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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-9722
INTERGRAPH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 63-0573222
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Intergraph Corporation
Huntsville, Alabama 35894-0001
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(Address of principal executive offices) (Zip Code)
(256) 730-2000
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(Telephone Number)
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
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Common stock, par value $.10 per share: 49,380,467 shares
outstanding as of June 30, 2000
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This Form 10-Q/A hereby amends Item 1 - Note 19 of Notes to
Consolidated Financial Statements and Item 2 of the
Company's Form 10-Q for the quarterly period ended June 30,
2000.
SUBSEQUENT EVENTS
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On July 21, 2000, the Company completed the sale of the
Intense3D graphics accelerator division of ICS to 3Dlabs,
Inc. Ltd. ("3Dlabs"), a leading supplier of integrated
hardware and software graphics accelerator solutions for
workstations and design professionals. Full year 1999 third-
party revenue for the Intense3D division approximated $38
million, with operating results at an approximate breakeven
level. As initial consideration for the acquired assets,
3Dlabs issued to the Company approximately 3.6 million of
its common shares, subject to a registration rights
agreement and a three year irrevocable proxy granted to
3Dlabs, with an aggregate market value of approximately
$13.2 million on the date of closing. As of the date of
filing this Form 10-Q/A, the market value of these shares
has declined by approximately $3.6 million. Fifteen percent
of the shares have been placed in escrow for one year to
cover any potential claims against the Company by 3Dlabs.
The agreement also contains an earn-out provision based on
various performance measures for Intense3D operations for
the remainder of 2000 following the July 1 effective date of
the sale. These performance measures include the financial
contribution of the division, the retention of key employees
by the division, the delivery schedules of new products, and
the performance of products developed by the division.
The earn-out provision provides an opportunity for
additional proceeds of up to $25 million, payable in stock
and/or cash at the option of 3Dlabs. Significant
contingencies associated with the sale include potential
penalties for the failure of ICS to meet its forecasted
level of purchases from 3Dlabs and potential liability for
inventory included in the sale, including inventory on order
from SCI, that proves to be obsolete or excess. In
addition, the Company serves as the intermediary between
3Dlabs and SCI for manufacturing performed by SCI for
3Dlabs, and as such, is exposed should 3Dlabs be unable to
meet its obligations to SCI, though such exposure is
mitigated by a certain payment guarantee in favor of the
Company. See the Company's Annual Report on Form 10-K for
the year ended December 31, 1999 for a discussion of the
Company's business relationship with SCI.
The Company expects to record a pretax gain from the initial
proceeds of the sale of approximately $8 million in third
quarter 2000, with any unrealized holding gains or losses on
the Company's stock investment in 3Dlabs recorded as a
component of "Accumulated other comprehensive income" in the
Company's consolidated balance sheet.
On July 21, 2000, the Company announced its intent to form a
strategic alliance with Silicon Graphics, Inc. ("SGI"), a
worldwide provider of high-performance computing and
advanced graphics solutions, in which SGI will acquire
certain of the Company's hardware business assets, including
ICS's Zx10 family of workstations and servers. Under the
proposed alliance, the Company will become a reseller for
SGI and will offer its application solutions on the SGI
platform. In connection with this agreement, the Company
plans to purchase $100 million in SGI products and services
over a three year period. The terms of the sale are still
being finalized. The transaction is expected to close in
third quarter 2000.
These two transactions signal completion of the Company's
exit of the development, design, and manufacture of hardware
products, allowing the Company's operating segments to focus
on providing software, systems integration, and services to
the industries in which Intergraph is a market leader. Upon
completion of these transactions, the Company expects to
incur a nonrecurring charge to operations in the range of
$10 million to $12 million, primarily for inventory and
fixed asset write-offs, employee severance, and other costs
incurred in connection with the shutdown of the remainder of
the hardware development business. The Company will
continue to sell hardware products from other vendors,
including SGI, and to perform hardware maintenance services
for its installed customer base. However, the Company
anticipates that revenues from both of these sources will
continue to decline over time as hardware will no longer be
a primary focus of the Company.
INTERGRAPH CORPORATION AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this amendment to be signed on its behalf by
the undersigned thereunto duly authorized.
INTERGRAPH CORPORATION
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(Registrant)
By: /s/ John W. Wilhoite Date: August 23, 2000
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John W. Wilhoite
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
