Advanced Devices
Fourth quarter 2008 Advanced Devices revenue was $27.2 million, down approximately 5 percent when compared to the fourth quarter of 2007. Fiscal 2008 Advanced Devices revenue was $119.7 million down approximately one percent compared to 2007. The decline in fourth quarter revenue was due mainly to slower sales of component technology products which are sold to OEMs.
Operating income in Advanced Devices for the fourth quarter 2008 was $6.3 million, or 23.3 percent of revenue, compared to $3.7 million, or 12.7 percent of revenue, in the fourth quarter of 2007. For 2008 operating income in Advanced Devices was $24.4 million, or 20.4 percent of revenue, compared to $17.3 million, or 14.3 percent of revenue, in 2007.
In the fourth quarter of 2008, non-GAAP operating income in Advanced Devices was $6.7 million, or 24.7 percent of revenue, compared to 14.0 percent of revenue in the fourth quarter of 2007. For fiscal 2008, non-GAAP operating income in Advanced Devices was $25.8 million, or 21.6 percent of revenue compared to 15.4 percent of revenue in fiscal 2007. For both the quarter and the full year margin improvement was the result of increased licensing revenue and product mix.
Stock Repurchase Program
As part of its stock repurchase program, in the fourth quarter of 2008, Trimble repurchased 536,000 shares of Trimble stock at an average price of $18.69.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non- GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://www.investor.trimble.com.
Forward Looking Guidance
Trimble assumes that fourth quarter market uncertainty will continue into the first quarter of 2009. The Company currently estimates first quarter 2009 revenue of $300 million. However, given the volatility of current market conditions we believe this revenue estimate could vary plus or minus five percent. Using a $300 million dollar revenue estimate, first quarter 2009 GAAP earnings per share are projected to be $0.12 and non-GAAP earnings per share are projected to be $0.27. Non-GAAP guidance for the first quarter of 2009 excludes the amortization of intangibles of $14.2 million related to previous acquisitions, the anticipated impact of stock-based compensation expense of $4.2 million and $5.5 million in restructuring charges. Both GAAP and non-GAAP guidance use a 28 percent tax rate and assume 122 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on February 3, 2009 at 1:30 p.m. PT to review its fourth quarter and fiscal year 2008 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 80512820. 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 http://www.trimble.com.
Safe Harbor
Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, engineering and construction market spending, revenue and earnings per share that Trimble expects to report in the first quarter 2009, changes in tax-rate, our estimated restructuring costs and the impact of cost-reduction efforts on financial results in fiscal 2009. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. If the current global economic crisis and recessionary conditions in the U.S. and Europe show no signs of recovery 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. Whether the Company achieves growth will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
FTRMB CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended Jan-02, Dec-28, Jan-02, Dec-28, 2009 2007 2009 2007 Revenue $268,084 $312,783 $1,329,234 $1,222,270 Cost of sales 146,046 157,117 680,098 609,365 Gross margin 122,038 155,666 649,136 612,905 Gross margin (%) 45.5% 49.8% 48.8% 50.1% Operating expenses Research and development 36,168 34,731 148,265 131,468 Sales and marketing 44,563 51,528 196,290 186,495 General and administrative 23,972 25,390 94,023 92,572 Restructuring 287 - 2,722 3,025 Amortization of purchased intangible assets 6,608 4,754 22,376 18,966 In-process research and development - - - 2,112 Total operating expenses 111,598 116,403 463,676 434,638 Operating income 10,440 39,263 185,460 178,267 Non-operating income (expense), net Interest income 675 896 2,044 3,502 Interest expense (1,371) (1,127) (2,760) (6,602) Foreign currency transaction gain (loss), net (829) (819) 1,509 (1,351) Income from joint ventures, net 1,185 1,932 7,981 8,377 Minority interests in consolidated subsidiaries 519 6 540 6 Other income (expense), net (1,130) 384 (2,812) 1,557 Total non-operating income (expense), net (951) 1,272 6,502 5,489 Income before taxes 9,489 40,535 191,962 183,756 Income tax provision (benefit) (4,250) 14,244 50,490 66,382 Net income $13,739 $26,291 $141,472 $117,374 Earnings per share : Basic $0.12 $0.22 $1.17 $0.98 Diluted $0.11 $0.21 $1.14 $0.94 Shares used in calculating earnings per share : Basic 119,342 121,428 120,714 119,280 Diluted 121,728 126,532 124,235 124,410 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Jan-02, Dec-28, 2009 2007 Assets Current assets: Cash and cash equivalents $147,531 $103,202 Accounts receivables, net 204,269 239,884 Other receivables 17,540 10,201 Inventories, net 160,893 143,018 Deferred income taxes 41,810 44,333 Other current assets 16,404 15,661 Total current assets 588,447 556,299 Property and equipment, net 50,175 51,444 Goodwill 715,571 675,850 Other purchased intangible assets, net 228,901 197,777 Other non-current assets 51,922 57,989 Total assets $1,635,016 $1,539,359 Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $124 $126 Accounts payable 49,611 67,589 Accrued compensation and benefits 41,291 55,133 Deferred revenue 55,241 49,416 Accrued warranty expense 13,332 10,806 Income taxes payable - 14,802 Other accrued liabilities 63,719 51,980 Total current liabilities 223,318 249,852 Non-current portion of long-term debt 151,464 60,564 Non-current deferred revenue 12,418 15,872 Deferred income taxes 42,207 47,917 Other non-current liabilities 61,553 56,128 Total liabilities 490,960 430,333 Minority interests in consolidated subsidiaries 3,655 - Commitments and contingencies Shareholders' equity: Common stock 684,831 660,749 Retained earnings 427,921 388,557 Accumulated other comprehensive income 27,649 59,720 Total shareholders' equity 1,140,401 1,109,026 Total liabilities and shareholders' equity $1,635,016 $1,539,359 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Twelve Months Ended Jan-02, Dec-28, 2009 2007 Cash flow from operating activities: Net Income $141,472 $117,374 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 19,047 17,212 Amortization expense 45,066 38,744 Provision for doubtful accounts 2,709 1,410 Amortization of debt issuance cost 169 218 Deferred income taxes (17,356) 6,368 Non-cash restructuring expense - 1,725 Stock-based compensation 16,166 15,016 In-process research and development - 2,112 Equity gain from joint ventures (7,981) (8,377) Excess tax benefit for stock-based compensation (5,970) (12,409) Provision for excess and obsolete inventories 4,426 4,352 Other non-cash items (348) 651 Add decrease (increase) in assets: Accounts receivables 33,414 (35,696) Other receivables (7,422) 4,825 Inventories (16,461) (18,678) Other current and non- current assets 779 7,650 Add increase (decrease) in liabilities: Accounts payable (20,898) (3,521) Accrued compensation and benefits (12,487) 1,691 Accrued liabilities 3,183 (4,635) Deferred revenue (1,320) 32,400 Income taxes payable (114) 18,553 Net cash provided by operating activities 176,074 186,985 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (115,137) (295,848) Acquisition of property and equipment (16,196) (13,187) Purchases of debt and equity securities - (5,576) Dividends received 10,648 2,888 Capital infusion from minority investor 4,200 - Other (5,211) 331 Net cash used in investing activities (121,696) (311,392) Cash flow from financing activities: Issuance of common stock 22,802 31,864 Excess tax benefit for stock- based compensation 5,970 12,409 Repurchase and retirement of common stock (125,888) - Proceeds from long-term debt and revolving credit lines 151,000 250,000 Payments on long-term debt and revolving credit lines (60,314) (190,457) Other (11) - Net cash provided by (used in) financing activities (6,441) 103,816 Effect of exchange rate changes on cash and cash equivalents (3,608) (5,828) Net increase(decrease) in cash and cash equivalents 44,329 (26,419) Cash and cash equivalents - beginning of period 103,202 129,621 Cash and cash equivalents - end of period $147,531 $103,202 NON-GAAP RECONCILIATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended Jan-02, Dec-28, Jan-02, Dec-28, 2009 2007 2009 2007 REVENUE: $268,084 $312,783 $1,329,234 $1,222,270 GROSS MARGIN: GAAP gross margin: $122,038 $155,666 $649,136 $612,905 Restructuring (A) 559 - 1,919 - Amortization of purchased intangibles (B) 5,418 5,330 22,515 19,619 Stock-based compensation (D) 487 493 1,920 1,733 Amortization of acquisition- related inventory step-up (E) 813 - 1,414 - Non-GAAP gross margin: $129,315 $161,489 $676,904 $634,257 Non-GAAP gross margin (% of revenue) 48.2% 51.6% 50.9% 51.9% OPERATING EXPENSES: GAAP operating expenses: $111,598 $116,403 $463,676 $434,638 Restructuring (A) (287) - (2,722) (3,025) Amortization of purchased intangibles (B) (6,608) (4,754) (22,376) (18,966) In-process research and development (C) - - - (2,112) Stock-based compensation (D) (4,076) (3,574) (14,246) (13,283) Non-GAAP operating expenses: $100,627 $108,075 $424,332 $397,252 OPERATING INCOME: GAAP operating income: $10,440 $39,263 $185,460 $178,267 Restructuring (A) 846 - 4,641 3,025 Amortization of purchased intangibles (B) 12,026 10,084 44,891 38,585 In-process research and development (C) - - - 2,112 Stock-based compensation (D) 4,563 4,067 16,166 15,016 Amortization of acquisition- related inventory step-up (E) 813 - 1,414 - Non-GAAP operating income: $28,688 $53,414 $252,572 $237,005 Non-GAAP operating margin (% of revenue) 10.7% 17.1% 19.0% 19.4% NET INCOME: GAAP net income: $13,739 $26,291 $141,472 $117,374 Restructuring (A) 846 - 4,641 3,025 Amortization of purchased intangibles (B) 12,026 10,084 44,891 38,585 In-process research and development (C) - - - 2,112 Stock-based compensation (D) 4,563 4,067 16,166 15,016 Amortization of acquisition- related inventory step-up (E) 813 - 1,414 - Income tax effect on non-GAAP adjustments (F) (3,029) (4,973) (17,649) (21,035) Non-GAAP net income: $28,958 $35,469 $190,935 $155,077 DILUTED NET INCOME PER SHARE: GAAP diluted net income per share: $0.11 $0.21 $1.14 $0.94 Non-GAAP diluted net income per share: $0.24 $0.28 $1.54 $1.25 SHARES USED TO COMPUTE DILUTED NET INCOME PER SHARE: GAAP and Non-GAAP shares used to compute net income per share: 121,728 126,532 124,235 124,410 OPERATING LEVERAGE: Increase (decrease) in non-GAAP operating income $(24,726) $15,567 Increase (decrease) in revenue $(44,699) $106,964 Operating leverage (increase in non-GAAP operating income as a % of increase in revenue) N/A 14.6%