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. "