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Trimble Third Quarter 2010 Revenue $318.2 Million, Up 18 Percent; Non-GAAP EPS $0.39, Up 56 Percent
SUNNYVALE, Calif., Nov. 2, 2010 /PRNewswire via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced revenue of $318.2 million for its third quarter ended Oct. 1, 2010, up approximately 18 percent as compared to revenue of $269.7 million in the third quarter of 2009.
Operating income for the third quarter of 2010 was $31.7 million, up approximately 57 percent as compared to the third quarter of 2009. Operating margin in the third quarter of 2010 was 10.0 percent, as compared to an operating margin of 7.5 percent in the third quarter of 2009.
Amortization of intangibles was $14.4 million in the third quarter of 2010, as compared to $13.6 million in the third quarter of 2009. The impact of stock-based compensation expense was $5.5 million, as compared to $4.5 million in the third quarter of 2009. There was also $290 thousand of restructuring expense, a $69 thousand acquisition-related inventory step-up charge, and $2.5 million of non-recurring acquisition-related net gains in the third quarter of 2010. In the third quarter of 2009 there was a $1.1 million restructuring expense, no acquisition-related inventory step-up charge, and $577 thousand of non-recurring acquisition costs.
Excluding these items, third quarter 2010 non-GAAP operating income of $52.6 million was up 31 percent, as compared to the third quarter of 2009. Non-GAAP operating margin was 16.5 percent in the third quarter of 2010, as compared to 14.8 percent in the third quarter of 2009.
Third quarter 2010 net income was $32.8 million, up 111 percent, as compared to the third quarter of 2009. Diluted earnings per share for the third quarter of 2010 were $0.27, as compared to diluted earnings per share of $0.13 for the third quarter of 2009. The tax rate for the third quarter of 2010 was 14 percent as compared to 27 percent in the third quarter of 2009. The tax rate is lower primarily due to a previously announced settlement with the IRS and the geographical mix of pre-tax income.
Adjusting for the items noted above, non-GAAP net income of $48.2 million for the third quarter of 2010 was up 60 percent, as compared to the third quarter of 2009. Diluted non-GAAP earnings per share for the third quarter of 2010 were $0.39, as compared to diluted non-GAAP earnings per share of $0.25 in the third quarter of 2009.
"Trimble continues to see recovery in most of its markets, most particularly agriculture. We continue to work the issues in our Mobile Solutions segment and have established an improving trend which should continue into 2011," said Steven W. Berglund, Trimble's president and chief executive officer. "In spite of still uncertain economic conditions, we currently expect strengthening results for the total company in 2011."
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)
Third quarter 2010 E&C revenue was $189.6 million, up approximately 27 percent as compared to the third quarter of 2009, with strength across most product lines and geographies.
Operating income in E&C for the third quarter 2010 was $36.6 million, or 19.3 percent of revenue, as compared to $21.1 million, or 14.1 percent of revenue, in the third quarter of 2009. Non-GAAP operating income was $38.5 million, or 20.3 percent of revenue, as compared to $22.7 million, or 15.2 percent of revenue, in the third quarter of 2009. The improvement in non-GAAP operating margin was due to operating leverage from increased revenue.
Field Solutions
Third quarter 2010 Field Solutions revenue was $67.2 million, up 21 percent as compared to the third quarter of 2009. Sales of agricultural products were strong, driven by new product introductions and a better macro environment in agriculture. Geographic Information System (GIS) product sales were also up.
Operating income in Field Solutions for the third quarter 2010 was $21.0 million, or 31.3 percent of revenue, as compared to $16.3 million, or 29.3 percent of revenue, in the third quarter of 2009. Non-GAAP operating income was $21.5 million, or 32.0 percent of revenue, as compared to $16.6 million, or 29.8 percent of revenue, in the third quarter of 2009. The increase in operating margin was due to product mix and higher revenue.
Mobile Solutions
Third quarter 2010 Mobile Solutions revenue was $37.7 million, down 5 percent as compared to the third quarter of 2009 primarily due to the loss of a large customer in the second quarter partially offset by the acquisition of Punch Telematics.
Operating loss in Mobile Solutions for the third quarter 2010 was $83 thousand, or negative 0.2 percent of revenue, as compared to operating income of $3.4 million, or 8.5 percent of revenue, in the third quarter of 2009. Non-GAAP operating income was $744 thousand, or 2.0 percent of revenue, as compared to $4.3 million or 10.9 percent of revenue, in the third quarter of 2009. The decline in non-GAAP margins is due to lower revenue and product mix.
Advanced Devices
Third quarter 2010 Advanced Devices revenue was $23.7 million, down approximately 6 percent as compared to the third quarter of 2009 due to slower sales of embedded products.
Operating income in Advanced Devices for the third quarter 2010 was $4.1 million, or 17.2 percent of revenue, as compared to $4.5 million, or 17.9 percent of revenue, in the third quarter of 2009. Non-GAAP operating income in Advanced Devices was $4.5 million, or 19.1 percent of revenue, as compared to $4.9 million, or 19.5 percent of revenue, in the third quarter of 2009.
Stock Repurchase Program
Trimble repurchased $6.1 million in stock at an average price of $28.40 during the third quarter of 2010.
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://investor.trimble.com.
Forward Looking Guidance
For the fourth quarter of 2010 Trimble expects revenue between $313 million and $318 million, representing a year over year growth rate of 13 to 15 percent, with GAAP earnings per share of $0.18 to $0.20 and non-GAAP earnings per share of $0.33 to $0.35. Non-GAAP guidance for the fourth quarter of 2010 excludes the amortization of intangibles of $14.6 million related to previous acquisitions, the anticipated impact of stock-based compensation expense of $6.5 million, and expected acquisition costs of $1.6 million. Both GAAP and non-GAAP earnings per share assume an 18 to 20 percent tax rate and 124.2 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on Nov. 2, 2010 at 1:30 p.m. PT to review its third quarter 2010 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 (702) 928-6633 (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 20117040. 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 ability to deliver revenue, earnings per share that Trimble has guided for the Fourth quarter and full year 2010 and 2011, the expected tax-rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions. The Company may suspend its stock repurchase plan at any time and for any reason without further notice. 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 economic conditions worsen 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 or obtain new customers for its mobile solutions segment. 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Oct-1, Oct-2,
2010 2009
---- ----
Revenue $318,210 $269,713
Cost of sales 158,462 137,255
------- -------
Gross margin 159,748 132,458
------- -------
Gross margin (%) 50.2% 49.1%
Operating expenses
Research and development 36,897 33,250
Sales and marketing 53,228 47,022
General and administrative 29,637 23,237
Restructuring 238 872
Amortization of purchased intangible
assets 8,078 7,912
Total operating expenses 128,078 112,293
------- -------
Operating income 31,670 20,165
Non-operating income, net
Interest income 221 124
Interest expense (576) (450)
Foreign currency transaction gain (loss),
net 77 792
Income (loss) from equity method
investments, net 3,404 (58)
Other income, net 3,533 988
Total non-operating income, net 6,659 1,396
----- -----
Income before taxes 38,329 21,561
Income tax provision 5,487 5,714
Net income 32,842 15,847
Less: Net income (loss) attributable to
noncontrolling interests (3) 270
Net income attributable to Trimble
Navigation Ltd. $32,845 $15,577
======= =======
Earnings per share attributable to
Trimble Navigation Ltd.
Basic $0.27 $0.13
----- -----
Diluted $0.27 $0.13
----- -----
Shares used in calculating earnings per
share:
Basic 119,474 120,047
Diluted 122,869 122,854
------- -------
Nine Months Ended
-----------------
Oct-1, Oct-2,
2010 2009
---- ----
Revenue $970,588 $848,730
Cost of sales 488,417 429,514
------- -------
Gross margin 482,171 419,216
------- -------
Gross margin (%) 49.7% 49.4%
Operating expenses
Research and development 109,339 100,844
Sales and marketing 153,518 141,120
General and administrative 85,474 75,901
Restructuring 1,244 5,797
Amortization of purchased intangible
assets 24,250 22,411
Total operating expenses 373,825 346,073
------- -------
Operating income 108,346 73,143
Non-operating income, net
Interest income 864 546
Interest expense (1,385) (1,408)
Foreign currency transaction gain (loss),
net (1,046) 760
Income (loss) from equity method
investments, net 9,025 421
Other income, net 3,022 1,476
Total non-operating income, net 10,480 1,795
------ -----
Income before taxes 118,826 74,938
Income tax provision 51,061 20,244
Net income 67,765 54,694
Less: Net income (loss) attributable to
noncontrolling interests 669 795
Net income attributable to Trimble
Navigation Ltd. $67,096 $53,899
======= =======
Earnings per share attributable to
Trimble Navigation Ltd.
Basic $0.56 $0.45
----- -----
Diluted $0.54 $0.44
----- -----
Shares used in calculating earnings per
share:
Basic 120,296 119,620
Diluted 123,599 121,893
------- -------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Oct-1, Jan-1
2010 2010
---- ----
Assets
Current assets:
Cash and cash equivalents $211,056 $273,848
Accounts receivables, net 229,746 202,293
Other receivables 18,172 11,856
Inventories, net 176,853 144,012
Deferred income taxes 29,600 39,686
Other current assets 20,673 18,383
------ ------
Total current assets 686,100 690,078
Property and equipment, net 49,525 44,635
Goodwill 812,564 764,193
Other purchased intangible assets, net 203,230 202,782
Other non-current assets 64,661 51,589
------ ------
Total assets $1,816,080 $1,753,277
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $1,913 $445
Accounts payable 73,064 53,775
Accrued compensation and benefits 60,908 43,272
Deferred revenue 74,392 68,968
Accrued warranty expense 13,802 14,744
Other accrued liabilities 38,187 42,041
------ ------
Total current liabilities 262,266 223,245
Non-current portion of long-term debt 151,180 151,038
Non-current deferred revenue 12,606 15,599
Deferred income taxes 29,388 38,857
Other non-current liabilities 41,313 59,983
Total liabilities 496,753 488,722
------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 754,664 720,248
Retained earnings 500,407 491,367
Accumulated other comprehensive income 50,689 48,297
------ ------
Total Trimble Navigation Ltd.
shareholders' equity 1,305,760 1,259,912
Noncontrolling interests 13,567 4,643
Total equity 1,319,327 1,264,555
Total liabilities and equity $1,816,080 $1,753,277
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
Oct-1, Oct-2,
2010 2009
---- ----
Cash flow from operating activities:
Net Income $67,765 $54,694
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation expense 13,310 13,941
Amortization expense 42,165 38,968
Provision for doubtful accounts 3,022 2,933
Amortization of debt issuance cost 169 169
Deferred income taxes (3,827) (9,268)
Stock-based compensation 16,165 13,321
Income from equity method investments (9,025) (421)
Excess tax benefit for stock-based
compensation (1,971) (1,304)
Provision for excess and obsolete
inventories 3,573 2,943
Other non-cash items (3,799) (2,876)
Add decrease (increase) in assets:
Accounts receivables (17,030) 2,613
Other receivables 191 6,288
Inventories (32,549) 1,300
Other current and non-current assets 366 1,915
Add increase (decrease) in liabilities:
Accounts payable 15,796 (1,068)
Accrued compensation and benefits 15,780 2,273
Accrued liabilities (25,051) 1,947
Deferred revenue 1,982 10,753
Net cash provided by operating activities 87,032 139,121
------ -------
Cash flow from investing activities:
Acquisitions of businesses, net of cash
acquired (90,757) (50,824)
Acquisition of property and equipment (17,162) (9,541)
Acquisitions of intangible assets (625) (26,839)
Purchases of equity method investments (5,692) -
Net purchases of short term investments - (2,000)
Dividends received 5,000 2,896
Other 99 (379)
---
Net cash used in investing activities (109,137) (86,687)
-------- -------
Cash flow from financing activities:
Issuance of common stock 31,901 13,673
Repurchase and retirement of common stock (73,853) -
Excess tax benefit for stock-based
compensation 1,971 1,304
Payments on long-term debt and revolving
credit lines (467) (168)
Tax withholding on restricted stock (16) -
Net cash provided by (used in) financing
activities (40,464) 14,809
------- ------
Effect of exchange rate changes on cash
and cash equivalents (223) 5,325
---- -----
Net increase (decrease) in cash and cash
equivalents (62,792) 72,568
Cash and cash equivalents -beginning of
period 273,848 142,531
------- -------
Cash and cash equivalents -end of period $211,056 $215,099
======== ========
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field
Construction Solutions
------------ ---------
THREE MONTHS ENDED OCTOBER 1, 2010:
Revenue $189,598 $67,240
Operating income (loss) before
corporate allocations: $36,589 $21,027
Operating margin (% of segment
external net revenues) 19.3% 31.3%
THREE MONTHS ENDED OCTOBER 2, 2009:
Revenue $149,384 $55,654
Operating income before corporate
allocations: $21,131 $16,286
Operating margin (% of segment
external net revenues) 14.1% 29.3%
NINE MONTHS ENDED OCTOBER 1, 2010:
Revenue $535,657 $243,299
Operating income before corporate
allocations: $89,317 $89,320
Operating margin (% of segment
external net revenues) 16.7% 36.7%
NINE MONTHS ENDED OCTOBER 2, 2009:
Revenue $424,275 $234,598
Operating income before corporate
allocations: $42,800 $88,637
Operating margin (% of segment
external net revenues) 10.1% 37.8%
Reporting Segments
------------------
Mobile Advanced
Solutions Devices
--------- -------
THREE MONTHS ENDED OCTOBER 1, 2010:
Revenue $37,692 $23,680
Operating income (loss) before
corporate allocations: $(83) $4,073
Operating margin (% of segment
external net revenues) (0.2%) 17.2%
THREE MONTHS ENDED OCTOBER 2, 2009:
Revenue $39,572 $25,103
Operating income before corporate
allocations: $3,367 $4,488
Operating margin (% of segment
external net revenues) 8.5% 17.9%
NINE MONTHS ENDED OCTOBER 1, 2010:
Revenue $113,839 $77,793
Operating income before corporate
allocations: $2,140 $14,879
Operating margin (% of segment
external net revenues) 1.9% 19.1%
NINE MONTHS ENDED OCTOBER 2, 2009:
Revenue $116,925 $72,932
Operating income before corporate
allocations: $10,163 $13,633
Operating margin (% of segment
external net revenues) 8.7% 18.7%
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Oct-1, Oct-2,
2010 2009
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $159,748 50.2% $132,458 49.1%
Restructuring ( A ) 52 0.0% 270 0.1%
Amortization of
purchased
intangibles ( B ) 6,356 2.0% 5,661 2.1%
Stock-based
compensation ( C ) 485 0.2% 453 0.2%
Amortization of
acquisition-
related inventory
step-up ( D ) 69 0.0% - 0.0%
--- --- --- ---
Non-GAAP gross
margin: $166,710 52.4% $138,842 51.5%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating
expenses: $128,078 40.3% $112,293 41.6%
Restructuring ( A ) (238) -0.1% (872) -0.3%
Amortization of
purchased
intangibles ( B ) (8,078) -2.5% (7,912) -3.0%
Stock-based
compensation ( C ) (5,055) -1.6% (4,088) -1.5%
Non-recurring
acquisition costs ( E ) (569) -0.2% (577) -0.2%
---- ---- ---- ----
Non-GAAP operating
expenses: $114,138 35.9% $98,844 36.6%
-------- ---- ------- ----
OPERATING INCOME:
GAAP operating
income: $31,670 10.0% $20,165 7.5%
Restructuring ( A ) 290 0.1% 1,142 0.4%
Amortization of
purchased
intangibles ( B ) 14,434 4.5% 13,573 5.0%
Stock-based
compensation ( C ) 5,540 1.7% 4,541 1.7%
Amortization of
acquisition-
related inventory
step-up ( D ) 69 0.0% - 0.0%
Non-recurring
acquisition costs ( E ) 569 0.2% 577 0.2%
--- --- --- ---
Non-GAAP operating
income: $52,572 16.5% $39,998 14.8%
------- ---- ------- ----
NON-OPERATING
INCOME, NET:
GAAP non-operating
income, net: $6,659 $1,396
Non-recurring
acquisition
(gains) costs ( E ) (3,022) -
------ ---
Non-GAAP non-
operating income,
net: $3,637 $1,396
------ ------
NET INCOME:
GAAP net income
attributable to
Trimble Navigation
Ltd. $32,845 $15,577
Restructuring ( A ) 290 1,142
Amortization of
purchased
intangibles ( B ) 14,434 13,573
Stock-based
compensation ( C ) 5,540 4,541
Amortization of
acquisition-
related inventory
step-up ( D ) 69 -
Non-recurring
acquisition
(gains) costs ( E ) (2,453) 577
Income tax effect
on non-GAAP
adjustments ( F ) (2,560) (5,256)
------ ------
Non-GAAP net
income
attributable to
Trimble Navigation
Ltd. $48,165 $30,154
------- -------
DILUTED NET INCOME
PER SHARE:
GAAP diluted net
income per share
attributable to
Trimble Navigation
Ltd. $0.27 $0.13
Restructuring ( A ) - 0.01
Amortization of
purchased
intangibles ( B ) 0.12 0.11
Stock-based
compensation ( C ) 0.04 0.04
Amortization of
acquisition-
related inventory
step-up ( D ) - -
Non-recurring
acquisition
(gains) costs ( E ) (0.02) -
Income tax effect
on non-GAAP
adjustments ( F ) (0.02) (0.04)
----- -----
Non-GAAP diluted
net income per
share attributable
to Trimble
Navigation Ltd. $0.39 $0.25
----- -----
OPERATING LEVERAGE:
Increase in non-
GAAP operating
income $12,574
Increase in revenue $48,497
Operating leverage
(increase in non-
GAAP operating
income as a % of
increase in
revenue) 25.9%
% of % of
Segment Segment
SEGMENT OPERATING
INCOME: Revenue Revenue
------- -------
Engineering and
Construction
GAAP operating
income before
corporate
allocations: $36,589 19.3% $21,131 14.1%
Stock-based
compensation ( G ) 1,891 1.0% 1,563 1.1%
Non-GAAP operating
income before
corporate
allocations: $38,480 20.3% $22,694 15.2%
------- ---- ------- ----
Field Solutions
GAAP operating
income before
corporate
allocations: $21,027 31.3% $16,286 29.3%
Stock-based
compensation ( G ) 464 0.7% 293 0.5%
Non-GAAP operating
income before
corporate
allocations: $21,491 32.0% $16,579 29.8%
------- ---- ------- ----
Mobile Solutions
GAAP operating
income (loss)
before corporate
allocations: $(83) -0.2% $3,367 8.5%
Stock-based
compensation ( G ) 827 2.2% 958 2.4%
Non-GAAP operating
income before
corporate
allocations: $744 2.0% $4,325 10.9%
---- --- ------ ----
Advanced Devices
GAAP operating
income before
corporate
allocations: $4,073 17.2% $4,488 17.9%
Stock-based
compensation ( G ) 450 1.9% 397 1.6%
Non-GAAP operating
income before
corporate
allocations: $4,523 19.1% $4,885 19.5%
------ ---- ------ ----
Nine Months Ended
-----------------
Oct-1, Oct-02,
2010 2009
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $482,171 49.7% $419,216 49.4%
Restructuring ( A ) 150 0.0% 3,333 0.4%
Amortization of
purchased
intangibles ( B ) 17,915 1.8% 16,421 1.9%
Stock-based
compensation ( C ) 1,472 0.2% 1,368 0.2%
Amortization of
acquisition-
related inventory
step-up ( D ) 140 0.0% 470 0.0%
--- --- --- ---
Non-GAAP gross
margin: $501,848 51.7% $440,808 51.9%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating
expenses: $373,825 38.5% $346,073 40.8%
Restructuring ( A ) (1,244) -0.1% (5,797) -0.7%
Amortization of
purchased
intangibles ( B ) (24,250) -2.5% (22,411) -2.7%
Stock-based
compensation ( C ) (14,693) -1.5% (11,953) -1.4%
Non-recurring
acquisition costs ( E ) (3,071) -0.3% (3,382) -0.4%
------ ---- ------ ----
Non-GAAP operating
expenses: $330,567 34.1% $302,530 35.6%
-------- ---- -------- ----
OPERATING INCOME:
GAAP operating
income: $108,346 11.2% $73,143 8.6%
Restructuring ( A ) 1,394 0.1% 9,130 1.1%
Amortization of
purchased
intangibles ( B ) 42,165 4.3% 38,832 4.6%
Stock-based
compensation ( C ) 16,165 1.7% 13,321 1.6%
Amortization of
acquisition-
related inventory
step-up ( D ) 140 0.0% 470 0.0%
Non-recurring
acquisition costs ( E ) 3,071 0.3% 3,382 0.4%
----- --- ----- ---
Non-GAAP operating
income: $171,281 17.6% $138,278 16.3%
-------- ---- -------- ----
NON-OPERATING
INCOME, NET:
GAAP non-operating
income, net: $10,480 $1,795
Non-recurring
acquisition
(gains) costs ( E ) (3,212) (386)
------ ----
Non-GAAP non-
operating income,
net: $7,268 $1,409
------ ------
NET INCOME:
GAAP net income
attributable to
Trimble Navigation
Ltd. $67,096 $53,899
Restructuring ( A ) 1,394 9,130
Amortization of
purchased
intangibles ( B ) 42,165 38,832
Stock-based
compensation ( C ) 16,165 13,321
Amortization of
acquisition-
related inventory
step-up ( D ) 140 470
Non-recurring
acquisition
(gains) costs ( E ) (141) 2,996
Income tax effect
on non-GAAP
adjustments ( F ) 15,591 (17,411)
------ -------
Non-GAAP net
income
attributable to
Trimble Navigation
Ltd. $142,410 $101,237
-------- --------
DILUTED NET INCOME
PER SHARE:
GAAP diluted net
income per share
attributable to
Trimble Navigation
Ltd. $0.54 $0.44
Restructuring ( A ) 0.01 0.07
Amortization of
purchased
intangibles ( B ) 0.34 0.32
Stock-based
compensation ( C ) 0.13 0.11
Amortization of
acquisition-
related inventory
step-up ( D ) - -
Non-recurring
acquisition
(gains) costs ( E ) - 0.03
Income tax effect
on non-GAAP
adjustments ( F ) 0.13 (0.14)
---- -----
Non-GAAP diluted
net income per
share attributable
to Trimble
Navigation Ltd. $1.15 $0.83
----- -----
OPERATING LEVERAGE:
Increase in non-
GAAP operating
income $33,003
Increase in revenue $121,858
Operating leverage
(increase in non-
GAAP operating
income as a % of
increase in
revenue) 27.1%
% of % of
Segment Segment
SEGMENT OPERATING
INCOME: Revenue Revenue
------- -------
Engineering and
Construction
GAAP operating
income before
corporate
allocations: $89,317 16.7% $42,800 10.1%
Stock-based
compensation ( G ) 5,494 1.0% 4,302 1.0%
Non-GAAP operating
income before
corporate
allocations: $94,811 17.7% $47,102 11.1%
------- ---- ------- ----
Field Solutions
GAAP operating
income before
corporate
allocations: $89,320 36.7% $88,637 37.8%
Stock-based
compensation ( G ) 1,397 0.6% 775 0.3%
Non-GAAP operating
income before
corporate
allocations: $90,717 37.3% $89,412 38.1%
------- ---- ------- ----
Mobile Solutions
GAAP operating
income (loss)
before corporate
allocations: $2,140 1.9% $10,163 8.7%
Stock-based
compensation ( G ) 2,246 2.0% 3,205 2.7%
Non-GAAP operating
income before
corporate
allocations: $4,386 3.9% $13,368 11.4%
------ --- ------- ----
Advanced Devices
GAAP operating
income before
corporate
allocations: $14,879 19.1% $13,633 18.7%
Stock-based
compensation ( G ) 1,350 1.8% 1,068 1.5%
Non-GAAP operating
income before
corporate
allocations: $16,229 20.9% $14,701 20.2%
------- ---- ------- ----
FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION
(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 non-operating income, net, 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, non-recurring acquisition
costs, and a $27.5 million charge associated with the IRS
settlement, 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 it is
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. 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
nine months ended October 1, 2010 and October 2, 2009, stock-based
compensation was allocated as follows:
Three Months Ended Nine Months Ended
------------------ -----------------
Oct-1, Oct-2, Oct-1, Oct-2,
(Dollars in thousands) 2010 2009 2010 2009
---- ---- ---- ----
Cost of sales $485 $453 $1,472 $1,368
Research and
development 968 866 2,899 2,504
Sales and Marketing 1,283 1,134 4,013 3,200
General and
administrative 2,804 2,088 7,781 6,249
$5,540 $4,541 $16,165 $13,321
------ ------ ------- -------
( 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 (gains) 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 identifiable net assets acquired
exceeding the consideration transferred), adjustments to the fair
value of earnout liabilities and payments made or received 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. In addition, the nine months
ended October 1, 2010 include the net impact of the $27.5 million
associated with the IRS audit settlement.
( G ) 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. 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 $1.9 million and $1.3 million for the three
months
ended October 1, 2010 and October 2, 2009, respectively and $5.7
million and $4.0 million for the nine months ended October 1, 2010
and October 2, 2009, respectively.
SOURCE Trimble
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