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Trimble Second Quarter 2010 Revenue $333.4 Million, Up 15 Percent; Non-GAAP EPS $0.42, Up 35 Percent
SUNNYVALE, Calif., July 27, 2010 /PRNewswire via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced revenue of $333.4 million for its second quarter ended July 2, 2010, up approximately 15 percent as compared to revenue of $290.1 million in the second quarter of 2009.
Operating income for the second quarter of 2010 was $40.6 million, up approximately 41 percent as compared to the second quarter of 2009. Operating margin in the second quarter of 2010 was 12.2 percent, as compared to an operating margin of 9.9 percent in the second quarter of 2009.
Amortization of intangibles was $13.9 million in the second quarter of 2010, as compared to $13.0 million in the second quarter of 2009. The impact of stock-based compensation expense was $5.0 million, as compared to $4.6 million in the second quarter of 2009. There was also $0.4 million of restructuring expense and $1.8 million of non-recurring acquisition costs in the second quarter of 2010. This compares to a $3.5 million restructuring expense, a $0.2 million acquisition-related inventory step-up charge, and $2.3 million of non-recurring acquisition costs in the second quarter of 2009.
Excluding these items, second quarter 2010 non-GAAP operating income of $61.7 million was up 18 percent, as compared to the second quarter of 2009. Non-GAAP operating margin was 18.5 percent in the second quarter of 2010, as compared to 18.1 percent in the second quarter of 2009.
As previously announced on May 11, 2010, Trimble made an agreement with the IRS that resulted in a one-time charge of approximately $27.5 million in the second quarter of 2010 and a reduced annual ongoing tax rate guidance of 22 to 24 percent. The second quarter 2010 tax rate, excluding the one-time charge, was 16 percent.
Because of the above one-time $27.5 million charge, second quarter 2010 net income was $6.4 million, down 70 percent, as compared to the second quarter of 2009. Diluted earnings per share for the second quarter of 2010 were $0.05, as compared to diluted earnings per share of $0.17 for the second quarter of 2009.
Adjusting for the items noted above and excluding the $27.5 million charge, non-GAAP net income of $51.6 million for the second quarter of 2010 was up 38 percent, as compared to the second quarter of 2009. Diluted non-GAAP earnings per share for the second quarter of 2010 were $0.42, as compared to diluted non-GAAP earnings per share of $0.31 in the second quarter of 2009. The tax rate for the second quarter of 2010 was 16 percent compared to 29 percent in the second quarter of 2009.
"Second quarter results demonstrated continuing improvement in market conditions and reinforced our earlier expectations for full year results," said Steven W. Berglund, Trimble's president and chief executive officer. "Engineering and Construction revenue and profitability were significantly stronger than the prior year, in spite of inconsistent market conditions in the residential and commercial markets. The relative strength of the segment is primarily a result of the growing engagement of the SITECH channel, general improvement in the heavy and highway market, improving conditions in the market for surveying instruments, and continuing strength in international markets. As expected, Field Solutions was relatively unchanged compared to the prior year with agriculture sales down modestly and GIS revenue growing at a double digit rate. Mobile Solutions' segment performance was unimpressive due to the loss of a major account. We have rationalized the segment's cost base to restore profitability and anticipate growth in the second half based on identified pipeline," Berglund continued. "Overall, the uncertainties in the environment will require us to remain careful in our outlook. However, our recent ability to produce meaningful improvement in our overall financial performance without the full participation of all our businesses allows us to anticipate an improving trend as the lagging businesses begin to contribute more fully," Berglund concluded.
Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges, non-recurring acquisition costs, and the impact of stock-based compensation expense.
Engineering and Construction (E&C)
Second quarter 2010 E&C revenue was $188.4 million, up approximately 28 percent as compared to the second quarter of 2009, due to strong sales of both survey and machine control products across most geographies and strengthened distribution through the new SITECH channel.
Operating income in E&C for the second quarter 2010 was $33.9 million, or 18.0 percent of revenue, as compared to $19.2 million, or 13.0 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $35.8 million, or 19.0 percent of revenue, as compared to $20.6 million, or 14.0 percent of revenue, in the second quarter of 2009. The improvement in non-GAAP operating margin was due to operating leverage from increased revenue.
Field Solutions
Second quarter 2010 Field Solutions revenue was $80.2 million, approximately flat with the second quarter of 2009. Sales of agricultural products were down, offset by strong sales of geographical information system (GIS) products.
Operating income in Field Solutions for the second quarter 2010 was $29.0 million, or 36.2 percent of revenue, as compared to $30.1 million, or 37.8 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $29.5 million, or 36.7 percent of revenue, as compared to $30.4 million, or 38.1 percent of revenue, in the second quarter of 2009. The decrease in non-GAAP operating margin was due primarily to increased investment in research and development.
Mobile Solutions
Second quarter 2010 Mobile Solutions revenue was $38.2 million, down 2 percent as compared to the second quarter of 2009.
Operating income in Mobile Solutions for the second quarter 2010 was $0.3 million, or 0.8 percent of revenue, as compared to $3.6 million, or 9.3 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $0.5 million, or 1.4 percent of revenue, as compared to $4.8 million or 12.2 percent of revenue, in the second quarter of 2009. The decline in non-GAAP operating margin was due to the previously disclosed loss of a large customer.
Advanced Devices
Second quarter 2010 Advanced Devices revenue was $26.6 million, up approximately 11 percent as compared to the second quarter of 2009.
Operating income in Advanced Devices for the second quarter 2010 was $5.2 million, or 19.5 percent of revenue, as compared to $4.8 million, or 20.2 percent of revenue, in the second quarter of 2009. Non-GAAP operating income in Advanced Devices was $5.6 million, or 21.2 percent of revenue, as compared to $5.2 million, or 21.6 percent of revenue, in the second quarter of 2009.
Stock Repurchase Program
Trimble repurchased $67.7 million in stock at an average price of $28.67 during the second quarter of 2010.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.
Forward Looking Guidance
For the third quarter of 2010 Trimble expects revenue between $303 million and $308 million, with GAAP earnings per share of $0.19 to $0.21 and non-GAAP earnings per share of $0.32 to $0.34. Non-GAAP guidance for the third quarter of 2010 excludes the amortization of intangibles of $14.0 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $5.7 million. Both GAAP and non-GAAP earnings per share assume a 22 to 24 percent tax rate and 123.0 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on Jul. 27, 2010 at 1:30 p.m. PT to review its second quarter 2010 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 86612820. The replay will also be available on the Web at the address above.
About Trimble
Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location--including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif.
For more information visit www.trimble.com.
Safe Harbor
Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, the ability to deliver revenue, earnings per share that Trimble has guided for the third quarter and full year 2010, the expected tax-rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions, the amount and timing of repurchases under the stock repurchase program, and the return to profitability of the mobile solutions segment. The Company may suspend its stock repurchase plan at any time and for any reason without further notice. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. If the current economic conditions in Europe or elsewhere worsen it may negatively impact our customers' purchasing decisions worldwide, including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products or obtain new customers for its mobile solutions segment. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company's financial results will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Jul-2, Jul-3, Jul-2, Jul-3,
2010 2009 2010 2009
---- ---- ---- ----
Revenue $333,363 $290,063 $652,378 $579,017
Cost of sales 169,937 147,263 329,955 292,259
------- ------- ------- -------
Gross margin 163,426 142,800 322,423 286,758
------- ------- ------- -------
Gross margin (%) 49.0% 49.2% 49.4% 49.5%
Operating
expenses
Research and
development 36,552 33,457 72,442 67,594
Sales and
marketing 50,522 45,163 100,290 94,098
General and
administrative 27,290 26,622 55,837 52,664
Restructuring 375 1,302 1,006 4,925
Amortization of
purchased
intangible
assets 8,126 7,530 16,172 14,499
Total operating
expenses 122,865 114,074 245,747 233,780
------- ------- ------- -------
Operating income 40,561 28,726 76,676 52,978
Non-operating
income, net
Interest income 244 223 643 422
Interest expense (411) (465) (809) (958)
Foreign currency
transaction
loss, net (1,869) (216) (1,123) (32)
Income from
equity method
investments,
net 3,147 586 5,621 479
Other income
(expense), net (825) 927 (511) 488
Total non-
operating
income, net 286 1,055 3,821 399
--- ----- ----- ---
Income before
taxes 40,847 29,781 80,497 53,377
Income tax
provision 34,076 8,631 45,574 14,530
Net income 6,771 21,150 34,923 38,847
Less: Net income
attributable to
noncontrolling
interests 418 293 672 525
Net income
attributable to
Trimble
Navigation Ltd. $6,353 $20,857 $34,251 $38,322
====== ======= ======= =======
Earnings per
share
attributable to
Trimble
Navigation Ltd.
Basic $0.05 $0.17 $0.28 $0.32
----- ----- ----- -----
Diluted $0.05 $0.17 $0.28 $0.32
----- ----- ----- -----
Shares used in
calculating
earnings per
share:
Basic 120,654 119,551 120,707 119,406
Diluted 124,099 121,897 123,964 121,411
------- ------- ------- -------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jul-2, Jan-1
2010 2010
---- ----
Assets
Current assets:
Cash and cash equivalents $261,660 $273,848
Restricted cash 17,151 -
Accounts receivables, net 219,583 202,293
Other receivables 3,916 11,856
Inventories, net 159,179 144,012
Deferred income taxes 38,694 39,686
Other current assets 19,761 18,383
------ ------
Total current assets 719,944 690,078
Property and equipment, net 46,058 44,635
Goodwill 769,438 764,193
Other purchased intangible assets, net 190,803 202,782
Other non-current assets 54,290 51,589
------ ------
Total assets $1,780,533 $1,753,277
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $2,004 $445
Accounts payable 70,756 53,775
Accrued compensation and benefits 49,958 43,272
Deferred revenue 68,161 68,968
Accrued warranty expense 14,266 14,744
Income taxes payable 43,727 -
Other accrued liabilities 44,916 42,041
------ ------
Total current liabilities 293,788 223,245
Non-current portion of long-term debt 151,018 151,038
Non-current deferred revenue 13,636 15,599
Deferred income taxes 36,261 38,857
Other non-current liabilities 43,422 59,983
Total liabilities 538,125 488,722
------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 735,861 720,248
Retained earnings 472,386 491,367
Accumulated other comprehensive income 20,670 48,297
------ ------
Total Trimble Navigation Ltd.
shareholders' equity 1,228,917 1,259,912
Noncontrolling interests 13,491 4,643
Total equity 1,242,408 1,264,555
Total liabilities and equity $1,780,533 $1,753,277
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
Jul-2, Jul-3,
2010 2009
---- ----
Cash flow from operating activities:
Net Income $34,923 $38,847
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation expense 8,736 9,071
Amortization expense 27,733 25,348
Provision for doubtful accounts 2,596 3,053
Amortization of debt issuance cost 113 113
Deferred income taxes (4,461) (3,406)
Stock-based compensation 10,625 8,780
Income from equity method investments (5,621) (479)
Gain on bargain purchase (386)
Excess tax benefit for stock-based
compensation (1,412) (304)
Provision for excess and obsolete
inventories 3,173 2,933
Other non-cash items (3,447) (2,401)
Add decrease (increase) in assets:
Accounts receivables (15,398) 4,117
Other receivables 7,647 5,242
Inventories (19,747) (7,556)
Other current and non-current assets 1,003 2,289
Add increase (decrease) in liabilities:
Accounts payable 17,315 4,790
Accrued compensation and benefits 8,142 2,808
Accrued liabilities (21,680) 8,591
Deferred revenue 676 7,224
Income taxes payable 44,393
Net cash provided by operating activities 95,309 108,674
---
Cash flow from investing activities:
Acquisitions of businesses, net of cash
acquired (33,605) (39,029)
Acquisition of property and equipment (11,030) (7,415)
Acquisitions of intangible assets (297) (26,839)
Purchases of equity method investments (3,692)
Net purchases of debt and equity securities (6,995)
Increase in restricted cash for business
acquisition (17,151)
Dividends received 5,000 -
Other 67 (513)
Net cash used in investing activities (60,708) (80,791)
------- -------
Cash flow from financing activities:
Issuance of common stock 17,867 5,775
Repurchase and retirement of common stock (60,510)
Excess tax benefit for stock-based
compensation 1,412 304
Payments on long-term debt and revolving
credit lines (94) (149)
Net cash provided by financing activities (41,325) 5,930
-------
Effect of exchange rate changes on cash and
cash equivalents (5,464) 1,815
------ -----
Net increase in cash and cash equivalents (12,188) 35,628
Cash and cash equivalents -beginning of
period 273,848 142,531
------- -------
Cash and cash equivalents - end of period $261,660 $178,159
======== ========
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
THREE MONTHS ENDED
JULY 2, 2010:
Revenue $188,441 $80,158 $38,188 $26,576
Operating income
before corporate
allocations: $33,921 $28,980 $324 $5,181
Operating margin (%
of segment
external net
revenues) 18.0% 36.2% 0.8% 19.5%
THREE MONTHS ENDED
JULY 3, 2009:
Revenue $147,240 $79,787 $39,065 $23,971
Operating income
before corporate
allocations: $19,160 $30,148 $3,648 $4,833
Operating margin (%
of segment
external net
revenues) 13.0% 37.8% 9.3% 20.2%
SIX MONTHS ENDED
JULY 2, 2010:
Revenue $346,059 $176,059 $76,147 $54,113
Operating income
before corporate
allocations: $52,728 $68,293 $2,223 $10,806
Operating margin (%
of segment
external net
revenues) 15.2% 38.8% 2.9% 20.0%
SIX MONTHS ENDED
JULY 3, 2009:
Revenue $274,891 $178,944 $77,353 $47,829
Operating income
before corporate
allocations: $21,669 $72,351 $6,796 $9,145
Operating margin (%
of segment
external net
revenues) 7.9% 40.4% 8.8% 19.1%
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Jul-2, Jul-3,
2010 2009
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $163,426 49.0% $142,800 49.2%
Restructuring ( A ) 55 0.0% 2,198 0.7%
Amortization of
purchased intangibles ( B ) 5,790 1.7% 5,475 1.9%
Stock-based
compensation ( C ) 486 0.2% 477 0.2%
Amortization of
acquisition-related
inventory step-up ( D ) - 0.0% 247 0.1%
--- --- --- ---
Non-GAAP gross margin: $169,757 50.9% $151,197 52.1%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating
expenses: $122,865 $114,074
Restructuring ( A ) (375) (1,302)
Amortization of
purchased intangibles ( B ) (8,126) (7,530)
Stock-based
compensation ( C ) (4,498) (4,077)
Non-recurring
acquisition costs ( E ) (1,764) (2,340)
------ ------
Non-GAAP operating
expenses: $108,102 $98,825
-------- -------
OPERATING INCOME:
GAAP operating income: $40,561 12.2% $28,726 9.9%
Restructuring ( A ) 430 0.1% 3,500 1.2%
Amortization of
purchased intangibles ( B ) 13,916 4.2% 13,005 4.5%
Stock-based
compensation ( C ) 4,984 1.5% 4,554 1.6%
Amortization of
acquisition-related
inventory step-up ( D ) - 0.0% 247 0.1%
Non-recurring
acquisition costs ( E ) 1,764 0.5% 2,340 0.8%
----- --- ----- ---
Non-GAAP operating
income: $61,655 18.5% $52,372 18.1%
------- ---- ------- ----
NET INCOME:
GAAP net income
attributable to
Trimble Navigation
Ltd. $6,353 $20,857
Restructuring ( A ) 430 3,500
Amortization of
purchased intangibles ( B ) 13,916 13,005
Stock-based
compensation ( C ) 4,984 4,554
Amortization of
acquisition-related
inventory step-up ( D ) - 247
Non-recurring
acquisition costs ( E ) 1,774 1,954
Income tax effect on
non-GAAP adjustments ( F ) 24,165 (6,741)
------ ------
Non-GAAP net income
attributable to
Trimble Navigation
Ltd. $51,622 $37,376
------- -------
DILUTED NET INCOME PER
SHARE:
GAAP diluted net income
per share attributable
to Trimble Navigation
Ltd. $0.05 $0.17
Restructuring ( A ) - 0.03
Amortization of
purchased intangibles ( B ) 0.11 0.11
Stock-based
compensation ( C ) 0.04 0.04
Amortization of
acquisition-related
inventory step-up ( D ) - -
Non-recurring
acquisition costs ( E ) 0.02 0.02
Income tax effect on
non-GAAP adjustments ( F ) 0.20 (0.06)
---- -----
Non-GAAP diluted net
income per share
attributable to
Trimble Navigation
Ltd. $0.42 $0.31
----- -----
OPERATING LEVERAGE:
Increase (decrease) in
non-GAAP operating
income $9,283
Increase (decrease) in
revenue $43,300
Operating leverage
(increase in non-GAAP
operating
income as a % of
increase in revenue) 21.4%
% of % of
Segment Segment
SEGMENT OPERATING
INCOME: Revenue Revenue
------- -------
Engineering and
Construction
GAAP operating income
before corporate
allocations: $33,921 18.0% $19,160 13.0%
Stock-based
compensation ( G ) 1,878 1.0% 1,431 1.0%
Non-GAAP operating
income before
corporate allocations: $35,799 19.0% $20,591 14.0%
------- ---- ------- ----
Field Solutions
GAAP operating income
before corporate
allocations: $28,980 36.2% $30,148 37.8%
Stock-based
compensation ( G ) 477 0.5% 260 0.3%
Non-GAAP operating
income before
corporate allocations: $29,457 36.7% $30,408 38.1%
------- ---- ------- ----
Mobile Solutions
GAAP operating income
before corporate
allocations: $324 0.8% $3,648 9.3%
Stock-based
compensation ( G ) 217 0.6% 1,103 2.9%
Non-GAAP operating
income before
corporate allocations: $541 1.4% $4,751 12.2%
---- --- ------ ----
Advanced Devices
GAAP operating income
before corporate
allocations: $5,181 19.5% $4,833 20.2%
Stock-based
compensation ( G ) 457 1.7% 346 1.4%
Non-GAAP operating
income before
corporate allocations: $5,638 21.2% $5,179 21.6%
------ ---- ------ ----
Six Months Ended
----------------
Jul-2, Jul-03,
2010 2009
---- ----
% of % of
Revenue Revenue
------- -------
GROSS MARGIN:
GAAP gross margin: $322,423 49.4% $286,758 49.5%
Restructuring ( A ) 98 0.0% 3,063 0.5%
Amortization of
purchased intangibles ( B ) 11,559 1.8% 10,760 1.9%
Stock-based
compensation ( C ) 987 0.2% 915 0.2%
Amortization of
acquisition-related
inventory step-up ( D ) 71 0.0% 470 0.1%
--- --- --- ---
Non-GAAP gross margin: $335,138 51.4% $301,966 52.2%
-------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating
expenses: $245,747 $233,780
Restructuring ( A ) (1,006) (4,925)
Amortization of
purchased intangibles ( B ) (16,172) (14,499)
Stock-based
compensation ( C ) (9,638) (7,865)
Non-recurring
acquisition costs ( E ) (2,502) (2,805)
------ ------
Non-GAAP operating
expenses: $216,429 $203,686
-------- --------
OPERATING INCOME:
GAAP operating income: $76,676 11.7% $52,978 9.1%
Restructuring ( A ) 1,104 0.2% 7,988 1.4%
Amortization of
purchased intangibles ( B ) 27,731 4.3% 25,259 4.4%
Stock-based
compensation ( C ) 10,625 1.6% 8,780 1.5%
Amortization of
acquisition-related
inventory step-up ( D ) 71 0.0% 470 0.1%
Non-recurring
acquisition costs ( E ) 2,502 0.4% 2,805 0.5%
----- --- ----- ---
Non-GAAP operating
income: $118,709 18.2% $98,280 17.0%
-------- ---- ------- ----
NET INCOME:
GAAP net income
attributable to
Trimble Navigation
Ltd. $34,251 $38,322
Restructuring ( A ) 1,104 7,988
Amortization of
purchased intangibles ( B ) 27,731 25,259
Stock-based
compensation ( C ) 10,625 8,780
Amortization of
acquisition-related
inventory step-up ( D ) 71 470
Non-recurring
acquisition costs ( E ) 2,312 2,419
Income tax effect on
non-GAAP adjustments ( F ) 18,151 (12,155)
------ -------
Non-GAAP net income
attributable to
Trimble Navigation
Ltd. $94,245 $71,083
------- -------
DILUTED NET INCOME PER
SHARE:
GAAP diluted net income
per share attributable
to Trimble Navigation
Ltd. $0.28 $0.32
Restructuring ( A ) 0.01 0.07
Amortization of
purchased intangibles ( B ) 0.22 0.21
Stock-based
compensation ( C ) 0.09 0.07
Amortization of
acquisition-related
inventory step-up ( D ) - -
Non-recurring
acquisition costs ( E ) 0.02 0.02
Income tax effect on
non-GAAP adjustments ( F ) 0.14 (0.10)
---- -----
Non-GAAP diluted net
income per share
attributable to
Trimble Navigation
Ltd. $0.76 $0.59
----- -----
OPERATING LEVERAGE:
Increase (decrease) in
non-GAAP operating
income $20,429
Increase (decrease) in
revenue $73,361
Operating leverage
(increase in non-GAAP
operating
income as a % of
increase in revenue) 27.8%
% of % of
Segment Segment
SEGMENT OPERATING
INCOME: Revenue Revenue
------- -------
Engineering and
Construction
GAAP operating income
before corporate
allocations: $52,728 15.2% $21,669 7.9%
Stock-based
compensation ( G ) 3,603 1.1% 2,739 1.0%
Non-GAAP operating
income before
corporate allocations: $56,331 16.3% $24,408 8.9%
------- ---- ------- ---
Field Solutions
GAAP operating income
before corporate
allocations: $68,293 38.8% $72,351 40.4%
Stock-based
compensation ( G ) 933 0.5% 482 0.3%
Non-GAAP operating
income before
corporate allocations: $69,226 39.3% $72,833 40.7%
------- ---- ------- ----
Mobile Solutions
GAAP operating income
before corporate
allocations: $2,223 2.9% $6,796 8.8%
Stock-based
compensation ( G ) 1,419 1.9% 2,247 2.9%
Non-GAAP operating
income before
corporate allocations: $3,642 4.8% $9,043 11.7%
------ --- ------ ----
Advanced Devices
GAAP operating income
before corporate
allocations: $10,806 20.0% $9,145 19.1%
Stock-based
compensation ( G ) 900 1.6% 671 1.4%
Non-GAAP operating
income before
corporate allocations: $11,706 21.6% $9,816 20.5%
------- ---- ------ ----
FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
The non-GAAP financial measures included in the previous table are
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
operating income, non-GAAP net income, non-GAAP diluted net income
per share and operating leverage, and non-GAAP segment operating
income before corporate allocations. These non-GAAP measures can
be used to evaluate the Company's historical and prospective
financial performance, as well as its performance relative to
competitors. The Company believes some of its investors track the
Company's "core operating performance" as a means of evaluating the
Company's performance in the ordinary, ongoing, and customary course
of its operations. Management also believes that looking at its
core operating performance provides a supplemental way to provide
consistency in period to period comparisons. Accordingly,
management excludes from non-GAAP those items relating to
restructuring, amortization of purchased intangibles, stock based
compensation, amortization of acquisition-related inventory step-
up and non-recurring acquisition costs, which the Company believes
are not indicative of its core operating performance.
( A ) Restructuring. Included in our GAAP presentation of cost of
sales and operating expenses, restructuring costs recorded are
primarily for employee compensation resulting from reductions in
employee headcount in connection with our company restructurings.
We exclude restructuring from our non-GAAP measures because we
believe it is not indicative of our core operating performance.
( B ) Amortization of purchased intangibles. Included in our GAAP
presentation of cost of sales and operating expenses, amortization
of purchased intangibles recorded arise from prior acquisitions and
are non-cash in nature. We exclude these expenses from our non-
GAAP measures because we believe they are not indicative of our core
operating performance.
( C ) Stock-based compensation. Included in our GAAP presentation
of cost of sales and operating expenses, stock-based compensation
consists of expenses for employee stock options and awards and
purchase rights under our employee stock purchase plan. We exclude
stock-based compensation expense from our non-GAAP measures
because some investors may view it as not reflective of our core
operating performance as it is a non-cash expense. For the three
months and six months ended July 2, 2010 and July 3, 2009, stock-
based compensation was allocated as follows:
Three Months Ended Six Months Ended
------------------ ----------------
Jul-2, Jul-3, Jul-2, Jul-3,
(Dollars in thousands) 2010 2009 2010 2009
---- ---- ---- ----
Cost of sales $486 $477 $987 $915
Research and
development 984 854 1,931 1,638
Sales and Marketing 1,347 1,062 2,730 2,066
General and
administrative 2,167 2,161 4,977 4,161
$4,984 $4,554 $10,625 $8,780
------ ------ ------- ------
( D ) Amortization of acquisition-related inventory step-up. The
purchase accounting entries associated with our business
acquisitions require us to record inventory at its fair value, which
is sometimes greater than the previous book value of the inventory.
Included in our GAAP presentation of cost of sales, the increase in
inventory value is amortized to cost of sales over the period that
the related product is sold. We exclude inventory step-up
amortization from our non-GAAP measures because we do not believe
it is indicative of our core operating performance.
( E ) Non-recurring acquisition costs. Included in our GAAP
presentation of operating expenses and non-operating income, net,
non-recurring acquisition costs consist of external and incremental
costs resulting directly from merger and acquisition activities such
as legal, due diligence and integration costs. Also included are
unusual acquisition related items such as adjustments to the fair
value of earnout liabilities and payments made to settle earnout and
holdback disputes. We exclude these items because they are non-
recurring and unique to specific acquisitions and are not indicative
of our core operating performance.
( F ) Income tax effect on non-GAAP adjustments. This amount
adjusts the provision for income taxes to reflect the effect of the
non-GAAP adjustments on non-GAAP net income.
( G ) Stock-based Compensation. The amounts consist of expenses for
employee stock options and awards and purchase rights under our
employee stock purchase plan. 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 $2.0 million and $1.4 million for the three months
ended July 2, 2010 and July 3, 2009, respectively and $3.8 million
and $2.6 million for the six months ended July 2, 2010 and July 3,
2009, respectively. ``
SOURCE Trimble
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