Intergraph Reports Second Quarter 2006 Financial Results

Operating Margin Increased to 7.8%; Operating Margin Before Restructuring Increased to 11.6% (a non-GAAP Measure); Share Repurchase Authorization Increased to $100 Million

HUNTSVILLE, Ala.—(BUSINESS WIRE)—July 26, 2006— Intergraph Corporation (NASDAQ: INGR), a leading global provider of spatial information management (SIM) software, today announced financial results for its second quarter ended June 30, 2006. Revenue for the quarter was $152.8 million, an increase of 5.1% from the $145.4 million reported in the second quarter of 2005. For the six months ended June 30, 2006, revenue was $291.8 million, an increase of 3.5% from the $281.8 million reported in the same period of 2005.

Operating income for the quarter was $12.0 million, or 7.8% of revenue, compared to $9.8 million, or 6.7% of revenue, reported in the second quarter of 2005. For the six months ended June 30, 2006, operating income was $18.2 million, or 6.2% of revenue, compared to $15.7 million, or 5.6% of revenue, reported in the same period of 2005. The Company reported restructuring charges of $5.7 million in the second quarter of 2006 and $10.4 million for the six months ended June 30, 2006. Operating income before restructuring (a non-GAAP measure) for the quarter was $17.7 million, or 11.6% of revenue, compared to $11.8 million, or 8.1% of revenue, reported in the second quarter of 2005. For the six months ended June 30, 2006, operating income before restructuring (a non-GAAP measure) was $28.6 million, or 9.8% of revenue, compared to $19.4 million, or 6.9% of revenue, reported in the same period of 2005.

"We are very pleased with our strong operating performance as second quarter operating income exceeded our original financial guidance and operating income before restructuring in the second quarter exceeded the total amount generated in all of fiscal year 2003," said R. Halsey Wise, Intergraph President & CEO. "We are also pleased that we completed our organizational realignment and associated restructuring charges in the second quarter per our original schedule. I attribute our significant operating improvements and the success of our organizational realignment to the people of Intergraph, whose determination and dedication to our mission made these results possible."

Net income for the quarter was $16.8 million, or $0.56 per diluted share, compared to $7.5 million, or $0.25 per diluted share, reported in the second quarter of 2005. Net income includes approximately $6.7 million and ($0.4) million of after-tax intellectual property income (expense), net of all fees and expenses, in the second quarter of 2006 and 2005, respectively. For the six months ended June 30, 2006, net income was $30.8 million, or $1.00 per diluted share, compared to $89.5 million, or $2.79 per diluted share, for the same period of 2005. Net income includes $15.3 million and $80.8 million of after-tax intellectual property income, net of all fees and expenses, in the first six months of 2006 and 2005, respectively.

(dollars in millions)                                    Six Months
                                  Quarterly Results    Ended June 30,
                               ----------------------- ---------------
                               Q2 2006 Q1 2006 Q2 2005   2006    2005
                               ------- ------- ------- ------- -------

Revenue                        $152.8  $139.0  $145.4  $291.8  $281.8
Year-over-year growth             5.1%    1.9%    5.4%    3.5%    4.3%

Operating income - before
 restructuring (b)              $17.7   $10.9   $11.8   $28.6   $19.4
Operating margin - before
 restructuring (b)               11.6%    7.9%    8.1%    9.8%    6.9%

Restructuring charges            $5.7    $4.7    $2.0   $10.4    $3.7

Operating income                $12.0    $6.2    $9.8   $18.2   $15.7
Operating margin                  7.8%    4.5%    6.7%    6.2%    5.6%

Net income                      $16.8   $14.0    $7.5   $30.8   $89.5
Earnings per share (diluted)    $0.56   $0.44   $0.25   $1.00   $2.79


                                                  Financial
                                                 Guidance (a)
                                         -----------------------------
                                            Q3 2006        CY 2006
                                         -------------- --------------

Revenue                                  $148  -  $152    $600 - $610
Year-over-year growth

Operating income - before 
 restructuring (b)                       $13.5 - $15.5  $59.0 - $63.0
Operating margin - before 
 restructuring (b)

Restructuring charges                                -          $10.4

Operating income                         $13.5 - $15.5  $48.6 - $52.6
Operating margin

Net income
Earnings per share (diluted)

-----------------------------------------

(a)Forward-looking statements.  See "Cautionary Note Regarding
   Forward-Looking Statements."
(b)See "Non-GAAP Financial Measures."



"Our strong second quarter operating performance and completion of our organizational realignment underscore the progress of Intergraph's business transformation efforts and solid execution of our Strategic Plan," Mr. Wise said. "While we are pleased with our second quarter financial results, we remain committed to investing in various growth initiatives for the future and further enhancing our operational efficiency. We believe the organizational realignment and continued investments in new products and capabilities will improve our ability to serve our customers and better position us to capitalize on our attractive market opportunities and Intergraph's increased relevance in the current global environment."

Fluctuations in the value of the U.S. dollar in international markets can have a significant impact on the Company's financial results. The Company estimates for the quarter that the strengthening of the U.S. dollar in its international markets, primarily in Europe, negatively impacted revenue by 0.2%, reduced operating expenses by 0.5%, and had no impact on quarterly net income in comparison to the second quarter of 2005. The Company estimates that the weakening of the U.S. dollar in the second quarter of 2006 as compared with the first quarter of 2006 positively impacted revenue by 1.7%, increased operating expenses by 1.4%, and increased its quarterly net income by approximately $0.02 per diluted share. The Company estimates for the six months ended June 30, 2006 that the strengthening of the U.S. dollar negatively impacted revenue by 1.6%, reduced operating expenses by 1.7%, and decreased its net income by approximately $0.02 per diluted share in comparison to the same period of 2005.

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