Non-GAAP Operating Margins of 18.1 percent
SUNNYVALE, Calif., July 28 /PRNewswire-FirstCall/ -- Trimble (NASDAQ: TRMB) today announced revenue of $290.1 million for its second quarter ended July 3, 2009, down approximately 23 percent from revenue of $377.8 million in the second quarter of 2008.
Operating income for the second quarter of 2009 was $28.7 million, down approximately 54 percent from the second quarter of 2008. Operating margin in the second quarter of 2009 was 9.9 percent, compared to an operating margin of 16.7 percent in the second quarter of 2008. Amortization of intangibles was $13.0 million in the second quarter of 2009 compared to $10.9 million in the second quarter of 2008. The impact of stock-based compensation expense was $4.6 million compared to $3.8 million in the second quarter of 2008. There was also a $3.5 million restructuring expense, a $0.3 million acquisition-related inventory step-up charge and $2.0 million of non-recurring acquisition costs in the second quarter of 2009 compared to a $3.3 million restructuring expense, and no inventory step-up, or non-recurring acquisition costs in the second quarter of 2008. Excluding the above impacts, non-GAAP operating income of $52.4 million was down 35 percent compared to the second quarter of 2008. Non-GAAP operating margin was 18.1 percent in the second quarter of 2009, compared to 21.4 percent in the second quarter of 2008.
Second quarter 2009 net income was $20.9 million, down 57 percent compared to the second quarter of 2008. Diluted earnings per share for the second quarter of 2009 were $0.17 compared to diluted earnings per share of $0.39 in the second quarter of 2008.
Adjusting for the items noted above, non-GAAP net income of $37.4 million for the second quarter of 2009 was down 39 percent compared to the second quarter of 2008. Non-GAAP earnings per share for the second quarter of 2009 were $0.31 compared to non-GAAP earnings per share of $0.49 in the second quarter of 2008.
Cash flow from operations for the second quarter of 2009 was $65.5 million and cash flow from operations for the first half of 2009 was $108.7 million compared to $79.6 million in the second quarter of 2008 and $100.4 million in the first half of 2008.
"Although the engineering and construction segment continues to encounter severe recessionary conditions, the market demonstrated more stability in the second quarter than the prior two quarters," said Steven W. Berglund, Trimble's president and chief executive officer. "Field Solutions segment revenue was lower as a result of declines in both GIS and agriculture. The decline in agriculture reflected a slower market but also reflected the difficult comparison to an exceptional performance level in 2008. We expect the agricultural market to continue to be moderately slower than 2008 for the remainder of the year. Mobile Solutions orders have begun to reflect our generally strong sales pipeline which increases the probability of a significant performance improvement in 2010 for the segment," Berglund continued.
"Conditions continue to be uncertain and the second half of 2009 remains difficult to forecast. Even if overall economic conditions do not significantly improve, we believe we can return to year-over-year revenue growth in late 2009 or early 2010. Our focus remains on aligning costs and revenue while continuing to fund key strategic programs. This is reflected in the improvement of our non-GAAP operating margin in both the first and second quarters of 2009 compared to the fourth quarter of 2008," concluded Berglund.
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 2009 E&C revenue was $147.2 million, down approximately 31 percent when compared to the second quarter of 2008. The decline in demand continued to primarily be driven by recessionary conditions in the U.S. and Europe.
Operating income in E&C for the second quarter 2009 was $19.2 million, or 13.0 percent of revenue, compared to $45.2 million, or 21.2 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in E&C was $20.6 million, or 14.0 percent of revenue, compared to $46.2 million, or 21.7 percent of revenue, in the second quarter of 2008. The decline in operating margin was largely due to lower revenue.
Field Solutions
Second quarter 2009 Field Solutions revenue was $79.8 million, down 11 percent when compared to the second quarter of 2008. The revenue decline was driven by lower agriculture product sales. It should be noted that the year-over-year comparison was difficult because in the second quarter of 2008 Field Solutions demonstrated 63 percent year-over-year revenue growth due to an extended buying season in the quarter.
Operating income in Field Solutions for the second quarter 2009 was $30.1 million, or 37.8 percent of revenue, compared to $34.8 million, or 38.6 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Field Solutions was $30.4 million, or 38.1 percent of revenue, compared to $35.0 million, or 38.9 percent of revenue in the second quarter of 2008.
Mobile Solutions
Second quarter 2009 Mobile Solutions revenue was $39.1 million, down approximately 8 percent when compared to the second quarter of 2008. The decline in revenue was primarily attributable to a decline in sales of ready mix products as well as the fact that the second quarter of 2008 benefited from the recognition of two large non-recurring revenue items.
Operating income in Mobile Solutions for the second quarter 2009 was $3.6 million, or 9.3 percent of revenue, compared to $1.9 million, or 4.6 percent of revenue in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Mobile Solutions was $4.8 million, or 12.2 percent of revenue, up from 7.4 percent of revenue in the second quarter of 2008. The improvement is primarily due to reduced cost of sales overhead and operating expenses from restructuring.
Advanced Devices
Second quarter 2009 Advanced Devices revenue was $24.0 million, down approximately 26 percent when compared to the second quarter of 2008. The decline in second quarter revenue was due to slower sales of embedded products.
Operating income in Advanced Devices for the second quarter 2009 was $4.8 million, or 20.2 percent of revenue, compared to $6.6 million, or 20.3 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Advanced Devices was $5.2 million, or 21.6 percent of revenue, compared to 21.3 percent of revenue in the second quarter of 2008.
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 investor.trimble.com
Forward Looking Guidance
For the third quarter of 2009 Trimble expects revenue in the range of $275 million plus or minus five percent. At a point estimate of $275 million in revenue, Trimble expects third quarter 2009 GAAP earnings per share of $0.13 and non-GAAP earnings per share of $0.25. Non-GAAP guidance for the third quarter of 2009 excludes the amortization of intangibles of $13.3 million related to previous acquisitions, the anticipated impact of stock-based compensation expense of $4.5 million and $1.3 million in anticipated restructuring charges. Both GAAP and non-GAAP earnings per share assume a 28 percent tax rate and 122.5 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on July 28, 2009 at 1:30 p.m. PT to review its second quarter 2009 results. It will be broadcast live on the Web at investor.trimble.com Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 20081931. 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 Trimble's Web site at 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, our ability to maintain operating margins, revenue and earnings per share that Trimble expects to report in the third quarter 2009, changes in tax-rate, estimated restructuring costs and when we can return to year-over-year revenue growth. 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 global economic crisis and recessionary conditions in the U.S. and Europe worsen or do not improve 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. 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
TRIMBLE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Jul-3, Jun-27, Jul-3, Jun-27,
2009 2008 2009 2008
---- ---- ---- ----
Revenue $290,063 $377,767 $579,017 $733,063
Cost of sales 147,263 190,668 292,259 371,588
------- ------- ------- -------
Gross margin 142,800 187,099 286,758 361,475
------- ------- ------- -------
Gross margin (%) 49.2% 49.5% 49.5% 49.3%
Operating expenses
Research and development 33,457 39,405 67,594 76,750
Sales and marketing 45,163 51,904 94,098 103,062
General and administrative 26,622 25,289 52,664 47,979
Restructuring 1,302 2,414 4,925 2,414
Amortization of purchased
intangible assets 7,530 5,163 14,499 10,306
----- ----- ------ ------
Total operating expenses 114,074 124,175 233,780 240,511
------- ------- ------- -------
Operating income 28,726 62,924 52,978 120,964
Non-operating income, net
Interest income 223 508 422 965
Interest expense (465) (413) (958) (1,175)
Foreign currency transaction
gain (loss), net (216) 1,253 (32) 2,221
Income from joint ventures,
net 352 2,618 520 4,633
Other income (expense), net 1,161 153 447 (754)
----- --- --- ----
Total non-operating income,
net 1,055 4,119 399 5,890
----- ----- --- -----
Income before taxes 29,781 67,043 53,377 126,854
Income tax provision 8,631 18,444 14,530 38,188
----- ------ ------ ------
Net income 21,150 48,599 38,847 88,666
Less: Net income attributable
to
noncontrolling interests 293 - 525 -
--- --- --- ---
Net income attributable to
Trimble Navigation Ltd. $20,857 $48,599 $38,322 $88,666
======= ======= ======= =======
Earnings per share attributable
to Trimble Navigation Ltd.
Basic $0.17 $0.40 $0.32 $0.73
----- ----- ----- -----
Diluted $0.17 $0.39 $0.32 $0.71
----- ----- ----- -----
Shares used in calculating
earnings per share:
Basic 119,551 121,523 119,406 121,495
------- ------- ------- -------
Diluted 121,897 125,712 121,411 125,435
------- ------- ------- -------
TRIMBLE
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jul-3, Jan-2,
2009 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $190,154 $147,531
Accounts receivables, net 199,928 204,269
Other receivables 9,747 17,540
Inventories, net 168,272 160,893
Deferred income taxes 36,358 41,810
Other current assets 18,392 16,404
------ ------
Total current assets 622,851 588,447
Property and equipment, net 48,905 50,175
Goodwill 746,159 715,571
Other purchased intangible assets, net 223,682 228,901
Other non-current assets 49,446 51,922
------ ------
Total assets $1,691,043 $1,635,016
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $48 $124
Accounts payable 55,596 49,611
Accrued compensation and benefits 45,196 41,291
Deferred revenue 68,603 55,241
Accrued warranty expense 14,161 13,332
Other accrued liabilities 39,160 63,719
------ ------
Total current liabilities 222,764 223,318
Non-current portion of long-term debt 151,460 151,464
Non-current deferred revenue 9,145 12,418
Deferred income taxes 36,453 42,207
Other non-current liabilities 63,877 61,553
------ ------
Total liabilities 483,699 490,960
------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 699,790 684,831
Retained earnings 466,243 427,921
Accumulated other comprehensive income 36,934 27,649
------ ------
Total Trimble Navigation Ltd. shareholders'
equity 1,202,967 1,140,401
Noncontrolling interests 4,377 3,655
----- -----
Total equity 1,207,344 1,144,056
Total liabilities and equity $1,691,043 $1,635,016
========== ==========
TRIMBLE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
Jul-3, Jun-27,
2009 2008
---- ----
Cash flow from operating activities:
Net Income $38,847 $88,666
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation expense 9,071 9,274
Amortization expense 25,348 21,811
Provision for doubtful accounts 3,053 119
Amortization of debt issuance cost 113 113
Deferred income taxes (3,406) (2,791)
Stock-based compensation 8,780 7,777
Equity gain from joint ventures (520) (4,633)
Gain on bargain purchase (386) -
Excess tax benefit for stock-based
compensation (304) (5,249)
Provision for excess and obsolete
inventories 2,933 3,283
Other non-cash items (2,360) 1
Add decrease (increase) in assets:
Accounts receivables 4,117 (26,832)
Other receivables 5,242 481
Inventories (7,556) (8,997)
Other current and non-current assets 2,289 (464)
Add increase (decrease) in liabilities:
Accounts payable 4,790 4,637
Accrued compensation and benefits 2,808 (303)
Accrued liabilities 8,591 (597)
Deferred revenue 7,224 3,974
Income taxes payable - 10,093
------ ------
Net cash provided by operating activities 108,674 100,363
------- -------
Cash flow from investing activities:
Acquisitions of businesses, net of cash
acquired (39,029) (45,082)
Acquisition of property and equipment (7,415) (7,932)
Acquisitions of intangible assets (26,839) (165)
Other (513) 302
---- ---
Net cash used in investing activities (73,796) (52,877)
------- -------
Cash flow from financing activities:
Issuance of common stock 5,775 15,425
Excess tax benefit for stock-based
compensation 304 5,249
Repurchase and retirement of common stock - (36,293)
Payments on long-term debt and revolving credit
lines (149) (60,314)
---- -------
Net cash provided by (used in) financing
activities 5,930 (75,933)
----- -------
Effect of exchange rate changes on cash and cash
equivalents 1,815 5,068
----- -----
Net decrease in cash and cash equivalents 42,623 (23,379)
Cash and cash equivalents - beginning of period 147,531 103,202
------- -------
Cash and cash equivalents - end of period $190,154 $79,823
======== =======
TRIMBLE
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
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%
THREE MONTHS ENDED
JUNE 27, 2008:
Revenue $213,019 $90,070 $42,285 $32,393
Operating income before
corporate allocations: $45,161 $34,808 $1,942 $6,578
Operating margin (% of
segment external net
revenues) 21.2% 38.6% 4.6% 20.3%
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%
SIX MONTHS ENDED
JUNE 27, 2008:
Revenue $407,199 $178,107 $86,296 $61,461
Operating income before
corporate allocations: $82,115 $69,903 $4,395 $11,270
Operating margin (% of
segment external net
revenues) 20.2% 39.2% 5.1% 18.3%
TRIMBLE
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Jul-3, Jun-27,
2009 2008
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $142,800 49.2% $187,099 49.5%
Restructuring ( A ) 2,198 0.7% 930 0.3%
Amortization of
purchased
intangibles ( B ) 5,475 1.9% 5,755 1.5%
Stock-based
compensation ( C ) 477 0.2% 487 0.1%
Amortization of
acquisition-related
inventory step-up ( D ) 247 0.1% - 0.0%
--- --- --- ---
Non-GAAP gross
margin: $151,197 52.1% $194,271 51.4%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating expenses: $114,074 $124,175
Restructuring ( A ) (1,302) (2,414)
Amortization of
purchased
intangibles ( B ) (7,530) (5,163)
Stock-based
compensation ( C ) (4,077) (3,308)
Non-recurring
acquisition costs ( E ) (2,340) -
------ ------
Non-GAAP operating
expenses: $98,825 $113,290
------- --------
OPERATING INCOME:
GAAP operating
income: $28,726 9.9% $62,924 16.7%
Restructuring ( A ) 3,500 1.2% 3,344 0.8%
Amortization of
purchased
intangibles ( B ) 13,005 4.5% 10,918 2.9%
Stock-based
compensation ( C ) 4,554 1.6% 3,795 1.0%
Amortization of
acquisition-
related
inventory step-up ( D ) 247 0.1% - 0.0%
Non-recurring
acquisition
costs ( E ) 2,340 0.8% - 0.0%
----- --- ----- ---
Non-GAAP operating
income: $52,372 18.1% $80,981 21.4%
------- ---- ------- ----
NET INCOME:
GAAP net income
attributable to Trimble
Navigation Ltd. $20,857 $48,599
Restructuring ( A ) 3,500 3,344
Amortization of
purchased
intangibles ( B ) 13,005 10,918
Stock-based
compensation ( C ) 4,554 3,795
Amortization of
acquisition-
related inventory
step-up ( D ) 247 -
Non-recurring
acquisition costs ( E ) 1,954 -
Income tax effect
on non-GAAP
adjustments ( F ) (6,741) (4,966)
------ ------
Non-GAAP net income
attributable to
Trimble
Navigation Ltd. $37,376 $61,690
------- -------
DILUTED NET INCOME PER SHARE:
GAAP diluted net
income per share
attributable to
Trimble Navigation Ltd. $0.17 $0.39
Restructuring ( A ) 0.03 0.02
Amortization of
purchased
intangibles ( B ) 0.11 0.09
Stock-based
compensation ( C ) 0.04 0.03
Amortization of
acquisition-
related inventory
step-up ( D ) - -
Non-recurring
acquisition costs ( E ) 0.02 -
Income tax effect
on non-GAAP
adjustments ( F ) (0.06) (0.04)
----- -----
Non-GAAP diluted net
income per share
attributable
to Trimble
Navigation Ltd. $0.31 $0.49
----- -----
OPERATING LEVERAGE:
Increase (decrease)
in non-GAAP operating
income $(28,609)
Increase (decrease)
in revenue $(87,704)
Operating leverage
(increase in non-GAAP
operating income as
a % of increase
in revenue) N/A
% of % of
Segment Segment
SEGMENT OPERATING INCOME: Revenue Revenue
Engineering and Construction
GAAP operating
income before
corporate
allocations: $19,160 13.0% $45,161 21.2%
Stock-based
compensation ( G ) 1,431 1.0% 1,076 0.5%
----- --- ----- ---
Non-GAAP operating
income before
corporate allocations: $20,591 14.0% $46,237 21.7%
------- ---- ------- ----
Field Solutions
GAAP operating income
before corporate
allocations: $30,148 37.8% $34,808 38.6%
Stock-based
compensation ( G ) 260 0.3% 199 0.3%
--- --- --- ---
Non-GAAP operating
income before
corporate
allocations: $30,408 38.1% $35,007 38.9%
------- ---- ------- ----
Mobile Solutions
GAAP operating income
before corporate
allocations: $3,648 9.3% $1,942 4.6%
Stock-based
compensation ( G ) 1,103 2.9% 1,187 2.8%
----- --- ----- ---
Non-GAAP operating
income before
corporate
allocations: $4,751 12.2% $3,129 7.4%
------ ---- ------ ---
Advanced Devices
GAAP operating income
before corporate
allocations: $4,833 20.2% $6,578 20.3%
Stock-based
compensation ( G ) 346 1.4% 315 1.0%
--- --- --- ---
Non-GAAP operating
income before
corporate
allocations: $5,179 21.6% $6,893 21.3%
------ ---- ------ ----
Six Months Ended
----------------
Jul-3, Jun-27,
2009 2008
---- ----
% of % of
Revenue Revenue
------- -------
GROSS MARGIN:
GAAP gross margin: $286,758 49.5% $361,475 49.3%
Restructuring ( A ) 3,063 0.5% 930 0.1%
Amortization of
purchased
intangibles ( B ) 10,760 1.9% 11,416 1.6%
Stock-based
compensation ( C ) 915 0.2% 980 0.2%
Amortization of
acquisition-
related inventory
step-up ( D ) 470 0.1% 183 0.0%
--- --- --- ---
Non-GAAP gross margin: $301,966 52.2% $374,984 51.2%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating expenses: $233,780 $240,511
Restructuring ( A ) (4,925) (2,414)
Amortization of
purchased
intangibles ( B ) (14,499) (10,306)
Stock-based
compensation ( C ) (7,865) (6,797)
Non-recurring
acquisition
costs ( E ) (2,805) -
------ -----
Non-GAAP operating
expenses: $203,686 $220,994
-------- --------
OPERATING INCOME:
GAAP operating income: $52,978 9.1% $120,964 16.5%
Restructuring ( A ) 7,988 1.4% 3,344 0.4%
Amortization of
purchased
intangibles ( B ) 25,259 4.4% 21,722 3.0%
Stock-based
compensation ( C ) 8,780 1.5% 7,777 1.1%
Amortization of
acquisition-
related inventory
step-up ( D ) 470 0.1% 183 0.0%
Non-recurring
acquisition costs ( E ) 2,805 0.5% - 0.0%
----- --- --- ---
Non-GAAP operating
income: $98,280 17.0% $153,990 21.0%
------- ---- -------- ----
NET INCOME:
GAAP net income
attributable to
Trimble
Navigation Ltd. $38,322 $88,666
Restructuring ( A ) 7,988 3,344
Amortization of
purchased
intangibles ( B ) 25,259 21,722
Stock-based
compensation ( C ) 8,780 7,777
Amortization of
acquisition-
related inventory
step-up ( D ) 470 183
Non-recurring
acquisition costs ( E ) 2,419 -
Income tax effect
on non-GAAP
adjustments ( F ) (12,155) (9,907)
------- ------
Non-GAAP net income
attributable to
Trimble
Navigation Ltd. $71,083 $111,785
------- --------
DILUTED NET INCOME PER SHARE:
GAAP diluted net
income per share
attributable to
Trimble Navigation
Ltd. $0.32 $0.71
Restructuring ( A ) 0.07 0.03
Amortization of
purchased
intangibles ( B ) 0.21 0.17
Stock-based
compensation ( C ) 0.07 0.06
Amortization of
acquisition-
related inventory
step-up ( D ) - -
Non-recurring
acquisition costs ( E ) 0.02 -
Income tax effect
on non-GAAP
adjustments ( F ) (0.10) (0.08)
----- -----
Non-GAAP diluted
net income per
share attributable
to Trimble
Navigation Ltd. $0.59 $0.89
----- -----
OPERATING LEVERAGE:
Increase (decrease)
in non-GAAP
operating income $(55,710)
Increase (decrease)
in revenue $(154,046)
Operating leverage
(increase in non-GAAP
operating income as
a % of increase
in revenue) N/A
% of % of
Segment Segment
Revenue Revenue
SEGMENT OPERATING INCOME:
Engineering and Construction
GAAP operating income
before corporate
allocations: $21,669 7.9% $82,115 20.2%
Stock-based
compensation ( G ) 2,739 1.0% 2,047 0.5%
----- --- ----- ---
Non-GAAP operating
income before
corporate
allocations: $24,408 8.9% $84,162 20.7%
------- --- ------- ----
Field Solutions
GAAP operating
income before
corporate allocations: $72,351 40.4% $69,903 39.2%
Stock-based
compensation ( G ) 482 0.3% 397 0.3%
--- --- --- ---
Non-GAAP operating
income before
corporate
allocations: $72,833 40.7% $70,300 39.5%
------- ---- ------- ----
Mobile Solutions
GAAP operating
income before
corporate
allocations: $6,796 8.8% $4,395 5.1%
Stock-based
compensation ( G ) 2,247 2.9% 2,595 3.0%
----- --- ----- ---
Non-GAAP operating
income before
corporate
allocations: $9,043 11.7% $6,990 8.1%
------ ---- ------ ---
Advanced Devices
GAAP operating income
before
corporate
allocations: $9,145 19.1% $11,270 18.3%
Stock-based
compensation ( G ) 671 1.4% 642 1.1%
--- --- --- ---
Non-GAAP operating
income before
corporate
allocations: $9,816 20.5% $11,912 19.4%
------ ---- ------- ----
TRIMBLE
FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands)
(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 they are 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 determined in
accordance with SFAS 123(R). 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
3, 2009 and June 27, 2008, stock-based compensation was allocated
as follows:
Three Months Six Months
Ended Ended
------------ ----------
Jul-3, Jun-27, Jul-3, Jun-27,
2009 2008 2009 2008
---- ---- ---- ----
Cost of sales $477 $487 $915 $980
Research and development 854 916 1,638 1,833
Sales and Marketing 1,062 931 2,066 1,961
General and administrative 2,161 1,461 4,161 3,003
----- ----- ----- -----
$4,554 $3,795 $8,780 $7,777
------ ------ ------ ------
( 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 a gain on bargain
purchase (resulting from the fair value of indentifiable net assets
acquired exceeding the consideration transferred) and payments made
to settle earnout 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 determined in accordance with SFAS
123(R). 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 to understand the
impact of the application of SFAS 123(R) to our results of
operations. Stock-based compensation not allocated to the
reportable segments was approximately $1,414K and $1,018K for the
three months ended July 3, 2009 and June 27, 2008, respectively and
$2,641K and $2,096K for the six months ended July 3, 2009 and June
27, 2008, respectively.
SOURCE Trimble
Web site:
http://www.trimble.com/
http://investor.trimble.com/