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Last updated on April 16, 2014 at 1:21 EDT

Trimble Reports Second Quarter 2013 Revenue of $576.3 Million, GAAP EPS of $0.21 and Non-GAAP EPS of $0.38

July 30, 2013

SUNNYVALE, Calif., July 30, 2013 /PRNewswire/ — Trimble (NASDAQ: TRMB) today announced second quarter 2013 revenue of $576.3 million, up 11 percent as compared to the second quarter of 2012.

GAAP operating income for the second quarter of 2013 was $64.9 million, or 11.3 percent of revenue, as compared to 11.4 percent of revenue in the second quarter of 2012.

GAAP net income for the second quarter of 2013 was $54.6 million, up 2 percent as compared to the second quarter of 2012. Diluted GAAP earnings per share in the second quarter of 2013 were $0.21, flat with the second quarter of 2012. The tax rate for the second quarter of 2013 was 20 percent as compared to 16 percent in the second quarter of 2012.

Non-GAAP operating income for the second quarter of 2013 was $120.3 million, or 20.9 percent of revenue, compared to $105.2 million, or 20.3 percent of revenue, in the second quarter of 2012.

Non-GAAP net income of $98.6 million for the second quarter of 2013 was up 7 percent as compared to the second quarter of 2012. Diluted non-GAAP earnings per share were $0.38 in the second quarter of 2013, as compared to diluted non-GAAP earnings per share of $0.36 in the second quarter of 2012.

Second quarter 2013 non-GAAP results included the following adjustments as compared to the second quarter of 2012:

  • Restructuring expense of $3.7 million as compared to $1.1 million;
  • Amortization of intangibles of $39.8 million as compared to $29.1 million;
  • Stock-based compensation expense of $8.4 million as compared to $8.2 million;
  • Acquisition-related inventory step-up charge of $524 thousand as compared to $122 thousand;
  • Acquisition and divestiture costs of $2.5 million as compared to $7.3 million.

“We met expectations in the second quarter in spite of problematic conditions in some of our markets. Despite those challenges the Engineering & Construction, Mobile Solutions, and Advanced Devices segments all demonstrated year-to-year revenue and margin growth,” said Steven W. Berglund, Trimble’s president and chief executive officer. “The most significant issue for us was in the Field Solutions segment which declined year-to-year, primarily as a result of lower GIS revenues which were impacted by cutbacks in government funding. Agriculture sales declined slightly due to market conditions in the U.S., which were partially offset by strong growth in the rest of the world. We anticipate some of these market conditions to continue for the rest of the year; we nonetheless continue to expect double digit revenue growth for the second half.”

Results by Segment

Segment operating income is revenue less cost of sales and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges and acquisition costs. Non-GAAP segment operating income also excludes the impact of stock-based compensation expense.

Engineering and Construction (E&C)

Second quarter 2013 E&C revenue was $313.4 million, up 10 percent as compared to the second quarter of 2012 primarily due to organic growth in buildings and construction solutions sales and contributions from acquisitions.

Operating income in E&C for the second quarter of 2013 was $66.8 million, or 21.3 percent of revenue, as compared to 20.9 percent of revenue in the second quarter of 2012. Non-GAAP operating income was $69.7 million, or 22.2 percent of revenue, as compared to 22.1 percent of revenue in the second quarter of 2012.

Field Solutions

Second quarter 2013 Field Solutions revenue was $115.9 million, down 6 percent as compared to the second quarter of 2012, due primarily to softer sales of Geographical Information System (GIS) solutions. Sales of agricultural solutions were also down slightly.

Second quarter 2013 Field Solutions operating income was $43.4 million, or 37.4 percent of revenue, as compared to $46.6 million, or 37.8 percent of revenue, in the second quarter of 2012. Non-GAAP operating income was $44.2 million, or 38.1 percent of revenue, as compared to $47.3 million, or 38.3 percent of revenue, in the second quarter of 2012. The slight decrease in non-GAAP operating margin was due primarily to lower revenue, as well as GIS product mix, partially offset by positive product mix and pricing in agriculture.

Mobile Solutions

Second quarter 2013 Mobile Solutions revenue was $115.5 million, up 42 percent as compared to the second quarter of 2012 due to higher revenue from transportation and logistics sales, primarily due to acquisitions.

Second quarter 2013 Mobile Solutions operating income was $15.4 million, or 13.4 percent of revenue, as compared to $5.6 million, or 6.9 percent of revenue, in the second quarter of 2012. Second quarter 2013 non-GAAP operating income was $16.4 million, or 14.2 percent of revenue, as compared to $5.9 million, or 7.2 percent of revenue, in the second quarter of 2012. The increase in non-GAAP operating margins was primarily due to leverage from increased revenue, product mix and cost controls.

Advanced Devices

Second quarter 2013 Advanced Devices revenue was $31.5 million, up 10 percent as compared to the second quarter of 2012, primarily due to stronger sales of military and RFID components and subsystems.

Operating income in Advanced Devices for the second quarter of 2013 was $6.5 million, or 20.7 percent of revenue, as compared to $3.9 million, or 13.7 percent of revenue, in the second quarter of 2012. Non-GAAP operating income in Advanced Devices was $7.4 million, or 23.6 percent of revenue, as compared to $4.5 million, or 15.6 percent of revenue, in the second quarter of 2012. The improvement in non-GAAP operating margin was due to leverage on higher revenue.

Use of Non-GAAP Financial Information

To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. 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. Further, 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. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons.

The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items 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. 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 2013 Trimble expects revenue between $555 million and $565 million with GAAP earnings per share of $0.18 to $0.20 and non-GAAP earnings per share of $0.36 to $0.38. Non-GAAP guidance excludes the amortization of intangibles of $42.0 million related to previous acquisitions; anticipated acquisition costs of $4.5 million and the anticipated impact of stock-based compensation expense of $9.3 million. Both GAAP and non-GAAP earnings per share assume a 16 to 18 percent tax rate and 261 million shares outstanding.

Investor Conference Call / Webcast Details

Trimble will hold a conference call today, July 30, 2013 at 1:30 p.m. PT to discuss its results. The call 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 (855) 859-2056 (U.S.) or (404) 537-3406 (international). The pass code for all calls is 19870023. 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 impact of acquisitions, and the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the third and fourth quarters of 2013, the expected tax rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions and the anticipated number of shares outstanding and interest costs. 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. The Company’s results may be adversely affected if the Company is unable to market, manufacture and ship new products or integrate new acquisitions. The Company’s results would also be negatively impacted by further weakening in the macro environment in Europe and China or a softening of the market in North or South America, including government spending cuts and any further softening of the agriculture market in the U.S. 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 and 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, such as changes in economic conditions, critical part supply chain shortages, possible write-offs of goodwill, and regulatory proceedings affecting GPS. 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)

                                           Second Quarter of                     First Two Quarters of
                                           -----------------                     ---------------------

                                                              2013                                    2012           2013       2012
                                                              ----                                    ----           ----       ----

    Revenues:

            Product                                       $425,880                                $402,198       $838,667   $800,736

            Service                                         84,511                                  63,595        166,107    121,025

            Subscription                                    65,902                                  51,767        127,630     98,066

    Total revenues                                         576,293                                 517,560      1,132,404  1,019,827
                                                           -------                                 -------      ---------  ---------

    Cost of sales:

            Product                                        200,493                                 199,135        399,194    392,179

            Service                                         32,549                                  21,455         63,392     43,976

            Subscription                                    20,995                                  15,978         40,967     30,409

            Amortization of purchased
             intangible assets                              19,855                                  13,296         39,536     26,417

    Total cost of sales                                    273,892                                 249,864        543,089    492,981
                                                           -------                                 -------        -------    -------

    Gross margin                                           302,401                                 267,696        589,315    526,846
                                                           -------                                 -------        -------    -------

    Gross margin (%)                                          52.5%                                   51.7%          52.0%      51.7%

    Operating expenses

        Research and development                            76,555                                  64,305        150,163    124,540

        Sales and marketing                                 85,307                                  77,589        168,930    153,613

        General and administrative                          52,760                                  49,987        104,730     96,873

        Restructuring                                        2,966                                   1,112          4,571      1,593

        Amortization of purchased
         intangible assets                                  19,908                                  15,782         39,559     31,458

           Total operating expenses                        237,496                                 208,775        467,953    408,077
                                                           -------                                 -------        -------    -------

    Operating income                                        64,905                                  58,921        121,362    118,769

    Non-operating income, net

        Interest expense, net                               (4,255)                                 (3,773)        (9,326)    (7,636)

        Foreign currency transaction
         gain (loss), net                                      600                                     196           (969)    (2,017)

        Income from equity method
         investments, net                                    7,157                                   7,063         11,414     13,255

        Other income, net                                      284                                     884            579      1,247

           Total non-operating income, net                   3,786                                   4,370          1,698      4,849
                                                             -----                                   -----          -----      -----

    Income before taxes                                     68,691                                  63,291        123,060    123,618

    Income tax provision                                    13,738                                  10,126         19,175     20,381

    Net income                                              54,953                                  53,165        103,885    103,237

    Less: Net gain (loss)
     attributable to noncontrolling
     interests                                                 372                                    (527)          (504)    (1,273)

    Net income attributable to
     Trimble Navigation Ltd.                               $54,581                                 $53,692       $104,389   $104,510
                                                           =======                                 =======       ========   ========

    Earnings per share attributable
     to Trimble Navigation Ltd.

         Basic                                               $0.21                                   $0.21          $0.41      $0.42
                                                             -----                                   -----          -----      -----

         Diluted                                             $0.21                                   $0.21          $0.40      $0.41
                                                             -----                                   -----          -----      -----

    Shares used in calculating
     earnings per share:

        Basic                                              256,186                                 250,732        255,683    249,736

        Diluted                                            260,533                                 256,586        260,416    256,052
                                                           -------                                 -------        -------    -------

                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (In thousands)

                                    (Unaudited)

                                     Second Quarter          Fiscal Year End

    As of                                             2013                     2012
    -----                                             ----                     ----

    Assets

    Current
     assets:

       Cash and
        cash
        equivalents                               $129,072                 $157,771

       Accounts
        receivables,
        net                                        356,264                  323,477

       Other
        receivables                                 20,162                   17,327

       Inventories,
        net                                        258,709                  240,529

       Deferred
        income
        taxes                                       41,865                   43,473

       Other
        current
        assets                                      40,568                   33,396
                                                    ------                   ------

          Total
           current
           assets                                  846,640                  815,973

    Property and
     equipment,
     net                                           123,795                   96,890

    Goodwill                                     1,911,578                1,815,699

    Other
     purchased
     intangible
     assets, net                                   648,610                  644,419

    Other non-
     current
     assets                                        103,137                   96,123
                                                   -------                   ------

          Total assets                          $3,633,760               $3,469,104
                                                ==========               ==========

    Liabilities

    Current
     liabilities:

       Current
        portion of
        long-term
        debt                                      $109,561                  $38,092

       Accounts
        payable                                    108,864                  124,532

       Accrued
        compensation
        and
        benefits                                    81,938                   86,064

       Deferred
        revenue                                    189,915                  138,920

       Accrued
        warranty
        expense                                     16,921                   17,066

       Other
        accrued
        liabilities                                 74,554                   63,996

          Total
           current
           liabilities                             581,753                  468,670

    Non-current
     portion of
     long-term
     debt                                          789,626                  873,066

    Non-current
     deferred
     revenue                                        13,207                    7,262

    Deferred
     income
     taxes                                         141,057                  148,260

    Other non-
     current
     liabilities                                    66,828                   58,322

          Total
           liabilities                           1,592,471                1,555,580
                                                 ---------                ---------

    Commitments
     and
     contingencies

    Equity

     Shareholders'
     equity:

       Common stock                              1,057,927                1,006,818

       Retained
        earnings                                   970,657                  868,026

       Accumulated
        other
        comprehensive
        income
        (loss)                                      (4,711)                  22,611
                                                    ------                   ------

    Total
     Trimble
     Navigation
     Ltd.
     shareholders'
     equity                                      2,023,873                1,897,455

     Noncontrolling
     interests                                      17,416                   16,069

          Total equity                           2,041,289                1,913,524

          Total
           liabilities
           and equity                           $3,633,760               $3,469,104
                                                ==========               ==========

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                (In thousands)

                                  (Unaudited)

                                                    First Two Quarters of
                                                    ---------------------

                                                         2013                 2012
                                                         ----                 ----

    Cash flow from operating
     activities:

        Net Income                                   $103,885             $103,237

        Adjustments to reconcile
         net income to net cash
         provided by

           operating activities:

             Depreciation expense                      12,854               11,300

             Amortization expense                      79,095               57,875

             Provision for doubtful
              accounts                                    261                1,486

             Deferred income taxes                    (13,732)                 381

             Stock-based compensation                  17,253               15,944

             Income from equity method
              investments                             (11,414)             (13,255)

             Excess tax benefit for
              stock-based compensation                 (7,616)             (15,254)

             Provision for excess and
              obsolete inventories                        569                4,993

             Other non-cash items                        (494)              (1,851)

        Add decrease (increase) in
         assets:

             Accounts receivables                     (24,071)             (38,589)

             Other receivables                         (1,558)              (6,638)

             Inventories                              (14,725)                 594

             Other current and non-
              current assets                          (12,165)              (8,904)

        Add increase (decrease) in
         liabilities:

             Accounts payable                         (18,936)               4,148

             Accrued compensation and
              benefits                                 (7,166)               2,270

             Deferred revenue                          55,994               32,117

             Accrued warranty expense                    (154)              (1,814)

             Other current and non-
              current liabilities                      14,163                7,054

     Net cash provided by
      operating activities                            172,043              155,094
                                                      -------              -------

     Cash flow from investing
      activities:

          Acquisitions of
           businesses, net of cash
           acquired                                  (178,953)            (337,676)

          Acquisitions of property
           and equipment                              (39,431)             (21,308)

          Dividends received from
           equity method investments                    2,526                  221

          Other                                           730                 (706)

     Net cash used in investing
      activities                                     (215,128)            (359,469)
                                                     --------             --------

     Cash flow from financing
      activities:

          Issuance of common stock,
           net                                         23,954               27,162

          Excess tax benefit for
           stock-based compensation                     7,616               15,254

          Proceeds from long-term
           debt and revolving credit
           lines                                      239,613              436,500

          Payments on short-term
           and long-term debt                        (252,780)            (304,013)

     Net cash provided by
      financing activities                             18,403              174,903
                                                       ------              -------

     Effect of exchange rate
      changes on cash and cash
      equivalents                                      (4,017)              (3,212)
                                                       ------               ------

     Net decrease in cash and
      cash equivalents                                (28,699)             (32,684)

     Cash and cash equivalents
      -beginning of period                            157,771              154,621
                                                      -------              -------

     Cash and cash equivalents
      -end of period                                 $129,072             $121,937
                                                     ========             ========

                                                                                                                       REPORTING SEGMENTS

                                                                                                                     (Dollars in thousands)

                                                                                                                           (Unaudited)

                                                                                       Reporting Segments
                                                                                       ------------------

                                                                                   Engineering

                                                                                       and                                          Field                                        Mobile                                     Advanced

                                                                                   Construction                                   Solutions                                    Solutions                                     Devices
                                                                                   ------------                                   ---------                                    ---------                                     -------

    SECOND QUARTER OF FISCAL 2013 :

                            Revenues                          $313,446                                       $115,864                                     $115,524                                      $31,459

                             Operating
                             income before
                             corporate
                             allocations:                      $66,840                                        $43,372                                      $15,435                                       $6,514

                             Operating
                             margin (%
                             of segment
                             external
                             net
                             revenues)                            21.3%                                          37.4%                                        13.4%                                        20.7%

    SECOND QUARTER OF FISCAL 2012 :

                            Revenues                          $284,175                                       $123,371                                      $81,402                                      $28,612

                             Operating
                             income before
                             corporate
                             allocations:                      $59,473                                        $46,623                                       $5,624                                       $3,913

                             Operating
                             margin (%
                             of segment
                             external
                             net
                             revenues)                            20.9%                                          37.8%                                         6.9%                                        13.7%

    FIRST TWO QUARTERS OF FISCAL 2013 :

                            Revenue                           $580,317                                       $263,345                                     $225,688                                      $63,054

                             Operating
                             income before
                             corporate
                             allocations:                     $109,813                                       $102,898                                      $27,008                                      $12,999

                             Operating
                             margin (%
                             of segment
                             external
                             net
                             revenues)                            18.9%                                          39.1%                                        12.0%                                        20.6%

    FIRST TWO QUARTERS OF FISCAL 2012 :

                            Revenue                           $533,060                                       $270,870                                     $159,785                                      $56,112

                             Operating
                             income before
                             corporate
                             allocations:                      $99,550                                       $108,984                                      $12,982                                       $7,252

                             Operating
                             margin (%
                             of segment
                             external
                             net
                             revenues)                            18.7%                                          40.2%                                         8.1%                                        12.9%

                                                                                                                                                                                            GAAP TO NON-GAAP RECONCILIATION

                                                                                                                                                                                     (Dollars in thousands, except per share data)

                                                                                                                                                                                                      (Unaudited)

                                                                                                      Second Quarter of                                                  First Two Quarters of
                                                                                                      -----------------                                                  ---------------------

                                                                                                                          2013                                       2012                                                        2013                                               2012
                                                                                                                          ----                                       ----                                                        ----                                               ----

                                                                                                           Dollar                         % of                                          Dollar                         % of                                          Dollar                         % of                                          Dollar                         % of

                                                                                                           Amount                        Revenue                                        Amount                        Revenue                                        Amount                        Revenue                                        Amount                        Revenue
                                                                                                           ------                        -------                                        ------                        -------                                        ------                        -------                                        ------                        -------

    GROSS MARGIN:

                            GAAP gross margin:                                                                        $302,401                      52.5%                                          $267,696                      51.7%                                          $589,315                      52.0%                                          $526,846                      51.7%

                            Restructuring                                 ( A )                                            766                       0.1%                                                34                       0.0%                                               821                       0.1%                                                79                       0.0%

                             Amortization of purchased
                             intangible assets                            ( B )                                         19,855                       3.4%                                            13,296                       2.6%                                            39,536                       3.5%                                            26,417                       2.6%

                            Stock-based compensation                      ( C )                                            607                       0.1%                                               458                       0.1%                                             1,207                       0.1%                                               978                       0.1%

                             Amortization of acquisition-
                             related inventory step-up                    ( D )                                            524                       0.1%                                               122                       0.0%                                             1,127                       0.1%                                               130                       0.0%

                             Non-GAAP gross
                             margin:                                                                                  $324,153                      56.2%                                          $281,606                      54.4%                                          $632,006                      55.8%                                          $554,450                      54.4%
                                                                                                                      --------                                                                     --------                                                                     --------                                                                     --------

    OPERATING EXPENSES:

                             GAAP operating
                             expenses:                                                                                $237,496                      41.2%                                          $208,775                      40.3%                                          $467,953                      41.3%                                          $408,077                      40.0%

                            Restructuring                                 ( A )                                         (2,966)                     -0.5%                                            (1,112)                     -0.2%                                            (4,571)                     -0.4%                                            (1,593)                     -0.2%

                             Amortization of purchased
                             intangible assets                            ( B )                                        (19,908)                     -3.5%                                           (15,782)                     -3.0%                                           (39,559)                     -3.5%                                           (31,458)                     -3.1%

                            Stock-based compensation                      ( C )                                         (7,828)                     -1.4%                                            (7,697)                     -1.5%                                           (16,046)                     -1.4%                                           (14,966)                     -1.4%

                            Acquisition costs                             ( E )                                         (2,976)                     -0.4%                                            (7,815)                     -1.5%                                            (6,394)                     -0.6%                                           (12,581)                     -1.2%

                             Non-GAAP
                             operating
                             expenses:                                                                                $203,818                      35.4%                                          $176,369                      34.1%                                          $401,383                      35.4%                                          $347,479                      34.1%
                                                                                                                      --------                                                                     --------                                                                     --------                                                                     --------

    OPERATING INCOME:

                             GAAP operating
                             income:                                                                                   $64,905                      11.3%                                           $58,921                      11.4%                                          $121,362                      10.7%                                          $118,769                      11.6%

                            Restructuring                                 ( A )                                          3,732                       0.6%                                             1,146                       0.2%                                             5,392                       0.5%                                             1,672                       0.2%

                             Amortization of purchased
                             intangible assets                            ( B )                                         39,763                       6.9%                                            29,078                       5.6%                                            79,095                       7.0%                                            57,875                       5.7%

                            Stock-based compensation                      ( C )                                          8,435                       1.5%                                             8,155                       1.6%                                            17,253                       1.5%                                            15,944                       1.6%

                             Amortization of acquisition-
                             related inventory step-up                    ( D )                                            524                       0.1%                                               122                       0.0%                                             1,127                       0.1%                                               130                       0.0%

                            Acquisition costs                             ( E )                                          2,976                       0.5%                                             7,815                       1.5%                                             6,394                       0.6%                                            12,581                       1.2%

                             Non-GAAP
                             operating income:                                                                        $120,335                      20.9%                                          $105,237                      20.3%                                          $230,623                      20.4%                                          $206,971                      20.3%
                                                                                                                      --------                                                                     --------                                                                     --------                                                                     --------

    NON-OPERATING INCOME, NET:

                             GAAP non-
                             operating income,
                             net:                                                                                       $3,786                                                                       $4,370                                                                       $1,698                                                                       $4,849

                            Acquisition / divestiture gain                ( E )                                           (459)                                                                        (557)                                                                        (860)                                                                        (113)

                             Foreign exchange loss associated
                             with acquisitions                            ( F )                                              -                                                                            -                                                                            -                                                                        1,578

                             Non-GAAP non-
                             operating income,
                             net:                                                                                       $3,327                                                                       $3,813                                                                         $838                                                                       $6,314

                                                                                                                                        GAAP and                                                                     GAAP and                                                                     GAAP and                                                                     GAAP and

                                                                                                                                        Non-GAAP                                                                     Non-GAAP                                                                     Non-GAAP                                                                     Non-GAAP

                                                                                                                                              Tax Rate %           ( H )                                                  Tax Rate %           ( H )                                                  Tax Rate %           ( H )                                                  Tax Rate %           ( H )
                                                                                                                                               ---------                                                                    ---------                                                                    ---------                                                                    ---------

    INCOME TAX PROVISION:

                             GAAP income tax
                             provision:                                                                                $13,738                        20%                                           $10,126                        16%                                           $19,175                        16%                                           $20,381                        16%

                            Non-GAAP items tax effected                   ( G )                                         10,994                                                                        7,321                                                                       16,337                                                                       14,785

                             Non-GAAP income
                             tax provision:                                                                            $24,732                        20%                                           $17,447                        16%                                           $35,512                        16%                                           $35,166                        16%
                                                                                                                       -------                                                                      -------                                                                      -------                                                                      -------

    NET INCOME:

                             GAAP net income
                             attributable to
                             Trimble
                             Navigation Ltd.                                                                           $54,581                                                                      $53,692                                                                     $104,389                                                                     $104,510

                            Restructuring                                 ( A )                                          3,732                                                                        1,146                                                                        5,392                                                                        1,672

                             Amortization of purchased
                             intangible assets                            ( B )                                         39,763                                                                       29,078                                                                       79,095                                                                       57,875

                            Stock-based compensation                      ( C )                                          8,435                                                                        8,155                                                                       17,253                                                                       15,944

                             Amortization of acquisition-
                             related inventory step-up                    ( D )                                            524                                                                          122                                                                        1,127                                                                          130

                             Acquisition /divestiture costs,
                             net                                          ( E )                                          2,517                                                                        7,258                                                                        5,534                                                                       12,468

                             Foreign exchange loss associated
                             with acquisitions                            ( F )                                              -                                                                            -                                                                            -                                                                        1,578

                            Non-GAAP items tax affected                   ( G )                                        (10,994)                                                                      (7,321)                                                                     (16,337)                                                                     (14,785)

                             Non-GAAP net
                             income
                             attributable to
                             Trimble
                             Navigation Ltd.                                                                           $98,558                                                                      $92,130                                                                     $196,453                                                                     $179,392

    DILUTED NET INCOME PER SHARE:

                             GAAP diluted net
                             income per share
                             attributable to
                             Trimble
                             Navigation Ltd.                                                                             $0.21                                                                        $0.21                                                                        $0.40                                                                        $0.41

                            Restructuring                                 ( A )                                           0.01                                                                            -                                                                         0.02                                                                         0.01

                             Amortization of purchased
                             intangible assets                            ( B )                                           0.15                                                                         0.11                                                                         0.30                                                                         0.23

                            Stock-based compensation                      ( C )                                           0.04                                                                         0.04                                                                         0.07                                                                         0.06

                             Amortization of acquisition-
                             related inventory step-up                    ( D )                                              -                                                                            -                                                                            -                                                                            -

                             Acquisition /divestiture costs,
                             net                                          ( E )                                           0.01                                                                         0.03                                                                         0.02                                                                         0.05

                             Foreign exchange loss associated
                             with acquisitions                            ( F )                                              -                                                                            -                                                                            -                                                                         0.01

                            Non-GAAP items tax affected                   ( G )                                          (0.04)                                                                       (0.03)                                                                       (0.06)                                                                       (0.07)

                             Non-GAAP diluted net
                             income per share
                             attributable to Trimble
                             Navigation Ltd.                                           $0.38                                                                        $0.36                                                                        $0.75                                                                        $0.70

    OPERATING LEVERAGE:

                             Increase in non-
                             GAAP operating
                             income                                                                                    $15,098                                                                      $24,910                                                                      $23,652                                                                      $56,542

                             Increase in
                             revenue                                                                                   $58,733                                                                     $110,391                                                                     $112,577                                                                     $228,365

                             Operating leverage
                             (increase in non-
                             GAAP operating

                             income as a % of
                             increase in
                             revenue)                                                                                     25.7%                                                                        22.6%                                                                        21.0%                                                                        24.8%

                                                                                                                                                                    GAAP TO NON-GAAP RECONCILIATION (CONTINUED)

                                                                                                                                                                   (Dollars in thousands, except per share data)

                                                                                                                                                                                    (Unaudited)

                                                                                                 Second Quarter of                                           First Two Quarters of
                                                                                                 -----------------                                         ---------------------

                                                                                                                   2013                                  2012                                                   2013                                        2012
                                                                                                                   ----                                  ----                                                   ----                                        ----

                                                                                                                               % of Segment                                                   % of Segment Revenue                                                      % of Segment                                                          % of Segment

                                                                                                                                  Revenue                                                                                                                                  Revenue                                                               Revenue
                                                                                                                                  -------                                                                                                                                  -------                                                               -------

    SEGMENT OPERATING INCOME:

                            Engineering and
                            Construction

                            GAAP operating income before
                            corporate allocations:                                                              $66,840                      21.3%                                 $59,473                      20.9%                                   $109,813                      18.9%                                    $99,550                      18.7%

                           Stock-based compensation                      ( I )                                    2,890                       0.9%                                   3,299                       1.2%                                      5,752                       1.0%                                      6,055                       1.1%

                            Non-GAAP operating income before
                            corporate allocations:                                                              $69,730                      22.2%                                 $62,772                      22.1%                                   $115,565                      19.9%                                   $105,605                      19.8%
                                                                                                                -------                      ----                                  -------                      ----                                    --------                      ----                                    --------                      ----

                           Field Solutions

                            GAAP operating income before
                            corporate allocations:                                                              $43,372                      37.4%                                 $46,623                      37.8%                                   $102,898                      39.1%                                   $108,984                      40.2%

                           Stock-based compensation                      ( I )                                      827                       0.7%                                     681                       0.5%                                      1,544                       0.6%                                      1,324                       0.5%

                            Non-GAAP operating income before
                            corporate allocations:                                                              $44,199                      38.1%                                 $47,304                      38.3%                                   $104,442                      39.7%                                   $110,308                      40.7%
                                                                                                                -------                      ----                                  -------                      ----                                    --------                      ----                                    --------                      ----

                           Mobile Solutions

                            GAAP operating income before
                            corporate allocations:                                                              $15,435                      13.4%                                  $5,624                       6.9%                                    $27,008                      12.0%                                    $12,982                       8.1%

                           Stock-based compensation                      ( I )                                      948                       0.8%                                     235                       0.3%                                      1,860                       0.8%                                      1,028                       0.7%

                            Non-GAAP operating income before
                            corporate allocations:                                                              $16,383                      14.2%                                  $5,859                       7.2%                                    $28,868                      12.8%                                    $14,010                       8.8%
                                                                                                                -------                      ----                                   ------                       ---                                     -------                      ----                                     -------                       ---

                           Advanced Devices

                            GAAP operating income before
                            corporate allocations:                                                               $6,514                      20.7%                                  $3,913                      13.7%                                    $12,999                      20.6%                                     $7,252                      12.9%

                           Stock-based compensation                      ( I )                                      901                       2.9%                                     540                       1.9%                                      1,750                       2.8%                                      1,172                       2.1%

                            Non-GAAP operating income before
                            corporate allocations:                                                               $7,415                      23.6%                                  $4,453                      15.6%                                    $14,749                      23.4%                                     $8,424                      15.0%
                                                                                                                 ------                      ----                                   ------                      ----                                     -------                      ----                                      ------                      ----

                                                                                                                 FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

                                                                                                                                  (Unaudited)

    Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The non-GAAP financial measures included in the previous table as well as detailed explanations to the adjustments
     to comparable GAAP measures, are set forth below:

    Non-GAAP gross margin

    We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions and manufacturing costs influence our business.  Non-GAAP gross margin excludes
     restructuring costs, amortization of purchased intangible assets, stock-based compensation and amortization of acquisition-related inventory step-up from GAAP gross margin. We believe that these exclusions offer investors
     additional information that may be useful to view trends in our gross margin performance.

    Non-GAAP operating expenses

    We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating expenses exclude restructuring costs, amortization of purchased intangible assets, stock-based
     compensation and acquisition costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs, and acquisition bonus payments from GAAP
     operating expenses. We believe that these exclusions offer investors supplemental information to facilitate comparison of our operating expenses to our prior results.

    Non-GAAP operating income

    We believe our investors benefit by understanding our non-GAAP operating income trends which are driven by revenue, gross margin, and spending. Non-GAAP operating income excludes restructuring costs, amortization of purchased
     intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up and acquisition costs associated with external and incremental costs resulting directly from merger and acquisition activities
     such as legal, due diligence, integration costs, and acquisition bonus payments. We believe that these exclusions offer an alternative means for our investors to evaluate current operating performance compared to results of other
     periods.

    Non-GAAP non-operating income, net

    We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income, net excludes acquisition and divestiture gains associated with unusual acquisition related items such as
     adjustments to the fair value of earn-out liabilities and gains or losses related to the acquisition or sale of certain businesses and investments. These gains are specific to particular acquisitions and divestitures and vary
     significantly in amount and timing. Non-GAAP non-operating income, net also excludes foreign exchange loss specifically associated with a hedge for one of our acquisitions. We believe that these exclusions provide investors with
     a supplemental view of our ongoing financial results.

    Non-GAAP income tax provision

    Non-GAAP items tax effected adjusts the provision for income taxes to reflect the effect of certain non-GAAP items on non-GAAP net income. We believe this information is useful to investors because it provides for consistent
     treatment of the excluded items in our non-GAAP presentation.

    Non-GAAP net income

    This measure provides a supplemental view of net income trends which are driven by non-GAAP income before taxes and our non-GAAP tax rate. Non-GAAP net income excludes restructuring costs, amortization of purchased intangible
     assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange loss from a hedge associated with one of our acquisitions, and non-GAAP tax
     adjustments from GAAP net income. We believe our investors benefit from understanding these exclusions and from an alternative view of our net income performance as compared to our past net income performance.

    Non-GAAP diluted net income per share

    We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the company. Non-GAAP diluted net
     income per share excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange
     loss from a hedge associated with one of our acquisitions, and non-GAAP tax adjustments from GAAP diluted net income per share. We believe that these exclusions offer investors a useful view of our diluted net income per share as
     compared to our past diluted net income per share.

    Non-GAAP operating leverage

    We believe this information is beneficial to investors as a measure of how much incremental revenue is contributed to our operating income. Non-GAAP operating leverage is the increase in non-GAAP operating income as a percentage
     of the increase in revenue. We believe that this information offers investors supplemental information to evaluate our current performance and to compare to our past non-GAAP operating leverage.

    Non-GAAP segment operating income

    Non-GAAP segment operating income excludes stock-based compensation from GAAP segment operating income. We believe this information is useful to investors because some may exclude stock-based compensation as an alternative view
     when assessing trends in the operating income of our segments.

    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. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial
     results.  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 intangible assets, stock based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a foreign exchange loss from a hedge
     associated with one of our acquisitions, and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP measures, see items (A) - ( I ) below,

    ( A )             Restructuring costs. 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 do not
                      reflect expected future operating expenses, they are not indicative of our core operating
                      performance, and they are not meaningful in comparisons to our past operating performance.
                      We have incurred  restructuring expense in each of the last three years however the amount
                      incurred can vary significantly based on whether a restructuring has occurred in the period
                      and the timing of headcount reductions.

    ( B )             Amortization of purchased intangible assets. Included in our GAAP presentation of gross
                      margin and operating expenses is amortization of purchased intangible assets. US GAAP
                      accounting requires that intangible assets are recorded at fair value and amortized over
                      their useful lives. Consequently, the timing and size of our acquisitions will cause our
                      operating results to vary from period to period, making a comparison to past performance
                      difficult for investors. This accounting treatment may cause differences when comparing our
                      results to companies that grow internally because the fair value assigned to the intangible
                      assets acquired through acquisition may significantly exceed the equivalent expenses that a
                      company may incur for similar efforts when performed internally. Furthermore, the useful
                      life that we expense our intangible assets over may be substantially different from the
                      time period that an internal growth company incurs and recognizes such expenses. We believe
                      that by excluding the amortization of purchased intangible assets, which primarily
                      represents technology and/or customer relationships already developed, it provides an
                      alternative way for investors to compare our operations pre-acquisition to those post-
                      acquisitions and to those of our competitors that have pursued internal growth strategies.
                      However, we note that companies that grow internally will incur costs to develop intangible
                      assets that will be expensed in the period incurred, which may make a direct comparison
                      more difficult.

    ( 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 second
                      quarter and the first two quarters of fiscal 2013 and 2012, stock-based compensation was
                      allocated as follows:

                                                                                     Second Quarter of                            First Two Quarters of
                                                                                     -----------------

                     (Dollars in thousands)                                                                 2013                                           2012                                           2013                                2012
                                                                                                            ----                                           ----                                           ----                                ----

                     Cost of sales                                                                          $607                                           $458                                         $1,207                                $978

                     Research and development                                                              1,232                                          1,477                                          2,379                               2,706

                     Sales and Marketing                                                                   1,761                                          1,837                                          3,525                               3,628

                     General and administrative                                                            4,835                                          4,383                                         10,142                               8,632

                                                                                                          $8,435                                         $8,155                                        $17,253                             $15,944
                                                                                                          ------                                         ------                                        -------                             -------

    ( 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 it is a non-cash expense that we do not
                      believe is indicative of our ongoing operating results.  We further believe that excluding
                      this item from our non-GAAP results is useful to investors in that it allows for period-
                      over-period comparability.

    ( E )             Acquisition /divestiture items.  Included in our GAAP presentation of operating expenses,
                      acquisition costs consist of external and incremental costs resulting directly from merger
                      and acquisition activities such as legal, due diligence, integration costs and acquisition
                      bonus payments.  Included in our GAAP presentation of non-operating income, net,
                      acquisition /divestiture gain includes unusual acquisition or divestiture related items
                      such as adjustments to the fair value of earn-out liabilities and gains on divestitures of
                      certain businesses and investments. Although we do numerous acquisitions, the costs that
                      have been excluded from the non-GAAP measures are costs specific to particular
                      acquisitions. These are one-time costs that vary significantly in amount and timing and
                      are not indicative of our core operating performance.

    ( F )             Foreign exchange loss associated with acquisitions.  This amount represents a loss on a
                      foreign exchange hedge associated with one of our acquisitions.  We excluded the foreign
                      exchange loss from our non-GAAP measures because we believe that the exclusion of this
                      item provides investors an enhanced view of the cost structure of our operations and
                      facilitates comparisons with the results of other periods.

    ( G )             Non-GAAP items tax effected.  This amount adjusts the provision for income taxes to reflect
                      the effect of the non-GAAP items ( A ) - ( F ) on non-GAAP net income.   We believe this
                      information is useful to investors because it provides for consistent treatment of the
                      excluded items in this non-GAAP presentation.

    ( H )             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.   We believe that investors benefit from a
                      presentation of non-GAAP tax rate percentage as a way of facilitating a comparison to non-
                      GAAP tax rates in prior periods.

    ( I )             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 as it is a non-cash expense. 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 $2.9
                      million and $3.4 million for the second quarter of fiscal 2013 and 2012, respectively, and
                      $6.3 million and $6.4 million for the first two quarters of fiscal 2013 and 2012,
                      respectively.

SOURCE Trimble


Source: PR Newswire