Trimble Inc.
Feb 3, 2009

Trimble Reports Fiscal 2008 Revenue Growth of 9 Percent and Non-GAAP Earnings Per Share Growth of 23 Percent: Prepares For Challenging Year

SUNNYVALE, Calif., Feb 03, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced revenue of $268.1 million for its fourth quarter ended Jan. 2, 2009, down approximately 14 percent from revenue of $312.8 million in the fourth quarter of 2007. For fiscal 2008, Trimble had revenue of $1.33 billion dollars, up approximately 9 percent over fiscal 2007.

Operating income for the fourth quarter of 2008 was $10.4 million, down approximately 73 percent from the fourth quarter of 2007. Operating margins in the fourth quarter of 2008 were 3.9 percent, compared to operating margins of 12.6 percent in the fourth quarter of 2007. Amortization of intangibles was $12.0 million in the fourth quarter of 2008 compared to $10.1 million in the fourth quarter of 2008. The impact of stock-based compensation expense was $4.6 million compared to $4.1 million in the fourth quarter of 2007. There was an $846 thousand restructuring expense and an $813 thousand inventory step-up charge related to acquisitions in the fourth quarter of 2008. Excluding these impacts, non-GAAP operating income of $28.7 million was down 46 percent compared to the fourth quarter of 2007. Non-GAAP operating margins were 10.7 percent in the fourth quarter of 2008, down from 17.1 percent in the fourth quarter of 2007.

For fiscal 2008, operating income was $185.5 million, up approximately four percent from fiscal 2007. Fiscal 2008 operating margins were 14.0 percent, compared to operating margins of 14.6 percent in fiscal 2007. In fiscal 2008, amortization of intangibles was $44.9 million compared to $38.6 million in fiscal 2007. The impact of stock-based compensation expense was $16.2 million compared to $15.0 million in fiscal 2007. In 2008, there was $4.6 million in restructuring expense and $1.4 million in inventory step-up charges related to acquisitions compared to $3.0 million in restructuring expense and no inventory step-up charges related to acquisitions in fiscal 2007. During 2008 there was no in-process research and development compared to $2.1 million in 2007. Excluding these impacts, fiscal 2008 non-GAAP operating income of $252.6 million was up approximately 7 percent compared to fiscal 2007. Non-GAAP operating margins were 19.0 percent in fiscal 2008, the same as fiscal 2007.

Fourth quarter 2008 net income was $13.7 million, down 48 percent compared to the fourth quarter of 2007. Diluted earnings per share for the fourth quarter of 2008 were $0.11 compared to diluted earnings per share of $0.21 in the fourth quarter of 2007.

Fiscal 2008 net income was $141.5 million, up 21 percent compared to fiscal 2007. Diluted earnings per share for fiscal 2008 were $1.14, up from diluted earnings per share of $0.94 in the fiscal 2007.

The tax rate for 2008 was 26 percent as compared to 36 percent in 2007 due primarily to a reduction in the tax rate driven by the global supply chain project.

Adjusting for the items noted above, non-GAAP net income of $28.9 million for the fourth quarter of 2008 was down 18 percent compared to the fourth quarter of 2007. Non-GAAP earnings per share for the fourth quarter of 2008 were $0.24, down 14 percent from non-GAAP earnings per share of $0.28 in the fourth quarter of 2007. Non-GAAP net income of $190.9 million for fiscal 2008 was up 23 percent compared to the fourth quarter of 2007. Non-GAAP earnings per share for fiscal 2008 were $1.54, up 23 percent from fiscal 2007.

"In our October call we described an abrupt drop in demand in our Engineering and Construction segment in mid-September. This trend worsened during the fourth quarter," said Steven W. Berglund, Trimble's president and chief executive officer. "During this time of market volatility we will continue to take efforts to maintain our financial model, utilize this period of uncertainty as an opportunity to improve our strategic position, support those businesses with growth potential in the current environment, and adapt quickly to changing circumstances. For example, actions we have already taken will result in a reduction in the Trimble workforce of approximately ten percent, excluding acquisitions."

"Our visibility into 2009 is extremely limited. We currently expect the first quarter to reflect the confusion of the fourth quarter. We hope to see a transition to more rational business decision making in the second quarter with the second half of the year in a difficult recession, but one in which we can begin to market our ROI message," Berglund continued. "Our focus will be on managing through the recession as flexibly and opportunistically as we can while anticipating the inflection point when we can return to our historical growth trend."

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 inventory step-up charge, in- process research and development and the impact of stock-based compensation expense.

Engineering and Construction

Fourth quarter 2008 E&C revenue was $142.6 million, down approximately 24 percent when compared to the fourth quarter of 2007. For 2008, E&C revenue was $741.7 million, down less than one percent compared to 2007. During 2008, the E&C segment experienced declining demand due primarily to recessionary conditions in the U.S. and Europe.

Operating income in E&C for the fourth quarter 2008 was $2.3 million, or 1.6 percent of revenue, compared to $36.8 million, or 19.7 percent of revenue, in the fourth quarter of 2007. For 2008 operating income in E&C was $126.0 million, or 17.0 percent of revenue, compared to $174.2 million or 23.4 percent of revenue, in 2007.

In the fourth quarter of 2008, non-GAAP operating income in E&C was $3.9 million, or 2.7 percent of revenue, compared to $37.9 million, or 20.3 percent of revenue, in the fourth quarter of 2007. For fiscal 2008, non-GAAP operating income was $130.7 million, or 17.6 percent of revenue, compared to $177.8 million, or 23.9 percent of revenue, in 2007. The decline in operating margins was primarily due to the revenue decline and product mix.

Field Solutions

Fourth quarter 2008 Field Solutions revenue was $58.2 million, up 17.4 percent when compared to the fourth quarter of 2007. Fiscal 2008 revenue in Field Solutions was $300.7 million, up 50 percent from 2007. Strong sales of agriculture products drove Field Solutions growth in the quarter and for the year.

Operating income in Field Solutions for the fourth quarter 2008 was $17.5 million, or 30.1 percent of revenue, compared to $14.0 million, or 28.2 percent of revenue, in the fourth quarter of 2007. For 2008 operating income was $109.5 million, or 36.4 percent of revenue, compared to $60.9 million, or 30.4 percent of revenue, in 2007.

In the fourth quarter of 2008, non-GAAP operating income in Field Solutions was $17.7 million, or 30.5 percent of revenue, compared to 28.6 percent of revenue in the fourth quarter of 2007. For fiscal 2008, non-GAAP operating income in Field Solutions was $110.3 million, or 36.7 percent of revenue, up from 30.8 percent of revenue in fiscal 2007. Growth in Field Solutions' margin was driven by operating leverage resulting from increased revenue, as well as improvements in product costs.

Mobile Solutions

Fourth quarter 2008 Mobile Solutions revenue was $40.0 million, down approximately 16 percent when compared to the fourth quarter of 2007. Fiscal 2008 Mobile Solutions revenue was $167.1 million, up six percent compared to 2007. The fourth quarter of 2007 benefitted from the completion of deliverables for two large contracts.

Operating income in Mobile Solutions for the fourth quarter 2008 was $3.3 million, or 8.3 percent of revenue, compared to 12.0 percent of revenue in the fourth quarter of 2007. For 2008 operating income in Mobile Solutions was $11.3 million, or 6.8 percent of revenue, compared to 7.9 percent of revenue in 2007.

In the fourth quarter of 2008, non-GAAP operating income in Mobile Solutions was $4.5 million, or 11.2 percent of revenue, down from 14.8 percent of revenue in the fourth quarter of 2007. For fiscal 2008, non-GAAP operating income in Mobile Solutions was $16.1 million, or 9.6 percent of revenue compared to 11.1 percent of revenue in fiscal 2007. As mentioned above, margins in the fourth quarter of 2007 benefitted from of the completion of deliverables for two large contracts.

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://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%


The non-GAAP financial measures included in the table above are non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income and non-GAAP diluted net income per share, which adjust for the following items: expenses related to acquisitions, stock-based compensation expense and restructuring charges. Management uses these non-GAAP measures to assess trends in its business and for budgeting purposes, as many of these excluded items are non-cash. In addition, we believe that the presentation of these non-GAAP financial measures is useful to investors for the reasons associated with each of the adjusting items as described below.

     (A)  Restructuring. The amounts recorded are for employee compensation
          resulting from reductions in employee headcount in connection with
          our company restructurings and we believe they are not directly
          related to the operation of our business.
     (B)  Amortization of purchased intangibles.  The amounts recorded as
          amortization of purchased intangibles arise from prior acquisitions
          and are non-cash in nature.  We exclude these expenses because we
          believe they are not reflective of ongoing operating results in the
          period incurred and are not directly related to the operation of our
          business.
     (C)  In-process research and development. The amounts recorded as in-
          process research and development arise from prior acquisitions and
          are non-cash in nature.  We exclude these expenses because we
          believe they are not reflective of ongoing operating results in the
          period incurred and not directly related to the operation of our
          business.
     (D)  Stock-based Compensation. We exclude these stock-based compensation
          expenses because they are non-cash expenses that we believe are not
          reflective of ongoing operation results.  For the three and nine
          months ended September 26, 2008 and September 28, 2007, stock-based
          compensation was allocated as follows:



                                             Three Months    Twelve Months
                                                Ended            Ended
                                           Jan-02, Dec-28,  Jan-02,  Dec-28,
                                             2009    2007    2009     2007
        Cost of sales                        $487    $493   $1,920   $1,733
        Research and development              860     954    3,489    3,573
        Sales and Marketing                 1,095   1,091    3,993    3,891
        General and administrative          2,121   1,529    6,764    5,819
                                           $4,563  $4,067  $16,166  $15,016


     (E)  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.  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 reflective of our ongoing operating results, and it is not used
          by management to assess the core profitability of our business
          operations.
     (F)  Income tax effect on non-GAAP adjustments. This amounts adjusts the
          provision for income taxes to reflect the effect of the non-GAAP
          adjustments on non-GAAP operating income.



                             NON-GAAP RECONCILIATION
                                REPORTING SEGMENTS
                              (Dollars in thousands)
                                   (Unaudited)


                                                Reporting Segments
                                     Engineering  Field    Mobile   Advanced
                                         and    Solutions Solutions  Devices
                                    Construction
        THREE MONTHS ENDED JANUARY 2,
     2009:
      Revenue                          $142,613   $58,245   $39,995   $27,231

      GAAP operating income before
       corporate allocations:            $2,339   $17,528    $3,331    $6,340
        Stock-based compensation (G)      1,533       221     1,167       399
      Non-GAAP operating income before
       corporate allocations:            $3,872   $17,749    $4,498    $6,739
      Non-GAAP operating margin (% of
       segment external net revenues)      2.7%     30.5%     11.2%     24.7%

    THREE MONTHS ENDED DECEMBER 28,
     2007:
      Revenue                          $186,699   $49,616   $47,685   $28,783

      GAAP operating income before
       corporate allocations:           $36,818   $13,976    $5,739    $3,656
        Stock-based compensation (G)      1,073       232     1,306       368
      Non-GAAP operating income before
       corporate allocations:           $37,891   $14,208    $7,045    $4,024
      Non-GAAP operating margin (% of
       segment external net revenues)     20.3%     28.6%     14.8%     14.0%

    TWELVE MONTHS ENDED JANUARY 2,
     2009:
      Revenue                          $741,670  $300,706  $167,113  $119,745

      GAAP operating income before
       corporate allocations:          $126,014  $109,489   $11,328   $24,445
        Stock-based compensation (G)      4,726       821     4,749     1,378
      Non-GAAP operating income before
       corporate allocations:          $130,740  $110,310   $16,077   $25,823
      Non-GAAP operating margin (% of
       segment external net revenues)     17.6%     36.7%      9.6%     21.6%

    TWELVE MONTHS ENDED DECEMBER 28,
     2007:
      Revenue                          $743,291  $200,614  $157,673  $120,692

      GAAP operating income before
       corporate allocations:          $174,177   $60,933   $12,517   $17,276
        Stock-based compensation (G)      3,614       763     4,976     1,369
      Non-GAAP operating income before
       corporate allocations:          $177,791   $61,696   $17,493   $18,645
      Non-GAAP operating margin (% of
       segment external net revenues)     23.9%     30.8%     11.1%     15.4%


     (G)  Stock-based Compensation. The amounts consist of expenses for
          employee stock options and purchase rights under our employee stock
          purchase plan determined in accordance with SFAS 123(R), which
          became effective for us on January 1, 2006.  We discuss our
          operating results by segment with and with-out 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 $1,243K and $1,088K for
          the three months ended January 2, 2009 and December 28, 2007,
          respectively and $4,492K and $4,294K for the twelve months ended
          January 2, 2009 and December 28, 2007, respectively.

SOURCE Trimble

 
http://www.trimble.com

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