Print News   |   Send Link
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 2010 Revenue $333.4 Million, Up 15 Percent; Non-GAAP EPS $0.42, Up 35 Percent


SUNNYVALE, Calif., July 27, 2010 /PRNewswire via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced revenue of $333.4 million for its second quarter ended July 2, 2010, up approximately 15 percent as compared to revenue of $290.1 million in the second quarter of 2009.

Operating income for the second quarter of 2010 was $40.6 million, up approximately 41 percent as compared to the second quarter of 2009. Operating margin in the second quarter of 2010 was 12.2 percent, as compared to an operating margin of 9.9 percent in the second quarter of 2009.

Amortization of intangibles was $13.9 million in the second quarter of 2010, as compared to $13.0 million in the second quarter of 2009. The impact of stock-based compensation expense was $5.0 million, as compared to $4.6 million in the second quarter of 2009. There was also $0.4 million of restructuring expense and $1.8 million of non-recurring acquisition costs in the second quarter of 2010. This compares to a $3.5 million restructuring expense, a $0.2 million acquisition-related inventory step-up charge, and $2.3 million of non-recurring acquisition costs in the second quarter of 2009.

Excluding these items, second quarter 2010 non-GAAP operating income of $61.7 million was up 18 percent, as compared to the second quarter of 2009. Non-GAAP operating margin was 18.5 percent in the second quarter of 2010, as compared to 18.1 percent in the second quarter of 2009.

As previously announced on May 11, 2010, Trimble made an agreement with the IRS that resulted in a one-time charge of approximately $27.5 million in the second quarter of 2010 and a reduced annual ongoing tax rate guidance of 22 to 24 percent. The second quarter 2010 tax rate, excluding the one-time charge, was 16 percent.

Because of the above one-time $27.5 million charge, second quarter 2010 net income was $6.4 million, down 70 percent, as compared to the second quarter of 2009. Diluted earnings per share for the second quarter of 2010 were $0.05, as compared to diluted earnings per share of $0.17 for the second quarter of 2009.

Adjusting for the items noted above and excluding the $27.5 million charge, non-GAAP net income of $51.6 million for the second quarter of 2010 was up 38 percent, as compared to the second quarter of 2009. Diluted non-GAAP earnings per share for the second quarter of 2010 were $0.42, as compared to diluted non-GAAP earnings per share of $0.31 in the second quarter of 2009. The tax rate for the second quarter of 2010 was 16 percent compared to 29 percent in the second quarter of 2009.

"Second quarter results demonstrated continuing improvement in market conditions and reinforced our earlier expectations for full year results," said Steven W. Berglund, Trimble's president and chief executive officer. "Engineering and Construction revenue and profitability were significantly stronger than the prior year, in spite of inconsistent market conditions in the residential and commercial markets. The relative strength of the segment is primarily a result of the growing engagement of the SITECH channel, general improvement in the heavy and highway market, improving conditions in the market for surveying instruments, and continuing strength in international markets. As expected, Field Solutions was relatively unchanged compared to the prior year with agriculture sales down modestly and GIS revenue growing at a double digit rate. Mobile Solutions' segment performance was unimpressive due to the loss of a major account. We have rationalized the segment's cost base to restore profitability and anticipate growth in the second half based on identified pipeline," Berglund continued. "Overall, the uncertainties in the environment will require us to remain careful in our outlook. However, our recent ability to produce meaningful improvement in our overall financial performance without the full participation of all our businesses allows us to anticipate an improving trend as the lagging businesses begin to contribute more fully," Berglund concluded.

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, amortization of acquisition-related inventory step-up charges, non-recurring acquisition costs, and the impact of stock-based compensation expense.

Engineering and Construction (E&C)

Second quarter 2010 E&C revenue was $188.4 million, up approximately 28 percent as compared to the second quarter of 2009, due to strong sales of both survey and machine control products across most geographies and strengthened distribution through the new SITECH channel.

Operating income in E&C for the second quarter 2010 was $33.9 million, or 18.0 percent of revenue, as compared to $19.2 million, or 13.0 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $35.8 million, or 19.0 percent of revenue, as compared to $20.6 million, or 14.0 percent of revenue, in the second quarter of 2009. The improvement in non-GAAP operating margin was due to operating leverage from increased revenue.

Field Solutions

Second quarter 2010 Field Solutions revenue was $80.2 million, approximately flat with the second quarter of 2009. Sales of agricultural products were down, offset by strong sales of geographical information system (GIS) products.

Operating income in Field Solutions for the second quarter 2010 was $29.0 million, or 36.2 percent of revenue, as compared to $30.1 million, or 37.8 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $29.5 million, or 36.7 percent of revenue, as compared to $30.4 million, or 38.1 percent of revenue, in the second quarter of 2009. The decrease in non-GAAP operating margin was due primarily to increased investment in research and development.

Mobile Solutions

Second quarter 2010 Mobile Solutions revenue was $38.2 million, down 2 percent as compared to the second quarter of 2009.

Operating income in Mobile Solutions for the second quarter 2010 was $0.3 million, or 0.8 percent of revenue, as compared to $3.6 million, or 9.3 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $0.5 million, or 1.4 percent of revenue, as compared to $4.8 million or 12.2 percent of revenue, in the second quarter of 2009. The decline in non-GAAP operating margin was due to the previously disclosed loss of a large customer.

Advanced Devices

Second quarter 2010 Advanced Devices revenue was $26.6 million, up approximately 11 percent as compared to the second quarter of 2009.

Operating income in Advanced Devices for the second quarter 2010 was $5.2 million, or 19.5 percent of revenue, as compared to $4.8 million, or 20.2 percent of revenue, in the second quarter of 2009. Non-GAAP operating income in Advanced Devices was $5.6 million, or 21.2 percent of revenue, as compared to $5.2 million, or 21.6 percent of revenue, in the second quarter of 2009.

Stock Repurchase Program

Trimble repurchased $67.7 million in stock at an average price of $28.67 during the second quarter of 2010.

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

For the third quarter of 2010 Trimble expects revenue between $303 million and $308 million, with GAAP earnings per share of $0.19 to $0.21 and non-GAAP earnings per share of $0.32 to $0.34. Non-GAAP guidance for the third quarter of 2010 excludes the amortization of intangibles of $14.0 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $5.7 million. Both GAAP and non-GAAP earnings per share assume a 22 to 24 percent tax rate and 123.0 million shares outstanding.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on Jul. 27, 2010 at 1:30 p.m. PT to review its second quarter 2010 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 (702) 928-6633 (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 86612820. 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, Trimble is headquartered in Sunnyvale, Calif.

For more information visit 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 expectations for future financial market and economic conditions, the ability to deliver revenue, earnings per share that Trimble has guided for the third quarter and full year 2010, the expected tax-rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions, the amount and timing of repurchases under the stock repurchase program, and the return to profitability of the mobile solutions segment. The Company may suspend its stock repurchase plan at any time and for any reason without further notice. 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. If the current economic conditions in Europe or elsewhere worsen it may negatively impact our customers' purchasing decisions worldwide, including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products or obtain new customers for its mobile solutions segment. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company's financial results 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, especially in light of greater uncertainty than normal in the economy in general. 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.


FTRMB

                         CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                            (In thousands, except per share data)
                                         (Unaudited)

                              Three Months Ended          Six Months Ended
                              ------------------          ----------------

                            Jul-2,         Jul-3,    Jul-2,         Jul-3,
                               2010           2009      2010           2009
                               ----           ----      ----           ----

    Revenue                $333,363       $290,063  $652,378       $579,017
    Cost of sales           169,937        147,263   329,955        292,259
                            -------        -------   -------        -------
    Gross margin            163,426        142,800   322,423        286,758
                            -------        -------   -------        -------
    Gross margin (%)           49.0%          49.2%     49.4%          49.5%

    Operating
     expenses
        Research and
         development         36,552         33,457    72,442         67,594
        Sales and
         marketing           50,522         45,163   100,290         94,098
        General and
         administrative      27,290         26,622    55,837         52,664
        Restructuring           375          1,302     1,006          4,925
        Amortization of
         purchased
         intangible
         assets               8,126          7,530    16,172         14,499
           Total operating
            expenses        122,865        114,074   245,747        233,780
                            -------        -------   -------        -------


    Operating income         40,561         28,726    76,676         52,978

    Non-operating
     income, net
        Interest income         244            223       643            422
        Interest expense       (411)          (465)     (809)          (958)
        Foreign currency
         transaction
         loss, net           (1,869)          (216)   (1,123)           (32)
        Income from
         equity method
         investments,
         net                  3,147            586     5,621            479
        Other income
         (expense), net        (825)           927      (511)           488
           Total non-
            operating
            income, net         286          1,055     3,821            399
                                ---          -----     -----            ---

    Income before
     taxes                   40,847         29,781    80,497         53,377

    Income tax
     provision               34,076          8,631    45,574         14,530
    Net income                6,771         21,150    34,923         38,847
      Less: Net income
       attributable to
       noncontrolling
       interests                418            293       672            525
    Net income
     attributable to
     Trimble
     Navigation Ltd.         $6,353        $20,857   $34,251        $38,322
                             ======        =======   =======        =======

    Earnings per
     share
     attributable to
     Trimble
     Navigation Ltd.
         Basic                $0.05          $0.17     $0.28          $0.32
                              -----          -----     -----          -----
         Diluted              $0.05          $0.17     $0.28          $0.32
                              -----          -----     -----          -----

    Shares used in
     calculating
     earnings per
     share:
        Basic               120,654        119,551   120,707        119,406
        Diluted             124,099        121,897   123,964        121,411
                            -------        -------   -------        -------


                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)
                               (Unaudited)



                                                    Jul-2,          Jan-1
                                                        2010           2010
                                                        ----           ----
    Assets

    Current assets:
       Cash and cash equivalents                    $261,660       $273,848
       Restricted cash                                17,151              -
       Accounts receivables, net                     219,583        202,293
       Other receivables                               3,916         11,856
       Inventories, net                              159,179        144,012
       Deferred income taxes                          38,694         39,686
       Other current assets                           19,761         18,383
                                                      ------         ------
          Total current assets                       719,944        690,078

    Property and equipment, net                       46,058         44,635
    Goodwill                                         769,438        764,193
    Other purchased intangible assets, net           190,803        202,782
    Other non-current assets                          54,290         51,589
                                                      ------         ------

          Total assets                            $1,780,533     $1,753,277
                                                  ==========     ==========

    Liabilities

    Current liabilities:
       Current portion of long-term debt              $2,004           $445
       Accounts payable                               70,756         53,775
       Accrued compensation and benefits              49,958         43,272
       Deferred revenue                               68,161         68,968
       Accrued warranty expense                       14,266         14,744
       Income taxes payable                           43,727              -
       Other accrued liabilities                      44,916         42,041
                                                      ------         ------
          Total current liabilities                  293,788        223,245

    Non-current portion of long-term debt            151,018        151,038
    Non-current deferred revenue                      13,636         15,599
    Deferred income taxes                             36,261         38,857
    Other non-current liabilities                     43,422         59,983
          Total liabilities                          538,125        488,722
                                                     -------        -------

    Commitments and contingencies

    Equity

    Shareholders' equity:
       Common stock                                  735,861        720,248
       Retained earnings                             472,386        491,367
       Accumulated other comprehensive income         20,670         48,297
                                                      ------         ------
    Total Trimble Navigation Ltd.
     shareholders' equity                          1,228,917      1,259,912
    Noncontrolling interests                          13,491          4,643
          Total equity                             1,242,408      1,264,555

          Total liabilities and equity            $1,780,533     $1,753,277
                                                  ==========     ==========



     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (In thousands)
                       (Unaudited)
                                                     Six Months Ended

                                                      Jul-2,    Jul-3,
                                                          2010       2009
                                                          ----       ----

    Cash flow from operating activities:
        Net Income                                     $34,923    $38,847

        Adjustments to reconcile net income  to net
         cash provided by
           operating activities:
             Depreciation expense                        8,736      9,071
             Amortization expense                       27,733     25,348
             Provision for doubtful accounts             2,596      3,053
             Amortization of debt issuance cost            113        113
             Deferred income taxes                      (4,461)    (3,406)
             Stock-based compensation                   10,625      8,780
             Income from equity method investments      (5,621)      (479)
             Gain on bargain purchase                                (386)
             Excess tax benefit for stock-based
              compensation                              (1,412)      (304)
             Provision for excess and obsolete
              inventories                                3,173      2,933
             Other non-cash items                       (3,447)    (2,401)

        Add decrease (increase) in assets:
             Accounts receivables                      (15,398)     4,117
             Other receivables                           7,647      5,242
             Inventories                               (19,747)    (7,556)
             Other current and non-current assets        1,003      2,289

        Add increase (decrease) in liabilities:
             Accounts payable                           17,315      4,790
             Accrued compensation and benefits           8,142      2,808
             Accrued liabilities                       (21,680)     8,591
             Deferred revenue                              676      7,224
             Income taxes payable                       44,393
     Net cash provided by operating activities          95,309    108,674
                                                                      ---

     Cash flow from investing activities:
          Acquisitions of businesses, net of cash
           acquired                                    (33,605)   (39,029)
          Acquisition of property and equipment        (11,030)    (7,415)
          Acquisitions of intangible assets               (297)   (26,839)
          Purchases of equity method investments        (3,692)
          Net purchases of debt and equity securities              (6,995)
          Increase in restricted cash for business
           acquisition                                 (17,151)
          Dividends received                             5,000          -
          Other                                             67       (513)

     Net cash used in investing activities             (60,708)   (80,791)
                                                       -------    -------

     Cash flow from financing activities:
          Issuance of common stock                      17,867      5,775
          Repurchase and retirement of common stock    (60,510)
          Excess tax benefit for stock-based
           compensation                                  1,412        304
          Payments on long-term debt and revolving
           credit lines                                    (94)      (149)
     Net cash provided by financing activities         (41,325)     5,930
                                                       -------

     Effect of exchange rate changes on cash and
      cash equivalents                                  (5,464)     1,815
                                                        ------      -----

     Net increase in cash and cash equivalents         (12,188)    35,628
     Cash and cash equivalents -beginning of
      period                                           273,848    142,531
                                                       -------    -------

     Cash and cash equivalents - end of period        $261,660   $178,159
                                                      ========   ========


                                     REPORTING SEGMENTS
                                   (Dollars in thousands)
                                         (Unaudited)



                                           Reporting Segments
                                           ------------------
                            Engineering
                                 and        Field          Mobile   Advanced
                            Construction  Solutions      Solutions   Devices
                            ------------  ---------      ---------   -------

    THREE MONTHS ENDED
     JULY 2, 2010:
      Revenue                   $188,441    $80,158        $38,188    $26,576

      Operating income
       before corporate
       allocations:              $33,921    $28,980           $324     $5,181
        Operating margin (%
         of segment
         external net
         revenues)                  18.0%      36.2%           0.8%      19.5%

    THREE MONTHS ENDED
     JULY 3, 2009:
      Revenue                   $147,240    $79,787        $39,065    $23,971

      Operating income
       before corporate
       allocations:              $19,160    $30,148         $3,648     $4,833
        Operating margin (%
         of segment
         external net
         revenues)                  13.0%      37.8%           9.3%      20.2%

    SIX MONTHS ENDED
     JULY 2, 2010:
      Revenue                   $346,059   $176,059        $76,147    $54,113

      Operating income
       before corporate
       allocations:              $52,728    $68,293         $2,223    $10,806
        Operating margin (%
         of segment
         external net
         revenues)                  15.2%      38.8%           2.9%      20.0%

    SIX MONTHS ENDED
     JULY 3, 2009:
      Revenue                   $274,891   $178,944        $77,353    $47,829

      Operating income
       before corporate
       allocations:              $21,669    $72,351         $6,796     $9,145
        Operating margin (%
         of segment
         external net
         revenues)                   7.9%      40.4%           8.8%      19.1%





            GAAP TO NON-GAAP RECONCILIATION
     (Dollars in thousands, except per share data)
                      (Unaudited)


                                               Three Months Ended
                                               ------------------
                                              Jul-2,               Jul-3,
                                                      2010               2009
                                                      ----               ----
                                         Dollar     % of     Dollar    % of
                                         Amount   Revenue    Amount  Revenue
                                         ------   -------    ------  -------
    GROSS MARGIN:
      GAAP gross margin:                $163,426      49.0% $142,800     49.2%
        Restructuring           ( A )         55       0.0%    2,198      0.7%
        Amortization of
         purchased intangibles  ( B )      5,790       1.7%    5,475      1.9%
        Stock-based
         compensation           ( C )        486       0.2%      477      0.2%
        Amortization of
         acquisition-related
         inventory step-up      ( D )          -       0.0%      247      0.1%
                                             ---       ---       ---      ---
      Non-GAAP gross margin:            $169,757      50.9% $151,197     52.1%
                                        --------      ----  --------     ----

    OPERATING EXPENSES:
      GAAP operating
       expenses:                        $122,865            $114,074
        Restructuring           ( A )       (375)             (1,302)
        Amortization of
         purchased intangibles  ( B )     (8,126)             (7,530)
        Stock-based
         compensation           ( C )     (4,498)             (4,077)
        Non-recurring
         acquisition costs      ( E )     (1,764)             (2,340)
                                          ------              ------
      Non-GAAP operating
       expenses:                        $108,102             $98,825
                                        --------             -------

    OPERATING INCOME:
      GAAP operating income:             $40,561      12.2%  $28,726      9.9%
        Restructuring           ( A )        430       0.1%    3,500      1.2%
        Amortization of
         purchased intangibles  ( B )     13,916       4.2%   13,005      4.5%
        Stock-based
         compensation           ( C )      4,984       1.5%    4,554      1.6%
        Amortization of
         acquisition-related
         inventory step-up      ( D )          -       0.0%      247      0.1%
        Non-recurring
         acquisition costs      ( E )      1,764       0.5%    2,340      0.8%
                                           -----       ---     -----      ---
      Non-GAAP operating
       income:                           $61,655      18.5%  $52,372     18.1%
                                         -------      ----   -------     ----

    NET INCOME:
      GAAP net income
       attributable to
       Trimble Navigation
       Ltd.                               $6,353             $20,857
        Restructuring           ( A )        430               3,500
        Amortization of
         purchased intangibles  ( B )     13,916              13,005
        Stock-based
         compensation           ( C )      4,984               4,554
        Amortization of
         acquisition-related
         inventory step-up      ( D )          -                 247
        Non-recurring
         acquisition costs      ( E )      1,774               1,954
        Income tax effect on
         non-GAAP adjustments   ( F )     24,165              (6,741)
                                          ------              ------
      Non-GAAP net income
       attributable to
       Trimble Navigation
       Ltd.                              $51,622             $37,376
                                         -------             -------

    DILUTED NET INCOME PER
     SHARE:
      GAAP diluted net income
       per share attributable
       to Trimble Navigation
       Ltd.                                $0.05               $0.17
        Restructuring           ( A )          -                0.03
        Amortization of
         purchased intangibles  ( B )       0.11                0.11
        Stock-based
         compensation           ( C )       0.04                0.04
        Amortization of
         acquisition-related
         inventory step-up      ( D )          -                   -
        Non-recurring
         acquisition costs      ( E )       0.02                0.02
        Income tax effect on
         non-GAAP adjustments   ( F )       0.20               (0.06)
                                            ----               -----
      Non-GAAP diluted net
       income per share
       attributable to
       Trimble Navigation
       Ltd.                          $0.42       $0.31
                                           -----               -----

    OPERATING LEVERAGE:
      Increase (decrease) in
       non-GAAP operating
       income                             $9,283
      Increase (decrease) in
       revenue                           $43,300
      Operating leverage
       (increase in non-GAAP
       operating
      income as a % of
       increase in revenue)                 21.4%

                                                    % of               % of
                                                   Segment            Segment
    SEGMENT OPERATING
     INCOME:                                      Revenue            Revenue
                                                  -------            -------
      Engineering and
       Construction
        GAAP operating income
         before corporate
         allocations:                    $33,921      18.0%  $19,160     13.0%
          Stock-based
           compensation         ( G )      1,878       1.0%    1,431      1.0%
        Non-GAAP operating
         income before
         corporate allocations:          $35,799      19.0%  $20,591     14.0%
                                         -------      ----   -------     ----

      Field Solutions
        GAAP operating income
         before corporate
         allocations:                    $28,980      36.2%  $30,148     37.8%
          Stock-based
           compensation         ( G )        477       0.5%      260      0.3%
        Non-GAAP operating
         income before
         corporate allocations:          $29,457      36.7%  $30,408     38.1%
                                         -------      ----   -------     ----

      Mobile Solutions
        GAAP operating income
         before corporate
         allocations:                       $324       0.8%   $3,648      9.3%
          Stock-based
           compensation         ( G )        217       0.6%    1,103      2.9%
        Non-GAAP operating
         income before
         corporate allocations:             $541       1.4%   $4,751     12.2%
                                            ----       ---    ------     ----

      Advanced Devices
        GAAP operating income
         before corporate
         allocations:                     $5,181      19.5%   $4,833     20.2%
          Stock-based
           compensation         ( G )        457       1.7%      346      1.4%
        Non-GAAP operating
         income before
         corporate allocations:           $5,638      21.2%   $5,179     21.6%
                                          ------      ----    ------     ----


                                               Six Months Ended
                                               ----------------
                                              Jul-2,             Jul-03,
                                                      2010               2009
                                                      ----               ----
                                                    % of              % of
                                                  Revenue            Revenue
                                                  -------            -------
    GROSS MARGIN:
      GAAP gross margin:                $322,423      49.4% $286,758     49.5%
        Restructuring           ( A )         98       0.0%    3,063      0.5%
        Amortization of
         purchased intangibles  ( B )     11,559       1.8%   10,760      1.9%
        Stock-based
         compensation           ( C )        987       0.2%      915      0.2%
        Amortization of
         acquisition-related
         inventory step-up      ( D )         71       0.0%      470      0.1%
                                             ---       ---       ---      ---
      Non-GAAP gross margin:            $335,138      51.4% $301,966     52.2%
                                        --------      ----  --------     ----

    OPERATING EXPENSES:
      GAAP operating
       expenses:                        $245,747            $233,780
        Restructuring           ( A )     (1,006)             (4,925)
        Amortization of
         purchased intangibles  ( B )    (16,172)            (14,499)
        Stock-based
         compensation           ( C )     (9,638)             (7,865)
        Non-recurring
         acquisition costs      ( E )     (2,502)             (2,805)
                                          ------              ------
      Non-GAAP operating
       expenses:                        $216,429            $203,686
                                        --------            --------

    OPERATING INCOME:
      GAAP operating income:             $76,676      11.7%  $52,978      9.1%
        Restructuring           ( A )      1,104       0.2%    7,988      1.4%
        Amortization of
         purchased intangibles  ( B )     27,731       4.3%   25,259      4.4%
        Stock-based
         compensation           ( C )     10,625       1.6%    8,780      1.5%
        Amortization of
         acquisition-related
         inventory step-up      ( D )         71       0.0%      470      0.1%
        Non-recurring
         acquisition costs      ( E )      2,502       0.4%    2,805      0.5%
                                           -----       ---     -----      ---
      Non-GAAP operating
       income:                          $118,709      18.2%  $98,280     17.0%
                                        --------      ----   -------     ----

    NET INCOME:
      GAAP net income
       attributable to
       Trimble Navigation
       Ltd.                              $34,251             $38,322
        Restructuring           ( A )      1,104               7,988
        Amortization of
         purchased intangibles  ( B )     27,731              25,259
        Stock-based
         compensation           ( C )     10,625               8,780
        Amortization of
         acquisition-related
         inventory step-up      ( D )         71                 470
        Non-recurring
         acquisition costs      ( E )      2,312               2,419
        Income tax effect on
         non-GAAP adjustments   ( F )     18,151             (12,155)
                                          ------             -------
      Non-GAAP net income
       attributable to
       Trimble Navigation
       Ltd.                              $94,245             $71,083
                                         -------             -------

    DILUTED NET INCOME PER
     SHARE:
      GAAP diluted net income
       per share attributable
       to Trimble Navigation
       Ltd.                                $0.28               $0.32
        Restructuring           ( A )       0.01                0.07
        Amortization of
         purchased intangibles  ( B )       0.22                0.21
        Stock-based
         compensation           ( C )       0.09                0.07
        Amortization of
         acquisition-related
         inventory step-up      ( D )          -                   -
        Non-recurring
         acquisition costs      ( E )       0.02                0.02
        Income tax effect on
         non-GAAP adjustments   ( F )       0.14               (0.10)
                                            ----               -----
      Non-GAAP diluted net
       income per share
       attributable to
       Trimble Navigation
       Ltd.                          $0.76        $0.59
                                           -----               -----

    OPERATING LEVERAGE:
      Increase (decrease) in
       non-GAAP operating
       income                            $20,429
      Increase (decrease) in
       revenue                           $73,361
      Operating leverage
       (increase in non-GAAP
       operating
      income as a % of
       increase in revenue)                 27.8%

                                                    % of               % of
                                                   Segment           Segment
    SEGMENT OPERATING
     INCOME:                                      Revenue            Revenue
                                                  -------            -------
      Engineering and
       Construction
        GAAP operating income
         before corporate
         allocations:                    $52,728      15.2%  $21,669      7.9%
          Stock-based
           compensation         ( G )      3,603       1.1%    2,739      1.0%
        Non-GAAP operating
         income before
         corporate allocations:          $56,331      16.3%  $24,408      8.9%
                                         -------      ----   -------      ---

      Field Solutions
        GAAP operating income
         before corporate
         allocations:                    $68,293      38.8%  $72,351     40.4%
          Stock-based
           compensation         ( G )        933       0.5%      482      0.3%
        Non-GAAP operating
         income before
         corporate allocations:          $69,226      39.3%  $72,833     40.7%
                                         -------      ----   -------     ----

      Mobile Solutions
        GAAP operating income
         before corporate
         allocations:                     $2,223       2.9%   $6,796      8.8%
          Stock-based
           compensation         ( G )      1,419       1.9%    2,247      2.9%
        Non-GAAP operating
         income before
         corporate allocations:           $3,642       4.8%   $9,043     11.7%
                                          ------       ---    ------     ----

      Advanced Devices
        GAAP operating income
         before corporate
         allocations:                    $10,806      20.0%   $9,145     19.1%
          Stock-based
           compensation         ( G )        900       1.6%      671      1.4%
        Non-GAAP operating
         income before
         corporate allocations:          $11,706      21.6%   $9,816     20.5%
                                         -------      ----    ------     ----


 
                 FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

                                 (Unaudited)

    The non-GAAP financial measures included in the previous table are
    non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
    operating income, non-GAAP net income, non-GAAP diluted net income
    per share and operating leverage, and non-GAAP segment operating
    income before corporate allocations.    These non-GAAP measures can
    be used to evaluate the Company's historical and prospective
    financial performance, as well as its performance relative to
    competitors.  The Company believes some of its investors track the
    Company's "core operating performance" as a means of evaluating the
    Company's performance in the ordinary, ongoing, and customary course
    of its operations.  Management also believes that looking at its
    core operating performance provides a supplemental way to provide
    consistency in period to period comparisons.  Accordingly,
    management excludes from non-GAAP those items relating to
    restructuring, amortization of purchased intangibles, stock based
    compensation, amortization of acquisition-related inventory step-
    up and non-recurring acquisition costs, which the Company believes
    are not indicative of its core operating performance.

     ( A )  Restructuring. Included in our GAAP presentation of cost of
     sales and operating expenses, restructuring costs recorded are
     primarily for employee compensation resulting from reductions in
     employee headcount in connection with our company restructurings.
     We exclude restructuring from our non-GAAP measures because we
     believe it is not indicative of our core operating performance.

     ( B )  Amortization of purchased intangibles.  Included in our GAAP
     presentation of cost of sales and operating expenses, amortization
     of purchased intangibles recorded arise from prior acquisitions and
     are non-cash in nature.  We exclude these expenses from our non-
     GAAP measures because we believe they are not indicative of our core
     operating performance.

     ( C )  Stock-based compensation. Included in our GAAP presentation
     of cost of sales and operating expenses, stock-based compensation
     consists of expenses for employee stock options and awards and
     purchase rights under our employee stock purchase plan.  We exclude
     stock-based compensation expense from our non-GAAP measures
     because some investors may view it as not reflective of our core
     operating performance as it is a non-cash expense.   For the three
     months and six months ended July 2, 2010 and July 3, 2009, stock-
     based compensation was allocated as follows:


                             Three Months Ended         Six Months Ended
                             ------------------         ----------------
                            Jul-2,       Jul-3,  Jul-2,         Jul-3,
     (Dollars in thousands)    2010         2009    2010            2009
                               ----         ----    ----            ----
     Cost of sales             $486         $477    $987            $915
     Research and
      development               984          854   1,931           1,638
     Sales and Marketing      1,347        1,062   2,730           2,066
     General and
      administrative          2,167        2,161   4,977           4,161
                             $4,984       $4,554 $10,625          $8,780
                             ------       ------ -------          ------



     ( D )  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.
     Included in our GAAP presentation of cost of sales, 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 indicative of our core operating performance.

     ( E )  Non-recurring acquisition costs.  Included in our GAAP
     presentation of operating expenses and non-operating income, net,
     non-recurring acquisition costs consist of external and incremental
     costs resulting directly from merger and acquisition activities such
     as legal, due diligence and integration costs.  Also included are
     unusual acquisition related items such as adjustments to the fair
     value of earnout liabilities and payments made to settle earnout and
     holdback disputes.  We exclude these items because they are non-
     recurring and unique to specific acquisitions and are not indicative
     of our core operating performance.

     ( F )  Income tax effect on non-GAAP adjustments. This amount
     adjusts the provision for income taxes to reflect the effect of the
     non-GAAP adjustments on non-GAAP net income.

     ( G )  Stock-based Compensation. The amounts consist of expenses for
     employee stock options and awards and purchase rights under our
     employee stock purchase plan. As referred to above we exclude stock-
     based compensation here because investors may view it as not
     reflective of our core operating performance.  However, management
     does include stock-based compensation for budgeting and incentive
     plans as well as for reviewing internal financial reporting. We
     discuss our operating results by segment with and without stock-
     based compensation expense, as we believe it is useful to investors.
      Stock-based compensation not allocated to the reportable segments
      was approximately $2.0 million and $1.4 million for the three months
     ended July 2, 2010 and July 3, 2009, respectively and $3.8 million
     and $2.6 million for the six months ended July 2, 2010 and July 3,
     2009, respectively. ``




Print News   |   Send Link