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 Reports Third Quarter 2013 Revenue of $556.5 Million,
GAAP EPS of $0.21 and Non-GAAP EPS of $0.39


SUNNYVALE, Calif. , Oct. 31, 2013 /PRNewswire/ -- Trimble (NASDAQ:  TRMB) today announced third quarter 2013 revenue of $556.5 million, up 10 percent as compared to the third quarter of 2012.

GAAP operating income for the third quarter of 2013 was $63.0 million, or 11.3 percent of revenue, as compared to 12.6 percent of revenue in the third quarter of 2012. 

GAAP net income for the third quarter of 2013 was $54.5 million, up 2 percent as compared to the third quarter of 2012.  Diluted GAAP earnings per share in the third quarter of 2013 were $0.21, flat with the third quarter of 2012.  The tax rate for the third quarter of 2013 was 14 percent as compared to 19 percent in the third quarter of 2012.

Non-GAAP operating income for the third quarter of 2013 was $118.2 million, or 21.2 percent of revenue, compared to $105.3 million, or 20.9 percent of revenue, in the third quarter of 2012.  

Non-GAAP net income of $101.9 million for the third quarter of 2013 was up 17 percent as compared to the third quarter of 2012.  Diluted non-GAAP earnings per share were $0.39 in the third quarter of 2013, as compared to diluted non-GAAP earnings per share of $0.34 in the third quarter of 2012. 

Third quarter 2013 non-GAAP results included the following adjustments as compared to the third quarter of 2012:

  • Restructuring expense of $39 thousand as compared to $361 thousand;
  • Amortization of intangibles of $41.6 million as compared to $31.4 million;
  • Stock-based compensation expense of $8.9 million as compared to $7.7 million;
  • Acquisition-related inventory step-up charge of $378 thousand as compared to $547 thousand;
  • Acquisition and divestiture costs of $2.9 million as compared to $1.5 million;
  • Litigation settlement of $1.3 million as compared to no cost in the third quarter of 2012.

"While below our projected long-term growth rate, our third quarter revenue was consistent with our guidance for the quarter.  Although the worldwide economic environment is expected to remain challenging into 2014 and a constraint to robust growth, we did see encouraging signs in the quarter, particularly in survey instruments, building construction and agriculture," said Steven W. Berglund, Trimble's president and chief executive officer.  "These indicators support our view that our organic growth will step up in 2014 from the levels we have seen in 2013."

Results by Segment

Segment operating income is revenue less cost of sales and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges and acquisition costs.  Non-GAAP segment operating income also excludes the impact of stock-based compensation expense.

Engineering and Construction (E&C)

Third quarter 2013 E&C revenue was $310.6 million, up 8 percent as compared to the third quarter of 2012 due to organic sales growth in survey, heavy civil, buildings, and positioning services and from the effect of acquisitions.

Operating income in E&C for the third quarter of 2013 was $73.5 million, or 23.7 percent of revenue, as compared to 23.8 percent of revenue in the third quarter of 2012.  Non-GAAP operating income was $76.4 million, or 24.6 percent of revenue, as compared to 24.8 percent of revenue in the third quarter of 2012.

Field Solutions

Third quarter 2013 Field Solutions revenue was $99.5 million, down 3 percent as compared to the third quarter of 2012, due to softer sales of Geographical Information System (GIS) solutions, partially offset by growth in agricultural solutions sales.

Third quarter 2013 Field Solutions operating income was $31.4 million, or 31.5 percent of revenue, as compared to $36.0 million, or 35.0 percent of revenue, in the third quarter of 2012.  Non-GAAP operating income was $32.1 million, or 32.3 percent of revenue, as compared to $36.6 million, or 35.6 percent of revenue, in the third quarter of 2012.  The decrease in non-GAAP operating margin was due primarily to lower revenue from government GIS sales.  Non-GAAP operating margins in agriculture were consistent with the prior year.

Mobile Solutions  

Third quarter 2013 Mobile Solutions revenue was $113.6 million, up 35 percent as compared to the third quarter of 2012 due primarily to higher revenue from transportation and logistics sales, both from the organic business and acquisitions.

Third quarter 2013 Mobile Solutions operating income was $15.3 million or 13.5 percent of revenue, as compared to $8.2 million, or 9.8 percent of revenue, in the third quarter of 2012.  Third quarter 2013 non-GAAP operating income was $16.2 million, or 14.3 percent of revenue, as compared to $8.9 million, or 10.6 percent of revenue, in the third quarter of 2012.  The increase in non-GAAP operating margins was primarily due to higher revenue from software, subscription and services.

Advanced Devices

Third quarter 2013 Advanced Devices revenue was $32.9 million, up 7 percent as compared to the third quarter of 2012, primarily due to stronger sales of RFID solutions.

Operating income in Advanced Devices for the third quarter of 2013 was $8.4 million, or 25.6 percent of revenue, as compared to $5.7 million, or 18.5 percent of revenue, in the third quarter of 2012. Non-GAAP operating income in Advanced Devices was $9.3 million, or 28.4 percent of revenue, as compared to $6.2 million, or 20.3 percent of revenue, in the third quarter of 2012. The improvement in non-GAAP operating margin was due to product mix. 

Use of Non-GAAP Financial Information

To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. 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. Further, we believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations.  Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons. 

The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items 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.  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 fourth quarter of 2013 Trimble expects revenue between $560 million and $580 million with GAAP earnings per share of $0.17 to $0.21 and non-GAAP earnings per share of $0.35 to $0.39.  Non-GAAP guidance excludes the amortization of intangibles of $42.0 million related to previous acquisitions; anticipated acquisition costs of $3.5 million and the anticipated impact of stock-based compensation expense of $10.5 million. Both GAAP and non-GAAP earnings per share assume a 16 to 18 percent tax rate and 261.5 million shares outstanding.  

Investor Conference Call / Webcast Details

Trimble will hold a conference call today, Oct. 31, 2013 at 1:30 p.m. PT to discuss its results. The call 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 (855) 859-2056 (U.S.) or (404) 537-3406 (international). The pass code for all calls is 71253435.  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 impact of acquisitions, the improvement in our organic growth during 2014 and the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the fourth quarter of 2013, the expected tax rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions and the anticipated number of shares outstanding and interest costs. 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. The Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products or integrate new acquisitions. The Company's results would also be negatively impacted by further weakening in the macro environment in Europe and China or a softening of the market in North or South America, including government spending cuts and any further softening of the agriculture market in the U.S. 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 and 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, such as changes in economic conditions, critical part supply chain shortages, possible write-offs of goodwill, and regulatory proceedings affecting GPS. 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)












Third Quarter of


First Three Quarters of












2013


2012


2013


2012










Revenues:









        Product


$ 401,565


$ 386,902


$1,240,232


$1,187,638

        Service


85,521


64,237


251,628


185,262

        Subscription


69,416


53,624


197,046


151,690

Total revenues


556,502


504,763


1,688,906


1,524,590










Cost of sales:









        Product


187,865


185,102


587,059


577,281

        Service


31,959


23,615


95,351


67,592

        Subscription


21,223


17,450


62,190


47,859

        Amortization of purchased intangible assets


20,402


15,728


59,938


42,145

Total cost of sales


261,449


241,895


804,538


734,877










Gross margin


295,053


262,868


884,368


789,713

Gross margin (%)


53.0%


52.1%


52.4%


51.8%










Operating expenses









    Research and development


71,622


61,181


221,785


185,721

    Sales and marketing


85,507


76,481


254,437


230,094

    General and administrative


53,648


45,723


158,378


142,595

    Restructuring


31


301


4,602


1,894

    Amortization of purchased intangible assets


21,216


15,712


60,775


47,170

       Total operating expenses


232,024


199,398


699,977


607,474



















Operating income 


63,029


63,470


184,391


182,239










Non-operating income, net









    Interest expense, net


(4,122)


(3,925)


(13,448)


(11,561)

    Foreign currency transaction gain (loss), net


(157)


174


(1,126)


(1,843)

    Income from equity method investments, net


4,494


6,453


15,908


19,708

    Other income, net


268


650


847


1,897

       Total non-operating income, net


483


3,352


2,181


8,201










Income before taxes


63,512


66,822


186,572


190,440










Income tax provision


8,892


13,022


28,067


33,403

Net income


54,620


53,800


158,505


157,037

Less: Net gain (loss) attributable to noncontrolling interests 


151


436


(353)


(837)

Net income attributable to Trimble Navigation Ltd.


$  54,469


$   53,364


$   158,858


$   157,874










Earnings per share attributable to Trimble Navigation Ltd.









     Basic


$      0.21


$      0.21


$        0.62


$        0.63

     Diluted


$      0.21


$      0.21


$        0.61


$        0.62










Shares used in calculating earnings per share:









    Basic


257,037


251,742


256,135


250,404

    Diluted


261,137


256,758


260,664


256,288

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)











Third Quarter of


Fiscal Year End

As of


2013


2012

Assets










Current assets:





   Cash and cash equivalents


$         115,257


$         157,771

   Restricted cash


6,696


-

   Accounts receivables, net


361,556


323,477

   Other receivables


13,443


17,327

   Inventories, net


241,509


240,529

   Deferred income taxes


44,578


43,473

   Other current assets


45,454


33,396

      Total current assets


828,493


815,973






Property and equipment, net


136,155


96,890

Goodwill


1,938,870


1,815,699

Other purchased intangible assets, net


621,675


644,419

Other non-current assets


109,979


96,123






      Total assets


$      3,635,172


$      3,469,104






Liabilities 










Current liabilities:





   Current portion of long-term debt


$         105,202


$           38,092

   Accounts payable


105,808


124,532

   Accrued compensation and benefits


87,829


86,064

   Deferred revenue


174,407


138,920

   Accrued warranty expense


17,455


17,066

   Other accrued liabilities


78,336


63,996

      Total current liabilities


569,037


468,670






Non-current portion of long-term debt


703,862


873,066

Non-current deferred revenue


16,541


7,262

Deferred income taxes


135,494


148,260

Other non-current liabilities


70,085


58,322

      Total liabilities


1,495,019


1,555,580






Commitments and contingencies










Equity










Shareholders' equity:





   Common stock


1,077,756


1,006,818

   Retained earnings


1,025,119


868,026

   Accumulated other comprehensive income 


23,944


22,611

Total Trimble Navigation Ltd. shareholders' equity


2,126,819


1,897,455

Noncontrolling interests 


13,334


16,069

      Total equity


2,140,153


1,913,524






      Total liabilities and equity


$      3,635,172


$      3,469,104

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In thousands)

(Unaudited)



First Three Quarters of



2013


2012






Cash flow from operating activities:





    Net Income


$        158,505


$ 157,037






    Adjustments to reconcile net income to net cash provided by





       operating activities:





         Depreciation expense


19,630


16,910

         Amortization expense


120,713


89,315

         Provision for doubtful accounts


1,204


1,428

         Deferred income taxes


(13,520)


646

         Stock-based compensation


26,158


23,628

         Income from equity method investments


(15,908)


(19,708)

         Excess tax benefit for stock-based compensation


(8,803)


(16,673)

         Provision for excess and obsolete inventories


1,551


6,372

         Other non-cash items


738


(3,019)






    Add decrease (increase) in assets:





         Accounts receivables


(28,466)


(39,496)

         Other receivables


4,047


(7,996)

         Inventories


2,645


(4,650)

         Other current and non-current assets


(22,765)


(2,844)






    Add increase (decrease) in liabilities:





         Accounts payable


(22,467)


7,828

         Accrued compensation and benefits


(2,738)


6,375

         Deferred revenue


46,891


12,390

         Accrued warranty expense


347


(2,491)

         Other current and non-current liabilities


10,646


18,842

 Net cash provided by operating activities 


278,408


243,894






 Cash flow from investing activities: 





      Acquisitions of businesses, net of cash acquired 


(200,401)


(355,484)

      Acquisitions of property and equipment 


(57,646)


(34,126)

      Dividends received from equity method investments 


7,672


2,140

      Increase in restricted cash 


(6,696)


-

      Other 


663


(492)

 Net cash used in investing activities 


(256,408)


(387,962)






 Cash flow from financing activities: 





      Issuance of common stock, net of tax withholdings 


37,667


37,142

      Excess tax benefit for stock-based compensation 


8,803


16,673

      Proceeds from long-term debt and revolving credit lines 


332,021


478,556

      Payments on short-term and long-term debt  


(440,886)


(401,062)

 Net cash provided by (used in) financing activities 


(62,395)


131,309






 Effect of exchange rate changes on cash and cash equivalents 


(2,119)


(22)






 Net decrease in cash and cash equivalents 


(42,514)


(12,781)

 Cash and cash equivalents - beginning of period 


157,771


154,621






 Cash and cash equivalents - end of period 


$        115,257


$ 141,840

 

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)






























Reporting Segments






Engineering












and


Field


Mobile


Advanced






Construction


Solutions


Solutions


Devices













THIRD QUARTER OF FISCAL 2013 :










Revenues

$    310,611


$    99,466


$  113,570


$   32,855














Operating income before corporate allocations:


$      73,488


$    31,373


$    15,276


$    8,420


     Operating margin (% of segment external net revenues)


23.7%


31.5%


13.5%


25.6%













THIRD QUARTER OF FISCAL 2012 :










Revenues


$    287,244


$  102,993


$    83,830


$   30,696














Operating income before corporate allocations:


$      68,451


$    36,021


$     8,218


$    5,684


     Operating margin (% of segment external net revenues)


23.8%


35.0%


9.8%


18.5%













FIRST THREE QUARTERS OF FISCAL 2013 :










Revenue


$    890,928


$  362,811


$  339,258


$   95,909














Operating income before corporate allocations:


$    183,301


$  134,271


$    42,284


$   21,419


     Operating margin (% of segment external net revenues)


20.6%


37.0%


12.5%


22.3%













FIRST THREE QUARTERS OF FISCAL 2012 :










Revenue


$    820,304


$  373,863


$  243,615


$   86,808














Operating income before corporate allocations:


$    168,001


$  145,005


$    21,200


$   12,936


     Operating margin (% of segment external net revenues)


20.5%


38.8%


8.7%


14.9%

 

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)























Third Quarter of


First Three Quarters of







2013


2012


2013


2012







Dollar

% of


Dollar

% of


Dollar

% of


Dollar

% of







Amount

Revenue


Amount

Revenue


Amount

Revenue


Amount

Revenue


GROSS MARGIN:
















GAAP gross margin:



$   295,053

53.0%


$   262,868

52.1%


$   884,368

52.4%


$   789,713

51.8%




Restructuring

( A )


8

0.0%


60

0.0%


829

0.0%


139

0.0%




Amortization of purchased intangible assets

( B )


20,402

3.7%


15,728

3.1%


59,938

3.6%


42,145

2.8%




Stock-based compensation

( C )


609

0.1%


502

0.1%


1,816

0.1%


1,480

0.1%




Amortization of acquisition-related inventory step-up

( D )


378

0.1%


547

0.1%


1,505

0.1%


677

0.0%



Non-GAAP gross margin: 



$   316,450

56.9%


$   279,705

55.4%


$   948,456

56.2%


$   834,154

54.7%



















OPERATING EXPENSES:
















GAAP operating expenses:



$   232,024

41.7%


$   199,398

39.5%


$   699,977

41.4%


$   607,474

39.8%




Restructuring

( A )


(31)

0.0%


(301)

-0.1%


(4,602)

-0.3%


(1,894)

-0.1%




Amortization of purchased intangible assets

( B )


(21,216)

-3.9%


(15,712)

-3.1%


(60,775)

-3.6%


(47,170)

-3.1%




Stock-based compensation

( C )


(8,296)

-1.5%


(7,182)

-1.3%


(24,342)

-1.4%


(22,148)

-1.5%




Acquisition / divestiture items

( E )


(2,891)

-0.5%


(1,804)

-0.4%


(9,285)

-0.5%


(14,385)

-0.9%




Litigation

( G )


(1,335)

-0.2%


-

0.0%


(1,335)

-0.1%


-

0.0%



Non-GAAP operating expenses:



$   198,255

35.6%


$   174,399

34.6%


$   599,638

35.5%


$   521,877

34.2%



















OPERATING INCOME:
















GAAP operating income:



$     63,029

11.3%


$     63,470

12.6%


$   184,391

10.9%


$   182,239

12.0%




Restructuring

( A )


39

0.0%


361

0.1%


5,431

0.3%


2,033

0.1%




Amortization of purchased intangible assets

( B )


41,618

7.5%


31,440

6.2%


120,713

7.2%


89,315

5.9%




Stock-based compensation

( C )


8,905

1.6%


7,684

1.5%


26,158

1.5%


23,628

1.6%




Amortization of acquisition-related inventory step-up

( D )


378

0.1%


547

0.1%


1,505

0.1%


677

0.0%




Acquisition / divestiture items

( E )


2,891

0.5%


1,804

0.4%


9,285

0.6%


14,385

0.9%




Litigation

( G )


1,335

0.2%


-

0.0%


1,335

0.1%


-

0.0%



Non-GAAP operating income: 



$   118,195

21.2%


$   105,306

20.9%


$   348,818

20.7%


$   312,277

20.5%



















NON-OPERATING INCOME, NET:
















GAAP non-operating income, net:



$          483



$       3,352



$       2,181



$      8,201





Acquisition / divestiture items

( E )


14



(334)



(846)



(447)





Foreign exchange loss associated with acquisitions

( F )


-



-



-



1,578




Non-GAAP non-operating income, net: 



$          497



$       3,018



$       1,335



$      9,332


























GAAP and 



GAAP and 



GAAP and 



GAAP and 








Non-GAAP



Non-GAAP



Non-GAAP



Non-GAAP








Tax Rate %

( I )


Tax Rate %

( I )


Tax Rate %

( I )


Tax Rate %

( I )

INCOME TAX PROVISION:
















GAAP income tax provision:



$       8,892

14%


$     13,022

19%


$     28,067

15%


$    33,403

18%




Non-GAAP items tax effected

( H )


7,725



8,088



24,062



22,873




Non-GAAP income tax provision: 



$     16,617

14%


$     21,110

19%


$     52,129

15%


$    56,276

18%



















NET INCOME:  
















GAAP net income attributable to Trimble Navigation Ltd.



$     54,469



$     53,364



$   158,858



$   157,874





Restructuring

( A )


39



361



5,431



2,033





Amortization of purchased intangible assets

( B )


41,618



31,440



120,713



89,315





Stock-based compensation

( C )


8,905



7,684



26,158



23,628





Amortization of acquisition-related inventory step-up

( D )


378



547



1,505



677





Acquisition / divestiture items

( E )


2,905



1,470



8,439



13,938





Foreign exchange loss associated with acquisitions

( F )


-



-



-



1,578





Litigation

( G )


1,335



-



1,335



-





Non-GAAP items tax affected

( H )


(7,725)



(8,088)



(24,062)



(22,873)




Non-GAAP net income attributable to Trimble Navigation Ltd.



$   101,924



$     86,778



$   298,377



$   266,170




















DILUTED NET INCOME PER SHARE:
















GAAP diluted net income per share attributable to Trimble Navigation Ltd.



$         0.21



$         0.21



$         0.61



$        0.62





Restructuring

( A )


-



-



0.02



0.01





Amortization of purchased intangible assets

( B )


0.16



0.12



0.45



0.35





Stock-based compensation

( C )


0.03



0.03



0.10



0.09





Amortization of acquisition-related inventory step-up

( D )


-



-



0.01



-





Acquisition / divestiture items

( E )


0.01



0.01



0.03



0.05





Foreign exchange loss associated with acquisitions

( F )


-



-



-



0.01





Litigation

( G )


0.01






0.01



-





Non-GAAP items tax affected

( H )


(0.03)



(0.03)



(0.09)



(0.09)




Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd.


$         0.39



$         0.34



$         1.14



$        1.04




















OPERATING LEVERAGE:
















Increase in non-GAAP operating income



$     12,889



$     32,317



$     36,541



$     88,859




Increase in revenue



$     51,739



$     87,330



$   164,316



$   315,695




Operating leverage (increase in non-GAAP operating income as a % of increase in revenue)


















24.9%



37.0%



22.2%



28.1%



 

GAAP TO NON-GAAP RECONCILIATION (CONTINUED)

(Dollars in thousands, except per share data)

(Unaudited)






















































Third Quarter of


First Three Quarters of






2013


2012


2013


2012







% of Segment



% of Segment



% of Segment



% of Segment

SEGMENT OPERATING INCOME:



Revenue



Revenue



Revenue



Revenue


Engineering and Construction
















GAAP operating income before corporate allocations:



$ 73,488

23.7%


$ 68,451

23.8%


$ 183,301

20.6%


$ 168,001

20.5%



Stock-based compensation

( J )


2,950

0.9%


2,675

1.0%


8,702

1.0%


8,730

1.0%



Non-GAAP operating income before corporate allocations:



$ 76,438

24.6%


$ 71,126

24.8%


$ 192,003

21.6%


$ 176,731

21.5%


















Field Solutions
















GAAP operating income before corporate allocations:



$ 31,373

31.5%


$ 36,021

35.0%


$ 134,271

37.0%


$ 145,005

38.8%



Stock-based compensation

( J )


714

0.8%


628

0.6%


2,258

0.6%


1,952

0.5%



Non-GAAP operating income before corporate allocations:



$ 32,087

32.3%


$ 36,649

35.6%


$ 136,529

37.6%


$ 146,957

39.3%


















Mobile Solutions
















GAAP operating income before corporate allocations:



$ 15,276

13.5%


$   8,218

9.8%


$  42,284

12.5%


$  21,200

8.7%



Stock-based compensation

( J )


934

0.8%


682

0.8%


2,794

0.8%


1,710

0.7%



Non-GAAP operating income before corporate allocations:



$ 16,210

14.3%


$   8,900

10.6%


$  45,078

13.3%


$  22,910

9.4%


















Advanced Devices
















GAAP operating income before corporate allocations:



$   8,420

25.6%


$   5,684

18.5%


$  21,419

22.3%


$  12,936

14.9%



Stock-based compensation

( J )


900

2.8%


544

1.8%


2,650

2.8%


1,716

2.0%



Non-GAAP operating income before corporate allocations:



$   9,320

28.4%


$   6,228

20.3%


$  24,069

25.1%


$  14,652

16.9%

 

FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION


(Unaudited)













Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The non-GAAP financial measures included in the previous table as well as detailed explanations to the adjustments to comparable GAAP measures, are set forth below:

Non-GAAP gross margin

We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions and manufacturing costs influence our business.  Non-GAAP gross margin excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation and amortization of acquisition-related inventory step-up from GAAP gross margin. We believe that these exclusions offer investors additional information that may be useful to view trends in our gross margin performance.

Non-GAAP operating expenses

We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating expenses exclude restructuring costs, amortization of purchased intangible assets, stock-based compensation, litigation, and acquisition/divestiture costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs, and acquisition bonus payments from GAAP operating expenses. We believe that these exclusions offer investors supplemental information to facilitate comparison of our operating expenses to our prior results. 

Non-GAAP operating income

We believe our investors benefit by understanding our non-GAAP operating income trends which are driven by revenue, gross margin, and spending. Non-GAAP operating income excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, litigation, and acquisition/divestiture costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs, and acquisition bonus payments. We believe that these exclusions offer an alternative means for our investors to evaluate current operating performance compared to results of other periods. 

Non-GAAP non-operating income, net

We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income, net excludes acquisition and divestiture (gains)/losses associated with unusual acquisition related items such as adjustments to the fair value of earn-out liabilities and gains or losses related to the acquisition or sale of certain businesses and investments. These (gains)/losses are specific to particular acquisitions and divestitures and vary significantly in amount and timing. Non-GAAP non-operating income, net also excludes a foreign exchange loss specifically associated with a hedge for one of our acquisitions. We believe that these exclusions provide investors with a supplemental view of our ongoing financial results.

Non-GAAP income tax provision

Non-GAAP items tax effected adjusts the provision for income taxes to reflect the effect of certain non-GAAP items on non-GAAP net income. We believe this information is useful to investors because it provides for consistent treatment of the excluded items in our non-GAAP presentation.

Non-GAAP net income

This measure provides a supplemental view of net income trends which are driven by non-GAAP income before taxes and our non-GAAP tax rate. Non-GAAP net income excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange loss from a hedge associated with one of our acquisitions, litigation, and non-GAAP tax adjustments from GAAP net income. We believe our investors benefit from understanding these exclusions and from an alternative view of our net income performance as compared to our past net income performance.

Non-GAAP diluted net income per share

We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the company. Non-GAAP diluted net income per share excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange loss from a hedge associated with one of our acquisitions, litigation and non-GAAP tax adjustments from GAAP diluted net income per share. We believe that these exclusions offer investors a useful view of our diluted net income per share as compared to our past diluted net income per share. 

Non-GAAP operating leverage

We believe this information is beneficial to investors as a measure of how much incremental revenue is contributed to our operating income. Non-GAAP operating leverage is the increase in non-GAAP operating income as a percentage of the increase in revenue. We believe that this information offers investors supplemental information to evaluate our current performance and to compare to our past non-GAAP operating leverage. 

Non-GAAP segment operating income

Non-GAAP segment operating income excludes stock-based compensation from GAAP segment operating income. We believe this information is useful to investors because some may exclude stock-based compensation as an alternative view when assessing trends in the operating income of our segments. 

These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. We believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results.  Management also believes that looking at our 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 intangible assets, stock based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange loss from a hedge associated with one of our acquisitions, litigation, and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP measures, see items (A) - ( J ) below,













( A )

Restructuring costs. 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 costs from our non-GAAP measures because we believe they do not reflect expected future operating expenses, they are not indicative of our core operating performance, and they are not meaningful in comparisons to our past operating performance.  We have incurred  restructuring expense in each of the last three years however the amount incurred can vary significantly based on whether a restructuring has occurred in the period and the timing of headcount reductions. 













( B )

Amortization of purchased intangible assets. Included in our GAAP presentation of gross margin and operating expenses is amortization of purchased intangible assets. US GAAP accounting requires that intangible assets are recorded at fair value and amortized over their useful lives. Consequently, the timing and size of our acquisitions will cause our operating results to vary from period to period, making a comparison to past performance difficult for investors. This accounting treatment may cause differences when comparing our results to companies that grow internally because the fair value assigned to the intangible assets acquired through acquisition may significantly exceed the equivalent expenses that a company may incur for similar efforts when performed internally. Furthermore, the useful life that we expense our intangible assets over may be substantially different from the time period that an internal growth company incurs and recognizes such expenses. We believe that by excluding the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed, it provides an alternative way for investors to compare our operations pre-acquisition to those post-acquisitions and to those of our competitors that have pursued internal growth strategies. However, we note that companies that grow internally will incur costs to develop intangible assets that will be expensed in the period incurred, which may make a direct comparison more difficult.     













( 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 third quarter and the first three quarters of fiscal 2013 and 2012, stock-based compensation was allocated as follows: 


















Third Quarter of


First Three Quarters of



(Dollars in thousands)



2013


2012


2013


2012



Cost of sales



$                 609


$                 502


$              1,816


$                      1,480



Research and development



1,265


1,163


3,644


3,869



Sales and Marketing



1,816


1,616


5,341


5,244



General and administrative



5,215


4,403


15,357


13,035






$              8,905


$              7,684


$            26,158


$                     23,628













( 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 it is a non-cash expense that we do not believe is indicative of our ongoing operating results.  We further believe that excluding this item from our non-GAAP results is useful to investors in that it allows for period-over-period comparability.













( E )

Acquisition / divestiture items. Included in our GAAP presentation of operating expenses, acquisition costs consist of external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs and acquisition bonus payments.  Included in our GAAP presentation of non-operating income, net, acquisition / divestiture (gain)/loss includes unusual acquisition or divestiture related items such as adjustments to the fair value of earn-out liabilities and gains on divestitures of certain businesses and investments. Although we do numerous acquisitions, the costs that have been excluded from the non-GAAP measures are costs specific to particular acquisitions. These are one-time costs that vary significantly in amount and timing and are not indicative of our core operating performance.













( F )

Foreign exchange loss associated with acquisitions. This amount represents a loss on a foreign exchange hedge associated with one of our acquisitions.  We excluded the foreign exchange loss from our non-GAAP measures because we believe that the exclusion of this item provides investors an enhanced view of the cost structure of our operations and facilitates comparisons with the results of other periods.                     













( G )

Litigation. This amount represents a settlement of litigation related to a pre-acquisition agreement with a contract manufacturer. We have excluded this litigation settlement cost from our non-GAAP measures because it is a non-recurring expense that is not indicative of our ongoing operating results.  We further believe that excluding this item from our non-GAAP results is useful to investors in that it allows for period-over-period comparability.













( H )

Non-GAAP items tax effected. This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items ( A ) - ( G ) on non-GAAP net income.   We believe this information is useful to investors because it provides for consistent treatment of the excluded items in this non-GAAP presentation. 













( I )

GAAP and non-GAAP tax rate %. These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.   We believe that investors benefit from a presentation of non-GAAP tax rate percentage as a way of facilitating a comparison to non-GAAP tax rates in prior periods.













( J )

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 as it is a non-cash expense. 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 $3.4 million and $3.2 million for the third quarter of fiscal 2013 and 2012, respectively, and $9.8 million and $9.5 million for the first three quarters of fiscal 2013 and 2012, respectively.

 

SOURCE Trimble

News Provided by Acquire Media




Print News   |   Send Link