CIMdata PLM Industry Summary Online Archive
26 January 2005
Financial News
Intergraph Reports Fourth Quarter 2004 Results
Intergraph Corporation announced financial results for its fourth quarter ended December 31, 2004. Revenue for the quarter was $146.2 million, compared to $144.5 million reported in the fourth quarter of 2003. For the year ended December 31, 2004, revenue was $551.1 million, an increase of 4.8% from $526.0 million reported in 2003.
Operating income for the quarter was $9.8 million, or 6.7% of revenue, compared to $0.8 million, or 0.5% of revenue, reported in the fourth quarter of 2003. For the year ended December 31, 2004, operating income was $34.1 million, or 6.2% of revenue, compared to $13.4 million, or 2.5% of revenue, reported in 2003.
Net income for the quarter was $7.3 million, or $0.21 per diluted share, compared to $0.4 million, or $0.01 per diluted share, in the fourth quarter of 2003. For the year ended December 31, 2004, net income was $159.0 million, or $4.37 per diluted share, compared to $22.3 million, or $0.47 per diluted share, reported in 2003. Net income for 2004 includes $121.6 million of after-tax intellectual property income, net of all fees and expenses.
"We are very pleased with our fourth quarter and 2004 financial results as they illustrate the progress that Intergraph has made over the past 18 months in improving operating performance," said Halsey Wise, Intergraph President & CEO. "Our results in both the fourth quarter and 2004 represent Intergraph's best financial performance in twelve years. Our 2004 operating income more than doubled from 2003, and we continue to execute on our three-phase strategic plan ("NOW"-"NEXT"-"AFTER NEXT")."
Commenting on the financial results, Wise said, "While we made a great deal of progress in 2004, there is still much work to be done at Intergraph. As we move into 2005, we are focused on capitalizing on the specific opportunities in our markets and executing on our strategic plan initiatives, which we believe will help us to continue to expand operating margins and generate additional revenue growth over time."
In addition, Larry Laster has announced his intention to retire as Intergraph's Chief Financial Officer. Laster will continue to serve as CFO until a successor is named. He will also continue to serve as a member of the Company's Board of Directors and will remain with Intergraph to assist in the day-to-day operations until the transition to new leadership is complete.
"I deeply thank Larry for his years of service to Intergraph," said Halsey Wise. "Through his leadership and efforts, Intergraph's turnaround story took hold. His unwavering commitment to Intergraph is a testament to his character, and I appreciate all that he has done to help me in my first 18 months of leadership at Intergraph. I look forward to working with Larry in another capacity after we find a new CFO."
"This is an exciting time for Intergraph," said Larry Laster. "We have completed the transition to a profitable corporation and successfully defended our intellectual property. We now have the financial strength to take our company to higher levels of success. I am confident that Intergraph's strategy, combined with new financial leadership, will result in continued growth in shareholder value. It has been an honor to serve as Intergraph's CFO, and I look forward to continued service to the Company."
Intergraph's overall effective tax rate in 2004 was 32.0%, while the Company's tax rate on its operations, which excludes intellectual property income (expense), was 11.9%. This difference resulted from the usage of NOL's in many of the Company's international legal entities. Intergraph has fully utilized all of its NOL's in the United States due to both improvements in its core business and the success of its intellectual property enforcement efforts over the past several years. The Company still has NOL's of approximately $75 million available across certain of its international legal entities. For 2005, we have projected an overall effective tax rate of approximately 35%.
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 weakening of the U.S. dollar in its international markets, primarily in Europe, positively impacted revenue by approximately 3.8%, negatively impacted operating expenses by approximately 3.9%, and improved its quarterly operating results by approximately $0.02 per diluted share in comparison to the fourth quarter of 2003. The Company estimates that the weakening of the U.S. dollar in the fourth quarter as compared with the third quarter of 2004 positively impacted revenue by approximately 2.7%, negatively impacted operating expenses by approximately 2.2%, and improved its quarterly operating results by approximately $0.03 per diluted share. The Company estimates for the year that the weakening of the U.S. dollar positively impacted revenue by approximately 3.8%, negatively impacted operating expenses by approximately 3.6%, and improved its quarterly operating results by approximately $0.10 per diluted share in comparison to 2003.
Fourth Quarter Business Highlights
• Intergraph added its seventh outside Board director with the addition of Kevin M. Twomey, President, COO & CFO of The St. Joe Company.
• Process, Power & Marine (PPM) acquired the EYECAD 3D plant design software from Asahi Kasei Engineering, expanding Intergraph's customer base within Japan and accelerating Japanese localization of the SmartPlant suite.
• Intergraph Mapping and Geospatial Solutions (IMGS) signed a multi-year agreement to provide geospatial solutions for a major water authority in Poland, providing this customer with site wide access to all IMGS GIS products for management of infrastructure and decision support.
• Intergraph Public Safety (IPS) achieved fourth quarter bookings of $13.7 million, compared to $5.7 million in the fourth quarter of last year and $14.9 million in the third quarter of 2004. Total orders in 2004 increased 20.0% over 2003 while ending backlog for the year increased 11.7% from December 31, 2003.
• Intergraph Solutions Group (ISG), in-line with our Force Protection strategy, was selected by the National Security Agency as part of a team led by Lockheed Martin to provide security systems for certain confidential sites in the Washington Metropolitan Area.
• PPM delivered several significant software releases in the fourth quarter including SmartPlant3D 5.0, SmartPlant Electrical 3.0, SmartPlant Review 5.1, and MARIAN CCM.
• Exxon Chemical and Honeywell standardized worldwide on PPM's SmartPlant Instrumentation offering and ABS, a leading ship classification society, standardized on PPM's IntelliShip offering.
• IPS orders in the fourth quarter included Suffolk County Fire NY, Tennessee Highway Patrol, North Wales Police Integrated Communications System (UK), and additional sites for the German Border Guards.
• IMGS was selected by the Canadian Department of National Defense for mapping solutions to enable the Canadian Government to participate in a worldwide cooperative initiative for mapping production that encompasses over 20 different countries globally.
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Business Unit Performance (Excerpt) Full financials are available at http://www.intergraph.com/investors/documents/20050126_Intergraph_Q4_2004_Earnings_Release.pdf
Process, Power & Marine (PPM):
PPM revenue for the quarter was $43.5 million, an increase of 25.3% from the fourth quarter of the prior year and an increase of 23.7% from the third quarter of 2004. Revenue for the year was $147.0 million, an increase of 11.7% from 2003. The revenue growth was primarily the result of the adoption of SmartPlant and information management technology and the increasing maintenance and services revenue on these new products. PPM had $2.6 million of revenue in the fourth quarter due to the delivery of SmartPlant 3D Version 5.0 in conjunction with the third quarter restatement related to the Early Adopter Program. Operating income for the quarter was $9.9 million, or 22.6% of revenue, compared to $2.3 million in the fourth quarter of the prior year and $4.0 million in the third quarter of 2004. The increase in operating income over the previous quarter and prior year quarter was mainly due to higher software revenues, particularly in our SmartPlant suite and information management product offerings. Operating income for the year increased 48.2% from 2003 to $21.9 million, or 14.9% of revenue.
Intergraph will provide an online, real-time Webcast and rebroadcast of the fourth quarter conference call to be held Thursday, January 27, 2005, at 11:00 a.m. EST. The live broadcast will be available online at http://www.intergraph.com/investors Listeners will be asked to pre-register and should plan to visit the Website a few minutes before the broadcast begins. The replay will be available shortly after the conference call ends and will remain available online until January 27, 2006. In addition, the replay can be heard by telephone any time before the close of business on February 27, 2005 by calling 1-866-357-1431 and referring to the reservation number 2330944.
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