Trimble Inc.
TRIMBLE NAVIGATION LTD /CA/ (Form: 10-Q, Received: 05/10/2011 16:04:47)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2011

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM             TO             

Commission file number: 001-14845

 

 

TRIMBLE NAVIGATION LIMITED

(Exact name of registrant as specified in its charter)

 

California   94-2802192

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employer Identification Number)

935 Stewart Drive, Sunnyvale, CA 94085

(Address of principal executive offices) (Zip Code)

Telephone Number (408) 481-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer   x    Accelerated Filer   ¨
Non-accelerated Filer   ¨   (Do not check if a smaller reporting company)    Smaller Reporting Company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

As of May 6, 2011, there were 122,627,594 shares of Common Stock (no par value) outstanding.

 

 

 


Table of Contents

TRIMBLE NAVIGATION LIMITED

FORM 10-Q for the Quarter Ended April 1, 2011

TABLE OF CONTENTS

 

PART I.   

Financial Information

     Page   

ITEM 1.

   Financial Statements (Unaudited):   
   Condensed Consolidated Balance Sheets — as of April 1, 2011 and December 31, 2010      3   
  

Condensed Consolidated Statements of Income — for the Three Months Ended April 1, 2011 and

April 2, 2010

     4   
  

Condensed Consolidated Statements of Cash Flows — for the Three Months Ended April 1, 2011 and

April 2, 2010

     5   
   Notes to Condensed Consolidated Financial Statements      6   

ITEM 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations      17   

ITEM 3.

   Quantitative and Qualitative Disclosures about Market Risk      28   

ITEM 4.

   Controls and Procedures      28   
PART II.   

Other Information

  

ITEM 1.

   Legal Proceedings      28   

ITEM 1A.

   Risk Factors      28   

ITEM 6.

   Exhibits      30   

SIGNATURES

     31   

 

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PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TRIMBLE NAVIGATION LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

     April 1,
2011
     December 31,
2010
 
(In thousands)              

ASSETS

     

Current assets :

     

Cash and cash equivalents

   $ 244,342       $ 220,788   

Accounts receivable, net

     265,693         222,820   

Other receivables

     25,983         21,069   

Inventories, net

     203,014         192,852   

Deferred income taxes

     36,620         36,924   

Other current assets

     20,279         19,917   
                 

Total current assets

     795,931         714,370   

Property and equipment, net

     51,634         50,692   

Goodwill

     863,459         828,737   

Other purchased intangible assets, net

     215,394         204,948   

Other non-current assets

     73,286         68,145   
                 

Total assets

   $ 1,999,704       $ 1,866,892   
                 

LIABILITIES

     

Current liabilities:

     

Current portion of long-term debt

   $ 153,029       $ 1,993   

Accounts payable

     89,357         72,349   

Accrued compensation and benefits

     51,987         60,976   

Deferred revenue

     81,501         73,888   

Accrued warranty expense

     12,829         12,868   

Other current liabilities

     32,977         29,741   
                 

Total current liabilities

     421,680         251,815   

Non-current portion of long-term debt

     271         151,160   

Non-current deferred revenue

     7,736         10,777   

Deferred income taxes

     31,447         24,598   

Other non-current liabilities

     49,569         42,843   
                 

Total liabilities

     510,703         481,193   
                 

Commitments and contingencies

     

EQUITY

     

Shareholders’ equity:

     

Preferred stock, no par value; 3,000 shares authorized; none outstanding

     —           —     

Common stock, no par value; 180,000 shares authorized; 122,561 and 120,939 shares issued and outstanding at April 1, 2011 and December 31, 2010, respectively

     826,495         781,779   

Retained earnings

     575,968         536,350   

Accumulated other comprehensive income

     67,826         48,027   
                 

Total Trimble Navigation Ltd. shareholders’ equity

     1,470,289         1,366,156   

Noncontrolling interests

     18,712         19,543   
                 

Total equity

     1,489,001         1,385,699   
                 

Total liabilities and equity

   $ 1,999,704       $ 1,866,892   
                 

See accompanying Notes to the Condensed Consolidated Financial Statements.

 

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TRIMBLE NAVIGATION LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(In thousands, except per share data)             

Revenue (1)

   $ 384,293      $ 319,015   

Cost of sales (1)

     192,763        160,018   
                

Gross margin

     191,530        158,997   

Operating expenses

    

Research and development

     43,232        35,890   

Sales and marketing

     61,207        49,768   

General and administrative

     33,472        28,547   

Restructuring charges

     767        631   

Amortization of purchased intangible assets

     9,177        8,046   
                

Total operating expenses

     147,855        122,882   
                

Operating income

     43,675        36,115   

Non-operating income, net

    

Interest income

     285        399   

Interest expense

     (496     (398

Foreign currency transaction gain, net

     306        746   

Income from equity method investments, net

     2,763        2,474   

Other income (expense), net

     (252     314   
                

Total non-operating income, net

     2,606        3,535   
                

Income before taxes

     46,281        39,650   

Income tax provision

     7,409        11,498   
                

Net income

     38,872        28,152   

Less: Net income (loss) attributable to noncontrolling interests

     (831     254   
                

Net income attributable to Trimble Navigation Ltd.

   $ 39,703      $ 27,898   
                

Basic earnings per share

   $ 0.33      $ 0.23   
                

Shares used in calculating basic earnings per share

     121,819        120,760   

Diluted earnings per share

   $ 0.32      $ 0.23   
                

Shares used in calculating diluted earnings per share

     125,856        123,829   

 

(1) Sales to Caterpillar Trimble Control Technologies Joint Venture (CTCT) and Nikon-Trimble Joint Venture (Nikon-Trimble) were $5.8 million and $5.5 million for the three months ended April 1, 2011 and April 2, 2010, respectively, with associated cost of sales to those related parties of $3.9 million and $3.7 million, respectively. In addition, cost of sales associated with related party net inventory purchases was $7.9 million and $6.1 million for the three months ended April 1, 2011 and April 2, 2010, respectively. See Note 4 regarding joint ventures for further information about related party transactions.

See accompanying Notes to the Condensed Consolidated Financial Statements.

 

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TRIMBLE NAVIGATION LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Cash flow from operating activities:

    

Net income

   $ 38,872      $ 28,152   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation expense

     4,603        4,451   

Amortization expense

     16,065        13,817   

Provision for doubtful accounts

     359        1,038   

Deferred income taxes

     (1,393     103   

Stock-based compensation

     6,798        5,641   

Income from equity method investments, net

     (2,763     (2,474

Excess tax benefit for stock-based compensation

     (8,357     (482

Provision for excess and obsolete inventories

     2,489        1,902   

Other non-cash items

     577        (1,760

Add decrease (increase) in assets:

    

Accounts receivable

     (40,624     (31,546

Other receivables

     5,776        8,060   

Inventories

     (8,717     (9,441

Other current and non-current assets

     4,927        (2,103

Add increase (decrease) in liabilities:

    

Accounts payable

     16,377        27,319   

Accrued compensation and benefits

     (10,241     4,741   

Accrued liabilities

     4,398        2,617   

Deferred revenue

     (1,219     5,468   
                

Net cash provided by operating activities

     27,927        55,503   
                

Cash flow from investing activities:

    

Acquisitions of businesses, net of cash acquired

     (38,979     (21,571

Acquisitions of property and equipment

     (4,036     (5,299

Acquisitions of intangible assets

     (250     (297

Purchases of equity method investments

     —          (2,750

Other

     44        1   
                

Net cash used in investing activities

     (43,221     (29,916
                

Cash flow from financing activities:

    

Issuances of common stock, net

     27,785        8,649   

Excess tax benefit for stock-based compensation

     8,357        482   

Payments on long-term debt and revolving credit lines

     (672     (54
                

Net cash provided by financing activities

     35,470        9,077   
                

Effect of exchange rate changes on cash and cash equivalents

     3,378        (1,439
                

Net increase in cash and cash equivalents

     23,554        33,225   

Cash and cash equivalents, beginning of period

     220,788        273,848   
                

Cash and cash equivalents, end of period

   $ 244,342      $ 307,073   
                

See accompanying Notes to the Condensed Consolidated Financial Statements.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Trimble Navigation Limited (the Company), incorporated in California in 1981, provides positioning solutions to commercial and government users in a large number of markets. These markets include surveying, agriculture, construction, asset management, mapping, and mobile resource management.

The Company has a 52-53 week fiscal year, ending on the Friday nearest to December 31, which for fiscal 2010 was December 31, 2010. The first quarter of fiscal 2011 and fiscal 2010 ended on April 1, 2011 and April 2, 2010, respectively. Fiscal 2011 and 2010 were both 52-week years. Unless otherwise stated, all dates refer to the Company’s fiscal year and fiscal periods.

The Condensed Consolidated Financial Statements include the results of the Company and its consolidated subsidiaries. Inter-company accounts and transactions have been eliminated. Noncontrolling interests represent the noncontrolling shareholders’ proportionate share of the net assets and results of operations of the Company’s consolidated subsidiaries.

The accompanying financial data as of April 1, 2011 and for the three months ended April 1, 2011 and April 2, 2010 has been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements, prepared in accordance with U.S. generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. The Condensed Consolidated Balance Sheet as of December 31, 2010 is derived from the audited Consolidated Financial Statements included in the Annual Report on Form 10-K of Trimble Navigation Limited for fiscal year 2010. The following discussion should be read in conjunction with the Company’s 2010 Annual Report on Form 10-K.

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in its Condensed Consolidated Financial Statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present a fair statement of financial position as of April 1, 2011, results of operations for the three months ended April 1, 2011 and April 2, 2010 and cash flows for the three months ended April 1, 2011 and April 2, 2010, as applicable, have been made. The results of operations for the three months ended April 1, 2011 are not necessarily indicative of the operating results for the full fiscal year or any future periods. Individual segment revenue may be affected by seasonal buying patterns and general economic conditions. The Company has evaluated all subsequent events through the date that these financial statements have been filed with the Securities and Exchange Commission.

NOTE 2. UPDATES TO SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting polices during the three months ended April 1, 2011 from those disclosed in the Company’s 2010 Form 10-K.

Recent Accounting Pronouncements

There are no updates to recent accounting standards as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

NOTE 3. SHAREHOLDERS’ EQUITY

Stock Repurchase Activities

In January 2008, the Company’s Board of Directors authorized a stock repurchase program (“2008 Stock Repurchase Program”), authorizing the Company to repurchase up to $250 million of Trimble’s common stock under this program. No shares of common stock were repurchased during the three months ended April 1, 2011 and April 2, 2010. Since January 2008, the Company has repurchased approximately 6,819,000 shares of common stock in open market purchases at an average price of $29.29 per share, for a total of $199.7 million. The purchase price was reflected as a decrease to common stock based on the average stated value per share with the remainder to retained earnings. Common stock repurchases under the program were recorded based upon the trade date for accounting purposes. All common shares repurchased under this program have been retired. As of April 1, 2011, the 2008 Stock Repurchase Program had remaining authorized funds of $50.3 million. The timing and actual number of future shares repurchased will depend on a variety of factors including price, regulatory requirements, capital availability, and other market conditions. The program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time without public notice.

 

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Stock-Based Compensation

The Company accounts for its employee stock options and rights to purchase shares under its stock participation plans under the fair value method, which requires stock-based compensation to be estimated using the fair value on the date of grant using an option-pricing model. The value of the portion of the award that is expected to vest is recognized as expense over the related employees’ requisite service periods in the Company’s Condensed Consolidated Statements of Income.

The following table summarizes stock-based compensation expense, net of tax, related to employee stock-based compensation included in the Condensed Consolidated Statements of Income for the three months ended April 1, 2011 and April 2, 2010.

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Cost of sales

   $ 468      $ 501   
                

Research and development

     1,096        947   

Sales and marketing

     1,634        1,383   

General and administrative

     3,600        2,810   
                

Total operating expenses

     6,330        5,140   
                

Total stock-based compensation expense

     6,798        5,641   

Tax benefit (1)

     (2,203     (776
                

Total stock-based compensation expense, net of tax

   $ 4,595      $ 4,865   
                

 

(1) Tax benefit related to U.S. non-qualified options, restricted stock units, and disqualified disposition of incentive stock options, applying a Federal statutory and State (Federal effected) tax rate for the respective periods.

Options

Stock option expense recognized during the period is based on the fair value of the portion of the stock option that is expected to vest during the period and is net of estimated forfeitures. The fair value of each stock option is estimated on the date of grant using a binomial valuation model. The binomial model takes into account variables such as volatility, dividend yield rate, and risk free interest rate. For options granted during the three months ended April 1, 2011 and April 2, 2010, the following weighted average assumptions were used:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 

Expected dividend yield

     —          —     

Expected stock price volatility

     41.9     43.5

Risk free interest rate

     1.0     2.1

Expected life of option

     4.2 years        4.2 years   

Expected Dividend Yield — The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Expected Stock Price Volatility — The Company’s computation of expected volatility is based on a combination of implied volatilities from traded options on the Company’s stock and historical volatility, commensurate with the expected life of the stock options.

Expected Risk Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the stock options.

Expected Life Of Option — The Company’s expected life represents the period that the Company’s stock options are expected to be outstanding and is determined based on historical experience of similar stock options with consideration to the contractual terms of the stock options, vesting schedules, and expectations of future employee behavior.

NOTE 4. JOINT VENTURES

Caterpillar Trimble Control Technologies Joint Venture

 

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On April 1, 2002, Caterpillar Trimble Control Technologies LLC (CTCT), a joint venture formed by the Company and Caterpillar, began operations. CTCT develops advanced electronic guidance and control products for earth moving machines in the construction and mining industries. The joint venture is 50% owned by the Company and 50% owned by Caterpillar, with equal voting rights. The joint venture is accounted for under the equity method of accounting. Under the equity method, the Company’s share of profits and losses are included in Income from equity method investments, net in the Non-operating income, net section of the Condensed Consolidated Statements of Income. During the three months ended April 1, 2011, the Company recorded $2.4 million as its proportionate share of CTCT net income. During the comparable period of 2010, the Company recorded $1.7 million as its proportionate share of CTCT net income. During the fiscal quarters ended April 1, 2011 and April 2, 2010, there were no dividends received from CTCT. The carrying amount of the investment in CTCT was $11.3 million at April 1, 2011 and $8.9 million at December 31, 2010, and is included in Other non-current assets on the Condensed Consolidated Balance Sheets.

The Company acts as a contract manufacturer for CTCT. Products are manufactured based on orders received from CTCT and are sold at direct cost, plus a mark-up for the Company’s overhead costs to CTCT. CTCT then resells products at cost, plus a mark-up in consideration for CTCT’s research and development efforts to both Caterpillar and to the Company for sales through their respective distribution channels. Generally, the Company sells products through its after-market dealer channel, and Caterpillar sells products for factory and dealer installation. CTCT does not have net inventory on its balance sheet in that the resale of products to Caterpillar and the Company occur simultaneously when the products are purchased from the Company. During the three months ended April 1, 2011, the Company recorded $1.4 million of revenue and $1.4 million of cost of sales for the manufacturing of products sold by the Company to CTCT and then sold through the Caterpillar distribution channel. During the comparable three month period of fiscal 2010, the Company recorded $0.9 million of revenue and $0.9 million of cost of sales for the manufacturing of products sold by the Company to CTCT and then sold through the Caterpillar distribution channel. In addition, during the three months ended April 1, 2011 and April 2, 2010, the Company recorded $7.9 million and $6.1 million in net cost of sales for the manufacturing of products sold by the Company to CTCT and then repurchased by the Company upon sale through the Company’s distribution channel.

In addition, the Company received reimbursement of employee-related costs from CTCT for company employees dedicated to CTCT or performance of work for CTCT totaling $3.9 million and $2.7 million for the three months ended April 1, 2011 and April 2, 2010, respectively. The reimbursements were offset against operating expense.

At April 1, 2011 and December 31, 2010, the Company had amounts due to and from CTCT. Receivables and payables to CTCT are settled individually with terms comparable to other non-related parties. The amounts due to and from CTCT are presented on a gross basis in the Condensed Consolidated Balance Sheets. At April 1, 2011 and December 31, 2010, the receivables from CTCT were $8.8 million and $4.4 million, respectively, and are included within Accounts receivable, net, on the Condensed Consolidated Balance Sheets. As of the same dates, the payables due to CTCT were $10.7 million and $5.7 million, respectively, and are included within Accounts payable on the Condensed Consolidated Balance Sheets.

Nikon-Trimble Joint Venture

On March 28, 2003, Nikon-Trimble Co., Ltd (Nikon-Trimble), a joint venture, was formed by the Company and Nikon Corporation. The joint venture began operations in July 2003 and is 50% owned by the Company and 50% owned by Nikon, with equal voting rights. It focuses on the design and manufacture of surveying instruments including mechanical total stations and related products.

The joint venture is accounted for under the equity method of accounting. Under the equity method, the Company’s share of profits and losses are included in Income from equity method investments, net in the Non-operating income, net section of the Condensed Consolidated Statements of Income. During the three months ended April 1, 2011 and April 2, 2010, the Company recorded a profit of both $0.8 million as its proportionate share of Nikon-Trimble net income. During the three months ended April 1, 2011 and April 2, 2010, there were no dividends received from Nikon-Trimble. The carrying amount of the investment in Nikon-Trimble was $15.8 million at April 1, 2011 and $15.0 million at December 31, 2010, and is included in Other non-current assets on the Condensed Consolidated Balance Sheets.

Nikon-Trimble is the distributor in Japan for Nikon and the Company’s products. The Company is the exclusive distributor outside of Japan for Nikon branded survey products. For products sold by the Company to Nikon-Trimble, revenue is recognized by the Company on a sell-through basis from Nikon-Trimble to the end customer.

The terms and conditions of the sales of products from the Company to Nikon-Trimble are comparable with those of the standard distribution agreements which the Company maintains with its dealer channel and margins earned are similar to those from third party dealers. Similarly, the purchases of product by the Company from Nikon-Trimble are made on terms comparable with the arrangements which Nikon maintained with its international distribution channel prior to the formation of the joint venture with the Company. During the three months ended April 1, 2011, the Company recorded $4.4 million of revenue and $2.5 million of cost of sales for the manufacturing of products sold by the Company to Nikon-Trimble. During the three months ended April 2, 2010, the Company recorded $4.6 million of revenue and $2.8 million of cost of sales for the manufacturing of products sold by the Company to Nikon-Trimble. The Company also purchases product from Nikon-Trimble for future sales to third party customers. Purchases of inventory from Nikon-Trimble were $5.9 million and $5.4 million during the three months ended April 1, 2011 and April 2, 2010, respectively.

 

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At April 1, 2011 and December 31, 2010, the Company had amounts due to and from Nikon-Trimble. Receivables and payables to Nikon-Trimble are settled individually with terms comparable to other non-related parties. The amounts due to and from Nikon-Trimble are presented on a gross basis in the Condensed Consolidated Balance Sheets. At April 1, 2011 and December 31, 2010, the amounts due from Nikon-Trimble were $2.5 million and $3.5 million, respectively, and are included within Accounts receivable, net on the Condensed Consolidated Balance Sheets. As of the same dates, the amounts due to Nikon-Trimble were $5.8 million and $7.0 million, respectively, and are included within Accounts payable on the Condensed Consolidated Balance Sheets.

NOTE 5. GOODWILL AND INTANGIBLE ASSETS

Intangible Assets

Intangible Assets consisted of the following:

 

     April 1, 2011  

(Dollars in thousands)

   Gross
Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Developed product technology

   $ 255,433       $ (158,847   $ 96,586   

Trade names and trademarks

     22,932         (16,923     6,009   

Customer relationships

     162,970         (73,765     89,205   

Distribution rights and other intellectual properties

     50,513         (26,919     23,594   
                         
   $ 491,848       $ (276,454   $ 215,394   
                         

 

     January 1, 2010  

(Dollars in thousands)

   Gross
Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Developed product technology

   $ 247,575       $ (148,171   $ 99,404   

Trade names and trademarks

     22,136         (16,449     5,687   

Customer relationships

     143,125         (68,104     75,021   

Distribution rights and other intellectual properties

     50,207         (25,371     24,836   
                         
   $ 463,043       $ (258,095   $ 204,948   
                         

The estimated future amortization expense of intangible assets as of April 1, 2011, is as follows:

 

(Dollars in thousands)

      

2011 (Remaining)

   $ 47,177   

2012

     55,477   

2013

     49,586   

2014

     27,497   

2015

     17,754   

Thereafter

     17,903   
        

Total

   $ 215,394   
        

Goodwill

The changes in the carrying amount of goodwill by operating segment for the three months ended April 1, 2011, are as follows:

 

     Engineering
and
Construction
    Field
Solutions
     Mobile
Solutions
     Advanced
Devices
     Total  
(Dollars in thousands)                                  

Balance as of December 31, 2010

   $ 432,364      $ 26,211       $ 348,166       $ 21,996       $ 828,737   

Additions due to acquisitions

     22,855        —           —           —           22,855   

Purchase price adjustments

     (3     —           —           —           (3

Foreign currency translation adjustments

     10,329        73         973         495         11,870   
                                           

Balance as of April 1, 2011

   $ 465,545      $ 26,284       $ 349,139       $ 22,491       $ 863,459   
                                           

 

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NOTE 6. CERTAIN BALANCE SHEET COMPONENTS

Inventories, net consisted of the following:

 

As of

   April 1,
2011
     December 31,
2010
 
(Dollars in thousands)              

Raw materials

   $ 82,223       $ 79,057   

Work-in-process

     7,426         5,672   

Finished goods

     113,365         108,123   
                 

Total inventories, net

   $ 203,014       $ 192,852   
                 

Deferred costs of revenue are included within finished goods and were $14.4 million at April 1, 2011 and $14.0 million at December 31, 2010.

Other non-current liabilities consisted of the following:

 

As of

   April 1,
2011
     December 31,
2010
 
(Dollars in thousands)              

Deferred compensation

   $ 10,894       $ 9,736   

Unrecognized tax benefits

     19,102         17,830   

Other non-current liabilities

     19,573         15,277   
                 

Total other non-current liabilities

   $ 49,569       $ 42,843   
                 

As of April 1, 2011 and December 31, 2010, the Company has $19.1 million and $17.8 million, respectively, of unrecognized tax benefits included in Other non-current liabilities that, if recognized, would favorably affect the effective income tax rate and interest and/or penalties related to income tax matters in future periods.

NOTE 7. SEGMENT INFORMATION

The Company is a designer and distributor of positioning solutions enabled by GPS, optical, laser, and wireless communications technology. The Company provides products for diverse applications in its targeted markets.

To achieve distribution, marketing, production, and technology advantages, the Company manages its operations in the following four segments:

 

   

Engineering and Construction — Consists of products currently used by survey and construction professionals in the field for positioning, data collection, field computing, data management, and machine guidance and control. The applications served include surveying, road, runway, construction, site preparation, and building construction.

 

   

Field Solutions — Consists of products that provide solutions in a variety of agriculture and geographic information systems (GIS) applications. In agriculture, these include precise land leveling and machine guidance systems. In GIS, these include handheld devices and software that enable the collection of data on assets for a variety of governmental and private entities.

 

   

Mobile Solutions — Consists of products that enable end-users to monitor and manage their mobile assets by communicating location and activity-relevant information from the field to the office. The Company offers a range of products that address a number of sectors of this market including truck fleets, security, and public safety vehicles.

 

   

Advanced Devices — The various operations that comprise this segment are aggregated on the basis that no single operation accounts for more than 10% of the Company’s total revenue, operating income, and assets. This segment is comprised of the Component Technologies, Military and Advanced Systems, Applanix, Trimble Outdoors, and ThingMagic businesses.

The Company evaluates each of its segment’s performance and allocates resources based on segment operating income before income taxes and some corporate allocations. The Company and each of its segments employ consistent accounting policies.

 

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The following table presents revenue, operating income, and identifiable assets for the four segments. Operating income is revenue less cost of sales and operating expense, excluding general corporate expense, amortization of purchased intangibles, amortization of acquisition-related inventory step-up, non-recurring acquisition costs and restructuring charges. The identifiable assets that the Company’s Chief Operating Decision Maker, its Chief Executive Officer, views by segment are accounts receivable, inventories, and goodwill.

 

     Reporting Segments      Total  
     Engineering
and
Construction
     Field
Solutions
     Mobile
Solutions
    Advanced
Devices
    
(Dollars in thousands)                                  

Three Months Ended April 1, 2011

             

Segment revenue

   $ 190,034       $ 123,053       $ 44,421      $ 26,785       $ 384,293   

Operating income

     22,779         52,505         (1,334     3,863         77,813   

Three Months Ended April 2, 2010

             

Segment revenue

   $ 157,618       $ 95,901       $ 37,959      $ 27,537       $ 319,015   

Operating income

     18,807         39,313         1,899        5,625         65,644   

As of April 1, 2011

             

Accounts receivable

   $ 142,348       $ 81,457       $ 25,374      $ 16,514       $ 265,693   

Inventories

     130,211         37,255         18,004        17,544         203,014   

Goodwill

     465,545         26,284         349,139        22,491         863,459   

As of December 31, 2010

             

Accounts receivable

   $ 131,808       $ 52,065       $ 24,806      $ 14,141       $ 222,820   

Inventories

     123,780         33,964         16,721        18,387         192,852   

Goodwill

     432,364         26,211         348,166        21,996         828,737   

Unallocated corporate expense includes general corporate expense, amortization of acquisition-related inventory step-up and non-recurring acquisition costs. A reconciliation of the Company’s consolidated segment operating income to consolidated income before income taxes is as follows:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Consolidated segment operating income

   $ 77,813      $ 65,644   

Unallocated corporate expense

     (17,207     (15,038

Amortization of purchased intangible assets

     (16,065     (13,817

Restructuring charges

     (866     (674
                

Consolidated operating income

     43,675        36,115   

Non-operating income, net

     2,606        3,535   
                

Consolidated income before taxes

   $ 46,281      $ 39,650   
                

NOTE 8. DEBT, COMMITMENTS AND CONTINGENCIES

Debt consisted of the following:

 

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As of

   April 1,
2011
     December 31,
2010
 
(Dollars in thousands)              

Credit Facilities:

     

Revolving credit facility

   $ 151,000       $ 151,000   

Promissory notes and other

     2,300         2,153   
                 

Total debt

     153,300         153,153   

Less current portion of long-term debt

     153,029         1,993   
                 

Non-current portion

   $ 271       $ 151,160   
                 

Credit Facilities

On July 28, 2005, the Company entered into a $200 million unsecured revolving credit agreement (the 2005 Credit Facility) with a syndicate of 10 banks with The Bank of Nova Scotia as the administrative agent. On February 16, 2007, the Company amended its existing $200 million unsecured revolving credit agreement with a syndicate of 11 banks with The Bank of Nova Scotia as the administrative agent (the 2007 Credit Facility). Under the 2007 Credit Facility, the Company exercised the option in the existing credit agreement to increase the availability under the revolving credit line by $100 million, for an aggregate availability of up to $300 million, and extended the maturity date of the revolving credit line by 18 months, from July 2010 to February 2012. Up to $25 million of the availability under the revolving credit line was available to be used to issue letters of credit, and up to $20 million may be used to pay off other debts or loans. The maximum leverage ratio under the 2007 Credit Facility was 3.00:1.00. The funds available under the 2007 Credit Facility may be used by the Company for acquisitions, stock repurchases, and general corporate purposes. As of August 20, 2008, the Company amended its 2007 Credit Facility to allow it to redeem, retire or purchase common stock of the Company without limitation so long as no default or unmatured default then existed, and leverage ratio for the two most recently completed periods was less than 2.00:1.00. In addition, the definition of the fixed charge was amended to exclude the impact of redemptions, retirements, or purchases common stock of the Company from the fixed charges coverage ratio.

As of April 1, 2011, the Company had an outstanding balance on the revolving credit line of $151.0 million, which is classified as short-term as the credit line matures in February 2012. The Company replaced the 2007 Credit Facility as described under Note 14 regarding subsequent events.

The Company was able to borrow funds under the 2007 Credit Facility in U.S. Dollars or in certain other currencies, and borrowings bear interest, at the Company’s option, at either: (i) a base rate, based on the administrative agent’s prime rate, plus a margin of between 0% and 0.125%, depending on the Company’s leverage ratio as of its most recently ended fiscal quarter, or (ii) a reserve-adjusted rate based on the London Interbank Offered Rate (LIBOR), Euro Interbank Offered Rate (EURIBOR), Stockholm Interbank Offered Rate (STIBOR), or other agreed-upon rate, depending on the currency borrowed, plus a margin of between 0.625% and 1.125%, depending on the Company’s leverage ratio as of the most recently ended fiscal quarter. The Company’s obligations under the 2007 Credit Facility were guaranteed by certain of the Company’s domestic subsidiaries.

The 2007 Credit Facility contained customary affirmative, negative, and financial covenants including, among other requirements, negative covenants that restrict the Company’s ability to dispose of assets, create liens, incur indebtedness, repurchase stock, pay dividends, make acquisitions, make investments, enter into mergers and consolidations and make capital expenditures, within certain limitations, and financial covenants that require the maintenance of leverage and fixed charge coverage ratios. The 2007 Credit Facility contained events of default that included, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments, and events constituting a change of control. Upon the occurrence and during the continuance of an event of default, interest on the obligations would accrue at an increased rate and the lenders could accelerate the Company’s obligations under the 2007 Credit Facility, however that acceleration would be automatic in the case of bankruptcy and insolvency events of default. As of April 1, 2011, the Company was in compliance with all financial debt covenants.

Promissory Notes and Other

As of April 1, 2011 and December 31, 2010, the Company had promissory notes and other totaling approximately $2.3 million and $2.2 million. Of these amounts, the Company had outstanding notes payable of $1.9 million which consisted primarily of notes payable to noncontrolling interest holders. The notes bear interest at 6% and have undefined payment terms, but are callable with a six month notification.

Leases and Other Commitments

The estimated future minimum operating lease commitments as of April 1, 2011, are as follows (dollars in thousands):

 

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2011 (Remaining)

   $ 16,402   

2012

     15,945   

2013

     10,993   

2014

     8,163   

2015

     5,904   

Thereafter

     6,702   
        

Total

   $ 64,109   
        

Additionally, as of April 1, 2011, the Company had acquisition-related earn-outs of $4.6 million and holdbacks of $8.1 million recorded in Other current liabilities and Other non-current liabilities. The maximum remaining payments, including the $4.6 million and $8.1 million recorded, will not exceed $23.5 million. The remaining payments are based upon targets achieved or events occurring over time that would result in amounts paid that may be lower than the maximum remaining payments. The remaining earn-outs and holdbacks are payable through 2016.

At April 1, 2011, the Company had unconditional purchase obligations of approximately $73.2 million. These unconditional purchase obligations primarily represent open non-cancelable purchase orders for material purchases with the Company’s vendors. Purchase obligations exclude agreements that are cancelable without penalty. These unconditional purchase obligations are related primarily to inventory and other items.

NOTE 9. FAIR VALUE MEASUREMENTS

The guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about assets and liabilities measured at fair value. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market, and the instruments’ complexity.

Assets and liabilities, recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by the guidance on fair value measurements are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows:

Level I — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II — Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level III — Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations.

 

     Fair Values as of April 1, 2011  

(Dollars in thousands)

   Level I      Level II      Level III      Total  

Assets

           

Money market funds(1)

   $ 98,301       $ —         $ —         $ 98,301   

Deferred compensation plan assets (2)

     10,735         —           —           10,735   

Derivative assets (3)

     —           563         —           563   
                                   

Total

   $ 109,036       $ 563       $ —         $ 109,599   
                                   

Liabilities

           

Deferred compensation plan liabilities (2)

   $ 10,894       $ —         $ —         $ 10,894   

Derivative liabilities (3)

     —           574         —           574   

Contingent consideration liabilities (4)

     —           —           4,550         4,550   
                                   

Total

   $ 10,894       $ 574       $ 4,550       $ 16,018   
                                   

 

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(1) These investments are highly liquid investments such as money market funds. The fair values are determined using observable quoted prices in active markets. Money market funds are included in Cash and cash equivalents on the Company’s Condensed Consolidated Balance Sheets.
(2) The Company maintains a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees. As of April 1, 2011 the plan assets and liabilities are invested in actively traded mutual funds and individual stocks valued using observable quoted prices in active markets. Deferred compensation plan assets and liabilities are included in Other non-current assets and Other non-current liabilities on the Company’s Consolidated Balance Sheets.
(3) Derivative assets and liabilities included in Level II primarily represent forward currency exchange contracts. The Company enters into these contracts to minimize the short-term impact of foreign currency fluctuations on certain trade and inter-company receivables and payables. The derivatives are not designated as hedging instruments. The fair values are determined using inputs based on observable quoted prices. Derivative assets and liabilities are included in Other current assets and Other current liabilities, respectively, on the Company’s Condensed Consolidated Balance Sheets.
(4) The Company has six contingent consideration arrangements that require it to pay the former owners of certain companies it acquired during fiscal 2009 and fiscal 2010. The undiscounted maximum payment under all six arrangements is $12.0 million, based on future revenues or gross margins over a 3 year period. The Company estimated the fair value of these liabilities using the expected cash flow approach with inputs being probability-weighted revenue or gross margin projections, as the case may be, and discount rates ranging from 0.07% to 0.80%. Of the total contingent consideration liability, $2.6 million and $2.0 million were included in Other current liabilities and Other non-current liabilities, respectively, on the Company’s Condensed Consolidated Balance Sheets.

The table below sets forth a summary of changes in the fair value of the Level III contingent consideration liabilities for the three month ended April 1, 2011.

 

As of

   Level III liabilities
April 1, 2011
 
(Dollars in thousands)       

Balance as of December 31, 2010

   $ 3,719   

Losses included in earnings

     605   

Losses recognized in other comprehensive income

     226   
        

Balance as of April 1, 2011

   $ 4,550   
        

The losses included in earnings represent the changes in fair value of the contingent consideration arrangements which are recognized in Other income (expense), net in the Condensed Consolidated Statements of Income. The losses recognized in other comprehensive income are a result of foreign currency translation adjustments.

Additional Fair Value Information

The following table provides additional fair value information relating to the Company’s financial instruments outstanding:

 

As of

   Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 
   April 1, 2011      December 31, 2010  
(Dollars in thousands)                            

Assets:

           

Cash and cash equivalents

   $ 244,342       $ 244,342       $ 220,788       $ 220,788   

Forward foreign currency exchange contracts

     563         563         407         407   

Liabilities:

           

Credit facility

   $ 151,000       $ 151,000       $ 151,000       $ 148,367   

Forward foreign currency exchange contracts

     574         574         140         140   

Promissory note and other

     2,300         2,277         2,153         2,133   

The fair value of the bank borrowings and promissory notes has been calculated using an estimate of the interest rate the Company would have had to pay on the issuance of notes with a similar maturity and discounting the cash flows at that rate. The fair values do not give an indication of the amount that Trimble would currently have to pay to extinguish any of this debt.

 

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NOTE 10. PRODUCT WARRANTIES

The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, technical support labor costs, and costs incurred by third parties performing work on the Company’s behalf. The Company’s expected future costs are primarily estimated based upon historical trends in the volume of product returns within the warranty period and the costs to repair or replace the equipment. The products sold are generally covered by a warranty for periods ranging from 90 days to three years.

While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, its warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ from the estimates, revisions to the estimated warranty accrual and related costs may be required.

Changes in the Company’s product warranty liability during the three months ended April 1, 2011 are as follows:

 

(Dollars in thousands)

      

Balance as of December 31, 2010

   $ 12,868   

Accruals for warranties issued

     3,751   

Changes in estimates

     (513

Warranty settlements (in cash or in kind)

     (3,277
        

Balance as of April 1, 2011

   $ 12,829   
        

NOTE 11. EARNINGS PER SHARE

The following data was used in computing earnings per share and the effect on the weighted-average number of shares of potentially dilutive common stock.

 

     Three Months Ended  
     April 1,
2011
     April 2,
2010
 
(Dollars in thousands, except per share amounts)              

Numerator:

     

Net income attributable to Trimble Navigation Ltd.

   $ 39,703       $ 27,898   
                 

Denominator:

     

Weighted average number of common shares used in basic earnings per share

     121,819         120,760   

Effect of dilutive securities (using treasury stock method):

     

Common stock options and restricted stock units

     4,037         3,069   
                 

Weighted average number of common shares and dilutive

     125,856         123,829   
                 

potential common shares used in diluted earnings per share Basic earnings per share

   $ 0.33       $ 0.23   
                 

Diluted earnings per share

   $ 0.32       $ 0.23   
                 

For the first quarter of fiscal 2011 and the first quarter of fiscal 2010 the Company excluded 0.9 million shares and 3.3 million shares of outstanding stock options, respectively, from the calculation of diluted earnings per share because the exercise prices of these stock options were greater than or equal to the average market value of the common shares during the respective periods. Inclusion of these shares would be antidilutive. These options could be included in the calculation in the future if the average market value of the common shares increases and is greater than the exercise price of these options.

NOTE 12. INCOME TAXES

The Company’s effective income tax rate for the three months ended April 1, 2011 was 16.0%, as compared to 29.0% for the three months ended April 2, 2010 primarily due to the cessation of the payment arrangement for the 2006 non-exclusive license of specified Trimble intellectual property rights to a foreign-based Trimble subsidiary as a result of the IRS settlement in May 2010 and reinstatement of the federal R&D credit in December 2010. Additionally, the 2011 and 2010 first quarter effective income tax rates were lower than the statutory federal income tax rate of 35% primarily due to geographical mix of the Company’s pre-tax income.

The Company and its U.S. subsidiaries are subject to U.S. federal and state income tax. The Company has concluded all U.S. federal income tax matters for the years through 2007 and state income tax matters for years through 1992. Generally, non-U.S. income tax matters have been

 

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concluded for years through 2000. The Company is currently in various stages of multiple year examinations by federal, state, and foreign taxing authorities. It is reasonably possible that the total amount of unrecognized tax benefits will change in the next twelve months. The amount of change cannot be reasonably estimated at this time. However, the Company does not believe that the unrecognized tax benefits will materially change in the next twelve months. Such changes could occur based on the normal expiration of various statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world.

The amount for unrecognized tax benefits, if recognized, would favorably affect the effective income tax rate in any future period are $29.7 million and $28.1 million at April 1, 2011 and December 31, 2010, respectively. Unrecognized tax benefits are recorded in Other non-current liabilities and in the deferred tax accounts in the accompanying Condensed Consolidated Balance Sheets.

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company’s unrecognized tax benefit liabilities include interest and penalties at April 1, 2011 and December 31, 2010, of $3.0 million and $2.6 million, respectively, which were recorded in Other non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.

NOTE 13. COMPREHENSIVE INCOME

The components of comprehensive income, net of related tax, were as follows:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Net income

   $ 38,872      $ 28,152   

Foreign currency translation adjustments

     19,881        (7,499

Net unrealized gain on investments/actuarial gain (loss)

     (82     (5
                

Comprehensive income

     58,671        20,648   

Less: Comprehensive income attributable to the noncontrolling interests

     (831     254   
                

Comprehensive income attributable to Trimble Navigation Ltd.

   $ 59,502      $ 20,394   
                

NOTE 14. SUBSEQUENT EVENTS

On May 9, 2011, the Company announced a public tender offer (“Tender Offer”) for all issued and outstanding shares in Finland-based Tekla Corporation (“Tekla”) for EUR 15.00 per share in cash representing an aggregate equity purchase price of approximately EUR 337 million (or approximately $489 million). Tekla’s shares are publicly listed on the NASDAQ OMX Helsinki stock exchange. In connection with the announcement of the Tender Offer, the Company entered into a combination agreement with Tekla to make a public tender offer to purchase all the issued and outstanding shares in Tekla that are not owned by Tekla itself. Pursuant to the agreement, the offer period for the Tender Offer is expected to commence on May 19, 2011 and expire on June 17, 2011. Gerako Oy, holding approximately 38 percent of the shares and 38 percent of the votes in Tekla, has given an irrevocable and unconditional undertaking to accept the Tender Offer.

On May 6, 2011, in connection with the announcement of the Tender Offer, the Company and several of its subsidiaries entered into a new credit agreement with a group of lenders for which JPMorgan Chase Bank, N.A. is acting as administrative agent, which we call our 2011 Credit Facility. This credit agreement provides for unsecured credit facilities in the aggregate principal amount of $1.1 billion comprised of a five-year revolving loan facility of $700.0 million and a five-year $400.0 million term loan facility. Subject to the terms of the 2011 Credit Facility, the revolving loan facility and the term loan facility may be increased by up to $300.0 million in the aggregate. The funds available under the 2011 Credit Facility may be used by the Company for general corporate purposes and for financing certain acquisitions, including the financing of the Tender Offer and the payment of transaction fees and expenses related thereto.

As of May 9, 2011, $151 million was outstanding under the 2011 Credit Facility. The Company expects to make additional borrowings under the 2011 Credit Facility of approximately $400 million in connection with the Tender Offer.

 

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Actual results could differ materially from those indicated in the forward-looking statements due to a number of factors including, but not limited to, the risk factors discussed in “Risk Factors” below and elsewhere in this report as well as in the Company’s Annual Report on Form 10-K for fiscal year 2010 and other reports and documents that the Company files from time to time with the Securities and Exchange Commission. The Company has attempted to identify forward-looking statements in this report by placing an asterisk (*) before paragraphs. Discussions containing such forward-looking statements may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q, and the Company disclaims any obligation to update these statements or to explain the reasons why actual results may differ.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U. S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to product returns, doubtful accounts, inventories, investments, intangible assets, income taxes, warranty obligations, restructuring costs, contingencies, and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the amount and timing of revenue and expense and the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to the Company’s significant accounting polices during the three months ended April 1, 2011 from those disclosed in the Company’s 2010 Form 10-K.

Recent Accounting Pronouncements

There are no updates to recent accounting standards as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

EXECUTIVE LEVEL OVERVIEW

Trimble’s focus is on combining positioning technology with wireless communication and application capabilities to create system-level solutions that enhance productivity and accuracy for our customers. The majority of our markets are end-user markets, including engineering and construction firms, governmental organizations, public safety workers, farmers, and companies who must manage fleets of mobile workers and assets. In our Advanced Devices segment, we also provide components to original equipment manufacturers to incorporate into their products. In the end-user markets, we provide a system that includes a hardware platform that may contain software and customer support. Some examples of our solutions include products that automate and simplify the process of surveying land, products that automate the utilization of equipment such as tractors and bulldozers, products that enable a company to manage its mobile workforce and assets, and products that allow municipalities to manage their fixed assets. In addition, we also provide software applications on a stand-alone basis. For example, we provide software for project management on construction sites.

Solutions targeted at the end-user make up a significant majority of our revenue. To create compelling products, we must attain an understanding of the end-users’ needs and work flow, and how location-based technology can enable that end-user to work faster, more efficiently, and more accurately. We use this knowledge to create highly innovative products that change the way work is done by the end-user. With the exception of our Mobile Solutions and Advanced Devices segments, our products are generally sold through a dealer channel, and it is crucial that we maintain a proficient, global, third-party distribution channel.

We continued to execute our strategy with a series of actions that can be summarized in three categories.

Reinforcing our position in existing markets

* We believe these markets provide us with additional, substantial potential for substituting our technology for traditional methods. We are continuing to develop new products and to strengthen our distribution channels in order to expand our market. In our Engineering and Construction segment, we introduced our next generation TSC3 Handheld Controller which provides surveyors with a range of new features and functions from multiple devices into a single handheld: a digital camera, integrated communications as well as a GPS navigator, compass and accelerometer. These features facilitate more efficient communication between field and office. For contractors, this product allows

 

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construction professionals to stay connected and to be equipped with accurate positioning, digital design information and the ability to locate, measure and record information anywhere on the construction site with just one device. Furthermore, we released the next generation of Trimble Ranger 3 rugged handheld computer which meets or exceeds rigorous military standards for temperature extremes, drops, vibration, humidity and altitude.

In our Field Solutions segment, we released the new Trimble’s DCM-300 Modem which facilitates asset tracking and data transfer for Agriculture. The DCM-300 allows farmers to save time without the need to hand-deliver electronic data cards or jump drives from the farm office. We also introduced new capabilities for our Field-IQ Crop Input Control System that allows farmers to optimize planter operation by delivering more accurate seed placement thereby giving the operators more confidence in their planting applications.

In our Advanced Devices segment, we announced the availability of ThingMagic Mercury6e RFID Reader Module, which is the world’s smallest 1 Watt, four port UHF reader module on the market today. This product’s extensive feature set, small size and performance provide developers with more latitude when creating high-performance RFID-enabled solutions. All of these products strengthened our competitive position and created new value for the user.

Extending our position in new and existing markets through new product categories

* We are utilizing the strength of the Trimble brand in our markets to expand our revenue by bringing new products to new and existing users. In our Engineering and Construction segment, through our acquisition of Sinning Vermessungsbedarf GmbH of Bavaria, Germany, we introduced the Trimble GEDO CE Trolley System, which is a system and software that allows railway track recording and documentation to be completed easily and economically. Furthermore, our acquisition of the assets of OmniSTAR allows us to provide space-based Global Navigation Satellite System, or GNSS, correction services that can improve the accuracy of a GNSS receiver for precise positioning applications. This acquisition is expected to significantly expand Trimble’s worldwide ability to provide land-based correction services for agriculture, construction, mapping and Geographic Information System (GIS) and survey applications.

In our Field Solutions segment, through our acquisition of the Corridor Analyst from Photo Science of Lexington, we introduced the Trimble Corridor Analyst routing software for power transmission lines. This software helps select the most appropriate corridors for high voltage power transmission lines.

Bringing existing technology to new markets

* We continue to position ourselves in newer markets that will serve as important sources of future growth. In our Engineering and Construction segment, our acquisition of Mesta’s software suite allows us to expand our Construction applications to the Nordic Markets. This software suite includes office, field data collection and on-machine solutions specifically designed for the Nordic construction market. In our Mobile Solutions segment, we announced our collaboration efforts with Zurich, one of the largest fleet insurers in North America and globally, with its new, integrated fleet risk management program called Zurich Fleet Intelligence (ZFI). Trimble will offer telematics devices to Zurich’s insurance customers seeking ways to minimize their fleet’s operating costs and reduce crashes to improve productivity and driver safety. Our efforts continue to be focused in emerging markets in Africa, China, India, the Middle-East and Russia.

RECENT BUSINESS DEVELOPMENTS

The following companies and joint ventures were acquired or formed during twelve months ended April 2, 2010 and are combined in our results of operations since the date of acquisition or formation:

OmniSTAR

On March 24, 2011, we acquired certain assets related to the OmniSTAR™ GNSS signal corrections business from Fugro N.V. OmniSTAR provides space-based GNSS correction services that can improve the accuracy of a GNSS receiver for precise positioning applications. The correction services business performance is reported under our Engineering and Construction business segment.

GEDO CE Trolley System

On February 11, 2011, we acquired the GEDO CE Trolley System and software from Sinning Vermessungsbedarf GmbH of Bavaria, Germany. The new trolley system and software provide as-built survey and documentation for railway track maintenance and modernization. The GEDO CE Trolley System’s performance is reported under our Engineering and Construction business segment.

Mesta

On February 9, 2011, we acquired a suite of software solutions from Mesta Entreprener AS, a subsidiary of Mesta Konsern AS. Mesta Konsern AS is one of Norway’s largest contracting groups for road and highway construction as well as related operations and maintenance. Mesta’s performance is reported under our Engineering and Construction business segment.

 

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Tata AutoComp Mobility Telematics Limited

On December 14, 2010, we acquired Tata AutoComp Mobility Telematics Limited, or TMT, a wholly-owned subsidiary of Tata AutoComp Systems Limited of Pune, India. TMT is a leading provider of telematics solutions and mobile resource management services in India. TMT’s performance is reported under our Mobile Solutions business segment.

ThingMagic, Inc.

On October 22, 2010, we acquired privately-held ThingMagic, Inc. of Cambridge, Massachusetts. ThingMagic is a leading developer of radio frequency identification technology and offers advanced development services to facilitate the integration of this technology into a wide range of applications. ThingMagic’s performance is reported under our Advanced Devices business segment.

Novariant

On October 8, 2010, we acquired the Terralite assets from Novariant to expand our portfolio of positioning solutions. The Terralite XPS technology is a scalable infrastructure that generates signals for real-time positioning to augment existing GPS coverage. The Terralite assets’ performance is reported under our Engineering and Construction business segment.

Intelligent Construction Tools, LLC.

On September 29, 2010, we and the Hilti Group formed a joint venture, Intelligent Construction Tools, LLC. The joint venture, 50 percent owned by us and 50 percent owned by Hilti, will focus on leveraging technologies from both companies to develop measuring solutions for the building construction trades.

Cengea

On September 10, 2010, we acquired privately-held Cengea Solutions Inc., based in British Columbia, Canada. Cengea is a leading provider of spatially-enabled business operations and supply chain management software for the forestry, agriculture and natural resource industries. Cengea’s performance is reported under our Mobile Solutions business segment.

Accubid Systems

On August 12, 2010, we acquired the assets of privately-held Accubid Systems, based in Ontario, Canada. Accubid is a leading provider of estimating, project management and service management software and services for electrical and mechanical contractors. Accubid’s performance is reported under our Engineering and Construction business segment.

Punch Telematix NV

On July 7, 2010, we acquired control of Punch Telematix NV. Punch was a public company based in Belgium and engaged in the development and marketing of transport management solutions. Punch’s performance is reported under our Mobile Solutions business segment.

Zhongtie Trimble Digital Engineering and Construction Limited Company

On June 28, 2010, we and the China Railway Eryuan Engineering Group Co. Ltd. (CREEC) formed a joint venture, Zhongtie Trimble Digital Engineering and Construction Limited Company (ZTD). The joint venture is 50 percent owned by us and 50 percent by CREEC and will leverage Trimble’s commercial positioning, communications and software technologies, as well as CREEC’s expertise in rail design and construction, to develop and provide digital railway solutions that address the design, construction and maintenance for the Chinese railway industry.

Definiens

On June 10, 2010, we acquired Definiens’ Earth Sciences business assets and licenses of its software technology platform. Definiens is a Germany-based company specializing in image analysis solutions. Definiens’ performance is reported under our Engineering and Construction business segment.

Rusnavgeoset Limited Liability Company

On May 14, 2010, we and Russian Space Systems formed a joint venture, Rusnavgeoset Limited Liability Company. We and Russian Space Systems both maintain a 50 percent ownership of Rusnavgeoset. Rusnavgeoset will be responsible for selling commercial GNSS geodetic network infrastructure systems localized for Russia and the Commonwealth of Independent States.

Seasonality of Business

 

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* Our individual segment revenue may be affected by seasonal buying patterns. Typically, the second fiscal quarter has been the strongest quarter for the Company driven by the construction buying season.

RESULTS OF OPERATIONS

Overview

The following table is a summary of revenue, gross margin, and operating income for the periods indicated and should be read in conjunction with the narrative descriptions below.

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Total consolidated revenue

   $ 384,293      $ 319,015   

Gross margin

   $ 191,530      $ 158,997   

Gross margin %

     49.8     49.8

Total consolidated operating income

   $ 43,675      $ 36,115   

Operating income %

     11.4     11.3

Revenue

In the three months ended April 1, 2011, total revenue increased by $65.3 million or 20%, as compared to the same corresponding period in fiscal 2010. Of the increase, Engineering and Construction revenue increased $32.4 million, Field Solutions increased $27.2 million, Mobile Solutions increased $6.5 million, slightly offset by a decrease in Advanced Devices of $0.8 million. The revenue increase was primarily due to the economic recovery in the U.S. and rest of the world markets in both Engineering and Construction and Field Solutions.

Gross Margin

Gross margin varies due to a number of factors including product mix, pricing, distribution channel, production volumes, and foreign currency translations.

Gross margin increased by $32.5 million for the three months ended April 1, 2011, as compared to the corresponding period in the prior year, primarily due to increased sales in Engineering and Construction and Field Solutions. Gross margin as a percentage of total revenue for the three months ended April 1, 2011 was 49.8%, consistent with the prior year.

Operating Income

Operating income increased by $7.6 million for the three months ended April 1, 2011, as compared to the corresponding period in the prior year. Operating income as a percentage of total revenue was 11.4% for the three months ended April 1, 2011, as compared to 11.3% for the three months ended April 2, 2010. The increase in operating income was primarily driven by higher revenue, partially offset by increased operating expense. The slight increase in operating income percentage for the three month period was primarily due to increased operating leverage in Field Solutions.

Results by Segment

To achieve distribution, marketing, production, and technology advantages in our targeted markets, we manage our operations in the following four segments: Engineering and Construction, Field Solutions, Mobile Solutions, and Advanced Devices. Operating income equals net revenue less cost of sales and operating expense, excluding general corporate expense, amortization of purchased intangibles, amortization of inventory step-up charges, non-recurring acquisition costs, and restructuring charges.

The following table is a summary of revenue and operating income by segment:

 

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     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Engineering and Construction

    

Revenue

   $ 190,034      $ 157,618   

Segment revenue as a percent of total revenue

     49     49

Operating income

   $ 22,779      $ 18,807   

Operating income as a percent of segment revenue

     12     12

Field Solutions

    

Revenue

   $ 123,053      $ 95,901   

Segment revenue as a percent of total revenue

     32     30

Operating income

   $ 52,505      $ 39,313   

Operating income as a percent of segment revenue

     43     41

Mobile Solutions

    

Revenue

   $ 44,421      $ 37,959   

Segment revenue as a percent of total revenue

     12     12

Operating income

   ($ 1,334   $ 1,899   

Operating income as a percent of segment revenue

     -3     5

Advanced Devices

    

Revenue

   $ 26,785      $ 27,537   

Segment revenue as a percent of total revenue

     7     9

Operating income

   $ 3,863      $ 5,625   

Operating income as a percent of segment revenue

     14     20

Unallocated corporate expense includes general corporate expense, amortization of inventory step-up charges, and non-recurring acquisition costs. A reconciliation of our consolidated segment operating income to consolidated income before income taxes follows:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Consolidated segment operating income

   $ 77,813      $ 65,644   

Unallocated corporate expense

     (17,207     (15,038

Amortization of purchased intangible assets

     (16,065     (13,817

Restructuring charges

     (866     (674
                

Consolidated operating income

     43,675        36,115   

Non-operating income, net

     2,606        3,535   
                

Consolidated income before taxes

   $ 46,281      $ 39,650   
                

Engineering and Construction

Engineering and Construction revenue increased by $32.4 million or 21% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010. Segment operating income increased $4.0 million or 21% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010.

The revenue increase for the three months ended April 1, 2011 was primarily driven by improving economies as well as the strength of the newly formed SITECH construction channel. Segment operating income increased primarily due to higher revenue.

Field Solutions

Field Solutions revenue increased by $27.2 million or 28% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010. Segment operating income increased by $13.2 million or 34% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010.

The revenue increase for the three month periods ended April 1, 2011 was due to higher sales across the world for our agricultural products due to increased farmer demand. Operating income increased primarily due to higher revenue and strong operating expense control in our agricultural business.

 

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Mobile Solutions

Mobile Solutions revenue increased by $6.5 million or 17% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010. Segment operating income decreased $3.2 million or 170% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010.

The revenue increase for the three month periods ended April 1, 2011 was primarily due to revenue from acquisitions completed in the prior year, as well as the recognition of approximately $4.4 million of revenue previously deferred as a result of a material modification to the terms of an existing customer arrangement, partially offset by a loss of a large customer in the second quarter of 2010. The decrease in operating income was primarily due to a decrease in gross margin due to product mix.

Advanced Devices

Advanced Devices revenue decreased by $0.8 million or 3% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010. Segment operating income decreased by $1.8 million or 31% for the three months ended April 1, 2011, as compared to the same corresponding period in fiscal 2010.

The slight decrease in revenue was primarily due to a decrease in the sale of timing devices, partially offset by acquisition revenue not applicable in the prior year. The decrease in operating income was primarily due to product mix.

Research and Development, Sales and Marketing, and General and Administrative Expense

Research and development (R&D), sales and marketing (S&M), and general and administrative (G&A) expense are summarized in the following table:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Research and development

     43,232        35,890   

Percentage of revenue

     11     11

Sales and marketing

     61,207        49,768   

Percentage of revenue

     16     16

General and administrative

     33,472        28,547   

Percentage of revenue

     9     9
                

Total

     137,911        114,205   
                

Percentage of revenue

     36     36
                

Overall, R&D, S&M, and G&A expense increased by approximately $23.7 million for the three months ended April 1, 2011, as compared to the corresponding period in fiscal 2010.

Research and development expense increased by $7.3 million in the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010, primarily due to increased compensation related expense and the inclusion of expense from acquisitions not applicable in the prior year. All of our R&D costs have been expensed as incurred. Costs of software developed for external sale subsequent to reaching technical feasibility were not considered material and were expensed as incurred. Spending overall was at approximately 11% of revenue in both the first quarter of fiscal 2011 and corresponding period of fiscal 2010.

* We believe that the development and introduction of new products are critical to our future success and we expect to continue active development of new products.

Sales and marketing expense increased by $11.4 million in the first quarter of fiscal 2011, as compared to the corresponding period of fiscal 2010. The increase was primarily due to increased compensation related expense, trade show cost and the inclusion of expense from acquisitions not applicable in the prior year. Spending overall was at approximately 16% of revenue in both the first quarter of fiscal 2011 and corresponding period of fiscal 2010.

* Our future growth will depend in part on the timely development and continued viability of the markets in which we currently compete, as well as our ability to continue to identify and develop new markets for our products.

General and administrative expense increased by $4.9 million in the first quarter of fiscal 2011, as compared to the corresponding period in fiscal 2010, primarily due to the inclusion of expense from acquisitions not applicable in the prior year, partially offset by lower bad debt expense. Spending overall was at approximately 9% of revenue in both the first quarter of fiscal 2011 and corresponding period of fiscal 2010.

 

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Amortization of Purchased Intangible Assets

Amortization of purchased intangible assets was $16.1 million in the first quarter of fiscal 2011, as compared to $13.8 million in the first quarter of fiscal 2010. Of the total $16.1 million in the first quarter of fiscal 2011, $9.2 million is presented as a separate line within Operating expense and $6.9 million is included within Cost of sales on our Condensed Consolidated Statements of Income. The increase was due primarily to acquisitions not included in the corresponding period of fiscal 2010. As of April 1, 2011, future amortization of intangible assets is expected to be $47.2 million during the remaining three quarters of fiscal 2011, $55.5 million during 2012, $49.6 million during 2013, $27.5 million during 2014, $17.7 million during 2015, and $17.9 million thereafter.

Non-operating Income, Net

The components of non-operating income, net, were as follows:

 

     Three Months Ended  
     April 1,
2011
    April 2,
2010
 
(Dollars in thousands)             

Interest income

   $ 285      $ 399   

Interest expense

     (496     (398

Foreign currency transaction gains

     306        746   

Income from equity method investments, net

     2,763        2,474   

Other income (expense), net

     (252     314   
                

Total non-operating income, net

   $ 2,606      $ 3,535   
                

The non-operating income, net decreased $0.9 million for the first quarter of fiscal 2011, as compared to the corresponding period in fiscal 2010. The decrease was primarily due to a decrease in foreign exchange gains and other, offset by higher profitability from joint ventures.

Income Tax Provision

Our effective income tax rate for the three months ended April 1, 2011 was 16.0%, as compared to 29.0% for the three months ended April 2, 2010 primarily due to the cessation of the payment arrangement for the 2006 non-exclusive license of specified Trimble intellectual property rights to a foreign-based Trimble subsidiary as a result of the IRS settlement in May 2010 and reinstatement of the federal R&D credit in December 2010. Additionally, the 2011 and 2010 first quarter effective income tax rates were lower than the statutory federal income tax rate of 35% primarily due to geographical mix of our pre-tax income.

OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

Other than lease commitments incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries that are not included in the condensed consolidated financial statements. Additionally, we do not have any interest in, or relationship with, any special purpose entities.

In the normal course of business to facilitate sales of its products, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors, and our bylaws contain similar indemnification obligations to our agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements were not material and no liabilities have been recorded for these obligations on the Condensed Consolidated Balance Sheets as of April 1, 2011 and December 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES

 

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As of

   April 1,
2011
    December 31,
2010
 
(Dollars in thousands)             

Cash and cash equivalents

   $ 244,342      $ 220,788   

Total debt

     153,300        153,153   
Three Months Ended    April 1,
2011
    April 2, 2010  
(Dollars in thousands)             

Cash provided by operating activities

   $ 27,927      $ 55,503   

Cash used in investing activities

     (43,221     (29,916

Cash provided by financing activities

     35,470        9,077   

Effect of exchange rate changes on cash and cash equivalents

     3,378        (1,439
                

Net increase in cash and cash equivalents

   $ 23,554      $ 33,225   

Cash and Cash Equivalents

As of April 1, 2011, cash and cash equivalents totaled $244.3 million as compared to $220.8 million at December 31, 2010. Debt was $153.3 million as of April 1, 2011, as compared to $153.2 million at December 31, 2010.

* Our ability to continue to generate cash from operations will depend in large part on profitability, the rate of collections of accounts receivable, our inventory turns, and our ability to manage other areas of working capital.

*We believe that our cash and cash equivalents, together with borrowings under our 2011 Credit Facility as described below under the heading “Debt”, will be sufficient to meet our anticipated operating cash needs and stock purchases under the stock repurchase program for at least the next twelve months.

* We anticipate that planned capital expenditures primarily for computer equipment, software, manufacturing tools and test equipment, and leasehold improvements associated with business expansion, will constitute a partial use of our cash resources. Decisions related to how much cash is used for investing are influenced by the expected amount of cash to be provided by operations.

Operating Activities

Cash provided by operating activities was $27.9 million for the first quarter of fiscal 2011, as compared to $55.5 million for the first quarter of fiscal 2010. This decrease of $27.6 million was primarily driven by an increase in accounts receivable due to higher revenue, a decrease in accounts payable which is largely due to timing and a decrease in accrued compensation and benefits, partially offset by an increase in income tax payable.

Investing Activities

Cash used in investing activities was $43.2 million for the first quarter of fiscal 2011, as compared to $29.9 million for the first quarter of fiscal 2010. The increase was due to higher cash requirements for business and intangible asset acquisitions.

Financing Activities

Cash provided by financing activities was $35.5 million for the first quarter of fiscal 2011, as compared to cash used of $9.1 million for the first quarter of fiscal 2010. The increase was primarily due to an increase in proceeds received from issuance of common stock related to stock option exercises in the first quarter of fiscal 2011.

Accounts Receivable and Inventory Metrics

 

As of

   April 1,
2011
     December 31,
2010
 

Accounts receivable days sales outstanding

     63         63   

Inventory turns per year

     3.7         3.8   

Accounts receivable days sales outstanding were both 63 days as of April 1, 2011 and December 31, 2010. Our accounts receivable days sales outstanding are calculated based on ending accounts receivable, net, divided by revenue for the corresponding fiscal quarter, times a quarterly

 

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average of 91 days. Our inventory turns were 3.7 as of April 1, 2011, as compared to 3.8 as of December 31, 2010. Our inventory turnover is calculated based on total cost of sales for the most recent twelve months divided by average ending inventory, net, for this same twelve month period.

Debt

As of April 1, 2011, our total debt was comprised primarily of our revolving credit line in the amount of $151.0 million, which is classified as short-term as the credit line was due to mature in February 2012. As of April 1, 2011 and December 31, 2010, we had promissory notes and other totaling approximately $2.3 million and $2.2 million. Of these amounts, we had outstanding notes payable of $1.9 million which consisted primarily of notes payable to noncontrolling interest holders. The notes bear interest at 6% and have undefined payment terms, but are callable with a six month notification.

On May 6, 2011, we entered into a new credit agreement with a group of lenders for which JPMorgan Chase Bank, N.A. is acting as administrative agent, which we call our 2011 Credit Facility. This credit facility provides for unsecured credit facilities in the aggregate principal amount of $1.1 billion comprised of a five-year revolving loan facility of $700.0 million and a five-year $400.0 million term loan facility. Subject to the terms of the 2011 Credit Facility, the revolving loan facility and the term loan facility may be increased by up to $300.0 million in the aggregate. The term loan facility may be drawn on or before the 180th day following the date of the 2011 Credit Facility.

The funds available under the 2011 Credit Facility may be used for general corporate purposes and for financing certain acquisitions, and the payment of transaction fees and expenses related to such acquisitions. On May 6, 2011, we made an initial borrowing of $151.0 million under the term loan facility of the 2011 Credit Facility to repay all of the amounts outstanding under the then existing Amended and Restated Credit Agreement dated February 16, 2007. We expect to make additional borrowings under the 2011 Credit Facility of approximately $400 million in connection with the tender offer for all issued and outstanding shares in Finland-based Tekla Corporation.

We may borrow, repay and reborrow funds under the revolving loan facility until its maturity on May 6, 2016, at which time the revolving facility will terminate, and all outstanding loans, together with all accrued and unpaid interest, must be repaid. Amounts not borrowed under the revolving facility will be subject to a commitment fee, to be paid in arrears on the last day of each fiscal quarter, ranging from 0.20% to 0.40% per annum depending on our leverage ratio as of the most recently ended fiscal quarter. The term loan will be repaid in quarterly installments, with the last quarterly payment to be made at April 1, 2016. On an annualized basis, the amortization of the term loan is as follows: 5%, 5%, 10%, 10%, and 70% for years one through five respectively. The term loan may be prepaid in whole or in part, subject to certain minimum thresholds, without penalty or premium. Amounts repaid or prepaid with respect to the term loan facility may not be reborrowed.

We may borrow funds under the 2011 Credit Facility in U.S. Dollars, Euros or in certain other agreed currencies, and borrowings will bear interest, at our option, at either: (i) a floating per annum base rate based on the administrative agent’s prime rate or other agreed-upon rate, depending on the currency borrowed, plus a margin of between 0.25% and 1.25%, depending on our leverage ratio as of the most recently ended fiscal quarter, or (ii) a reserve-adjusted fixed per annum rate based on LIBOR, EURIBOR, STIBOR or other agreed-upon rate, depending on the currency borrowed, plus a margin of between 1.25% and 2.25%, depending on our leverage ratio as of the most recently ended fiscal quarter. Interest will be paid on the last day of each fiscal quarter with respect to borrowings bearing interest based on a floating rate, or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at a fixed rate. Our obligations under the 2011 Credit Facility are guaranteed by several of our domestic subsidiaries.

The 2011 Credit Facility contains various customary representations and warranties by us, which include customary use of materiality, material adverse effect and knowledge qualifiers. The 2011 Credit Facility also contains customary affirmative and negative covenants including, among other requirements, negative covenants that restrict our ability to dispose of assets, create liens, incur indebtedness, repurchase stock, pay dividends, make acquisitions and make investments. Further, the 2011 Credit Facility contains financial covenants that require the maintenance of maximum leverage and minimum fixed charge coverage ratios. The 2011 Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments, and events constituting a change of control. Upon the occurrence and during the continuance of an event of default, interest on the obligations will accrue at an increased rate and the lenders may accelerate our obligations under the 2011 Credit Facility, however that acceleration will be automatic in the case of bankruptcy and insolvency events of default.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

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 our historical and prospective financial performance, as well as our performance relative to competitors. We believe some of our investors track our “core operating performance” as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Management also believes that looking at our 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. We do not believe that these items are indicative of our core operating performance. For a detailed explanations of the adjustments made to comparable GAAP measures, see items (A) – (H) below.

 

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           Three Months Ended  
(Dollars In thousands, except per share data)          April-1,
2011
    Apr-2,
2010
 
           Dollar
Amount
    % of
Revenue
    Dollar
Amount
    % of
Revenue
 

GROSS MARGIN:

          

GAAP gross margin:

     $ 191,530        49.8   $ 158,997        49.8

Restructuring

    (A)         99        0.0     43        0.0

Amortization of purchased intangibles

    (B)         6,888        1.9     5,769        1.8

Stock-based compensation

    (C)         468        0.1     501        0.2

Amortization of acquisition-related inventory step-up

    (D)         508        0.1     71        0.0
                                  

Non-GAAP gross margin:

     $ 199,493        51.9   $ 165,381        51.8
                                  

OPERATING EXPENSES:

          

GAAP operating expenses:

     $ 147,855        38.5   $ 122,882        38.5

Restructuring

    (A)         (767     -0.2     (631     -0.2

Amortization of purchased intangibles

    (B)         (9,177     -2.4     (8,046     -2.5

Stock-based compensation

    (C)         (6,330     -1.6     (5,140     -1.6

Non-recurring acquisition costs

    (E)         (2,190     -0.6     (738     -0.2
                                  

Non-GAAP operating expenses:

     $ 129,391        33.7   $ 108,327        34.0
                                  

OPERATING INCOME:

          

GAAP operating income:

     $ 43,675        11.4   $ 36,115        11.3

Restructuring

    (A)         866        0.2     674        0.2

Amortization of purchased intangibles

    (B)         16,065        4.2     13,815        4.4

Stock-based compensation

    (C)         6,798        1.8     5,641        1.8

Amortization of acquisition-related inventory step-up

    (D)         508        0.1     71        0.0

Non-recurring acquisition costs

    (E)         2,190        0.5     738        0.2
                                  

Non-GAAP operating income:

     $ 70,102        18.2   $ 57,054        17.9
                                  

NON-OPERATING INCOME, NET:

          

GAAP non-operating income, net:

     $ 2,606        $ 3,535     

Non-recurring acquisition (gains) costs

    (E)         765          (200  
                      

Non-GAAP non-operating income, net:

     $ 3,371        $ 3,335     
                      
                 GAAP and
Non-GAAP
Tax Rate %  (F)
          GAAP and
Non-GAAP
Tax Rate %  (F)
 

INCOME TAX PROVISION (BENEFIT):

          

GAAP income tax provision (benefit):

     $ 7,409        16   $ 11,498        29

Income tax effect on non-GAAP adjustments

    (G)         4,353          6,014     
                                  

Non-GAAP income tax provision (benefit):

     $ 11,762        16   $ 17,512        29
                                  

NET INCOME:

          

GAAP net income attributable to Trimble Navigation Ltd.

     $ 39,703        $ 27,898     

Restructuring

    (A)         866          674     

Amortization of purchased intangibles

    (B)         16,065          13,815     

Stock-based compensation

    (C)         6,798          5,641     

Amortization of acquisition-related inventory step-up

    (D)         508          71     

Non-recurring acquisition costs

    (E)         2,955          538     

Income tax effect on non-GAAP adjustments

    (G)         (4,353       (6,014  
                      

Non-GAAP net income attributable to Trimble Navigation Ltd.

     $ 62,542        $ 42,623     
                      

DILUTED NET INCOME PER SHARE:

          

GAAP diluted net income per share attributable to Trimble Navigation Ltd.

     $ 0.32        $ 0.23     

Restructuring

    (A)         0.01          0.01     

Amortization of purchased intangibles

    (B)         0.13          0.11     

Stock-based compensation

    (C)         0.05          0.04     

Amortization of acquisition-related inventory step-up

    (D)         —            —       

Non-recurring acquisition costs

    (E)         0.02          —       

Income tax effect on non-GAAP adjustments

    (G)         (0.03       (0.05  
                      

Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd.

     $ 0.50        $ 0.34     
                      

OPERATING LEVERAGE:

          

Increase in non-GAAP operating income

     $ 13,048        $ 11,146     

Increase in revenue

     $ 65,278        $ 30,061     

Operating leverage (increase in non-GAAP operating income as a % of increase in revenue)

       20.0       37.1  

 

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Table of Contents
           Three Months Ended  
(Dollars In thousands, except per share data)          April-1,
2011
    Apr-2,
2010
 
                

% of
Segment

     Revenue     

          

% of
Segment

     Revenue     

 

SEGMENT OPERATING INCOME:

           

Engineering and Construction

           

GAAP operating income before corporate allocations:

     $ 22,779        12.0   $ 18,807         11.9

Stock-based compensation

     (H     2,338        1.2     1,726         1.1
                                   

Non-GAAP operating income before corporate allocations:

     $ 25,117        13.2   $ 20,533         13.0
                                   

Field Solutions

           

GAAP operating income before corporate allocations:

     $ 52,505        42.7   $ 39,313         41.0

Stock-based compensation

     (H)        512        0.4     455         0.5
                                   

Non-GAAP operating income before corporate allocations:

     $ 53,017        43.1   $ 39,768         41.5
                                   

Mobile Solutions

           

GAAP operating income (loss) before corporate allocations:

     $ (1,334     -3.0   $ 1,899         5.0

Stock-based compensation

     (H     996        2.2     1,202         3.2
                                   

Non-GAAP operating income before corporate allocations:

     $ (338     -0.8   $ 3,101         8.2
                                   

Advanced Devices

           

GAAP operating income before corporate allocations:

     $ 3,863        14.4   $ 5,625         20.4

Stock-based compensation

     (H     651        2.5     443         1.6
                                   

Non-GAAP operating income before corporate allocations:

     $ 4,514        16.9   $ 6,068         22.0
                                   

 

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 costs 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 arises 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 ended April 1, 2011 and April 2, 2010, stock-based compensation was allocated as follows:

 

     Three Months Ended  
     April-
1,
2011
     Apr-2,
2010
 
(Dollars in thousands)              

Cost of sales

   $ 468       $ 501   

Research and development

     1,096         947   

Sales and Marketing

     1,634         1,383   

General and administrative

     3,600         2,810   
                 
   $ 6,798       $ 5,641   
                 

 

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.

 

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Table of Contents
F. GAAP and non-GAAP tax rate %. These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.

 

G. Income tax effect on non-GAAP adjustments. This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A)—(E) on non-GAAP net income.

 

H. 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 $2.3 million and $1.8 million for the three months ended April 1, 2011 and April 2, 2010, respectively.

Non-GAAP Operating Income

Non-GAAP operating income increased by $13.0 million for the three months ended April 1, 2011, as compared to the corresponding period in the prior year. Non-GAAP Operating income as a percentage of total revenue was 18.2% for the three months ended April 1, 2011, as compared to 17.9% for the three months ended April 2, 2010. The increase in operating income was primarily driven by higher revenue and associated gross margin in Engineering and Construction and Field Solutions. The increase in operating income percentage for the three month period was primarily due to increased operating leverage in Field Solutions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. We use certain derivative financial instruments to manage these risks. We do not use derivative financial instruments for speculative purposes. All financial instruments are used in accordance with policies approved by our Board of Directors.

Market Interest Rate Risk

There have been no significant changes to our market interest rate risk assessment. Refer to our 2010 Annual Report on Form 10-K on page 53.

Foreign Currency Exchange Rate Risk

There have been no significant changes to our foreign currency exchange rate risk assessment. Refer to our 2010 Annual Report on Form 10-K on page 44.

ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.

The management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting.

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in litigation arising out of the ordinary course of our business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party or of which any of our or their property is subject.

ITEM 1A. RISK FACTORS

 

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Table of Contents

A description of factors that could materially affect our business, financial condition, or operating results is included under “Risk and Uncertainties” in Item 1A of Part I of our 2010 Annual Report on Form 10-K and is incorporated herein by reference. There have been no material changes to the risk factor disclosure since our 2010 Annual Report on Form 10-K. The risk factors described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial conditions and/or operating results.

For risks and uncertainties that may exist regarding our acquisition of Tekla pursuant to the Tender Offer, see “ Investing in and Integrating New Acquisitions Could be Costly and May Place a Significant Strain on Our Management Systems and Resources Which Could Negatively Impact Our Operating Results ” under Item 1A (Risk Factors – Risk and Uncertainties) of Part I of our 2010 Annual Report on Form 10-K and incorporated herein by reference.

The following risk factor, which is included in our 2010 Annual Report on Form 10-K, has been updated to account for the new credit agreement we recently entered into:

Our Debt Could Adversely Affect Our Cash Flow and Prevent Us from Fulfilling Our Financial Obligations

As of May 6, 2011, we have existing unsecured credit facilities in the aggregate principal amount of $1.1 billion comprised of five-year revolving loan facility of $700.0 million and a five-year $400.0 million term loan facility. Subject to the terms of the credit agreement, the revolving loan facility and the term loan facility may be increased by up to $300.0 million in the aggregate. As of May 9, 2011, $151 million was outstanding under the credit agreement. The Company expects to make additional borrowings under the credit agreement of approximately $400 million in connection with the Tender Offer. Debt incurred under the credit agreement could have important consequences, such as:

 

   

requiring us to dedicate a portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures, and other cash requirements,

 

   

increasing our vulnerability to adverse economic and industry conditions,

 

   

limiting our flexibility in planning for, or reacting to, changes and opportunities in, our industry, which may place us at a competitive disadvantage, and

 

   

limiting our ability to incur additional debt on acceptable terms, if at all.

Additionally, if we were to default under the credit agreement and were unable to obtain a waiver for such a default, interest on the obligations would accrue at an increased rate and the lenders could accelerate our obligations under the credit agreement, however that acceleration will be automatic in the case of bankruptcy and insolvency events of default. Additionally, our subsidiaries that have guaranteed the credit agreement could be required to pay the full amount of our obligations under the credit agreement. Any such action on the part of the lenders against us could harm our financial condition.

 

29


Table of Contents

ITEM 6. EXHIBITS

 

3.1    Restated Articles of Incorporation of the Company filed June 25, 1986. (2)
3.2    Certificate of Amendment of Articles of Incorporation of the Company filed October 6, 1988. (2)
3.3    Certificate of Amendment of Articles of Incorporation of the Company filed July 18, 1990. (2)
3.4    Certificate of Amendment of Articles of Incorporation of the Company filed May 29, 2003. (3)
3.5    Certificate of Amendment of Articles of Incorporation of the Company filed March 4, 2004. (4)
3.6    Certificate of Amendment of Articles of Incorporation of the Company filed February 21, 2007. (6)
3.7    Bylaws of the Company, amended and restated through February 24, 2010. (5)
4.1    Specimen copy of certificate for shares of Common Stock of the Company. (1)
10.1    Form of U.S. officer stock option agreement under the Company’s 2002 Stock Plan. (7)
10.2    Form of Non-U.S. officer stock option agreement under the Company’s 2002 Stock Plan. (7)
10.3    Form of U.S. director stock option agreement under the Company’s 2002 Stock Plan. (7)
10.4    Form of non-U.S. director stock option agreement under the Company’s 2002 Stock Plan. (7)
31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
32.1    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
32.2    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
101.INS    XBRL Instance Document. (8)
101.SCH    XBRL Taxonomy Extension Schema Document. (8)
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document. (8)
101.DEF    XBRL Taxonomy Extension Label Linkbase Document. (8)
101.LAB    XBRL Taxonomy Extension Presentation Linkbase Document. (8)
101.PRE    XBRL Taxonomy Extension Definition Linkbase Document. (8)

 

(1) Incorporated by reference to exhibit number 4.1 to the registrant’s Registration Statement on Form S-1, as amended (File No. 33-35333), which became effective July 19, 1990.
(2) Incorporated by reference to identically numbered exhibits to the registrant’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(3) Incorporated by reference to exhibit number 3.5 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.
(4) Incorporated by reference to exhibit number 3.6 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2004.
(5) Incorporated by reference to exhibit number 3.1 to the Company’s Current Report on Form 8-K, filed March 2, 2010.
(6) Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2007.
(7) Filed herewith.
(8) Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

 

30


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  TRIMBLE NAVIGATION LIMITED
  (Registrant)

By:

 

/s/ Rajat Bahri

  Rajat Bahri
  Chief Financial Officer
 

(Authorized Officer and Principal

Financial Officer)

DATE: May 10, 2011

 

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Table of Contents

EXHIBIT INDEX

 

3.1    Restated Articles of Incorporation of the Company filed June 25, 1986. (2)
3.2    Certificate of Amendment of Articles of Incorporation of the Company filed October 6, 1988. (2)
3.3    Certificate of Amendment of Articles of Incorporation of the Company filed July 18, 1990. (2)
3.4    Certificate of Amendment of Articles of Incorporation of the Company filed May 29, 2003. (3)
3.5    Certificate of Amendment of Articles of Incorporation of the Company filed March 4, 2004. (4)
3.6    Certificate of Amendment of Articles of Incorporation of the Company filed February 21, 2007. (6)
3.7    Bylaws of the Company, amended and restated through February 24, 2010. (5)
4.1    Specimen copy of certificate for shares of Common Stock of the Company. (1)
10.1    Form of U.S. officer stock option agreement under the Company’s 2002 Stock Plan. (7)
10.2    Form of Non-U.S. officer stock option agreement under the Company’s 2002 Stock Plan. (7)
10.3    Form of U.S. director stock option agreement under the Company’s 2002 Stock Plan. (7)
10.4    Form of non-U.S. director stock option agreement under the Company’s 2002 Stock Plan. (7)
31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
32.1    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
32.2    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 10, 2011. (7)
101.INS    XBRL Instance Document. (8)
101.SCH    XBRL Taxonomy Extension Schema Document. (8)
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document. (8)
101.DEF    XBRL Taxonomy Extension Label Linkbase Document. (8)
101.LAB    XBRL Taxonomy Extension Presentation Linkbase Document. (8)
101.PRE    XBRL Taxonomy Extension Definition Linkbase Document. (8)

 

(1) Incorporated by reference to exhibit number 4.1 to the registrant’s Registration Statement on Form S-1, as amended (File No. 33-35333), which became effective July 19, 1990.
(2) Incorporated by reference to identically numbered exhibits to the registrant’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(3) Incorporated by reference to exhibit number 3.5 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.
(4) Incorporated by reference to exhibit number 3.6 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2004.
(5) Incorporated by reference to exhibit number 3.1 to the Company’s Current Report on Form 8-K, filed March 2, 2010.
(6) Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2007.
(7) Filed herewith.
(8) Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

 

32

Exhibit 10.1

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(OFFICERS & INTERNAL EXECUTIVE OFFICERS – U.S. VERSION)

Unless otherwise defined herein, the capitalized terms used in this Stock Option Agreement shall have the same defined meanings as set forth in the Trimble Navigation Limited Amended and Restated 2002 Stock Plan (the “Plan”).

 

I.

NOTICE OF STOCK OPTION GRANT

Name (Optionee):                                                      

You have been granted an option to purchase shares of the Common Stock of the Company, subject to the terms and conditions of the Plan and this Stock Option Agreement (the “Option Agreement”), as follows:

 

Grant Number

                                                        

Date of Grant

                                                        

Vesting Commencement Date

                                                        

Exercise Price per Share

                                                    

Total Number of Shares Granted

                                                        

Total Exercise Price

                                                    

Type of Option

            Incentive Stock Option
            Nonstatutory Stock Option
Term/Expiration Date:                                                                         

Vesting Schedule :

This Option shall be exercisable, in whole or in part, in accordance with the following schedule:


20% of the Shares subject to this Option shall vest twelve months after the Vesting Commencement Date, and 1/60 th of the Shares subject to this Option shall vest each month thereafter on the same day of the month as the Vesting Commencement Date, such that 100% of the Shares subject to this Option shall vest five (5) years from the Vesting Commencement Date, subject to the Optionee continuing to be a Service Provider on such dates.

Termination Period :

The vested portion of this Option may be exercised for twelve (12) months after the Optionee ceases to be a Service Provider (including the death or Disability of the Optionee). In no event shall any portion of this Option be exercised later than the Term/Expiration Date as provided above.

 

II.

AGREEMENT

 

  A.

Grant of Option .

The Administrator hereby grants to the person named in the Notice of Stock Option Grant (the “Notice of Grant”) attached as Part I of this Option Agreement (the “Optionee”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Section 422(d) of the Code, it shall be treated as a Nonstatutory Stock Option (“NSO”).

 

  B.

Exercise of Option .

1. Right to Exercise . This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement.

2. Method of Exercise . This Option is exercisable by (i) electronic exercise in accordance with an approved automated exercise program or (ii) delivery of an exercise notice, in the form designated by the Company from time to time (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of the Exercise Price.

 

-2-


No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes, the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares.

 

  C.

Method of Payment .

Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

1. cash; or

2. check; or

3. consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; or

4. surrender of other Shares which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

 

  D.

Non-Transferability of Option .

This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

  E.

Term of Option .

This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

 

  F.

Tax Obligations .

1. Withholding Taxes . Regardless of any action the Company and/or the Optionee’s actual employer, if the Company is not the Optionee’s employer (collectively, the “Company”), takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to him or her (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company. The Optionee further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, without limitation, the grant, vesting or exercise of this Option, the issuance of Shares upon exercise of this Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or

 

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achieve any particular tax result. Furthermore, if the Optionee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, the Optionee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, the Optionee will pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company, or its agents, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

(a) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company; or

(b) withholding from proceeds of the sale of Exercised Shares acquired upon exercise, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); or

(c) withholding in the Exercised Shares to be issued upon exercise of this Option.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the Optionee is deemed, for tax purposes, to have been issued the full number of Exercised Shares, notwithstanding that some Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Optionee’s participation in the Plan.

Finally, the Optionee shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold or account for as a result of the Optionee’s participation in the Plan, which amount cannot be satisfied by the means previously described. The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

2. Notice of Disqualifying Disposition of ISO Shares . If the Option granted to the Optionee herein is an ISO, and if the Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition.

 

  G.

NO GUARANTEE OF CONTINUED SERVICE .

THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY OR THE EMPLOYER, IF THE COMPANY IS NOT THE OPTIONEE’S EMPLOYER (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR

 

-4-


PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONEE’S RIGHT OR THE EMPLOYER’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE, IN COMPLIANCE WITH APPLICABLE LOCAL LAW.

 

  H.

Nature of Option Grant .

In accepting this Option, the Optionee acknowledges the following:

1. the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

2. the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future stock options, or benefits in lieu of stock options, even if stock options have been granted repeatedly in the past;

3. all decisions with respect to future stock option grants, if any, will be at the sole discretion of the Company;

4. the Optionee’s participation in the Plan shall not create a right to further employment with the Company or any Affiliate and shall not interfere with the ability of the Company or an Affiliate, as applicable, to terminate the Optionee’s Service Provider relationship at any time;

5. the Optionee’s participation in the Plan is voluntary;

6. this Option and the Optioned Stock are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, and which is outside the scope of the Optionee’s employment contract, if any;

7. this Option and the Optioned Stock are not intended to replace any pension rights or compensation;

8. this Option and the Optioned Stock are not part of normal or expected compensation or salary for any purposes, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Affiliate;

9. this Option and the Optionee’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or any Affiliate;

 

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10. the future value of the underlying Shares is unknown and cannot be predicted with any certainty;

11. if the Optioned Stock does not increase in value, this Option will have no value;

12. if the Optionee exercises this Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price;

13. no claim or entitlement to compensation or damages shall arise from forfeiture of this Option if the Optionee ceases to be a Service Provider (for any reason whatsoever and whether or not in breach of local labor laws), and in consideration of the grant, to which the Optionee is not otherwise entitled, the Optionee irrevocably agrees never to institute any claim against the Company and his or her actual employer, if the Company is not his or her employer, waives his or her ability, if any, to bring any such claim, and releases the Company and any Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim; and

14. in the event that the Optionee ceases to be a Service Provider (whether or not in breach of local labor laws), the Optionee’s right, if any, to vest in this Option will terminate effective as of the date on which the Optionee is no longer an active Service Provider and will not be extended by any notice period mandated under Applicable Laws; the Administrator shall have the exclusive discretion to determine when the Optionee is no longer an active Service Provider for purposes of this Option.

 

  I.

No Advice Regarding Grant .

The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying Shares. The Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

 

  J.

Data Privacy .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Option Agreement and any other Option materials by and among, as applicable, the Company and any Affiliate for the exclusive purposes of implementing, administering and managing the Optionee’s participation in the Plan.

The Optionee understands that the Company may hold certain personal information about him or her, including, without limitation, the Optionee’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or

 

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outstanding in the Optionee’s favor, for the exclusive purposes of implementing, administering and managing the Plan (“Data”).

The Optionee understands that Data will be transferred to the Company’s broker, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands that the recipients of the Data may be located outside the United States, and that the recipients’ country may have different data privacy laws and protections than the United States. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the Company, the Company’s broker and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Optionee understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

 

  K.

Electronic Delivery .

The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

 

  L.

Severability .

The provisions of this Option Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

  M.

Imposition of Other Requirements .

The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan, and to require the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

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  N.

Entire Agreement; Governing Law; Venue .

The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the state of California.

For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Option or this Option Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

 

  O.

Securities Law Compliance

Notwithstanding anything to the contrary contained herein, no Shares will be issued to you upon the exercise of this Option unless the Shares subject to the Option are then registered under the Securities Act of 1933, as amended (the “Securities Act’), or, if such Shares are not so registered, the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. By accepting this Option, you agree not to sell any of the Shares received under this Option at a time when Applicable Laws or Company policies prohibit a sale.

 

  P.

Code Section 409A

The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan, this Option Agreement or the Notice of Grant or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate to ensure that this Option qualifies for exemption from, or complies with the requirements of, Section 409A of the Code; provided, however, that the Company makes no representation that the Option will be exempt from, or will comply with, Section 409A of the Code, and makes no undertakings to preclude Section 409A of the Code from applying to the Option or to ensure that it complies with Section 409A of the Code.

BY THE OPTIONEE’S SIGNATURE AND THE SIGNATURE OF THE COMPANY’S REPRESENTATIVE BELOW, THE OPTIONEE AND THE COMPANY AGREE THAT THIS OPTION IS GRANTED UNDER AND GOVERNED BY THE TERMS AND CONDITIONS OF THE PLAN AND THIS OPTION AGREEMENT. THE OPTIONEE HAS REVIEWED THE PLAN AND THIS OPTION AGREEMENT IN THEIR ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL

 

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PRIOR TO EXECUTING THIS OPTION AGREEMENT AND FULLY UNDERSTANDS ALL PROVISIONS OF THE PLAN AND OPTION AGREEMENT. THE OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS RELATING TO THE PLAN AND OPTION AGREEMENT. THE OPTIONEE FURTHER AGREES TO NOTIFY THE COMPANY UPON ANY CHANGE IN THE RESIDENCE ADDRESS INDICATED BELOW.

 

OPTIONEE:

 

TRIMBLE NAVIGATION LIMITED

                                                                                                  

 

                                                                                                

Signature

 

By

                                                                                                  

 

Steven W. Berglund

Print Name

 

Print Name

                                                                                                  

 

President & CEO

Residence Address

 

Title

 

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Exhibit 10.2

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(OFFICERS & INTERNAL EXECUTIVE OFFICERS – NON-U.S. VERSION)

Unless otherwise defined herein, the capitalized terms used in this Stock Option Agreement shall have the same defined meanings as set forth in the Trimble Navigation Limited Amended and Restated 2002 Stock Plan (the “Plan”).

 

I.

NOTICE OF STOCK OPTION GRANT

Name (Optionee):                                                      

You have been granted a Nonstatutory Stock Option to purchase shares of the Common Stock of the Company, subject to the terms and conditions of the Plan and this Stock Option Agreement (the “Option Agreement”), including any special terms and conditions for the Optionee’s country in any appendix hereto attached as Exhibit A (the “Appendix”), as follows:

 

Grant Number

                                                                          

Date of Grant

                                                                          

Vesting Commencement Date

                                                                          

Exercise Price per Share

                                                                      

Total Number of Shares Granted

                                                                          

Total Exercise Price

                                                                      

Term/Expiration Date:

                                                                         

Vesting Schedule :

This Option shall be exercisable, in whole or in part, in accordance with the following schedule:

20% of the Shares subject to this Option shall vest twelve months after the Vesting Commencement Date, and 1/60 th of the Shares subject to this Option shall vest each month thereafter on the same day of the month as the Vesting Commencement Date, such that 100% of the Shares subject to this Option shall vest five (5) years from the Vesting Commencement Date, subject to the Optionee continuing to be a Service Provider on such dates.


Termination Period:

The vested portion of this Option may be exercised for twelve (12) months after the Optionee ceases to be a Service Provider (including the death or Disability of the Optionee). The period during which Optionee is considered to be a Service Provider will not be extended by any notice of termination or similar period; instead, the termination date will be considered the last day of active service for the purposes of this Option Agreement. In no event shall any portion of this Option be exercised later than the Term/Expiration Date as provided above.

 

II.

AGREEMENT

 

  A.

Grant of Option .

The Administrator hereby grants to the person named in the Notice of Stock Option Grant (the “Notice of Grant”) attached as Part I of this Option Agreement (the “Optionee”) a Nonstatutory Stock Option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the Exercise Price per Share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

 

  B.

Exercise of Option .

1. Right to Exercise . This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement, including the Appendix.

2. Method of Exercise . This Option is exercisable by (i) electronic exercise in accordance with an approved automated exercise program or (ii) delivery of an exercise notice, designated by the Company from time to time (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of the Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws.

 

  C. Method of Payment .

Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

1. cash (in U.S. dollars); or

 

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2. check (denominated in U.S. dollars); or

3. consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan.

 

  D.

Non-Transferability of Option .

This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and this Option Agreement, including the Appendix, shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

  E.

Term of Option .

This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

 

  F.

Tax Obligations .

Regardless of any action the Company or the Optionee’s actual employer, if the Company is not the actual employer (the “Employer”), takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to him or her (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Optionee further acknowledges that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, without limitation, the grant, vesting or exercise of this Option, the issuance of Shares upon exercise of this Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Optionee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, the Optionee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

1. withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; or

 

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2. withholding from proceeds of the sale of Exercised Shares acquired upon exercise, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); or

3. withholding in the Exercised Shares to be issued upon exercise of this Option.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the Optionee is deemed, for tax purposes, to have been issued the full number of Exercised Shares, notwithstanding that some Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Optionee’s participation in the Plan.

Finally, the Optionee shall pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan, which amount cannot be satisfied by the means previously described. The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

 

  G.

NO GUARANTEE OF CONTINUED SERVICE .

THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE EMPLOYER (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONEE’S RIGHT OR THE EMPLOYER’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE, IN COMPLIANCE WITH APPLICABLE LOCAL LAW.

 

  H.

Nature of Option Grant .

In accepting this Option, the Optionee acknowledges the following:

1. the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

2. the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future stock options, or benefits in lieu of stock options, even if stock options have been granted repeatedly in the past;

 

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3. all decisions with respect to future stock option grants, if any, will be at the sole discretion of the Company;

4. the Optionee’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Optionee’s Service Provider relationship at any time;

5. the Optionee’s participation in the Plan is voluntary;

6. this Option and the Optioned Stock are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Optionee’s employment contract, if any;

7. this Option and the Optioned Stock are not intended to replace any pension rights or compensation;

8. this Option and the Optioned Stock are not part of normal or expected compensation or salary for any purposes, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Affiliate;

9. this Option and the Optionee’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or an Affiliate;

10. the future value of the underlying Shares is unknown and cannot be predicted with any certainty;

11. if the Optioned Stock does not increase in value, this Option will have no value;

12. if the Optionee exercises this Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price;

13. no claim or entitlement to compensation or damages shall arise from forfeiture of this Option if the Optionee ceases to be a Service Provider (for any reason whatsoever and whether or not in breach of local labor laws), and in consideration of the grant, to which the Optionee is not otherwise entitled, the Optionee irrevocably agrees never to institute any claim against the Company, the Employer or any Affiliate, waives his or her ability, if any, to bring any such claim, and releases the Company, the Employer, and any Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim; and

14. in the event that the Optionee ceases to be a Service Provider (whether or not in breach of local labor laws), the Optionee’s right, if any, to vest in this Option will terminate effective as of the date on which the Optionee is no longer an active Service Provider and will not be extended by any notice period mandated under Applicable Laws ( e.g. , Optionee would not

 

-5-


be an active Service Provider for a period of “garden leave” or similar period pursuant to Applicable Laws); the Plan Administrator shall have the exclusive discretion to determine when the Optionee is no longer an active Service Provider for purposes of this Option.

 

  I.

No Advice Regarding Grant .

The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

 

  J.

Data Privacy .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Option Agreement and any other Option materials by and among, as applicable, the Employer, the Company and any Affiliate for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

The Optionee understands that the Company and the Employer may hold certain personal information about him or her, including, without limitation, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purposes of implementing, administering and managing the Plan (“Data”).

The Optionee understands that Data will be transferred to the Company’s broker, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the Company, the Company’s broker and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Optionee understands, however, that refusing or withdrawing his or her consent may affect his or her

 

-6-


ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

 

  K.

Language .

If the Optionee has received this Option Agreement or any other documents related to the Plan translated into a language other than English and if the meaning of the translated version differs from the English version, the English version shall control.

 

  L.

Electronic Delivery .

The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

 

  M.

Severability .

The provisions of this Option Agreement, including the Appendix, are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

  N.

Appendix .

Notwithstanding any provisions in this Option Agreement, this Option shall be subject to any special terms and conditions for the Optionee’s country set forth in the Appendix. Moreover, if the Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. The Appendix constitutes part of this Option Agreement.

 

  O.

Imposition of Other Requirements .

The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan, and to require the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

  P.

Entire Agreement; Governing Law; Venue .

The Plan is incorporated herein by reference. The Plan and this Option Agreement, including the Appendix, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be

 

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modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the state of California.

For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Option or this Option Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

BY THE OPTIONEE’S SIGNATURE AND THE SIGNATURE OF THE COMPANY’S REPRESENTATIVE BELOW, THE OPTIONEE AND THE COMPANY AGREE THAT THIS OPTION IS GRANTED UNDER AND GOVERNED BY THE TERMS AND CONDITIONS OF THE PLAN AND THIS OPTION AGREEMENT, INCLUDING THE APPENDIX. THE OPTIONEE HAS REVIEWED THE PLAN AND THIS OPTION AGREEMENT, INCLUDING THE APPENDIX, IN THEIR ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO EXECUTING THIS OPTION AGREEMENT AND FULLY UNDERSTANDS ALL PROVISIONS OF THE PLAN AND OPTION AGREEMENT, INCLUDING THE APPENDIX. THE OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS RELATING TO THE PLAN AND OPTION AGREEMENT, INCLUDING THE APPENDIX. THE OPTIONEE FURTHER AGREES TO NOTIFY THE COMPANY UPON ANY CHANGE IN THE RESIDENCE ADDRESS INDICATED BELOW.

 

OPTIONEE:

  TRIMBLE NAVIGATION LIMITED

                                                                                                  

 

                                                                                                

Signature   By

                                                                                                  

  Steven W. Berglund
Print Name   Print Name

                                                                                                  

  President & CEO
Residence Address   Title

 

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EXHIBIT A

APPENDIX TO

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(OFFICERS & INTERNAL EXECUTIVE OFFICERS – NON-U.S. VERSION)

TERMS AND CONDITIONS

This Appendix, which is part of the Option Agreement, includes additional terms and conditions that govern this Option and that will apply to the Optionee if he or she is in one of the countries listed below. Unless otherwise defined herein, capitalized terms set forth in this Appendix shall have the meanings ascribed to them in the Plan or the Option Agreement.

NOTIFICATIONS

This Appendix also includes information regarding securities, exchange control and certain other issues of which the Optionee should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of August 2010. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information in this Appendix as the only source of information relating to the consequences of his or her participation in the Plan because such information may be outdated when he or she exercise this Option and/or sells any Shares acquired at exercise.

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation. As a result, the Company is not in a position to assure the Optionee of any particular result. The Optionee therefore is advised to seek appropriate professional advice as to how the relevant laws in his or her country may apply to his or her particular situation.

Finally, if the Optionee is a citizen or resident of a country other than that in which the Optionee currently is working, or transfers employment to a different country after the Date of Grant, the information contained herein may not apply to him or her.

AUSTRALIA

TERMS AND CONDITIONS

Australian Addendum . The Optionee understands and agrees that his or her right to participate in the Plan and any Option granted under the Plan are subject to an Australian Addendum to the Plan. This Option is subject to the terms and conditions stated in the Australian Addendum, the Offer Document, the Plan and the Option Agreement.

 

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Right to Exercise . Notwithstanding Paragraph B.1 of the Option Agreement and consistent with Section 7(e) of the Plan, the Optionee may not exercise any portion of this Option unless and until the Fair Market Value (as defined in Section 2(u) of the Plan) per Share underlying this Option on the date of exercise equals or exceeds the Exercise Price per Share pursuant to the procedures established by the Company to determine the length of time that the Fair Market Value must trade at or above the Exercise Price per Share to meet this requirement.

NOTIFICATIONS

Securities Law Notification . If the Optionee acquires Shares under the Plan and offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law, and the Optionee should obtain legal advice regarding any applicable disclosure obligations prior to making any such offer.

Exchange Control Notification . Exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report for the Optionee. If there is no Australian bank involved in the transfer, the Optionee will be required to file the report him/herself.

BELGIUM

TERMS AND CONDITIONS

Tax Considerations . This Option must be accepted in writing either (a) within 60 days of the offer (for tax at offer), or (b) more than 60 days after the offer (for tax at exercise). The Optionee will receive a separate offer letter, acceptance form and undertaking form in addition to the Option Agreement. The Optionee should refer to the offer letter for a more detailed description of the tax consequences of choosing to accept this Option. The Optionee should consult his or her personal tax advisor with respect to completion of the additional forms.

NOTIFICATIONS

Tax Reporting Notification . The Optionee is required to report any taxable income attributable to this Option on his or her annual tax return. The Optionee also is required to report any bank accounts opened and maintained outside of Belgium on his or her annual tax return.

CANADA

TERMS AND CONDITIONS

Termination Period . The following provision replaces the first sentence of the “Termination Period” provision in Part I of the Option Agreement:

This Option may be exercised for twelve (12) months after the date that is the earlier of (i) the date on which the Optionee receives notice of termination of his or her status as an active Service Provider; or (ii) the date on which the Optionee ceases to be a Service Provider.

 

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The following provisions apply if the Optionee is in Quebec:

Consent to Receive Information in English . The parties acknowledge that it is their express wish that the Option Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement, relativement à ou suite à la présente convention.

Data Privacy. The following provision supplements Paragraph J of the Option Agreement:

The Optionee hereby authorizes the Company and the Company’s representatives to discuss and obtain all relevant information from all personnel, professional or non-professional, involved in the administration of the Plan. The Optionee further authorizes the Company, the Employer and/or any Affiliate to disclose and discuss such information with their advisors. The Optionee also authorizes the Company, the Employer and/or any Affiliate to record such information and to keep such information in the Optionee’s employment file.

COSTA RICA

There are no country-specific terms and conditions.

CZECH REPUBLIC

NOTIFICATIONS

Exchange Control Information . The Optionee may be required to file a report with the Czech National Bank in connection with this Option and the opening and maintenance of a foreign account. However, because exchange control regulations change frequently and without notice, the Optionee should consult his or her personal advisor before exercising this Option to ensure compliance with current regulations. The Optionee is solely responsible for complying with applicable Czech exchange control laws.

FRANCE

TERMS AND CONDITIONS

Option Not Tax-Qualified . The Optionee understands that this Option is not intended to be French tax-qualified.

Consent to Receive Information in English . By accepting this Option, the Optionee confirms that he or she has read and understood the documents relating to the Option (the Option

 

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Agreement and the Plan), which were provided in the English language. The Optionee accepts the terms of these documents accordingly.

En acceptant cette Option, le Bénéficiaire d’Options confirme qu’il ou qu’elle a lu et compris les documents afférents à l’Option (le Contrat d’Options et le Plan), qui sont produits en langue anglaise. Le Bénéficiaire d’Options accepte les dispositions de ces documents en connaissance de cause.

NOTIFICATIONS

Exchange Control Information . If the Optionee imports or exports cash ( e.g. , sales proceeds received under the Plan) with a value equal to or exceeding €10,000 and does not use a financial institution to do so, he or she must submit a report to the customs and excise authorities. If the Optionee maintains a foreign bank account, he or she is required to report the maintenance of such to the French tax authorities when filing his or her annual tax return.

GERMANY

NOTIFICATIONS

Exchange Control Information . Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Optionee uses a German bank to transfer a cross-border payment in excess of €12,500 in connection with the sale of Shares acquired under the Plan, the bank will make the report for the Optionee. In addition, the Optionee must report any receivables or payables or debts in foreign currency exceeding an amount of €5,000,000 on a monthly basis.

INDIA

TERMS AND CONDITIONS

Payment Method . The Optionee understands and agrees that, if he or she elects to pay the Exercise Price by means of a cashless exercise program implemented by the Company in connection with the Plan, he or she will not be permitted to engage in a “cashless sell-to-cover” exercise whereby a portion of Exercised Shares are sold at exercise to cover the Exercise Price, Tax-Related Items, including FBT, and brokerage fees.

NOTIFICATIONS

Exchange Control Information . Please note that proceeds from the sale of Shares must be repatriated to India within a reasonable period of time ( i.e. , two weeks). Optionee should obtain a foreign inward remittance certificate (“FIRC”) from the bank for his or her records to document compliance with this requirement, in case evidence of such repatriation is requested by the Reserve Bank of India or the Employer.

 

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IRELAND

NOTIFICATIONS

Director Notification Requirement . If Optionee is a director, shadow director 1 or secretary of an Irish Affiliate of the Company, pursuant to Section 53 of the Irish Company Act 1990, he or she must notify the Irish Affiliate of the Company in writing within five (5) business days of receiving or disposing of an interest in the Company ( e.g. , an Option, Shares, etc.), or within five (5) business days of becoming aware of the event giving rise to the notification requirement, or within five (5) days of becoming a director, shadow director or secretary if such an interest exists at that time. This notification requirement also applies with respect to the interests of a spouse or minor child, whose interests will be attributed to the director, shadow director or secretary.

ITALY

TERMS AND CONDITIONS

Method of Payment . Notwithstanding Paragraph C of the Option Agreement, due to financial regulations in Italy, when the Optionee exercises the Option, the Optionee must use a cashless exercise program implemented by the Company in connection with the Plan whereby the Optionee makes an irrevocable election to exercise this Option as to all the Optioned Stock by instructing the Company’s broker to sell all the Exercised Shares and to remit the proceeds, less any Tax-Related Items and brokerage fees to the Optionee in cash (a “Cashless Sell-All Exercise”). The Company reserves the right to permit the Optionee to exercise by means other than the Cashless Sell-All Exercise depending on developments in local laws.

Data Privacy Notice and Consent . The following provision replaces Paragraph J of the Option Agreement:

The Optionee hereby explicitly and unambiguously consents to the collection, use, processing and transfer, in electronic or other form, of his or her personal data as described in this section of this Appendix by and among, as applicable, the Employer, the Company and any Affiliate for the exclusive purposes of implementing, administering, and managing the Optionee’s participation in the Plan.

The Optionee understands that the Employer, the Company and any Affiliate hold certain personal information about him or her, including, without limitation, the Optionee’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any Affiliate, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, managing and administering the Plan (“Data”).

 

1   A shadow director is an individual who is not on the board of directors of the Company or the Irish Affiliate but who has sufficient control so that the board of directors of the Company or the Irish Affiliate, as applicable, acts in accordance with the directions and instructions of the individual.

 

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The Optionee also understands that providing the Company with Data is necessary for the performance of the Plan and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect the Optionee’s ability to participate in the Plan. The Controller of personal data processing is Trimble Navigation Limited, with registered offices at 935 Stewart Drive, Sunnyvale, California 94085, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is Trimble Italia SrL, Centro Torri Bianche, Palazzo Larice, 3, 20059 Vimercate (MI), Italy.

The Optionee understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan. The Optionee understands that Data may also be transferred to the Company’s independent registered public accounting firm Ernst & Young LLP, or such other public accounting firm that may be engaged by the Company in the future. The Optionee further understands that the Company, the Employer and/or any Affiliate will transfer Data among themselves as necessary for the purposes of implementing, administering and managing the Optionee’s participation in the Plan, and that the Company, the Employer and/or Affiliate may each further transfer Data to third parties assisting the Company in the implementation, administration, and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom the Optionee may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing the Optionee’s participation in the Plan. The Optionee understands that these recipients may be located in or outside of the European Economic Area, such as in the United States or elsewhere. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.

The Optionee understands that Data-processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable local laws and regulations, does not require the Optionee’s consent thereto, as the processing is necessary to the performance of contractual obligations related to implementation, administration, and management of the Plan. The Optionee understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, he or she has the right, without limitation, to access, delete, update, correct, or terminate, for legitimate reason, the Data-processing. Furthermore, the Optionee is aware that Data will not be used for direct-marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the Optionee’s local human resources representative.

 

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Plan Document Acknowledgment . In accepting this Option, the Optionee acknowledges that he or she has received a copy of the Plan and the Option Agreement and has reviewed the Plan and the Option Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Option Agreement, including this Appendix.

The Optionee acknowledges that he or she has read and specifically approves the following provisions of the Option Agreement: the “Termination Period” provision in Part I; Paragraph F, “Tax Obligations”; Paragraph G, “No Guarantee of Continued Service”: Paragraph H, “Nature of Option Grant”; Paragraph I, “No Advice Regarding Grant”; Paragraph K, “Language”; Paragraph P, “Entire Agreement; Governing Law; Venue”; and the “Data Privacy Notice and Consent” in this Appendix.

NOTIFICATIONS

Exchange Control Information . The Optionee is required to report in his or her annual tax return: (a) any transfers of cash or Shares to or from Italy exceeding €10,000 or the equivalent amount in U.S. dollars; and (b) any foreign investments or investments (including proceeds from the sale of Shares acquired under the Plan) held outside of Italy exceeding €10,000 or the equivalent amount in U.S. dollars, if the investment may give rise to income in Italy. The Optionee is exempt from the formalities in (a) if the investments are made through an authorized broker resident in Italy, as the broker will comply with the reporting obligation on the Optionee’s behalf.

JAPAN

NOTIFICATIONS

Exchange Control Information . If the Optionee acquires Shares valued at more than ¥100,000,000 in a single transaction, the Optionee must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the Shares.

In addition, if the Optionee pays more than ¥30,000,000 in a single transaction for the purchase of Shares when the Optionee exercises the Option, the Optionee must file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements vary depending on whether or not the relevant payment is made through a bank in Japan.

A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the total amount that the Optionee pays upon a one-time transaction for exercising the Option and purchasing Shares exceeds ¥100,000,000, the Optionee must file both a Payment Report and a Securities Acquisition Report.

KENYA

There are no country-specific terms and conditions.

 

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KOREA

NOTIFICATIONS

Exchange Control Information . To remit funds out of Korea to exercise the Option by paying the Exercise Price with cash, the Optionee must obtain a confirmation of the remittance by a foreign exchange bank in Korea. This is an automatic procedure ( i.e. , the bank does not need to approve the remittance and the process should not take more than a day). The Optionee likely will need to present to the bank processing the transaction supporting documentation evidencing the nature of the remittance. If the Optionee receives US$500,000 or more from the sale of Shares, Korean exchange control laws require the Optionee to repatriate the proceeds to Korea within 18 months of the sale.

NETHERLANDS

NOTIFICATIONS

Securities Law Information . The Optionee should be aware of Dutch insider-trading rules, which may impact the sale of Shares acquired under the Plan. In particular, the Optionee may be prohibited from effectuating certain transactions if he or she has inside information regarding the Company.

By accepting the grant of this Option and participating in the Plan, the Optionee acknowledges having read and understood this Securities Law Information and further acknowledges that it is the Optionee’s responsibility to comply with the following Dutch insider-trading rules.

Under Article 46 of the Act on the Supervision of the Securities Trade 1995, anyone who has “inside information” related to an issuing company is prohibited from effectuating a transaction in securities in or from the Netherlands. “Inside information” is defined as knowledge of details concerning the issuing company to which the securities relate, which is not public and which, if published, would reasonably be expected to affect the stock price, regardless of the development of the price. The insider could be a Service Provider in the Netherlands who has inside information as described herein.

Given the broad scope of the definition of inside information, certain Service Providers working in the Netherlands (possibly including the Optionee) may have inside information and, thus, would be prohibited from effectuating a transaction in securities in the Netherlands at a time when the Optionee had such inside information.

NEW ZEALAND

TERMS AND CONDITIONS

Securities Law Acknowledgment . The Optionee acknowledges that he or she will receive the following documents in connection with the offer to purchase shares at exercise of this Option:

 

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  (i)

the Option Agreement, including this Appendix, which sets forth the terms and conditions of this Option;

 

  (ii)

a copy of the Company’s most recent annual report and most recent financial reports have been made available to the Optionee to enable the Optionee to make informed decisions concerning participation in the Plan; and

 

  (iii)

a copy of the description of the Plan (the “Description”) ( i.e. , the Company’s Form S-8 Plan Prospectus under the U.S. Securities Act of 1933, as amended), and the Company will provide any attachments or documents incorporated by reference into the Description upon written request. The documents incorporated by reference into the Description are updated periodically. Should the Optionee request copies of the documents incorporated by reference into the Description, the Company will provide the Optionee with the most recent documents incorporated by reference.

RUSSIA

TERMS AND CONDITIONS

U.S. Transaction . The Optionee understands that this Option shall be valid and this Option Agreement shall be concluded and become effective only when the executed Option Agreement is received by the Company in the United States.

Method of Payment . This provision supplements Paragraph C of the Option Agreement:

Due to legal restrictions in Russia, payment in full of the aggregate Exercise Price to purchase the Shares underlying the Option must be made by means of a cashless sell-all exercise, whereby all of the Shares subject to the portion of the Option that is exercised are immediately sold upon exercise and the proceeds of sale, less the Exercise Price, any Tax-Related Items and broker’s fees or commissions, will be remitted to the Optionee in accordance with any applicable Russian exchange control laws and regulations. The Optionee will not be permitted to hold any Shares upon exercise of the Option. The Board reserves the right to permit additional methods of paying the Exercise Price in the future, depending on developments in applicable local law.

NOTIFICATIONS

Securities Law Information . This Appendix, the Option Agreement, the Plan and any other materials that the Optionee may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering the securities or public circulation in Russia.

Exchange Control Information . To remit funds out of Russia to exercise the Option by paying the Exercise Price with cash, the Optionee must remit the funds from a foreign currency account

 

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at an authorized bank in Russia. This requirement does not apply if the Optionee pays the Exercise Price by means of a cashless exercise program implemented by the Company in connection with the Plan, such that there is no remittance of funds out of Russia.

Under current exchange control regulations, within a reasonably short time after sale of the Shares acquired under the Plan, the Optionee must repatriate the sale proceeds to Russia. Such sale proceeds must be initially credited to the Optionee through a foreign currency account at an authorized bank in Russia. After the sale proceeds are initially received in Russia, they may be remitted further to foreign banks in accordance with Russian exchange control laws, subject to the following limitations: (i) the foreign account may be opened only for individuals; (ii) the foreign account may not be used for business activities; (iii) the Optionee must give notice to the Russian tax authorities about the opening/closing of each foreign account within one month of the account opening/closing; and (iv) the Optionee must notify the Russian tax authorities of the account balances on his or her foreign accounts as of the beginning of each calendar year.

SINGAPORE

NOTIFICATIONS

Securities Law Information . This Option is being granted on a private basis and is, therefore, exempt from registration in Singapore.

Director Notification Requirement . If the Optionee is a director, associate director or shadow director of a Singaporean Affiliate, he or she must notify the Singaporean Affiliate in writing within two days of receiving or disposing of an interest ( e.g. , this Option) in the Company or an Affiliate, or within two days of becoming a director if such an interest exists at the time.

SPAIN

TERMS AND CONDITIONS

Nature of Option Grant . This provision supplements Paragraph H of the Option Agreement:

In accepting this Option, the Optionee consents to participation in the Plan and acknowledges that he or she has received a copy of the Plan.

The Optionee understands that the Company has unilaterally, gratuitously and in its own discretion decided to grant stock options under the Plan to certain Service Providers throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not bind the Company or an Affiliate, other than as set forth in the Option Agreement. Consequently, the Optionee understands that this Option is granted on the assumption and condition that this Option and any Shares acquired upon exercise of this Option are not a part of any employment contract (either with the Company or an Affiliate) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation), or any other right whatsoever. Furthermore, the Optionee understands that he or she will not be entitled to continue vesting in this Option once his or her relationship with the

 

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Company or an Affiliate as a Service Provider ceases. In addition, the Optionee understands that this Option would not be granted but for the assumptions and conditions referred to above; thus, the Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken, or should any of the conditions not be met for any reason, any grant of or right to this Option shall be null and void.

Termination of Relationship as a Service Provider . If the Optionee ceases to be a Service Provider for any reason other than upon the Optionee’s death or Disability (including if the termination is deemed to be an “unfair dismissal” or “constructive dismissal”), any portion of this Option that is vested shall remain exercisable in accordance with “Termination Period” paragraph in Part I of the Option Agreement and the shares of Common Stock subject to any unvested portion of this Option shall be forfeited.

NOTIFICATIONS

Exchange Control Information . The Optionee must declare the acquisition of Shares to the Direccion General de Política Comercialy de Inversiones Extranjeras (the “DGPCIE”) of the Ministerio de Economia for statistical purposes. The Optionee must also declare ownership of any Shares with the Directorate of Foreign Transactions each January while the Shares are owned. In addition, if the Optionee wishes to import the ownership title of the Shares ( i.e. , share certificates) into Spain, he or she must declare the importation of such securities to the DGPCIE.

When receiving foreign currency payments derived from the ownership of Shares ( i.e. , dividends or sale proceeds), the Optionee must inform the financial institution receiving the payment of the basis upon which such payment is made. The Optionee will need to provide the institution with the following information: (i) the Optionee’s name, address, and fiscal identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the payment; (iv) the currency used; (v) the country of origin; (vi) the reasons for the payment; and (vii) any further information that may be required.

SWEDEN

There are no country-specific terms and conditions.

THAILAND

NOTIFICATIONS

Exchange Control Information . Under current exchange control regulations, the Optionee may remit funds up to US$1,000,000 per year to invest in securities abroad by submitting an application to an authorized agent ( i.e. , a commercial bank authorized by the Bank of Thailand to engage in the purchase, exchange and withdrawal of foreign currency). Thus, if the Optionee exercises this Option by paying the Exercise Price in cash, he or she will be required to execute certain documents and submit them, together with certain documents relating to the Plan, to an authorized commercial bank.

 

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If the Optionee exercises this Option by means of a cashless exercise program implemented by the Company in connection with the Plan, no submission to a commercial bank must be made since no funds will be remitted out of Thailand.

The Optionee must repatriate all cash proceeds received from participation in the Plan to Thailand and convert such proceeds to Thai Baht within 360 days of repatriation or deposit the funds in a foreign exchange account with a Thai bank. If the amount of the proceeds is equal to or greater than US$20,000, the Optionee must specifically report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form.

UNITED ARAB EMIRATES

There are no country-specific provisions.

UNITED KINGDOM

TERMS AND CONDITIONS

Joint Election . As a condition of participation in the Plan and the exercise of this Option, the Optionee agrees to accept any liability for secondary Class 1 National Insurance contributions which may be payable by the Company and/or the Employer in connection with this Option and any event giving rise to Tax-Related Items (the “Employer NICs”). Without prejudice to the foregoing, the Optionee agrees to execute a joint election with the Company, the form of such joint election having been approved formally by Her Majesty’s Revenue and Customs (“HMRC”) (the “Joint Election”), and any other required consent or election. The Optionee further agrees to execute such other joint elections as may be required between the Optionee and any successor to the Company or the Employer. The Optionee further agrees that the Company or the Employer may collect the Employer NICs from the Optionee by any of the means set forth in Paragraph F of the Option Agreement.

If the Optionee does not enter into a Joint Election prior to the exercise of this Option, he or she will not be entitled to exercise this Option unless and until he or she enters into a Joint Election, and no Shares will be issued to the Optionee under the Plan, without any liability to the Company or the Employer.

Tax Obligations . The following provision supplements Paragraph F of the Option Agreement:

The Optionee agrees that, if he or she does not pay or the Company or the Employer does not withhold from the Optionee, the full amount of Tax-Related Items that the Optionee owes upon exercise of this Option, or the release or assignment of this Option for consideration, or the receipt of any other benefit in connection with this Option (the “Taxable Event”) within 90 days after the Taxable Event, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, the amount that should have been withheld shall constitute a loan owed by the Optionee to the Company and/or the Employer, effective 90 days after the Taxable Event. The Optionee agrees that the loan will bear interest at the official

 

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HMRC rate and immediately will be due and repayable by Optionee, and the Company and/or the Employer may recover it at any time thereafter by withholding such amount from salary, bonus or any other funds due to the Optionee by the Company or the Employer, by withholding in Shares issued upon exercise of this Option or from the cash proceeds from the sale of Shares or by demanding cash or a check from the Optionee. The Optionee also authorizes the Company to delay the issuance of any Shares to the Optionee unless and until the loan is repaid in full.

Notwithstanding the foregoing, if the Optionee is a director or an executive officer within the meaning of Section 13(k) of the Exchange Act, the terms of the immediately foregoing provision will not apply. In the event that the Optionee is a director or an executive officer and Tax-Related Items are not collected within 90 days of the Taxable Event, the amount of any uncollected Tax-Related Items may constitute a benefit to the Optionee on which additional income tax and National Insurance contributions may be payable. The Optionee acknowledges that he or she will be responsible for reporting any income tax and National Insurance contributions (including Employer NICs) due on this additional benefit directly to HMRC under the self-assessment regime.

 

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Exhibit 10.3

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(Outside Director Option – U.S. Version)

Unless otherwise defined herein, the capitalized terms used in this Stock Option Agreement shall have the same defined meanings as set forth in the Trimble Navigation Limited Amended and Restated 2002 Stock Plan (the “Plan”).

 

I.

NOTICE OF STOCK OPTION GRANT

Name:

Address:

You have been granted an option to purchase shares of the Common Stock of the Company, subject to the terms and conditions of the Plan and this Stock Option Agreement (the “Option Agreement”), as follows:

 

Grant Number

                                                                                             

Date of Grant

                                                                                             

Vesting Commencement Date

                                                                                             

Exercise Price per Share

                                                                                        

Total Number of Shares Granted

                                                                                             

Total Exercise Price

                                                                                        

Type of Option:

   Nonstatutory Stock Option

Term/Expiration Date:

   Seventh (7 th ) Anniversary of the Date of Grant

Vesting Schedule :

This Option shall be exercisable, in whole or in part, in accordance with the following schedule:

This Option shall vest and become exercisable cumulatively, to the extent of 1/12 th of the Shares subject to the Option for each complete calendar month after the Date of Grant of the Option.


Termination Period:

The vested portion of this Option may be exercised for twelve (12) months after the Optionee ceases to be a Service Provider (including the death or Disability of the Optionee). In no event shall any portion of this Option be exercised later than the Term/Expiration Date as provided above.

 

II.

AGREEMENT

 

  A.

Grant of Option .

The Administrator hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

 

  B.

Exercise of Option .

(a) Right to Exercise . This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise . This Option is exercisable by (i) electronic exercise in accordance with an approved automated exercise program or (ii) delivery of an exercise notice, in the form designated by the Company from time to time, which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of the Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares.

 

  C.

Method of Payment .

Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

 

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1. cash; or

2. check; or

3. consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; or

4. surrender of other Shares which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

 

  D.

Non-Transferability of Option .

This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

  E.

Term of Option .

This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

 

  F.

Tax Obligations .

Regardless of any action the Company takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to him or her (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company. The Optionee further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, without limitation, the grant, vesting or exercise of this Option, the issuance of Shares upon exercise of this Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Optionee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, the Optionee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, the Optionee will pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company, or its agents, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by either or both of the following:

 

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(a) withholding from proceeds of the sale of Exercised Shares acquired upon exercise, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); or

(b) withholding in the Exercised Shares to be issued upon exercise of this Option.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the Optionee is deemed, for tax purposes, to have been issued the full number of Exercised Shares, notwithstanding that some Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Optionee’s participation in the Plan.

Finally, the Optionee shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold or account for as a result of the Optionee’s participation in the Plan, which amount cannot be satisfied by the means previously described. The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

 

  G.

No Advice Regarding Grant .

The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendation regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying Shares. The Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

 

  H.

Data Privacy .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Option Agreement and any other Option materials by and among, as applicable, the Company and any Affiliate for the exclusive purposes of implementing, administering and managing the Optionee’s participation in the Plan.

The Optionee understands that the Company may hold certain personal information about him or her, including, without limitation, the Optionee’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purposes of implementing, administering and managing the Plan (“Data”).

The Optionee understands that Data will be transferred to the Company’s broker, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands that the recipients of the Data may be located outside the United States, and that the recipients’ country may have different data privacy laws and protections than the United States. The

 

-4-


Optionee authorizes the Company, the Company’s broker and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan.

 

  I.

Electronic Delivery .

The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

 

  J.

Severability .

The provisions of this Option Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

  K.

Imposition of Other Requirements .

The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan, and to require the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

  L.

Securities Law Compliance .

Notwithstanding anything to the contrary contained herein, no Shares will be issued to the Optionee upon the exercise of this Option unless the Shares subject to the Option are then registered under the Securities Act of 1933, as amended (the “Securities Act’), or, if such Shares are not so registered, the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. By accepting this Option, the Optionee agrees not to sell any of the Shares received under this Option at a time when Applicable Laws or Company policies prohibit a sale.

 

  M.

Code Section 409A .

The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan, this Option Agreement or the Notice of Grant or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate to ensure that this Option qualifies for exemption from, or complies with the requirements of, Section 409A of the Code; provided, however, that the Company makes no representation that the Option will be exempt from, or will comply with, Section 409A of the Code, and makes no undertakings to preclude Section 409A of the Code from applying to the Option or to ensure that it complies with Section 409A of the Code.

 

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  N.

Entire Agreement; Governing Law .

The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the state of California.

By the Optionee’s signature and the signature of the Company’s representative below, the Optionee and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement. The Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Plan and Option Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Option Agreement. The Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

OPTIONEE:

     TRIMBLE NAVIGATION LIMITED   

                                                                                          

    

                                                                                       

  
Signature      By   

                                                                                          

    

                                                                                       

  
Print Name      Print Name   

                                                                                          

    

                                                                                       

  
Residence Address      Title   
                                                                                                  

 

-6-

Exhibit 10.4

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(Outside Director Option – Non-U.S. Version)

Unless otherwise defined herein, the capitalized terms used in this Stock Option Agreement shall have the same defined meanings as set forth in the Trimble Navigation Limited Amended and Restated 2002 Stock Plan (the “Plan”).

 

I. NOTICE OF STOCK OPTION GRANT

Name:

Address:

You have been granted an option to purchase shares of the Common Stock of the Company, subject to the terms and conditions of the Plan and this Stock Option Agreement (the “Option Agreement”), as follows:

 

Grant Number

                                                                                             

Date of Grant

                                                                                             

Vesting Commencement Date

                                                                                             

Exercise Price per Share

                                                                                        

Total Number of Shares Granted

                                                                                             

Total Exercise Price

                                                                                        

Type of Option:

   Nonstatutory Stock Option

Term/Expiration Date:

   Seventh (7 th ) Anniversary of the Date of Grant

Vesting Schedule :

This Option shall be exercisable, in whole or in part, in accordance with the following schedule:

This Option shall vest and become exercisable cumulatively, to the extent of 1/12 th of the Shares subject to the Option for each complete calendar month after the Date of Grant of the Option.


Termination Period :

The vested portion of this Option may be exercised for twelve (12) months after the Optionee ceases to be a Service Provider (including the death or Disability of the Optionee). In no event shall any portion of this Option be exercised later than the Term/Expiration Date as provided above.

 

II. AGREEMENT

 

  A. Grant of Option .

The Administrator hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

 

  B. Exercise of Option .

(a) Right to Exercise . This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise . This Option is exercisable by (i) electronic exercise in accordance with an approved automated exercise program or (ii) delivery of an exercise notice, in the form designated by the Company from time to time, which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of the Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares.

 

  C. Method of Payment .

Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

 

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1. cash; or

2. check; or

3. consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan.

 

  D. Non-Transferability of Option .

This Option may not be transferred in any manner otherwise than by will, by the laws of descent or distribution, or by contribution to a personal corporation wholly owned by the Optionee, and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

  E. Term of Option .

This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

 

  F. Tax Obligations .

Regardless of any action the Company and/or any Affiliate (collectively, the “Company”) takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to him or her (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company. The Optionee further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, without limitation, the grant, vesting or exercise of this Option, the issuance of Shares upon exercise of this Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Optionee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, the Optionee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, the Optionee will pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company, or its agents, at its discretion, to satisfy the obligations with regard to all Tax-Related Items by either or both of the following:

1. withholding from proceeds of the sale of Exercised Shares acquired upon exercise, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); or

 

-3-


2. withholding in the Exercised Shares to be issued upon exercise of this Option.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the Optionee is deemed, for tax purposes, to have been issued the full number of Exercised Shares, notwithstanding that some Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Optionee’s participation in the Plan.

Finally, the Optionee shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold or account for as a result of the Optionee’s participation in the Plan, which amount cannot be satisfied by the means previously described. The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

 

  G.

Nature of Option Grant .

In accepting this Option, the Optionee acknowledges the following:

1. the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

2. the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future stock options, or benefits in lieu of stock options, even if stock options have been granted repeatedly in the past;

3. all decisions with respect to future stock option grants, if any, will be at the sole discretion of the Company;

4. the Optionee’s participation in the Plan shall not interfere with the ability of the Company to terminate the Optionee’s Service Provider relationship at any time;

5. the Optionee’s participation in the Plan is voluntary;

6. this Option and the Optioned Stock are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company;

7. this Option and the Optioned Stock are not intended to replace any pension rights or compensation;

8. this Option and the Optioned Stock are not part of normal or expected compensation or salary for any purposes, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or an Affiliate;

 

-4-


9. this Option and the Optionee’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or an Affiliate;

10. the future value of the underlying Shares is unknown and cannot be predicted with any certainty;

11. if the Optioned Stock does not increase in value, this Option will have no value;

12. if the Optionee exercises this Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price;

13. no claim or entitlement to compensation or damages shall arise from forfeiture of this Option if the Optionee ceases to be a Service Provider (for any reason whatsoever and whether or not in breach of local labor laws), and in consideration of the grant, to which the Optionee is not otherwise entitled, the Optionee irrevocably agrees never to institute any claim against the Company or an Affiliate, waives his or her ability, if any, to bring any such claim, and releases the Company and any Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim; and

14. in the event that the Optionee ceases to be a Service Provider (whether or not in breach of local labor laws), the Optionee’s right, if any, to vest in this Option will terminate effective as of the date on which the Optionee is no longer an active Service Provider and will not be extended by any notice period mandated under Applicable Laws ( e.g. , Optionee would not be an active Service Provider for a period of “garden leave” or similar period pursuant to Applicable Laws); the Administrator shall have the exclusive discretion to determine when the Optionee is no longer an active Service Provider for purposes of this Option.

 

  H. No Advice Regarding Grant .

The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendation regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying Shares. The Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

 

  I. Data Privacy .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Option Agreement and any other Option materials by and between, as applicable, the Company and any Affiliate for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

The Optionee understands that the Company and any Affiliate may hold certain personal information about him or her, including, without limitation, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary,

 

-5-


nationality, job title, any Shares or directorships held in the Company, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purposes of implementing, administering and managing the Plan (“Data”).

The Optionee understands that Data will be transferred to the Company’s broker, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country ( e.g. , the United States) may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the Company, the Company’s broker and any other third parties which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company. The Optionee understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact the Company.

 

  J. Language .

If the Optionee has received this Option Agreement or any other documents related to the Plan translated into a language other than English and if the meaning of the translated version differs from the English version, the English version shall control.

 

  K. Electronic Delivery .

The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

 

  L. Severability .

The provisions of this Option Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

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  M. Appendix .

Notwithstanding any provisions in this Option Agreement, this Option shall be subject to any special terms and conditions for the Optionee’s country set forth in the Appendix. Moreover, if the Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. The Appendix constitutes part of this Option Agreement.

 

  N. Imposition of Other Requirements .

The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan, and to require the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

  O. Securities Law Compliance .

Notwithstanding anything to the contrary contained herein, no Shares will be issued to the Optionee upon the exercise of this Option unless the Shares subject to the Option are then registered under the Securities Act of 1933, as amended (the “Securities Act’), or, if such Shares are not so registered, the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. By accepting this Option, the Optionee agrees not to sell any of the Shares received under this Option at a time when Applicable Laws or Company policies prohibit a sale.

 

  P. Code Section 409A .

The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan, this Option Agreement or the Notice of Grant or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate to ensure that this Option qualifies for exemption from, or complies with the requirements of, Section 409A of the Code; provided, however, that the Company makes no representation that the Option will be exempt from, or will comply with, Section 409A of the Code, and makes no undertakings to preclude Section 409A of the Code from applying to the Option or to ensure that it complies with Section 409A of the Code.

 

-7-


  Q. Entire Agreement; Governing Law .

The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the state of California.

By the Optionee’s signature and the signature of the Company’s representative below, the Optionee and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement. The Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Plan and Option Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Option Agreement. The Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

OPTIONEE:

      TRIMBLE NAVIGATION LIMITED   

                                                                                          

     

                                                                                       

  
Signature       By   

                                                                                          

     

                                                                                       

  
Print Name       Print Name   

                                                                                          

     

                                                                                       

  
Residence Address       Title   

                                                                                          

        

 

-8-


EXHIBIT A

APPENDIX TO

TRIMBLE NAVIGATION LIMITED

AMENDED AND RESTATED 2002 STOCK PLAN

STOCK OPTION AGREEMENT

(NON-U.S. OPTIONEES)

TERMS AND CONDITIONS

This Appendix, which is part of the Option Agreement, includes additional terms and conditions that govern this Option and that will apply to the Optionee if he or she is in one of the countries listed below. Unless otherwise defined herein, capitalized terms set forth in this Appendix shall have the meanings ascribed to them in the Plan or the Option Agreement.

NOTIFICATIONS

This Appendix also includes information regarding securities, exchange control and certain other issues of which the Optionee should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of February 2010. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information in this Appendix as the only source of information relating to the consequences of his or her participation in the Plan because such information may be outdated when he or she exercise this Option and/or sells any Shares acquired at exercise.

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation. As a result, the Company is not in a position to assure the Optionee of any particular result. The Optionee therefore is advised to seek appropriate professional advice as to how the relevant laws in his or her country may apply to his or her particular situation.

Finally, if the Optionee is a citizen or resident of a country other than that in which the Optionee currently is working, or transfers his or her residence to a different country after the Date of Grant, the information contained herein may not apply to him or her.

SWEDEN

There are no country-specific terms and conditions.

 

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EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven W. Berglund, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Trimble Navigation Limited;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 10, 2011

    /s/ Steven W. Berglund
   

Steven W. Berglund

   

Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY

ACT OF 2002

I, Rajat Bahri, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Trimble Navigation Limited;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 10, 2011

    /s/ Rajat Bahri
   

Rajat Bahri

   

Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Trimble Navigation Limited (the “Company”) for the period ended April 1, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Steven W. Berglund, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Steven W. Berglund

Steven W. Berglund

Chief Executive Officer

May 10, 2011

EXHIBIT 32.2

CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Trimble Navigation Limited (the “Company”) for the period ended April 1, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Rajat Bahri, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Rajat Bahri

Rajat Bahri

Chief Financial Officer

May 10, 2011