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Trimble Navigation Limited
935 Stewart Drive
Post Office Box 3642
Sunnyvale, CA 94085
1.408.481.8000 phone
1.408.481.7781 fax

  NEWS RELEASE

 

Trimble Second Quarter 2008 Revenue $377.8 Million, Up 15 Percent

AAP Earnings Per Share $0.39; Non-GAAP Earnings Per Share $0.49

SUNNYVALE, Calif., July 24, 2008 -- Trimble (Nasdaq: TRMB) today announced revenue of $377.8 million for its second quarter of 2008 ended June 27, 2008. Revenue was up approximately 15 percent from revenue of $327.7 million in the second quarter of 2007.

Operating income for the second quarter of 2008 was $62.9 million, up 12 percent from operating income of $56.0 million in the second quarter of 2007. Operating margins in the second quarter of 2008 were 16.7 percent, down slightly from operating margins of 17.1 percent in the second quarter of 2007. Amortization of intangibles increased from $10.4 million in the second quarter of 2007 to $10.9 million in the second quarter of 2008. The impact of stock-based compensation expense was flat year-over-year at $3.8 million. There was a $3.3 million restructuring expense in the second quarter of 2008 and a $333 thousand restructuring expense in the second quarter of 2007. Excluding these impacts, non-GAAP operating income of $81.0 million was up 15 percent compared to the second quarter of 2007. Non-GAAP operating margins were 21.4 percent in the second quarter of 2008, approximately flat compared to 21.5 percent in the second quarter of 2007.

Net income for the second quarter of 2008 was $48.6 million, up 39 percent compared to net income of $35.0 million in the second quarter of 2007. Diluted earnings per share for the second quarter of 2008 were $0.39, up 39 percent from diluted earnings per share of $0.28 in the second quarter of 2007.

The tax rate for the second quarter of 2008 was 28 percent, compared to 38 percent in the second quarter of 2007. The lower tax rate is due to the previously announced implementation of a global supply chain structure. Trimble now expects the full-year tax rate to be 31 percent versus previous guidance of 33 percent.

Adjusting for the amortization of intangibles and the impact of stock-based compensation and restructuring expenses, non-GAAP net income of $61.7 million for the second quarter of 2008 was up 40 percent compared to non-GAAP net income of $44.1 million in the second quarter of 2007. Non-GAAP earnings per share for the second quarter of 2008 were $0.49, up 40 percent from non-GAAP earnings per share of $0.35 in the second quarter of 2007.

"The Field Solutions segment continued its strong growth trend in the second quarter and we expect a robust agricultural environment for the remainder of the year. The environment for the Engineering and Construction segment remains uncertain in the U.S. and European markets, with continued strength outside those regions," said Steven W. Berglund, Trimble's chief executive officer.

"Although the Mobile Solutions segment has not yet reached our financial goals, potential large customers are showing significant, increased interest in our mobile products. This interest is driven by higher fuel prices, which are putting pressure on operating costs. We believe this improving sales pipeline has the potential to generate significant growth in revenue and profitability in 2009 in the segment. We continue to invest aggressively in anticipation of this growth," Berglund continued.

"While recognizing the potential impact of economic uncertainties we are reiterating the total company revenue guidance and increasing the earnings per share guidance for the year."

Trimble Results by Business Segment

Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, in-process research and development and the impact of stock-based compensation expense.

Engineering and Construction

Second quarter 2008 Engineering and Construction (E&C) revenue was $213.0 million, up approximately 7 percent when compared to revenue of $198.9 million in the second quarter of 2007. E&C growth was driven by strong international sales partially offset by slower conditions in the U.S.

Second quarter 2008 operating income in E&C was $45.2 million, or 21.2 percent of revenue, compared to $52.4 million, or 26.3 percent of revenue, in the second quarter of 2007.

Non-GAAP operating income in E&C was $46.2 million, or 21.7 percent of revenue, in the second quarter of 2008 compared to $53.2 million, or 26.7 percent of revenue, in the second quarter of 2007. As in the first quarter of 2008, the decline in operating margins resulted from the impact of foreign exchange rates, the impact of recent acquisitions which have not yet fully contributed to profitability, higher marketing and product development costs, and product mix.

Field Solutions

Second quarter 2008 Field Solutions revenue was $90.1 million, up approximately 63 percent compared to revenue of $55.3 million in the second quarter of 2007. Revenue growth was driven primarily by strong demand for agricultural products.

Second quarter 2008 operating income in Field Solutions was $34.8 million, or 38.6 percent of revenue compared to $18.4 million, or 33.3 percent of revenue, in the second quarter of 2007.

Non-GAAP operating income in Field Solutions was $35.0 million, or 38.9 percent of revenue, in the second quarter of 2008 compared to $18.6 million, or 33.6 percent of revenue, in the second quarter of 2007. Operating margin expansion resulted from operating leverage due to increased sales.

Mobile Solutions

Second quarter 2008 Mobile Solutions revenue was $42.3 million, up approximately 3 percent when compared to revenue of $40.9 million in the second quarter of 2007.

Second quarter 2008 operating income in Mobile Solutions was $1.9 million, or 4.6 percent of revenue compared to $2.9 million, or 7.1 percent of revenue, in the second quarter of 2007.

Non-GAAP operating income in Mobile Solutions was $3.1 million, or 7.4 percent of revenue, in the second quarter of 2008 compared to $4.4 million, or 10.8 percent of revenue, in the second quarter of 2007. Operating income was impacted primarily by losses from the field service and direct store delivery products, which are expected to show improvement as a new product platform is rolled out.

Advanced Devices

Second quarter 2008 Advanced Devices revenue was $32.4 million, approximately flat when compared to revenue of $32.7 million in the second quarter of 2007.

Second quarter 2008 operating income in Advanced Devices was $6.6 million, or 20.3 percent of revenue compared to $5.4 million, or 16.5 percent of revenue, in the second quarter of 2007.

Non-GAAP operating income in Advanced Devices was $6.9 million, or 21.3 percent of revenue, in the second quarter of 2008 compared to $5.7 million, or 17.4 percent of revenue, in the second quarter of 2007. Improvements in operating margins were due to product mix.

Stock Repurchase Program

In January, Trimble announced a stock repurchase program for up to $250 million. As part of this program, in the first quarter of 2008, Trimble repurchased approximately 968 thousand shares of Trimble stock at an average purchase price of $26.71. In the second quarter of 2008, Trimble repurchased approximately 287 thousand shares of Trimble stock at an average purchase price of $36.25. Subsequent to the end of the second quarter, as of July 24, 2008, Trimble repurchased 741 thousand shares of Trimble stock at an average purchase price of $33.18.

Use of Non-GAAP Financial Information

To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.

Forward-Looking Guidance

In the third quarter of 2008, Trimble expects revenue to grow 13 to 15 percent compared to the third quarter of 2007, with revenue between $335 million and $340 million. Trimble expects third quarter 2008 GAAP earnings per share between $0.26 and $0.28 and non-GAAP earnings per share between $0.34 and $0.36. Non-GAAP guidance for the third quarter of 2008 excludes the amortization of intangibles expected to be $10.9 million related to previous acquisitions, and the anticipated impact of stock-based compensation expense of $3.8 million. Both GAAP and non-GAAP guidance use a 31 percent tax rate and assume 125.7 million shares outstanding.

Trimble has modified its full-year 2008 guidance incorporating the lower tax rate of 31 percent. Revenue for the full year 2008 is expected to grow 15 to 17 percent. Full-year non-GAAP earnings per share are expected to be $1.54 to $1.59, versus previous guidance of $1.50 to $1.55.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on July 24, 2008 at 1:30 p.m. PT to review its second quarter 2008 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or ((706) 645-9291 (international) and the pass code is 54071517. The replay will also be available on the Web at the address above.

About Trimble

Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location-including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978 and headquartered in Sunnyvale, Calif., Trimble has a worldwide presence with more than 3,600 employees in over 18 countries.

For more information visit Trimble's Web site at http://www.trimble.com.

Safe Harbor

Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include the revenue, effective tax rate, stock-based compensation, the impact from in-process research and development expense, amortization of purchased intangibles, gross margin and earnings per share estimates for the third quarter and full-year 2008, the impact on operating income for the Company's mobile solutions segment as a new product platform is rolled out, and the potential for the mobile solutions segment to generate significant revenue and profitability in 2009. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. For example, strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. In addition, the Company's results may be adversely affected if the growth rates and profitability expectations for each of its four segments are not achieved, or its joint ventures and recent acquisitions do not achieve anticipated results, or if the Company is unable to market, manufacture and ship new products. The potential impact of our new mobile solutions product platform and the ability of that segment to generate significant revenue and profitability in 2009 could be adversely affected by any delays in the roll out of the new platform or reduction in capital spending in its target customer base. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the third quarter and full year 2008 will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (Unaudited)
                                       Three Months Ended   Six Months Ended
                                       Jun-27,   Jun-29,   Jun-27,   Jun-29,
                                         2008      2007      2008      2007
    Revenue                            $377,767  $327,732  $733,063  $613,464
    Cost of sales                       190,668   160,563   371,588   303,165
    Gross margin                        187,099   167,169   361,475   310,299
    Gross margin (%)                      49.5%     51.0%     49.3%     50.6%
    Operating expenses
        Research and development         39,405    33,867    76,750    65,030
        Sales and marketing              51,904    47,546   103,062    89,693
        General and administrative       25,289    24,278    47,979    45,920
        Restructuring                     2,414       333     2,414     3,025
        Amortization of purchased
         intangible assets                5,163     5,195    10,306     9,301
        In-process research and
         development                          -         -         -     2,112
           Total operating expenses     124,175   111,219   240,511   215,081

    Operating income                     62,924    55,950   120,964    95,218
    Non-operating income, net
        Interest income                     508       593       965     1,836
        Interest expense                   (413)   (2,459)   (1,175)   (3,859)
        Foreign currency transaction
         gain (loss), net                 1,253      (430)    2,221       (73)
        Income from joint ventures,
         net                              2,618     2,080     4,633     4,502
        Other income (expense), net         153       487      (754)      722
           Total non-operating income,
            net                           4,119       271     5,890     3,128
    Income before taxes                  67,043    56,221   126,854    98,346
    Income tax provision                 18,444    21,195    38,188    34,637
    Net income                          $48,599   $35,026   $88,666   $63,709
    Earnings per share:
         Basic                            $0.40     $0.29     $0.73     $0.54
         Diluted                          $0.39     $0.28     $0.71     $0.52
    Shares used in calculating
     earnings per share :
        Basic                           121,523   119,621   121,495   117,535
        Diluted                         125,712   124,584   125,435   122,539
 
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                    Unaudited
                                                 Jun-27,           Dec-28,
                                                  2008              2007
    Assets
    Current assets:
       Cash and cash equivalents                   $79,823          $103,202
       Accounts receivables, net                   267,200           239,884
       Other receivables                             9,985            10,201
       Inventories, net                            153,369           143,018
       Deferred income taxes                        42,257            44,333
       Other current assets                         17,004            15,661
          Total current assets                     569,638           556,299
    Property and equipment, net                     51,615            51,444
    Goodwill                                       713,010           675,850
    Other purchased intangible assets, net         186,971           197,777
    Other non-current assets                        62,598            57,989
          Total assets                          $1,583,832        $1,539,359
    Liabilities and Shareholders' Equity
    Current liabilities:
       Current portion of long-term debt              $137              $126
       Accounts payable                             73,581            67,589
       Accrued compensation and benefits            56,149            55,133
       Deferred revenue                             59,077            49,416
       Accrued warranty expense                     11,942            10,806
       Income taxes payable                         14,060            14,802
       Other accrued liabilities                    36,333            51,980
          Total current liabilities                251,279           249,852
    Non-current portion of long-term debt              432            60,564
    Non-current deferred revenue                    10,719            15,872
    Deferred income taxes                           59,976            47,917
    Other non-current liabilities                   52,503            56,128
          Total liabilities                        374,909           430,333
    Commitments and contingencies
    Shareholders' equity:
       Common stock                                683,274           660,749
       Retained earnings                           447,806           388,557
       Accumulated other comprehensive
        income                                      77,843            59,720
          Total shareholders' equity             1,208,923         1,109,026
          Total liabilities and
           shareholders' equity                 $1,583,832        $1,539,359
 
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In thousands)
                                    Unaudited
                                                      Six Months Ended
                                                  Jun-27,            Jun-29,
                                                   2008              2007
    Cash flow from operating activities:
        Net Income                                 $88,666            $63,709
        Adjustments to reconcile net income
         to net cash provided by
         operating activities:
             Depreciation expense                    9,274              8,426
             Amortization expense                   21,811             18,394
             Provision for doubtful accounts           119                358
             Amortization of debt
              issuance cost                            113                105
             Deferred income taxes                  (2,791)            (8,636)
             Non-cash restructuring expense            -                1,725
             Stock-based compensation                7,777              7,145
             In-process research and
              development                              -                2,112
             Equity gain from joint
              ventures                              (4,633)            (4,502)
             Excess tax benefit for
              stock-based compensation              (5,249)            (5,929)
             Provision for excess and
              obsolete inventories                   3,283              1,941
             Other non-cash items                        1                139
        Add decrease (increase) in
         assets:
             Accounts receivables                  (26,832)           (41,832)
             Other receivables                         481              2,968
             Inventories                            (8,997)           (11,760)
             Other current and non-
              current assets                          (464)             9,414
        Add increase (decrease) in
         liabilities:
             Accounts payable                        4,637             (6,298)
             Accrued compensation and
              benefits                                (303)                80
             Accrued liabilities                      (597)             3,136
             Deferred revenue                        3,974             12,132
             Income taxes payable                   10,093             33,630
     Net cash provided by operating
      activities                                   100,363             86,457
     Cash flows from investing
      activities:
          Acquisitions of businesses, net
           of cash acquired                        (45,082)          (277,743)
          Acquisition of property and
           equipment                                (7,932)            (6,270)
          Dividends received                           151                581
          Other                                        (14)               378
     Net cash used in investing
      activities                                   (52,877)          (283,054)
     Cash flow from financing activities:
          Issuance of common stock                  15,425             15,761
          Excess tax benefit for stock-
           based compensation                        5,249              5,929
          Repurchase and retirement of
           common stock                            (36,293)               -
          Proceeds from long-term debt
           and revolving credit lines                  -              250,000
          Payments on long-term debt and
           revolving credit lines                  (60,314)          (127,517)
          Other                                        -                  -
     Net cash provided by (used in)
      financing activities                         (75,933)           144,173
     Effect of exchange rate changes on
      cash and cash equivalents                      5,068             (3,437)
     Net decrease in cash and cash
      equivalents                                  (23,379)           (55,861)
     Cash and cash equivalents -
      beginning of period                          103,202            129,621
     Cash and cash equivalents - end of
      period                                       $79,823            $73,760
 

                             NON-GAAP RECONCILIATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)
                                   (Unaudited)

                                       Three Months Ended   Six Months Ended
                                       Jun-27,   Jun-29,   Jun-27,   Jun-29,
                                         2008      2007      2008      2007
    REVENUE:                           $377,767  $327,732  $733,063  $613,464
    GROSS MARGIN:
      GAAP gross margin:               $187,099  $167,169  $361,475  $310,299
        Restructuring              (A)      930       -         930       -
        Amortization of purchased
         intangibles               (B)    5,755     5,237    11,416     9,026
        Stock-based compensation   (D)      487       429       980       771
        Amortization of
         acquisition-related
         inventory step-up         (E)        -         -       183         -
      Non-GAAP gross margin:           $194,271  $172,835  $374,984  $320,096
      Non-GAAP gross margin (% of
       revenue)                           51.4%     52.7%     51.2%     52.2%
    OPERATING EXPENSES:
      GAAP operating expenses:         $124,175  $111,219  $240,511  $215,081
        Restructuring              (A)   (2,414)     (333)   (2,414)   (3,025)
        Amortization of purchased
         intangibles               (B)   (5,163)   (5,195)  (10,306)   (9,301)
        In-process research and
         development               (C)      -         -         -      (2,112)
        Stock-based compensation   (D)   (3,308)   (3,363)   (6,797)   (6,374)
      Non-GAAP operating expenses:     $113,290  $102,328  $220,994  $194,269
    OPERATING INCOME:
      GAAP operating income:            $62,924   $55,950  $120,964   $95,218
        Restructuring              (A)    3,344       333     3,344     3,025
        Amortization of purchased
         intangibles               (B)   10,918    10,432    21,722    18,327
        In-process research and
         development               (C)        -         -         -     2,112
        Stock-based compensation   (D)    3,795     3,792     7,777     7,145
        Amortization of
         acquisition-related
         inventory step-up         (E)        -         -       183         -
      Non-GAAP operating income:        $80,981   $70,507  $153,990  $125,827
      Non-GAAP operating margin (% of
       revenue)                           21.4%     21.5%     21.0%     20.5%
    NET INCOME:
      GAAP net income:                  $48,599   $35,026   $88,666   $63,709
        Restructuring              (A)    3,344       333     3,344     3,025
        Amortization of purchased
         intangibles               (B)   10,918    10,432    21,722    18,327
        In-process research and
         development               (C)        -         -         -     2,112
        Stock-based compensation   (D)    3,795     3,792     7,777     7,145
        Amortization of
         acquisition-related
         inventory step-up         (E)        -         -       183         -
        Income tax effect on non-
         GAAP adjustments          (F)   (4,966)   (5,489)   (9,907)  (10,610)
      Non-GAAP net income:              $61,690   $44,094  $111,785   $83,708
    DILUTED NET INCOME PER SHARE:
      GAAP diluted net income per
       share:                             $0.39     $0.28     $0.71     $0.52
      Non-GAAP diluted net income per
       share:                             $0.49     $0.35     $0.89     $0.68
    SHARES USED TO COMPUTE DILUTED NET
    INCOME PER SHARE:
      GAAP and Non-GAAP shares used to
       compute net income per share:    125,712   124,584   125,435   122,539
    OPERATING LEVERAGE:
      Increase in non-GAAP operating
       income                           $10,474             $28,163
      Increase in revenue               $50,035            $119,599
      Operating leverage (increase in
       non-GAAP operating income as a
       % of increase in revenue)          20.9%               23.5%

    The non-GAAP financial measures included in the table above are non-GAAP
    gross margin, non-GAAP operating expenses, non-GAAP operating income,
    non-GAAP net income and non-GAAP diluted net income per share, which
    adjust for the following items: expenses related to acquisitions,
    stock-based compensation expense and restructuring charges.  Management
    uses these non-GAAP measures to assess trends in its business and for
    budgeting purposes, as many of these excluded items are non-cash. In
    addition, we believe that the presentation of these non-GAAP financial
    measures is useful to investors for the reasons associated with each of
    the adjusting items as described below.
    (A) Restructuring. The amounts recorded are for employee compensation
        resulting from reductions in employee headcount in connection with our
        company restructurings and we believe they are not directly related to
        the operation of our business.
    (B) Amortization of purchased intangibles. The amounts recorded as
        amortization of purchased intangibles arise from prior acquisitions
        and are non-cash in nature.  We exclude these expenses because we
        believe they are not reflective of ongoing operating results in the
        period incurred and are not directly related to the operation of our
        business. Approximately $5,755K and $5,237K of the amortization of
        purchased intangibles was included in cost of sales for the three
        months ended June 27, 2008 and June 29, 2007, and approximately
        $5,163K and $5,195K was reported as a separate line within operating
        expenses for the three months ended June 27, 2008 and June 29, 2007,
        respectively.  Approximately $11,416K and $9,026K of the amortization
        of purchased intangibles was included in cost of sales for the six
        months ended June 27, 2008 and June 29, 2007, and approximately
        $10,306K and $9,301K was reported as a separate line within operating
        expenses for the six months ended June 27, 2008 and June 29, 2007,
        respectively.
    (C) In-process research and development. The amounts recorded as
        in-process research and development arise from prior acquisitions and
        are non-cash in nature.  We exclude these expenses because we believe
        they are not reflective of ongoing operating results in the period
        incurred and not directly related to the operation of our business.
    (D) Stock-based Compensation. The amounts consist of expenses for employee
        stock options and purchase rights under our employee stock purchase
        plan determined in accordance with SFAS 123(R), which became effective
        for us on January 1, 2006.  We exclude these stock-based compensation
        expenses because they are non-cash expenses that we believe are not
        reflective of ongoing operation results.  For the three and six months
        ended June 27, 2008 and June 29, 2007, stock-based compensation was
        allocated as follows:
 
                                         Three Months Ended Six Months Ended
                                          Jun-27,  Jun-29,  Jun-27,  Jun-29,
                                           2008     2007     2008     2007
        Cost of sales                        $487     $429     $980     $771
        Research and development              916    1,022    1,833    1,751
        Sales and Marketing                   931      974    1,961    1,741
        General and administrative          1,461    1,367    3,003    2,882
                                           $3,795   $3,792   $7,777   $7,145
    (E) Amortization of acquisition-related inventory step-up. The purchase
        accounting entries associated with our business acquisitions require
        us to record inventory at its fair value, which is sometimes greater
        than the previous book value of the inventory. The increase in
        inventory value is amortized to cost of sales over the period that the
        related product is sold.  We exclude inventory step-up amortization
        from our non-GAAP measures because we do not believe it is reflective
        of our ongoing operating results, and it is not used by management to
        assess the core profitability of our business operations.
    (F) Income tax effect on non-GAAP adjustments. This amounts adjusts the
        provision for income taxes to reflect the effect of the non-GAAP
        adjustments on non-GAAP operating income.
 
                             NON-GAAP RECONCILIATION
                                REPORTING SEGMENTS
                             (Dollars in thousands)
                                   (Unaudited)

                                                  Reporting Segments
                                    Engineering
                                        and        Field     Mobile   Advanced
                                    Construction  Solutions Solutions  Devices
    THREE MONTHS ENDED JUNE 27, 2008:
      Revenue                            $213,019   $90,070  $42,285  $32,393
      GAAP operating income before
       corporate allocations:             $45,161   $34,808   $1,942   $6,578
        Stock-based compensation     (G)    1,076       199    1,187      315
      Non-GAAP operating income before
       corporate allocations:             $46,237   $35,007   $3,129   $6,893
      Non-GAAP operating margin (% of
       segment external net revenues)       21.7%     38.9%     7.4%    21.3%
    THREE MONTHS ENDED JUNE 29, 2007:
      Revenue                            $198,853   $55,273  $40,927  $32,679
      GAAP operating income before
       corporate allocations:             $52,371   $18,398   $2,906   $5,384
        Stock-based compensation     (G)      806       164    1,527      303
      Non-GAAP operating income before
       corporate allocations:             $53,177   $18,562   $4,433   $5,687
      Non-GAAP operating margin (% of
       segment external net revenues)       26.7%     33.6%    10.8%    17.4%
    SIX MONTHS ENDED JUNE 27, 2008:
      Revenue                            $407,199  $178,107  $86,296  $61,461
      GAAP operating income before
       corporate allocations:             $82,115   $69,903   $4,395  $11,270
        Stock-based compensation     (G)    2,047       397    2,595      642
      Non-GAAP operating income before
       corporate allocations:             $84,162   $70,300   $6,990  $11,912
      Non-GAAP operating margin (% of
       segment external net revenues)       20.7%     39.5%     8.1%    19.4%
    SIX MONTHS ENDED JUNE 29, 2007:
      Revenue                            $374,457  $106,235  $70,784  $61,988
      GAAP operating income before
       corporate allocations:             $94,535   $35,026   $3,923   $8,727
        Stock-based compensation     (G)    1,678       354    2,269      667
      Non-GAAP operating income before
       corporate allocations:             $96,213   $35,380   $6,192   $9,394
      Non-GAAP operating margin (% of
       segment external net revenues)       25.7%     33.3%     8.7%    15.2%
 
    (G) Stock-based Compensation. The amounts consist of expenses for employee
        stock options and purchase rights under our employee stock purchase
        plan determined in accordance with SFAS 123(R), which became effective
        for us on January 1, 2006.  We discuss our operating results by
        segment with and with-out stock-based compensation expense, as we
        believe it is useful to investors to understand the impact of the
        application of SFAS 123(R) to our results of operations.  Stock-based
        compensation not allocated to the reportable segments was
        approximately $1,018K and $992K for the three months ended June 27,
        2008 and June 29, 2007, respectively and $2,096K and $2,177K for the
        six months ended June 27, 2008 and June 29, 2007, respectively.



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