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February 1, 1998

INTERGRAPH BLAMES LATEST LOSSES ON INTEL LEGAL DISPUTE

By CBR Staff Writer

Intergraph Corp is blaming its legal dispute with supposed partner Intel Corp for the shortfall in its fourth quarter and year-end results, announced Friday. The company saw a net loss for the quarter of $0.43 per share, or $13.8m compared with a loss of $0.71 per share, or $27.8m in the same period last year, on revenues up 2% to 301m. For the year Intergraph saw losses of $54.9m, down from losses of $68.7m in 1996 on flat revenues of $1.12bn. Orders for new systems during the quarter were down 6% to $198m, remaining flat from the previous quarter. Intergraph launched its legal fight against Intel last November for patent infringement and anti-competitive behavior (CI No 3,292). Intel counter-sued a few days later. And in December, Intergraph amended the suit to include a federal antitrust claim. The most significant factor adversely affecting operating results is our dispute with Intel, said Intergraph chief executive officer Jim Meadlock. For the last half of 1997, Intel’s actions during this ongoing conflict have both hindered our product development and delivery, and forced us to incur added legal expenses, he said. In the suit, Intergraph accused Intel of putting pressure on it to relinquish RISC chip patents relating to its now defunct Clipper RISC chip, saying that Intel had cut it off from product information and support. After it gave up on RISC, Intergraph bet the company on an Intel-only strategy, and was one of the first companies to launch Intel-based technical workstations. It still hopes to expand its Intel business, and is currently ramping up the volumes on NT-based departmental servers (CI No 3,328). Meanwhile, Intergraph is in the process of selling off the assets of its mechanical CAD business, including its Solid Edge and EMS products, to EDS CAD/CAM subsidiary Unigraphics Solutions Inc (CI No 3,267), which is combining the products with Unigraphics, Parasolid and IMAN products. It hopes that transaction will close on March 2, subject to approval, at which time it will transfer mechanical business assets to Unigraphics for $105m, instead of the previously agreed common stock consideration.

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