Trimble Fourth Quarter 2011 Revenue $435.2 Million, Non-GAAP Earnings Per Share $0.54: Fiscal 2011 Revenue $1.64 Billion, Non-GAAP Earnings Per Share $2.15
SUNNYVALE, Calif., Feb. 2, 2012 /PRNewswire/ -- Trimble (NASDAQ: TRMB) today announced fourth quarter and fiscal 2011 results.
Fourth Quarter 2011 Results
For the fourth quarter of 2011, Trimble had revenue of $435.2 million, up approximately 35 percent as compared to the fourth quarter of 2010.
GAAP operating income for the fourth quarter of 2011 was $28.7 million, up 49 percent as compared to the fourth quarter of 2010. GAAP operating margin in the fourth quarter of 2011 was 6.6 percent as compared to 6.0 percent in the fourth quarter of 2010.
Fourth quarter 2011 GAAP net income was $29.4, down 20 percent as compared to the fourth quarter of 2010. Diluted earnings per share in the fourth quarter of 2011 were $0.23 as compared to diluted earnings per share of $0.29 in the fourth quarter of 2010. When looking at year-over-year GAAP net income and earnings per share it should be noted that in the fourth quarter of 2010 there was a tax benefit of 61 percent versus a tax rate of 8 percent in the fourth quarter of 2011. The fourth quarter 2010 tax benefit was primarily due to a non-recurring income tax benefit for a valuation allowance release of $7.6 million and a catch up on research and development tax credits due to legislation passed in the fourth quarter of 2010.
Fourth quarter 2011 non-GAAP operating income of $68.8 million was up 48 percent as compared to the fourth quarter of 2010. Non-GAAP operating margin was 15.8 percent as compared to 14.3 percent in the fourth quarter of 2010.
Non-GAAP net income of $67.8 million for the fourth quarter of 2011 was up 19 percent as compared to the fourth quarter of 2010. Diluted non-GAAP earnings per share in the fourth quarter of 2011 were $0.54 as compared to diluted non-GAAP earnings per share of $0.46 in the fourth quarter of 2010.
Fourth quarter 2011 non-GAAP results exclude:
-- Restructuring expense of $644 thousand as compared to $641 thousand in
the fourth quarter of 2010;
-- Amortization of intangibles of $29.2 million as compared to $15.5
million in the fourth quarter of 2010;
-- Stock-based compensation expense of $7.4 million as compared to $7.0
million in the fourth quarter of 2010;
-- Acquisition-related inventory step-up charge of $739 thousand as
compared to $589 thousand in the fourth quarter of 2010;
-- Acquisition-related costs of $1.9 million as compared to $3.5 million in
the fourth quarter of 2010;
-- Loss on foreign exchange of $1.7 million from hedges associated with
acquisitions as compared to no loss in the fourth quarter of 2010;
-- A non-recurring income tax benefit for a valuation allowance release of
$7.6 million in the fourth quarter of 2010. There was no such tax
benefit in the fourth quarter of 2011.
Fiscal 2011 Results
Fiscal 2011 revenue was $1.64 billion, up approximately 27 percent as compared to fiscal 2010.
GAAP operating income for fiscal 2011 was $156.4 million, up 23 percent as compared to fiscal 2010. GAAP operating margin in fiscal 2011 was 9.5 percent as compared to 9.9 percent in fiscal 2010.
Fiscal 2011 GAAP net income was $150.8 million, up 45 percent as compared to fiscal 2010. Diluted earnings per share in fiscal 2011 were $1.20 as compared to diluted earnings per share of $0.84 in fiscal 2010.
Fiscal 2011 non-GAAP operating income of $292.2 million was up 34 percent as compared to fiscal 2010. Non-GAAP operating margin was 17.8 percent as compared to 16.8 percent in fiscal 2010.
Non-GAAP net income of $271.2 million for fiscal 2011 was up 36 percent as compared to fiscal 2010. Diluted non-GAAP earnings per share in fiscal 2011 were $2.15 as compared to diluted non-GAAP earnings per share of $1.61 in fiscal 2010.
Fiscal 2011 non-GAAP results exclude:
-- Restructuring expense of $2.8 million as compared to $2.0 million in
fiscal 2010;
-- Amortization of intangibles of $85.9 million as compared to $57.6
million in fiscal 2010;
-- Stock-based compensation expense of $28.5 million as compared to $23.1
million in fiscal 2010;
-- Acquisition-related inventory step-up charge of $3.8 million as compared
to $728 thousand in fiscal 2010;
-- Acquisition-related costs of $14.6 million as compared to $3.4 million
in fiscal 2010;
-- Write-off of debt issuance costs of $377 thousand on a terminated credit
facility as compared to no write-off in fiscal 2010;
-- Gain on foreign exchange of $1.8 million from a hedge associated with
acquisitions as compared to no gain in fiscal 2010;
-- A non-recurring income tax charge of $27.5 million associated with an
IRS settlement, partially offset by a tax benefit of $7.6 million
associated with a valuation allowance release in fiscal 2010. There
were no such income tax related items in fiscal 2011.
"Our performance in the fourth quarter capped a strong year which exceeded our original expectations," said Steven W. Berglund, Trimble's president and chief executive officer. "We carry this momentum with us into 2012 which, subject to worldwide economic conditions, is expected to be another strong year."
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 and acquisition costs. Non-GAAP segment operating income also excludes the impact of stock-based compensation expense.
Engineering and Construction (E&C)
Fourth quarter 2011 E&C revenue was $238.7 million, up 30 percent as compared to the fourth quarter of 2010. This growth was driven by strong sales of heavy and highway solutions, double-digit growth in survey product sales and the Tekla acquisition.
Fourth quarter operating income in E&C was $36.6 million, or 15.3 percent of revenue as compared to $21.6 million, or 11.8 percent of revenue in the fourth quarter of 2010. Non-GAAP operating income was $39.4 million, or 16.5 percent of revenue, as compared to $24.0 million, or 13.1 percent of revenue, in the fourth quarter of 2010. The improvement in operating income was due to operating leverage as a result of increased revenue.
Fiscal 2011 E&C revenue was $906.5 million, up 26 percent as compared to fiscal 2010, driven primarily by strong sales across product lines and, to a lesser extent, the Tekla acquisition.
Operating income in E&C for fiscal 2011 was $149.0 million, or 16.4 percent of revenue, as compared to $111.0 million, or 15.4 percent of revenue in fiscal 2010. Non-GAAP operating income was $159.2 million, or 17.6 percent of revenue, as compared to $118.9 million, or 16.5 percent of revenue in fiscal 2010. Non-GAAP operating margin was higher due to operating leverage from increased revenue.
Field Solutions
Fourth quarter 2011 Field Solutions revenue was $95.5 million, up 28 percent as compared to the fourth quarter of 2010 due to strong sales of agriculture and geographic information system (GIS) products and the acquisition of Tekla.
Fourth quarter 2011 Field Solutions operating income was $34.1 million, or 35.7 percent of revenue, as compared to $27.1 million, or 36.1 percent of revenue, in the fourth quarter of 2010. Non-GAAP operating income was $34.7 million, or 36.3 percent of revenue, as compared to $27.6 million, or 36.9 percent of revenue, in the fourth quarter of 2010. Without the impact of the Tekla acquisition, Field Solutions operating margins were up for the quarter.
Fiscal 2011 Field Solutions revenue was $413.7 million, up 30 percent as compared to fiscal 2010 due primarily to strong sales across the product lines and, to a lesser extent, the Tekla acquisition.
Fiscal 2011 Field Solutions operating income was $160.1 million, or 38.7 percent of revenue, as compared to $116.4 million, or 36.6 percent of revenue, in fiscal 2010. Non-GAAP operating income was $162.4 million, or 39.3 percent of revenue, as compared to $118.4 million, or 37.2 percent of revenue, in fiscal 2010. Non-GAAP operating margins were up due to operating leverage on increased revenue.
Mobile Solutions
Fourth quarter 2011 Mobile Solutions revenue was $75.8 million, up 88 percent as compared to the fourth quarter of 2010 primarily due to the PeopleNet acquisition. The base business also displayed double-digit organic growth.
Fourth quarter 2011 Mobile Solutions operating income was $6.0 million, or 7.9 percent of revenue, as compared to an operating loss of $267 thousand, or negative 0.7 percent of revenue, in the fourth quarter of 2010. Non-GAAP operating income was $6.4 million, or 8.5 percent of revenue, as compared to operating income of $931 thousand, or 2.3 percent of revenue, in the fourth quarter of 2010. The improvement in non-GAAP operating margin was due to the PeopleNet acquisition and increased profitability from the base business.
Fiscal 2011 Mobile Solutions revenue was $218.5 million, up 42 percent as compared to fiscal 2010 due primarily to the PeopleNet acquisition and growth within the base business, partially offset by the loss of a large customer in the second quarter of 2010.
Fiscal 2011 Mobile Solutions operating income was $4.5 million, or 2.0 percent of revenue, as compared to $1.9 million, or 1.2 percent of revenue in fiscal 2010. Non-GAAP operating income was $7.4 million, or 3.4 percent of revenue, as compared to operating income of $5.3 million, or 3.4 percent of revenue, in fiscal 2010.
Advanced Devices
Fourth quarter 2011 Advanced Devices revenue was $25.2 million, up 2 percent as compared to the fourth quarter of 2010.
Operating income in Advanced Devices for the fourth quarter 2011 was $3.5 million, or 13.7 percent of revenue, as compared to $3.4 million, or 14.0 percent of revenue, in the fourth quarter of 2010. Non-GAAP operating income in Advanced Devices was $4.1 million, or 16.1 percent of revenue, as compared to $4.0 million, or 16.3 percent of revenue, in the fourth quarter of 2010.
Fiscal 2011 Advanced Devices revenue was $105.3 million, up 3 percent as compared to fiscal 2010.
Fiscal 2011 Advanced Devices operating income was $13.9 million, or 13.2 percent of revenue, as compared to $18.3 million, or 17.9 percent of revenue in fiscal 2010. Non-GAAP operating income was $16.5 million, or 15.6 percent of revenue, as compared to non-GAAP operating income of $20.3 million, or 19.8 percent of revenue, in fiscal 2010. Non-GAAP operating margins were down versus the prior year due primarily to product mix.
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 first quarter of 2012 Trimble expects revenue between $477 million and $482 million with GAAP earnings per share of $0.32 to $0.34 and non-GAAP earnings per share of $0.61 to $0.63. Non-GAAP guidance excludes the amortization of intangibles and acquisition expense of $35.5 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $7.6 million. Both GAAP and non-GAAP earnings per share assume a 15 to 17 percent tax rate, 128.0 million shares outstanding and interest costs of $3.0 million.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on Feb. 2, 2012 at 1:30 p.m. PT to review its fourth quarter 2011 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 (855) 859-2056 (U.S.) or (404) 537-3406 (international) and the pass code is 40598971. 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 and other financial projections that Trimble has guided for the first quarter and full year 2012, the expected tax rate, the anticipated impact of stock-based compensation expense, and the amortization of intangibles related to previous acquisitions. 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 obtain new customers for its Mobile Solutions segment or integrate new acquisitions. 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)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec-30, Dec-31, Dec-30, Dec-31,
2011 2010 2011 2010
---- ---- ---- ----
Revenue $435,170 $323,349 $1,644,065 $1,293,937
Cost of sales 217,412 160,019 814,484 648,436
------- ------- ------- -------
Gross margin 217,758 163,330 829,581 645,501
------- ------- ------- -------
Gross margin (%) 50.0% 50.5% 50.5% 49.9%
Operating expenses
Research and development 57,555 40,750 197,007 150,089
Sales and marketing 71,445 61,609 266,804 215,127
General and administrative 43,658 32,878 158,375 118,352
Restructuring 513 348 2,288 1,592
Amortization of purchased
intangible assets 15,875 8,489 48,705 32,739
Total operating expenses 189,046 144,074 673,179 517,899
------- ------- ------- -------
Operating income 28,712 19,256 156,402 127,602
Non-operating income, net
Interest income 338 219 1,364 1,083
Interest expense (3,431) (367) (8,641) (1,752)
Foreign currency transaction gain
(loss), net (1,727) 210 1,053 (836)
Income from equity method
investments, net 4,379 2,770 15,349 11,795
Other expense, net 2,819 173 1,927 3,195
Total non-operating income, net 2,378 3,005 11,052 13,485
----- ----- ------ ------
Income before taxes 31,090 22,261 167,454 141,087
Income tax provision (benefit) 2,427 (13,587) 18,545 37,474
Net income 28,663 35,848 148,909 103,613
Less: Net loss attributable to
noncontrolling interests (740) (716) (1,846) (47)
Net income attributable to
Trimble Navigation Ltd. $29,403 $36,564 $150,755 $103,660
======= ======= ======== ========
Earnings per share attributable
to Trimble Navigation Ltd.
Basic $0.24 $0.30 $1.23 $0.86
----- ----- ----- -----
Diluted $0.23 $0.29 $1.20 $0.84
----- ----- ----- -----
Shares used in calculating
earnings per share:
Basic 123,446 120,522 122,725 120,352
Diluted 126,592 124,395 126,133 123,798
------- ------- ------- -------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec-30, Dec-31,
2011 2010
---- ----
Assets
Current assets:
Cash and cash equivalents $154,621 $220,788
Accounts receivables, net 275,201 222,820
Other receivables 7,103 21,069
Inventories, net 232,063 192,852
Deferred income taxes 44,632 36,924
Other current assets 19,437 19,917
------ ------
Total current assets 733,057 714,370
Property and equipment, net 62,724 50,692
Goodwill 1,297,692 828,737
Other purchased intangible assets, net 476,791 204,948
Other non-current assets 82,211 68,145
------ ------
Total assets $2,652,475 $1,866,892
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $65,918 $1,993
Accounts payable 97,956 72,349
Accrued compensation and benefits 73,894 60,976
Deferred revenue 105,066 73,888
Accrued warranty expense 18,444 12,868
Other accrued liabilities 50,045 29,741
Total current liabilities 411,323 251,815
Non-current portion of long-term debt 498,518 151,160
Non-current deferred revenue 13,113 10,777
Deferred income taxes 95,594 24,598
Other non-current liabilities 45,025 42,843
Total liabilities 1,063,573 481,193
--------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 878,514 781,779
Retained earnings 685,639 536,350
Accumulated other comprehensive income 5,140 48,027
----- ------
Total Trimble Navigation Ltd.
shareholders' equity 1,569,293 1,366,156
Noncontrolling interests 19,609 19,543
Total equity 1,588,902 1,385,699
Total liabilities and equity $2,652,475 $1,866,892
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
Dec-30, Dec-31,
2011 2010
---- ----
Cash flow from operating
activities:
Net Income $148,909 $103,613
Adjustments to reconcile net
income to net cash provided
by
operating activities:
Depreciation expense 20,509 18,198
Amortization expense 85,160 57,639
Provision for doubtful accounts 1,913 2,320
Deferred income taxes (26,305) (14,918)
Stock-based compensation 28,451 23,125
Income from equity method
investments (15,349) (11,795)
Excess tax benefit for stock-
based compensation (14,762) (9,639)
Provision for excess and
obsolete inventories 8,410 4,752
Other non-cash items 2,885 (4,610)
Add decrease (increase) in
assets:
Accounts receivables (31,874) (7,376)
Other receivables 30,141 2,518
Inventories (30,139) (45,549)
Other current and non-current
assets 10,519 2,257
Add increase (decrease) in
liabilities:
Accounts payable (4,310) 13,577
Accrued compensation and
benefits 2,469 15,928
Deferred revenue 18,775 (1,177)
Accrued warranty expense 644 (2,217)
Other current and non-current
liabilities 5,583 (22,616)
Net cash provided by operating
activities 241,629 124,030
------- -------
Cash flow from investing
activities:
Acquisitions of businesses, net
of cash acquired (759,737) (136,419)
Acquisition of property and
equipment (23,278) (23,133)
Acquisitions of intangible
assets (1,666) (2,063)
Purchases of equity method
investments (3,267) (8,192)
Proceeds received from
noncontrolling interest holder - 7,470
Dividends received 12,398 5,858
Other 1,985 105
Net cash used in investing
activities (773,565) (156,374)
-------- --------
Cash flow from financing
activities:
Issuance of common stock, net 45,870 44,549
Repurchase and retirement of
common stock - (73,853)
Excess tax benefit for stock-
based compensation 14,762 9,639
Proceeds from long-term debt
and revolving credit lines 734,225 -
Payments on short-term and
long-term debt (330,690) (499)
Net cash provided by (used in)
financing activities 464,167 (20,164)
------- -------
Effect of exchange rate changes
on cash and cash equivalents 1,602 (552)
----- ----
Net decrease in cash and cash
equivalents (66,167) (53,060)
Cash and cash equivalents -
beginning of period 220,788 273,848
------- -------
Cash and cash equivalents -end
of period $154,621 $220,788
======== ========
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
THREE MONTHS ENDED
DECEMBER 30, 2011:
Revenue $238,689 $95,533 $75,794 $25,154
Operating
income
before
corporate
allocations: $36,615 $34,061 $5,976 $3,451
Operating
margin (% of
segment
external net
revenues) 15.3% 35.7% 7.9% 13.7%
THREE MONTHS ENDED
DECEMBER 31, 2010:
Revenue $183,396 $74,838 $40,415 $24,700
Operating
income
(loss)
before
corporate
allocations: $21,648 $27,053 $(267) $3,446
Operating
margin (% of
segment
external net
revenues) 11.8% 36.1% (0.7%) 14.0%
TWELVE MONTHS ENDED
DECEMBER 30, 2011:
Revenue $906,497 $413,721 $218,540 $105,307
Operating
income
before
corporate
allocations: $149,015 $160,139 $4,461 $13,891
Operating
margin (% of
segment
external net
revenues) 16.4% 38.7% 2.0% 13.2%
TWELVE MONTHS ENDED
DECEMBER 31, 2010:
Revenue $719,053 $318,137 $154,254 $102,493
Operating
income
before
corporate
allocations: $110,965 $116,373 $1,873 $18,325
Operating
margin (% of
segment
external net
revenues) 15.4% 36.6% 1.2% 17.9%
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec-30, Dec-31, Dec-30, Dec-31,
2011 2010 2011 2010
---- ---- ---- ----
Dollar % of Dollar % of Dollar % of Dollar % of
Amount Revenue Amount Revenue Amount Revenue Amount Revenue
------ ------- ------ ------- ------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $217,758 50.0% $163,330 50.5% $829,581 50.5% $645,501 49.9%
Restructuring ( A ) 131 0.0% 293 0.1% 466 0.0% 443 0.0%
Amortization of purchased intangibles ( B ) 13,279 3.1% 6,985 2.2% 37,197 2.3% 24,900 1.9%
Stock-based compensation ( C ) 494 0.1% 344 0.1% 1,955 0.1% 1,816 0.1%
Amortization of acquisition-related inventory step-up ( D ) 739 0.2% 588 0.2% 3,802 0.2% 728 0.1%
--- --- ---- ---
Non-GAAP gross margin: $232,401 53.4% $171,540 53.1% $873,001 53.1% $673,388 52.0%
-------- ---- -------- ---- -------- ---- -------- ----
OPERATING EXPENSES:
GAAP operating expenses: $189,046 43.4% $144,074 44.6% $673,179 40.9% $517,899 40.0%
Restructuring ( A ) (513) -0.1% (348) -0.1% (2,288) -0.1% (1,592) -0.1%
Amortization of purchased intangibles ( B ) (15,876) -3.6% (8,489) -2.6% (48,705) -3.0% (32,739) -2.5%
Stock-based compensation ( C ) (6,924) -1.6% (6,616) -2.1% (26,496) -1.6% (21,309) -1.7%
Acquisition costs ( E ) (2,117) -0.5% (3,466) -1.1% (14,892) -0.9% (6,537) -0.5%
----- ----- ----- -----
Non-GAAP operating expenses: $163,616 37.6% $125,155 38.7% $580,798 35.3% $455,722 35.2%
-------- ---- -------- ---- -------- ---- -------- ----
OPERATING INCOME:
GAAP operating income: $28,712 6.6% $19,256 6.0% $156,402 9.5% $127,602 9.9%
Restructuring ( A ) 644 0.1% 641 0.2% 2,754 0.2% 2,035 0.2%
Amortization of purchased intangibles ( B ) 29,155 6.7% 15,474 4.8% 85,902 5.2% 57,639 4.4%
Stock-based compensation ( C ) 7,418 1.7% 6,960 2.1% 28,451 1.8% 23,125 1.8%
Amortization of acquisition-related inventory step-up ( D ) 739 0.2% 588 0.2% 3,802 0.2% 728 0.0%
Acquisition costs ( E ) 2,117 0.5% 3,466 1.0% 14,892 0.9% 6,537 0.5%
---- ---- ---- ----
Non-GAAP operating income: $68,785 15.8% $46,385 14.3% $292,203 17.8% $217,666 16.8%
------- ---- ------- ---- -------- ---- -------- ----
NON-OPERATING INCOME, NET:
GAAP non-operating income, net: $2,378 $3,005 $11,052 $13,485
Acquisition (gain)/ loss ( E ) (194) 35 (264) (3,177)
Debt issuance cost write-off ( F ) - - 377 -
Foreign exchange loss (gain) associated with
acquisition ( G ) 1,688 - (1,768) -
Non-GAAP non-operating income, net: $3,872 $3,040 $9,397 $10,308
------ ------ ------ -------
GAAP and GAAP and GAAP and GAAP and
Non-GAAP Non-GAAP Non-GAAP Non-GAAP
Tax Rate % ( K ) Tax Rate % ( K ) Tax Rate % ( K ) Tax Rate % ( K )
---------- ---------- ---------- ----------
INCOME TAX PROVISION (BENEFIT):
GAAP income tax provision (benefit): $2,427 8% $(13,587) -61% $18,545 11% $37,474 27%
Non-GAAP items tax effected: ( H ) 3,218 (1,014) 13,696 10,935
IRS settlement ( I ) - - - (27,540)
Valuation allowance release ( J ) - 7,628 - 7,628
Non-GAAP income tax provision (benefit): $5,645 8% $(6,973) -14% $32,241 11% $28,497 13%
------ --- ------- --- ------- --- ------- ---
NET INCOME:
GAAP net income attributable to Trimble Navigation Ltd. $29,403 $36,564 $150,755 $103,660
Restructuring ( A ) 644 641 2,754 2,035
Amortization of purchased intangibles ( B ) 29,155 15,474 85,902 57,639
Stock-based compensation ( C ) 7,418 6,960 28,451 23,125
Amortization of acquisition-related inventory step-up ( D ) 739 588 3,802 728
Acquisition costs ( E ) 1,921 3,501 14,627 3,360
Debt issuance cost write-off ( F ) - - 377 -
Foreign exchange loss (gain) associated with
acquisition ( G ) 1,688 - (1,768) -
Non-GAAP tax adjustments ( H ), ( I ), (J) (3,218) (6,605) (13,696) 8,986
Non-GAAP net income attributable to Trimble Navigation Ltd. $67,750 $57,123 $271,204 $199,533
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DILUTED NET INCOME PER SHARE:
GAAP diluted net income per share attributable to Trimble Navigation
Ltd. $0.23 $0.29 $1.20 $0.84
Restructuring ( A ) 0.01 0.01 0.02 0.02
Amortization of purchased intangibles ( B ) 0.23 0.12 0.67 0.46
Stock-based compensation ( C ) 0.06 0.06 0.23 0.18
Amortization of acquisition-related inventory step-up ( D ) 0.01 - 0.03 0.01
Acquisition costs ( E ) 0.02 0.03 0.12 0.03
Debt issuance cost write-off ( F ) - - - -
Foreign exchange loss (gain) associated with
acquisition ( G ) 0.01 - (0.01) -
Non-GAAP tax adjustments ( H ), ( I ), (J) (0.03) (0.05) (0.11) 0.07
Non-GAAP diluted net income per share attributable to Trimble
Navigation Ltd. $0.54 $0.46 $2.15 $1.61
----- ----- ----- -----
OPERATING LEVERAGE:
Increase in non-GAAP operating income $22,399 $74,537
Increase in revenue $111,821 $350,128
Operating leverage (increase in non-GAAP operating
income as a % of increase in revenue) 20.0% 21.3%
GAAP TO NON-GAAP RECONCILIATION (CONTINUED)
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec-30, Dec-31, Dec-30, Dec-31,
2011 2010 2011 2010
---- ---- ---- ----
% of Segment % of Segment % of Segment % of Segment
SEGMENT OPERATING INCOME: Revenue Revenue Revenue Revenue
------- ------- ------- -------
Engineering and Construction
GAAP operating income before corporate
allocations: $36,615 15.3% $21,648 11.8% $149,015 16.4% $110,965 15.4%
( L
Stock-based compensation ) 2,780 1.2% 2,391 1.3% 10,140 1.2% 7,886 1.1%
Non-GAAP operating income before corporate
allocations: $39,395 16.5% $24,039 13.1% $159,155 17.6% $118,851 16.5%
------- ---- ------- ---- -------- ---- -------- ----
Field Solutions
GAAP operating income before corporate
allocations: $34,061 35.7% $27,053 36.1% $160,139 38.7% $116,373 36.6%
( L
Stock-based compensation ) 650 0.6% 582 0.8% 2,269 0.6% 1,978 0.6%
Non-GAAP operating income before corporate
allocations: $34,711 36.3% $27,635 36.9% $162,408 39.3% $118,351 37.2%
------- ---- ------- ---- -------- ---- -------- ----
Mobile Solutions
GAAP operating income (loss) before
corporate allocations: $5,976 7.9% $(267) -0.7% $4,461 2.0% $1,873 1.2%
( L
Stock-based compensation ) 470 0.6% 1,198 3.0% 2,943 1.4% 3,444 2.2%
Non-GAAP operating income before corporate
allocations: $6,446 8.5% $931 2.3% $7,404 3.4% $5,317 3.4%
------ --- ---- --- ------ --- ------ ---
Advanced Devices
GAAP operating income before corporate
allocations: $3,451 13.7% $3,446 14.0% $13,891 13.2% $18,325 17.9%
( L
Stock-based compensation ) 611 2.4% 584 2.3% 2,566 2.4% 1,934 1.9%
Non-GAAP operating income before corporate
allocations: $4,062 16.1% $4,030 16.3% $16,457 15.6% $20,259 19.8%
------ ---- ------ ---- ------- ---- ------- ----
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 intangibles, 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 intangibles, stock-based compensation and acquisition
costs associated with external and incremental costs resulting directly from merger
and acquisition activities such as legal, due diligence and integration costs 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 intangibles, 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 and integration
costs. 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 costs associated with
unusual acquisition related items such as a gain on bargain purchase (resulting from
the fair value of identifiable net assets acquired exceeding the consideration
transferred), adjustments to the fair value of earn-out liabilities and payments
made or received to settle earn-out and holdback disputes. These costs are specific
to particular acquisitions and vary significantly in amount and timing. Non-GAAP
non-operating income (expense), net also excludes the write-off of debt issuance
costs associated with a terminated credit facility as well as foreign exchange
(gains)/losses specifically associated with hedges for our acquisitions. We believe
that these exclusions provide investors with a supplemental view of our ongoing
financial results.
Non-GAAP income tax provision (benefit)
Investors benefit from the exclusion of an IRS settlement and valuation allowance
release because it facilitates comparisons to our past income tax provision. Non-
GAAP income tax provision (benefit) excludes an IRS settlement and a valuation
allowance release from GAAP income tax provision (benefit) and includes non-GAAP
items tax effected. 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 intangibles, stock-based
compensation, amortization of acquisition-related inventory step-up, acquisition
costs, the write-off of debt issuance costs, foreign exchange (gains)/losses from
hedges associated with 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 intangibles, stock-based
compensation, amortization of acquisition-related inventory step-up, acquisition
costs, the write-off of debt issuance costs, foreign exchange (gains)/losses from
hedges associated with 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 (loss). 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 comparison. 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, acquisition costs, the write-off of debt issuance costs
associated with a terminated credit facility, foreign exchange gains/losses from
hedges associated with acquisitions, and non-GAAP tax adjustments. For detailed
explanations of the adjustments made to comparable GAAP measures, see items (A) -
(L) below,
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
( A expenses, they are not indicative of our core operating performance, and they
) are not meaningful in comparisons to our past operating performance.
Amortization of purchased intangibles. Included in our GAAP presentation of
gross margin, operating expenses, operating income, and net income is
amortization of purchased intangibles. 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 purchased intangibles which represents
technology and/or customer relationships already developed, it enhances
comparability by allowing investors to compare our operations pre-acquisition
( B to those post-acquisitions and to those of our competitors that have pursued
) internal growth strategies.
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
( C twelve months ended December 30, 2011 and December 31, 2010, stock-based
) compensation was allocated as follows:
Three Months Ended Twelve Months Ended
------------------
Dec-30, Dec-31, Dec-30, Dec-31,
(Dollars in thousands) 2011 2010 2011 2010
---- ---- ---- ----
Cost of sales $494 $344 $1,955 $1,816
Research and development 1,251 1,092 4,624 3,991
Sales and Marketing 1,706 1,598 6,672 5,611
General and administrative 3,967 3,926 15,200 11,707
$7,418 $6,960 $28,451 $23,125
------ ------ ------- -------
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 non-cash expense
that we do not believe is indicative of our ongoing operating results. We
( D further believe that excluding this item from our non-GAAP results is useful
) to investors in that it allows for period-over-period comparability.
Acquisition costs. 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 and
integration costs. Included in our GAAP presentation of non-operating income,
net, acquisition costs include unusual acquisition related items such as a gain
on bargain purchase (resulting from the fair value of identifiable net assets
acquired exceeding the consideration transferred), adjustments to the fair
value of earn-out liabilities and payments made or received to settle earn-
out and holdback disputes. Although we do numerous acquisitions, the costs that
have been excluded from the non-GAAP measures are costs specific to particular
( E acquisitions. These are one-time costs that vary significantly in amount and
) timing and are not indicative of our core operating performance.
Debt issuance cost write-off. Included in our non-operating income, net this
amount represents a write-off of debt issuance cost for a terminated credit
facility. We excluded the debt issuance cost write-off from our non-GAAP
measures. We believe that investors benefit from excluding this item from our
( F non-operating income to facilitate a more meaningful evaluation of our non-
) operating income trends.
Foreign exchange (gain) loss associated with acquisition. This amount
represents gain and loss on foreign exchange hedges associated with two of our
larger acquisitions. We excluded the foreign exchange gain/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
( G) facilitates comparisons with the results of other periods.
Non-GAAP items tax effected. This amount adjusts the provision for income
taxes to reflect the effect of the non-GAAP items (A) - (G) on non-GAAP net
income. We believe this information is useful to investors because it
( H provides for consistent treatment of the excluded items in this non-GAAP
) presentation.
IRS settlement. This amount represents a net charge of $27.5 million in the
second quarter of 2010 resulting from the IRS audit settlement. We excluded
this because it is not indicative of our future operating results. We believe
( I that investors benefit from excluding this charge from our operating results to
) facilitate comparisons to past operating performance.
Valuation allowance release. This amount represents a benefit of $7.6 million
in the fourth quarter of 2010 resulting from a valuation allowance release. We
( J excluded this from our non-GAAP results to enhance comparability of results
) across periods.
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
( K 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.
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 $2.2 million for the three months ended
December 30, 2011 and December 31, 2010, respectively and $10.5 million and
( L $7.9 million for the twelve months ended December 30, 2011 and December 31,
) 2010, respectively.
SOURCE Trimble