FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
Jan-1, Jan-2, Jan-1, Jan-2,
2010 2009 2010 2009
---- ---- ---- ----
Revenue $277,529 $268,084 $1,126,259 $1,329,234
Cost of sales 146,877 146,046 576,391 680,098
------- ------- ------- -------
Gross margin 130,652 122,038 549,868 649,136
------- ------- ------- -------
Gross margin (%) 47.1% 45.5% 48.8% 48.8%
Operating expenses
Research and development 35,795 36,167 136,639 148,265
Sales and marketing 48,739 44,564 189,859 196,290
General and administrative 24,929 23,972 100,830 94,023
Restructuring 588 287 6,385 2,722
Amortization of purchased
intangible assets 7,924 6,608 30,335 22,376
----- ----- ------ ------
Total operating
expenses 117,975 111,598 464,048 463,676
------- ------- ------- -------
Operating income 12,677 10,440 85,820 185,460
Non-operating income (loss), net
Interest income 237 675 783 2,044
Interest expense (404) (1,371) (1,812) (2,760)
Foreign currency
transaction gain (loss), net (297) (829) 463 1,509
Income from joint
ventures, net 60 1,185 429 7,981
Other income (expense), net 410 (1,130) 1,938 (2,791)
--- ------ ----- ------
Total non-operating
income (loss), net 6 (1,470) 1,801 5,983
- ------ ----- -----
Income before taxes 12,683 8,970 87,621 191,443
Income tax provision 3,414 (4,270) 23,658 50,470
----- ------ ------ ------
Net income 9,269 13,240 63,963 140,973
Less: Net income (loss)
attributable to
noncontrolling interests (278) (499) 517 (499)
---- ---- --- ----
Net income attributable to
Trimble Navigation Ltd. $9,547 $13,739 $63,446 $141,472
====== ======= ======= ========
Earnings per share attributable
to Trimble Navigation Ltd.
Basic $0.08 $0.12 $0.53 $1.17
----- ----- ----- -----
Diluted $0.08 $0.11 $0.52 $1.14
----- ----- ----- -----
Shares used in calculating
earnings per share:
Basic 120,395 119,342 119,814 120,714
------- ------- ------- -------
Diluted 123,155 121,728 122,208 124,235
------- ------- ------- -------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jan-1, Jan-2,
2010 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $273,848 $142,531
Short-term investments - 5,000
Accounts receivables, net 202,293 204,269
Other receivables 11,856 17,540
Inventories, net 144,012 160,893
Deferred income taxes 39,686 41,810
Other current assets 18,383 16,404
------ ------
Total current assets 690,078 588,447
Property and equipment, net 44,635 50,175
Goodwill 764,193 715,571
Other purchased intangible assets, net 202,782 228,901
Other non-current assets 51,589 51,922
------ ------
Total assets $1,753,277 $1,635,016
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $445 $124
Accounts payable 53,775 49,611
Accrued compensation and benefits 43,272 41,291
Deferred revenue 68,968 55,241
Accrued warranty expense 14,744 13,332
Other accrued liabilities 42,041 63,719
------ ------
Total current liabilities 223,245 223,318
Non-current portion of long-term debt 151,038 151,464
Non-current deferred revenue 15,599 12,418
Deferred income taxes 38,857 42,207
Other non-current liabilities 59,983 61,553
------ ------
Total liabilities 488,722 490,960
------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 720,248 684,831
Retained earnings 491,368 427,921
Accumulated other comprehensive income 48,296 27,649
------ ------
Total Trimble Navigation Ltd. shareholders'
equity 1,259,912 1,140,401
Noncontrolling interests 4,643 3,655
----- -----
Total equity 1,264,555 1,144,056
Total liabilities and equity $1,753,277 $1,635,016
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months
Ended
---------------
Jan-1, Jan-2,
2010 2009
---- ----
Cash flow from operating activities:
Net Income $63,963 $140,973
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 18,795 19,047
Amortization expense 52,672 45,066
Provision for doubtful accounts 4,139 2,709
Amortization of debt issuance cost 226 169
Deferred income taxes (7,473) (17,356)
Stock-based compensation 18,659 16,166
Equity gain from joint ventures (429) (7,981)
Excess tax benefit for stock-based compensation (1,453) (5,970)
Provision for excess and obsolete inventories 3,530 4,426
Other non-cash items (3,036) 151
Add decrease (increase) in assets:
Accounts receivables (3,935) 33,414
Other receivables 3,516 (7,422)
Inventories 13,292 (16,461)
Other current and non-current assets (620) 779
Add increase (decrease) in liabilities:
Accounts payable 2,631 (20,898)
Accrued compensation and benefits 245 (12,487)
Accrued liabilities 4,433 3,069
Deferred revenue 25,476 (1,320)
------ ------
Net cash provided by operating activities 194,631 176,074
------- -------
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired (52,018) (115,137)
Acquisition of property and equipment (12,706) (16,196)
Acquisitions of intangible assets (26,839) -
Net maturities of short-term investments 5,000 (5,000)
Investment in joint venture (750) -
Capital infusion from minority investor - 4,200
Dividends received 2,896 10,648
Other 491 (5,211)
--- ------
Net cash used in investing activities (83,926) (126,696)
------- --------
Cash flow from financing activities:
Issuance of common stock 14,855 22,802
Excess tax benefit for stock-based compensation 1,453 5,970
Repurchase and retirement of common stock - (125,888)
Proceeds from long-term debt and revolving
credit lines - 151,000
Payments on long-term debt and revolving credit
lines (183) (60,314)
Other - (11)
--- ---
Net cash provided by (used in) financing activities 16,125 (6,441)
------ ------
Effect of exchange rate changes on cash and cash
equivalents 4,487 (3,608)
----- ------
Net increase in cash and cash equivalents 131,317 39,329
Cash and cash equivalents - beginning of period 142,531 103,202
------- -------
Cash and cash equivalents - end of period $273,848 $142,531
======== ========
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
THREE MONTHS ENDED JANUARY 1,
2010:
Revenue $154,304 $57,154 $37,956 $28,115
Operating income before
corporate allocations: $15,482 $15,861 $4,178 $3,594
Operating margin (% of
segment external net
revenues) 10.0% 27.8% 11.0% 12.8%
THREE MONTHS ENDED JANUARY 2,
2009:
Revenue $142,611 $58,247 $39,995 $27,231
Operating income before
corporate allocations: $2,339 $17,528 $3,331 $6,340
Operating margin (% of
segment external net
revenues) 1.6% 30.1% 8.3% 23.3%
TWELVE MONTHS ENDED JANUARY 1,
2010:
Revenue $578,579 $291,752 $154,881 $101,047
Operating income before
corporate allocations: $58,282 $104,498 $14,341 $17,227
Operating margin (% of
segment external net
revenues) 10.1% 35.8% 9.3% 17.0%
TWELVE MONTHS ENDED JANUARY 2,
2009:
Revenue $741,668 $300,708 $167,113 $119,745
Operating income before
corporate allocations: $126,014 $109,489 $11,328 $24,445
Operating margin (% of
segment external net
revenues) 17.0% 36.4% 6.8% 20.4%
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Jan-1, Jan-2,
2010 2009
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $130,652 47.1% $122,038 45.5%
Restructuring ( A ) 1,036 0.3% 559 0.2%
Amortization of
purchased
intangibles ( B ) 5,780 2.1% 5,418 2.0%
Stock-based
compensation ( C ) 486 0.2% 487 0.2%
Amortization of
acquisition-
related inventory
step-up ( D ) - 0.0% 813 0.3%
--- --- --- ---
Non-GAAP gross margin: $137,954 49.7% $129,315 48.2%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating
expenses: $117,975 $111,598
Restructuring ( A ) (588) (287)
Amortization of
purchased
intangibles ( B ) (7,924) (6,608)
Stock-based
compensation ( C ) (4,852) (4,076)
Non-recurring
acquisition costs ( E ) (440) -
---- ---
Non-GAAP operating expenses: $104,171 $100,627
-------- --------
OPERATING INCOME:
GAAP operating
income: $12,677 4.6% $10,440 3.9%
Restructuring ( A ) 1,624 0.6% 846 0.3%
Amortization of
purchased
intangibles ( B ) 13,704 4.9% 12,026 4.5%
Stock-based
compensation ( C ) 5,338 1.9% 4,563 1.7%
Amortization of
acquisition-
related inventory
step-up ( D ) - 0.0% 813 0.3%
Non-recurring
acquisition costs ( E ) 440 0.2% - 0.0%
--- --- --- ---
Non-GAAP operating income: $33,783 12.2% $28,688 10.7%
------- ---- ------- ----
NET INCOME:
GAAP net income attributable
to Trimble Navigation Ltd. $9,547 $13,739
Restructuring ( A ) 1,624 846
Amortization of
purchased
intangibles ( B ) 13,704 12,026
Stock-based
compensation ( C ) 5,338 4,563
Amortization of
acquisition-
related inventory
step-up ( D ) - 813
Non-recurring
acquisition costs ( E ) 826 -
Income tax effect
on non-GAAP
adjustments ( F ) (5,785) (3,029)
------ ------
Non-GAAP net income
attributable to Trimble
Navigation Ltd. $25,254 $28,958
------- -------
DILUTED NET INCOME PER SHARE:
GAAP diluted net income
per share attributable to
Trimble Navigation Ltd. $0.08 $0.11
Restructuring ( A ) 0.01 0.01
Amortization of
purchased
intangibles ( B ) 0.11 0.10
Stock-based
compensation ( C ) 0.05 0.04
Amortization of
acquisition-
related inventory
step-up ( D ) - 0.01
Non-recurring
acquisition costs ( E ) 0.01 -
Income tax effect
on non-GAAP
adjustments ( F ) (0.05) (0.03)
----- -----
Non-GAAP diluted net income
per share attributable to
Trimble Navigation Ltd. $0.21 $0.24
----- -----
OPERATING LEVERAGE:
Increase (decrease) in
non-GAAP operating income $5,095
Increase (decrease) in revenue $9,445
Operating leverage (increase
in non-GAAP operating income
as a % of increase in revenue) 53.9%
% of % of
Segment Segment
SEGMENT OPERATING INCOME: Revenue Revenue
------- -------
Engineering and Construction
GAAP operating income
before corporate
allocations: $15,482 10.0% $2,339 1.6%
Stock-based
compensation ( G ) 2,010 1.3% 1,533 1.1%
----- --- ----- ---
Non-GAAP operating income
before corporate
allocations: $17,492 11.3% $3,872 2.7%
------- ---- ------ ---
Field Solutions
GAAP operating income
before corporate
allocations: $15,861 27.8% $17,528 30.1%
Stock-based
compensation ( G ) 311 0.5% 221 0.4%
--- --- --- ---
Non-GAAP operating income
before corporate
allocations: $16,172 28.3% $17,749 30.5%
------- ---- ------- ----
Mobile Solutions
GAAP operating income before
corporate allocations: $4,178 11.0% $3,331 8.3%
Stock-based
compensation ( G ) 1,011 2.7% 1,167 2.9%
----- --- ----- ---
Non-GAAP operating income
before corporate
allocations: $5,189 13.7% $4,498 11.2%
------ ---- ------ ----
Advanced Devices
GAAP operating income before
corporate allocations: $3,594 12.8% $6,340 23.3%
Stock-based
compensation ( G ) 527 1.9% 399 1.4%
--- --- --- ---
Non-GAAP
operating income
before corporate
allocations: $4,121 14.7% $6,739 24.7%
------ ---- ------ ----
Twelve Months Ended
-------------------
Jan-1, Jan-2,
2010 2009
---- ----
% of % of
Revenue Revenue
------- -------
GROSS MARGIN:
GAAP gross margin: $549,868 48.8% $649,136 48.8%
Restructuring 4,369 0.4% 1,919 0.1%
Amortization of
purchased intangibles 22,201 2.0% 22,515 1.7%
Stock-based compensation 1,854 0.2% 1,920 0.2%
Amortization of
acquisition-related
inventory step-up 470 0.0% 1,414 0.1%
--- --- ----- ---
Non-GAAP gross margin: $578,762 51.4% $676,904 50.9%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating expenses: $464,048 $463,676
Restructuring (6,385) (2,722)
Amortization of
purchased intangibles (30,335) (22,376)
Stock-based compensation (16,805) (14,246)
Non-recurring
acquisition costs (3,822) -
------ ---
Non-GAAP operating
expenses: $406,701 $424,332
-------- --------
OPERATING INCOME:
GAAP operating income: $85,820 7.6% $185,460 14.0%
Restructuring 10,754 1.0% 4,641 0.3%
Amortization of
purchased intangibles 52,536 4.7% 44,891 3.4%
Stock-based compensation 18,659 1.7% 16,166 1.2%
Amortization of
acquisition-related
inventory step-up 470 0.0% 1,414 0.1%
Non-recurring
acquisition costs 3,822 0.3% - 0.0%
----- --- --- ---
Non-GAAP operating income: $172,061 15.3% $252,572 19.0%
-------- ---- -------- ----
NET INCOME:
GAAP net income attributable
to Trimble Navigation Ltd. $63,446 $141,472
Restructuring 10,754 4,641
Amortization of
purchased intangibles 52,536 44,891
Stock-based compensation 18,659 16,166
Amortization of
acquisition-related
inventory step-up 470 1,414
Non-recurring
acquisition costs 3,822 -
Income tax effect on
non-GAAP adjustments (23,196) (17,649)
------- -------
Non-GAAP net income
attributable to Trimble
Navigation Ltd. $126,491 $190,935
-------- --------
DILUTED NET INCOME PER SHARE:
GAAP diluted net income
per share attributable
to Trimble Navigation
Ltd. $0.52 $1.14
Restructuring 0.09 0.04
Amortization of
purchased intangibles 0.43 0.36
Stock-based compensation 0.15 0.13
Amortization of
acquisition-related
inventory step-up 0.01 0.01
Non-recurring
acquisition costs 0.03 -
Income tax effect on
non-GAAP adjustments (0.19) (0.14)
----- -----
Non-GAAP diluted net
income per share
attributable to Trimble
Navigation Ltd. $1.04 $1.54
----- -----
OPERATING LEVERAGE:
Increase (decrease) in
non-GAAP operating
income $(80,511)
Increase (decrease) in
revenue $(202,975)
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: $58,282 10.1% $126,014 17.0%
Stock-based compensation 6,312 1.1% 4,726 0.6%
----- --- ----- ---
Non-GAAP operating
income before corporate
allocations: $64,594 11.2% $130,740 17.6%
------- ---- -------- ----
Field Solutions
GAAP operating income
before corporate
allocations: $104,498 35.8% $109,489 36.4%
Stock-based compensation 1,086 0.4% 821 0.3%
----- --- --- ---
Non-GAAP operating
income before corporate
allocations: $105,584 36.2% $110,310 36.7%
-------- ---- -------- ----
Mobile Solutions
GAAP operating income
before corporate
allocations: $14,341 9.3% $11,328 6.8%
Stock-based compensation 4,216 2.7% 4,749 2.8%
----- --- ----- ---
Non-GAAP operating
income before corporate
allocations: $18,557 12.0% $16,077 9.6%
------- ---- ------- ---
Advanced Devices
GAAP operating income
before corporate
allocations: $17,227 17.0% $24,445 20.4%
Stock-based compensation 1,595 1.6% 1,378 1.2%
----- --- ----- ---
Non-GAAP operating
income before corporate
allocations: $18,822 18.6% $25,823 21.6%
------- ---- ------- ----
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 twelve months ended
January 1, 2010 and January 2, 2009, stock-based compensation was
allocated as follows:
Three Months Twelve Months
Ended Ended
------------ -------------
Jan-1, Jan-2, Jan-1, Jan-2,
2010 2009 2010 2009
---- ---- ---- ----
Cost of sales $486 $487 $1,854 $1,920
Research and development 972 860 3,476 3,489
Sales and Marketing 1,246 1,095 4,446 3,993
General and administrative 2,634 2,121 8,883 6,764
----- ----- ----- -----
$5,338 $4,563 $18,659 $16,166
------ ------ ------- -------
( 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 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 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 $1,479K and $1,243K for the
three months ended January 1, 2010 and January 2, 2009,
respectively and $5,450K and $4,492K for the twelve months ended
January 1, 2010 and January 2, 2009, respectively. "
