues earned from product sales, projects, and fixed-term and perpetual software license and lease agreements, was $298 million for 2003, up 4% from 2002 levels of $287.9 million, after declining 4% from 2001 to 2002.  The increase for 2003 is primarily due to the weakening U.S. dollar and an increase in revenue in the IPS business segment, offset by declines in revenue in the IMGS business segment for the completion of several task orders on a large U.S. government contract and in the ISG business segment as contracts completed in 2002 were replaced with new contracts which are categorized as services revenues in 2003.  The 2002 decrease is primarily due to weak economic conditions worldwide and continuing order weakness in the Company's Z/I Imaging Corporation ("Z/I Imaging") business and in the Utilities and Communications sectors of IMGS. 

Maintenance:  Maintenance revenue, consisting primarily of revenues from support services, including telephone support, software program fixes, and rights to product upgrades and enhancements, increased 8% in 2003, after declining 3% from 2001 to 2002.  The improvement in 2003 maintenance revenues is primarily the result of the weakening U.S. dollar and an increase in software maintenance revenues, offset by declines in hardware maintenance revenues.  The Company's hardware maintenance business has declined approximately 28% ($5.7 million) for 2003 and 47% ($18 million) for 2002, as a result of the Company's exit from the hardware business in 2000.

Services:  Services revenue, consisting primarily of revenues from implementation and consulting services, increased 7% in 2003, after decreasing 13% from 2001 to 2002.  The 2003 increase is primarily the result of the weakening U.S. dollar and the effect of a large U.S. government project that began mid-2003 in the ISG business segment, offset by the completion in late 2002 of a large services contract in Australia.  The 2002 decline is attributable to weak economic conditions worldwide, especially in the Utilities and Communications sectors of IMGS, and the completion of the large services contract in Australia.

Gross Margin

The Company's total gross margin percentage on revenue was 48% in 2003, compared to 47% in 2002 and 44% in 2001.  For 2003, the improvement in margin is primarily due to the weakening of the U.S. dollar against foreign currencies.  Exclusive of the 2003 impact of the weakening dollar, total margin percentage would have been 47%.

Systems:   Margin on systems revenue was 49% in 2003, 2002, and 2001.  In general, the Company believes its systems margins are improved by higher software content in the product mix, a weaker U.S. dollar in international markets, and less discounting.  Also, systems margins are lowered by price competition, a higher services and third party content in the product mix, a stronger U.S. dollar in international markets, and a higher mix of federal government sales, which generally produce lower margins than commercial sales. 

Maintenance: Margin on maintenance revenue was 63% in 2003, 55% in 2002, and 47% in 2001.  The continuing improvement in margins over the past two years is partially the result of an increase in new software maintenance contracts and fewer hardware maintenance contracts that produce lower margins than software maintenance contracts.  Maintenance margins in all business units improved from 2002 to 2003.  Although revenues declined in 2002 due to the expected decline in the Company's legacy hardware business, costs decreased at a higher rate primarily from headcount reductions as ISG continued to align maintenance expenses with revenue levels.

Services: Margin on services revenue for 2003 was 25%, a decline from 2002 margin of 29% and flat with 2001 margin of 25%.  The decline in margin for 2003 included lower margin sales, particularly in the ISG business segment.  More effective cost controls and better overall utilization of resources in the PPO business segment, as well as completion of a large services contract in Australia during 2002 positively impacted margins in 2002.  Significant fluctuations in services revenues and margins from period to period are not unusual and can be caused by new or completed large orders, delayed progress on existing projects, and employee utilization rates.

Operating Expenses (exclusive of restructuring charges) 

Operating expenses (exclusive of restructuring charges) increased 8% from 2002 to 2003 and were relatively flat from 2001 to 2002.  The weaker U.S. dollar resulted in an estimated increase in reported operating expenses of $11.4 million in 2003.  Total operating expenses increased only 3% ($6 million) from 2002 to 2003, exclusive of this unfavorable currency impact.   

Product Development Expense:   Product development expense increased 16% in 2003 after declining 6% from 2001 to 2002.  The 2003 increase was due to continuing research and development investments in several new product offerings in the PPO and IPS business units, including the development of the new SmartPlant^® 3D and IntelliShip™ products which were released to customers in 2003.  The weaker U.S. dollar resulted in an estimated increase in reported product development expenses of $820,000 in 2003.  The 2002 decrease was primarily due to higher capitalization of development costs offset by some increased expenses from new product development initiatives.

The Company capitalizes certain development costs incurred after the technological feasibility of new software products has been established and amortizes those costs against the revenues generated by those products.  Though the Company regularly reviews its capitalized development costs to ensure recognition of any decline in value, it is possible that, for any given product, revenues will not materialize in amounts anticipated due to industry conditions that include price and performance competition, or that product lives will be reduced due to shorter product cycles.  Should these events occur, the carrying amount of capitalized development costs would be reduced, producing adverse effects on the Company's systems margin and results of operations (see Note 1 of Notes to Consolidated Financial Statements).

The Company currently has many ongoing projects relating to development of new products and enhancement of existing products.  The ultimate timing and impact of certain of these projects on the Company's results of operations and financial condition cannot be accurately predicted.  Some of the Company's significant products, several of which were released during 2003, include software for engineering information management, intelligent piping and instrumentation diagrams, 3D visualization, enterprise information access and reports, and 2D CAD; and new technology for the earth-imaging industry, including new digital products for photogrammetry, airborne reconnaissance, aerial mapping, and image distribution.  For the significant products released during 2003, costs incurred over the past six years totaled $75.1 million.  The Company will continue to enhance the functionality of these and other products to meet the challenges of industries characterized by intense competition and rapidly changing technologies.

Sales and Marketing Expense:  Sales and marketing expense increased 5% from 2002 to 2003 and increased only slightly from 2001 to 2002.  The 2003 increase occurred primarily in the PPO and IPS business units due to the weakening of the U.S. dollar against international currencies.  Excluding the estimated $7.2 million unfavorable currency impact, sales and marketing expense decreased 3% from 2002 to 2003.  The 2002 increase was due to the weakening of the U.S. dollar against international currencies and increased sales and marketing activity, primarily in PPO.  These increases were partially offset by reduced spending in IMGS as a result of combining the Utilities and Communications and Z/I Imaging businesses with the IMGS business unit in late 2002. 

General and Administrative Expense:   General and administrative expense for 2003 increased 6% from the 2002 level and was flat from 2001 to 2002.  The increase from 2002 to 2003 was primarily the result of the estimated $3.4 million unfavorable currency impact and higher legal expenses associated with the Bentley Systems, Inc. ("BSI") litigation and other general Corporate legal matters.

Restructuring Charges 

In 2003, the Company recorded $4 million in restructuring charges in an effort to realign costs with revenues in the Corporate and IMGS business segments.  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.  For a complete description of these charges, see Note 10 of Notes to Consolidated Financial Statements for details of the Company's restructuring activities.

In first quarter 2004, the Company expects to record $1.2 million in restructuring charges as a result of realignment of costs in relation to revenues in the PPO business segment.  The Company does not anticipate any further restructuring charges to be recorded during 2004 as long as the Company remains on its 2004 plan.

Non-operating Income and Expense

Intellectual Property:  "Intellectual property income (expense), net" in the consolidated statements of income consists of income resulting from settlements and licensing of the Company's intellectual property, net of legal fees and other expenses associated with maintaining and defending the Company's intellectual property.  Income and expenses associated with the intellectual property division, including related legal expenses, are classified and reported in this section of the consolidated statements of income in order to more clearly show the operating results of the Company's business units.

In third quarter 2003, the Company recorded $18 million in income from its settlement of all patent disputes with Texas Instruments Incorporated ("TI").  In first quarter 2003, the Company recorded income of $10 million due to a balancing payment from International Business Machines Corporation ("IBM") for future royalties in a full cross-licensing agreement that also resolved all outstanding patent infringement claims between IBM and the Company.  For the twelve months ended December 31, 2003, $22.2 million in legal fees and other related expenses associated with protecting and licensing the Company's intellectual property were netted against this income.

In second quarter 2002, Intergraph and Intel settled a patent infringement lawsuit filed in Alabama Federal Court in 1997 for $300 million, which the Company received in May 2002.  In fourth quarter 2002, the U.S. District Court for the Eastern District of Texas ruled in favor of the Company in a related patent infringement case, resulting in an additional $150 million payment from Intel, which was received in November 2002.  For the twelve months ended December 31, 2002, $15.6 million in legal fees and other related expenses associated with protecting and licensing the Company's intellectual property were netted against this income. 

In 2001, the Company recorded $4 million in legal fees and other related expenses associated with protecting and licensing the Company's intellectual property.  See Note 18 of Notes to Consolidated Financial Statements for further discussion on these transactions.

Gains on Sales of Assets:  "Gains on sales of assets" in the consolidated statements of income and cash flows consists of the net gains and losses recognized by the Company on sales of various non-core subsidiaries, divisions, and product lines, and gains recorded on real estate sales.  See Notes 16 and 17 of Notes to Consolidated Financial Statements for details of the Company's acquisitions and divestitures during the three-year period ended December 31, 2003.

In 2003, IMGS reported a net gain of approximately $1.1 million from the March 2003 sale of its aeronautical intellectual property assets to Ingegneria Dei Sistemi S.p.a. in Rome, Italy.  In July 2003, the Company recognized a gain of $1.8 million for the sale of its remaining 1.5 million shares of Creative Technology Ltd. ("Creative") stock.  In December 2003, the Company also recognized a gain of $470,000 on the sale of 383 acres of unoccupied land adjacent to its Huntsville headquarters.

In 2002, the Company reported an additional gain of $2 million from the 2000 sale of its Intense3D graphics accelerator division to 3Dlabs Inc., Ltd. ("3Dlabs"), as the shares originally placed in escrow were released in March 2002.  In May 2002, Creative purchased all of the outstanding shares of 3Dlabs for $3.60 per share, paying one-third in cash and two-thirds in Creative common stock.  The Company recognized a gain of $17 million on the sale of its 3Dlabs stock to Creative.  In July 2002, Intergraph sold approximately 789,000 shares of Creative stock for a net loss of $1.3 million.  In March 2002, the Company also sold its subsidiary in Greece, reporting a net loss of $455,000. 

In 2001, the Company reported an additional gain of approximately $10.1 million from the 2000 sale of its civil, plotting, and raster product lines to BSI as part of the initial consideration for the sale, as well as consideration for transferred and renewed maintenance revenues for the products sold to BSI, as provided for in the original sale agreement.  See Note 18 of Notes to Consolidated Financial Statements for a discussion of pending litigation with BSI.  Also in 2001, the Company reported an additional gain of $581,000 as a result of the final calculation and settlement of the earn-out provisions with 3Dlabs.  In 2001, the Company sold its Middle East operation and reported a net gain of $530,000. 

Interest Income:  Interest income was $6.6 million in 2003, $6.9 million in 2002, and $7.4 million in 2001.  Interest income decreased in 2003 due to lower interest rates earned and the reduction in principal balance of the BSI note from 2002, but was partially offset by an increase in interest income from short-term investments due to proceeds from IP litigation. 

Other:  "Other income (expense), net" in the consolidated statements of income consists primarily of interest expense, foreign exchange gains and losses and other miscellaneous items of non-operating income and expense.  In 2003, this amount included a $1.4 million net foreign exchange loss, $608,000 in losses on the disposal of various assets, and interest expense of $212,000.  In 2002, this amount included a $7 million write-down of the other-than-temporary loss on Creative stock, an additional gain of approximately $1.1 million on the prior sale and leaseback of a European office building, gains of $691,000 on the disposal of various assets, a dividend of $376,000 from Creative, a $277,000 net foreign exchange gain, and interest expense of $219,000.  In 2001, this amount included a $3.8 million payment received from Micrografx, Inc. for a convertible debenture held by the Company, interest expense of $1.8 million, $1.7 million for a Mentor Graphics warrant, and a net foreign exchange loss of $1.5 million.  See "Impact of Currency Fluctuations and Currency Risk" and Notes 6 and 17 of Notes to Consolidated Financial Statements.

Income Taxes

The Company earned pretax income before minority interest of $28.2 million in 2003, compared to $469.2 million in 2002 and $28.9 million in 2001.  Income tax expense in 2003 was attributable both to taxes on individually profitable majority-owned subsidiaries and patent litigation income, partially offset by tax benefits of $4.1 million which resulted from favorable resolutions of audit issues with the Internal Revenue Service.  Income tax expense in 2002 and 2001 resulted from taxes on individually profitable subsidiaries.  Income tax expense in 2002 also resulted from income from IP litigation.

The Company must continually assess the likelihood that it will be able to recover deferred tax assets.  If recovery is not likely, the Company must increase its provision for taxes by recording a valuation allowance against the deferred tax assets.  As of December 31, 2003, the Company believed that all of the deferred tax assets recorded on its balance sheet would ultimately be recovered.  However, should there be a change in the Company's ability to recover its deferred tax assets, the tax provision would increase in the period in which the Company determines that the recovery is not probable.

In addition, the calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations from over 30 countries around the world.  The Company recognizes liabilities for anticipated taxes in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, taxes are and could be due.  If the Company ultimately determines that payment of these amounts is unnecessary, the Company would reverse the liability and recognize a tax benefit during the period in which it determines that the liability is no longer necessary.  The Company would record an additional charge in its provision for taxes in the period in which it determines that the recorded tax liability is less than it expects for the ultimate assessment.

Note 11 of Notes to Consolidated Financial Statements contains a reconciliation of statutory income tax expense to actual income tax expense for each year in the three-year period ended December 31, 2003, and includes further details of the Company's tax position, including net income and tax credit and net operating loss carryforwards.

Results by Business Segment

The Company's current operations are divided into four business segments, along with a Corporate oversight function.  The following discussion provides a comparative analysis of results of operations including restructuring charges (credits) based on the Company's current business structure.  See Note 15 of Notes to Consolidated Financial Statements for further explanation and details of the Company's segment reporting.

PPO: PPO earned operating income of $16 million, $19 million, and $6.8 million, on revenues of $132.8 million, $124.1 million, and $116.5 million, in 2003, 2002, and 2001, respectively.  The 7% increase in revenue in 2003 was due to higher new license and software maintenance revenue, including a large maintenance contract signed with GRAD (a consortium of shipbuilders for new shipbuilding applications), strong sales of new information management products, and continued strong sales of the 2D/3D design tools.  Revenue increased 7% in 2002, compared to 2001, due to nonrecurring revenue in the shipbuilding business and growth in new products covering instrumentation design, materials/procurement management, and information management software.  PPO's total gross margin improved from 68% in 2002 to 70% in 2003 and from 61% in 2001 to 68% in 2002.  The increase in the 2003 gross margin was primarily due to improved maintenance margins as a result of the large maintenance contract with GRAD, while the increase in the 2002 gross margin was the result of growth in higher margin products, improvements in services margins, and fewer sales of low-margin hardware and hardware maintenance.  Operating expenses increased 18% in 2003 while 2002 operating expenses were flat with the 2001 level.  The increase in operating expenses for 2003 was due to higher product development expenses for new products, higher sales and marketing costs resulting from the weakening of the U.S. dollar, trade shows and customer events, and higher sales compensation costs due to higher revenue.

IMGS:  In 2003, IMGS reported operating income of $3.8 million on revenue of $210 million, compared to a 2002 operating loss of $2.1 million on revenue of $195.1 million and 2001 operating income of $6.1 million on revenue of $222.7 million.  IMGS' 2003 increases in revenue and operating income were due to increased product sales and project sales that include products, services, and third party content, primarily in Europe and Canada.  The 2002 declines in revenue and operating income were the result of less capital spending in the utilities; communications; local, state, and federal government; and earth imaging markets.  The 2001 results also included nonrecurring transactions causing 2002 revenue to appear low in comparison.  IMGS' total gross margin was approximately 47% in 2003, 48% in 2002, and 47% in 2001.  Operating expenses for 2003, which included $1.5 million in restructuring charges, were relatively flat with 2002.  Compared to 2001, operating expenses for 2002 were 2% lower, due to a decrease in headcount and an increase in development costs that qualified for capitalization offset by $1 million in restructuring charges.

ISG: In 2003, ISG earned operating income of $8.1 million on revenue of $120.9 million, compared to 2002 operating income of $5.9 million on revenue of $127 million and 2001 operating income of $10 million on revenue of $134.1 million.  ISG's systems and maintenance revenues continue to be adversely impacted by the Company's exit from the hardware business in 2000.  ISG's total gross margin was 24% in 2003 and 2002, a slight decrease compared to 25% in 2001.  The decrease from 2001 to 2002 was due to a significant, nonrecurring government purchase of third-party software with very low margin.  Operating expenses decreased 14% from the 2002 level due to decreases in sales and marketing and general and administrative expenses as ISG continued to align expenses with revenue levels and increased 3% from 2001 to 2002 due to higher sales and marketing expenses associated with expanding into the commercial services market.

IPS:  IPS earned operating income of $14.4 million, $14.6 million, and $8.2 million, on revenues of $67.2 million, $63.6 million, and $60.9 million in 2003, 2002, and 2001, respectively.  The 2003 increase in revenue was due to new projects and more maintenance contracts, which offset the loss of revenues from a large Australian services contract that ended in September 2002.  A 2002 decline in revenue from Asia and Canada was offset by higher revenue recognized on several major projects in the United States and Europe.  The operating income decrease in 2003 was attributable to higher total gross margins that partially offset an increase in operating expenses and the loss of margin related to the services contract in Australia.   The 2002 increase in operating income was due to higher revenue with better gross margins, flat operating expenses, and a one-time sale of software and systems associated with the completion of a large outsourcing contract in Australia.  IPS' total gross margin improved from 49% in 2002 to 52% in 2003 as a result of the completion of the large Australian services contract in 2002 and improved maintenance margins.  The 2002 margin improvement from 41% in 2001 was also primarily attributable to the completion of the Australian services contract in 2002.

Corporate: Corporate incurred operating losses of $27.7 million in 2003, $23.3 million in 2002, and $19 million in 2001, on revenues of $12.7 million, $13.1 million, and $33.8 million, respectively.  The decline in total revenues was due to declining international hardware maintenance as a result of the Company's exit from the hardware business.  The operating losses were mainly due to continuing costs of exiting the hardware business, including management of warranty reserves, inventory write-downs, and management of a repair depot.  Operating expenses for 2003 increased 17% from 2002 while 2002 operating expenses decreased 4% from 2001.  The 2003 increase was due to higher legal expenses associated with the BSI litigation and other general Corporate legal matters and $1.5 million in additional restructuring costs.  The 2002 decrease was due to the Company's efforts to reduce its Corporate overhead, primarily through reductions in headcount.

Outlook for 2004 

The Company expects that the markets in which it competes will continue to be characterized by intense competition, rapidly changing technologies, and shorter product cycles.  Further improvement in the Company's operating results will depend on a reduction in operating expenses, improvements in gross margins, revenue growth, and further market penetration by accurately anticipating customer requirements and technological trends, and rapidly and continuously developing and delivering new products and services that are competitively priced, offer enhanced performance, and meet customers' requirements.  In addition, the Company continues to face legal expenses of unknown duration and amount as it licenses its intellectual property and otherwise asserts its intellectual property rights.  The ultimate impact of these initiatives is subject to known and unknown risks and uncertainties.   See "Cautionary Note Regarding Forward-Looking Statements." 

Many factors affect financial performance, and past performance is no assurance of similar future performance, although the Company remains focused on short-term goals and objectives designed to improve profitability.

Litigation and Other Risks and Uncertainties

See Note 18 of Notes to Consolidated Financial Statements for a discussion of the Company's legal proceedings and other risks and uncertainties.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2003, cash and short-term investments totaled $265.8 million compared to $506 million and $110.8 million at December 31, 2002, and 2001, respectively.  The reduction in cash and short-term investments in 2003 is due primarily to repurchases of 11.4 million shares of the Company's common stock for $290.7 million, including 10 million shares via a modified Dutch auction tender offer completed in December 2003 and $41.2 million of tax payments (primarily as a result of the Intel settlement and litigation proceeds).  Decreases in the Company's cash during the year were offset by increases in cash due to $18 million from the proceeds of the TI settlement, $10 million from the proceeds of the IBM settlement, $12.4 million from the proceeds of the sale of Creative stock, and $13.9 million from the exercise of stock options and employee stock purchases.  The improvement in cash and short-term investments in 2002 is due primarily to the receipt of $450 million from the Intel litigation, $13.4 million from the sale of its 3Dlabs stock, and $7.9 million from the sale of Creative stock.  During 2002, the Company spent approximately $83.6 million to purchase 4.7 million shares of its common stock under a stock repurchase program. 

The Company generates cash from operations primarily from net income plus non-cash charges included in net income and reductions in working capital requirements.  The Company uses cash primarily for capitalized software development, capital expenditures, and any increases in working capital requirements.  The Company incurred capital expenditures in 2002 and 2003 of approximately $10 million each year and expects that capital expenditures will require $10 million to $12 million in 2004, primarily for the purchase of computer equipment.  The Company does not anticipate significant non-operating events that will require the use of cash, with the exception of the Company's stock repurchase program.  In 2003, the Company's Board authorized an increase in the funding for the stock repurchase program from $175 million to $250 million (of which $115.7 million has been used as of January 31, 2004).  The Board also extended the termination date for the stock repurchase program from December 31, 2004, to December 31, 2005, and approved privately negotiated transactions in addition to open market purchases of the Company's stock.  The Company spent approximately $22 million in 2003 on patent litigation and enforcement and could spend a similar amount in 2004.  See the Company's Annual Report on Form 10-K for the year ended December 31, 2001, for further discussion of the Company's stock buyback plan and litigation.

At December 31, 2003, the Company had no debt.  During 2002, the Company reduced its debt under various floating rate arrangements to approximately $169,000.  Due to the immaterial amount of debt at December 31, 2002, market risk of future increases in interest rates was not considered material. 

In September 2002, in order to reduce the cost of issuing letters of credit, the Company established a $12.5 million credit line with Wells Fargo Bank to cover its outstanding letters of credit secured by $15 million of interest-bearing securities.  This credit line was reduced on January 20, 2004, to $6 million secured by $8.2 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 totaled $4.9 million at January 31, 2004). 

The Company's average collection period for accounts receivable in 2003 was approximately 72 days, representing a decrease of 15 days from the prior year.  Approximately 73% of the Company's 2003 revenues were derived from international customers and the U.S. government, both of which traditionally have longer collection periods.  Total U.S. government accounts receivable were $23.5 million at December 31, 2003 (compared with $26.7 million at December 31, 2002).  The Company endeavors to enforce its payment terms with these and other customers, and grants extended payment terms only in very limited circumstances.

The following is a summary of certain of the Company's obligations and commitments as of December 31, 2003: 

(in thousands)	Payments due by period
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Capital Lease Obligations	$     150	$     150	$       ---	$     ---	$       ---
Operating Lease Obligations	51,716	11,954	12,249	4,647	22,866
Other Noncurrent Liabilities	548	---	344	144	60
Research and Development Services Agreement Commitment	3,800	3,800	---	---	---
Total	$56,214	$15,904	$12,593	$4,791	$22,926

The Company believes that the combination of existing cash balances and cash flow from operations will exceed cash requirements for operations for 2004.

FOURTH QUARTER 2003

Revenue in fourth quarter was $145.8 million, an increase of 19% from fourth quarter 2002 revenues of $122 million.  Significant factors contributing to the overall increase in revenues include $7.5 million for a new professional services contract in the ISG business unit, increased product sales to international customers for $6.4 million, $4 million from new maintenance contracts, and an increase in reported revenues due to the weakening of the U.S. dollar.  Cost of revenues increased 22% from fourth quarter 2002 levels.  Gross margin declined from 49% of total revenues in 2002 to 47% in 2003, resulting from third party material elements of the new professional services contract mentioned above.  Operating expenses (excluding restructuring charges) increased 17% from the fourth quarter 2002 level.  This increase results mainly from an increase in legal fees, a weakening of the U.S. dollar against European currencies, and higher product development expenses for new and existing products.  Restructuring charges in fourth quarter 2003 were $4 million, as compared to $2.1 million in fourth quarter 2002.  Operating results for fourth quarter 2003 included $6.8 million net intellectual property expense and other non-operating income items netting to $506,000.  Fourth quarter 2002 operating results were impacted by the Intel patent litigation gain of $148.2 million and by other net expense of $4.5 million, including the $7 million write-down of a long-term investment.  The Company earned net income of $1.4 million ($0.03 per share diluted) for the quarter, compared to net income of $90.1 million ($1.85 per share diluted) in fourth quarter 2002.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board ("FASB") issued Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which is effective for guarantees issued or modified after December 31, 2002.  FIN No. 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit.  It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under the guarantee and must disclose that information in its interim and annual financial statements.  The provisions related to recognizing a liability at inception of the guarantee for the fair value of the guarantor's obligations does not apply to product warranties or to guarantees accounted for as derivatives.  The adoption of FIN No. 45 in first quarter 2003 did not have a significant impact on the Company's consolidated operating results or financial position.  The Company has not incurred costs to settle claims or pay awards under the patent infringement indemnity provisions of some of our sales agreements with customers; therefore, the Company has recorded no liabilities for these agreements as of December 31, 2003.

In January 2003, FASB issued FIN No. 46, Consolidation of Variable Interest Entities (revised December 2003), an interpretation of Accounting Research Bulletin No. 51, Consolidation of Financial Statements, which addresses consolidation of variable interest entities ("VIEs") by business enterprises.  This Statement is required in financial statements of public entities that have interests in VIEs or potential VIEs commonly referred to as special-purpose entities for periods ending after December 15, 2003.  Application by public entities (other than small business issuers) for all other types of entities is required in financial statements for periods ending after March 15, 2004.  The Company is still evaluating the impact, if any, that adoption of FIN No. 46 may have on its consolidated results of operations or financial position.

On April 30, 2003, FASB issued Statement of Financial Accounting Standards ("SFAS") No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, in order to provide for more consistent reporting of contracts as either freestanding derivative instruments subject to SFAS No. 133 in its entirety, or as hybrid instruments with debt host contracts and embedded derivative features.  SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003.  The adoption of this statement did not have a significant impact on the Company's consolidated results of operations or financial position.

On May 15, 2003, FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which establishes standards for classifying and measuring as liabilities certain freestanding financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity.  The statement defines an obligation as "a conditional or unconditional duty or responsibility on the part of the issuer to transfer assets or to issue its equity shares."  SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.  The adoption of this statement did not have a significant impact on the Company's consolidated results of operations or financial position.

In December 2003, FASB revised SFAS No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits -- an amendment of FASB Statements No. 87, 88, and 106.  This statement revises employers' disclosures about pension plans and other postretirement benefit plans to provide more information about pension plan assets, obligations, benefit payments, contributions, and net benefit cost.  This Statement retains the disclosures required by the originally issued SFAS No. 132 and requires further disclosures, including information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods.  SFAS No. 132 (revised 2003) is effective for financial statements with fiscal years ending after December 15, 2003, except for disclosure of information about foreign plans and disclosure of estimated future benefit payments, which are effective for fiscal years ending after June 15, 2004. 

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are disclosed in Note 1 of Notes to Consolidated Financial Statements.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management use judgments to make estimates and assumptions that affect the amounts reported in the financial statements.  As a result, there is some risk that reported financial results could have been different had other methods, assumptions, and estimates been used. 

The Company believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity in preparing its consolidated financial statements.

Revenue Recognition

The Company accounts for arrangements that include software in accordance with American Institute of Certified Public Accountants Statement of Position ("SOP") No. 97-2, Software Revenue Recognition. The application of SOP No. 97-2 requires judgment, including whether a software arrangement includes multiple elements, and if so, whether vendor-specific objective evidence ("VSOE") of fair value exists for those elements. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements, the fair value of the respective elements, and changes to a product's estimated life cycle could materially impact the amount of earned and unearned revenue.

For arrangements with multiple elements, the Company allocates revenue to each element of a transaction based upon its fair value as determined by VSOE.  VSOE of fair value for all elements of an arrangement is based upon the normal pricing and discounting practices for those products and services when sold separately.  The Company defers revenue for any undelivered elements, and recognizes revenue when the product is delivered or over the period in which the service is performed, in accordance with the Company's revenue recognition policy for such element.  If the Company cannot objectively determine the fair value of any undelivered element included in bundled software and service arrangements, the Company defers revenue until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements.  When the fair value of a delivered element has not been established, the Company uses the residual method to record revenue if the fair value of all undelivered elements is determinable.  Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue.

IMGS, ISG, and IPS derive a significant portion of revenue from contracts accounted for by the percentage-of-completion method with contractual terms generally fixed.  The Company regularly reviews its progress on these contracts and reviews the estimated costs of fulfilling its obligations.  If the Company does not accurately estimate the resources required or the scope of the work to be performed, or does not manage these contracts properly within the planned periods of time or satisfy its obligations under the contracts, then future revenue and margins may be significantly and negatively affected, or losses on existing contracts may need to be recognized.  Any resulting reductions in revenues, margins, or contract losses could be material to the Company's results of operations.

Maintenance and services are provided on both an as needed and long-term basis.  Maintenance and services provided outside a maintenance contract are on an as requested basis and revenue is recognized as the services are provided.  Revenue for maintenance and services provided on a long-term basis is recognized ratably over the terms of the contract.

Professional services revenues include fee-based implementation and consulting services.  These services are often billed on a time-and-materials basis.  The Company recognizes such professional services revenues as related services are rendered.

The Company evaluates arrangements with governmental entities containing "fiscal funding" or "termination for convenience" provisions, where such provisions are required by law, to determine the probability of possible cancellation.  If such a determination cannot be made, revenue is recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity.

Capitalized Software

The Company capitalizes certain product development costs incurred after the technological feasibility of new software products has been established and amortizes these costs on a straight-line basis once revenues begin to be generated by these products.  Though 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, or that products will have shorter lives.  Should these events occur, the carrying amount of capitalized development costs would be reduced, producing adverse effects on the Company's systems margin and results of operations.  The Company routinely assesses projects in process and associated costs capitalized for any net realizable value concerns.  Based on this assessment, the Company decided to cease further capitalization for certain projects and increase product development expense by $12.2 million, $10.5 million, and $8.6 million, in 2003, 2002, and 2001, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Impact of Currency Fluctuations and Currency Risk

International markets, particularly Europe and Asia, are important to the Company.  The Company's operations are subject to and may be adversely affected by a variety of risks inherent in doing business internationally, such as government policy restrictions, worldwide political conditions, currency exchange fluctuations, and other factors. 

Fluctuations in the value of the U.S. dollar in international markets can have a significant positive or negative impact on the Company's results of operations.  For 2003, approximately 47% of the Company's revenue was derived from customers outside the United States, primarily through subsidiary operations.  Most subsidiaries sell to customers and incur and pay operating expenses in local currencies.  These local currency revenues and expenses are translated into U.S. dollars for reporting purposes.  A stronger U.S. dollar will decrease the level of reported U.S. dollar orders and revenues, decrease the U.S. dollar gross margin, and decrease reported U.S. dollar operating expenses of the international subsidiaries.  A weaker U.S. dollar will have the opposite impact.  The Company estimates that the weakening of the U.S. dollar in its international markets improved its results of operations by approximately $0.16 per share (diluted) in 2003.  For 2002, the Company estimated that the weakening of the U.S. dollar positively impacted its results of operations by approximately $0.04 per share (diluted), and for 2001, the strengthening of the U.S. dollar adversely impacted its results of operations by approximately $0.08 per share (diluted). 

The Company estimates that the result of a uniform 10% strengthening in the value of the U.S. dollar relative to the currencies in which the Company's sales are denominated would result in a decrease in earnings of approximately $6 million for the year ended December 31, 2003.  Likewise, a uniform 10% weakening in the value of the U.S. dollar would result in increased earnings of approximately $7 million.  This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.  In addition to the direct effects of changes in exchange rates, exchange rate fluctuations may also affect the volume of sales and foreign currency sales prices.  The Company's estimation of the effects of changes in foreign currency exchange rates does not consider potential changes in sales levels or local currency prices.  See Note 15 of Notes to Consolidated Financial Statements for a summary of the Company's revenues by geographic area.

The Company conducts business in all major markets outside the United States, but the most significant of these operations with respect to currency risk are located in Europe and Asia.  Local currencies are the functional currencies for the Company's Canadian subsidiaries, a Japanese subsidiary, and all but one of the Company's European subsidiaries.  The U.S. dollar is the functional currency for all other international subsidiaries.  See Note 1 of Notes to Consolidated Financial Statements for a description of the Company's policy for managing the currency risks associated with its international operations.

In 2003, the Company recorded a net foreign exchange loss of $1.4 million, as compared to a net foreign exchange gain of $277,000 in 2002, and a net foreign exchange loss of $1.5 million in 2001.  The Company's exchange loss for 2003 resulted primarily from the unrealized loss on revaluation of euro-denominated intercompany loans and service fees.  The Company's exchange loss for 2001 resulted primarily from the strengthening of the U.S. dollar against the euro, particularly with respect to euro-denominated intercompany receivables combined with approximately $715,000 in loss incurred as the result of subsidiary recapitalizations.  At December 31, 2003, the Company had no forward exchange contracts outstanding.

The Company estimates that a uniform 10% strengthening or weakening in the value of the U.S. dollar relative to the currencies in which such intercompany receivables and loans are denominated at December 31, 2003, would not result in a significant loss or improvement in earnings.  This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.

See Notes 1 and 6 of Notes to Consolidated Financial Statements for further information related to management of currency risk.

EX-13

Intergraph Corporation 2003 Annual Report

EX-14

EXHIBIT 14 - CODE OF BUSINESS CONDUCT AND ETHICS

EX-31.1

Wise 302 Certification - Exhibit 31.1

EX-32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Intergraph Corporation (the "Company") on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, R. Halsey Wise, Chief Executive Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

          (1)      The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          (2)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
                     of the Company.

By:         /s/ R. Halsey Wise
Name:    R. Halsey Wise    
                             Title:       President and Chief Executive Officer
     Date:      March 10, 2004       

[A signed original of this written statement required by Section 906 has been provided to Intergraph Corporation and will be retained by Intergraph Corporation and furnished to the Securities and Exchange Commission or its staff upon request.]

EX-32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Annual Report of Intergraph Corporation (the "Company") on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Larry J. Laster, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

           (1)      The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

           (2)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
                      of the Company.

By:         /s/ Larry J. Laster
Name:    Larry J. Laster     
                                                   Title:       Executive Vice President and Chief Financial Officer
Date:      March 10, 2004   

[A signed original of this written statement required by Section 906 has been provided to Intergraph Corporation and will be retained by Intergraph Corporation and furnished to the Securities and Exchange Commission or its staff upon request.]