Operating income for the first quarter of 2009 was $24.3 million, down approximately 58 percent from the first quarter of 2008. Operating margin in the first quarter of 2009 was 8.4 percent, compared to an operating margin of 16.3 percent in the first quarter of 2008. Amortization of intangibles was $12.3 million in the first quarter of 2009 compared to $10.8 million in the first quarter of 2008. The impact of stock-based compensation expense was $4.2 million compared to $4.0 million in the first quarter of 2008. There was also a $4.5 million restructuring expense, a $0.2 million inventory step-up charge and a $0.5 million charge related to acquisitions in the first quarter of 2009 compared to a $0.2 million inventory step-up charge in the first quarter of 2008. Excluding these impacts, non-GAAP operating income of $45.9 million was down 37 percent compared to the first quarter of 2008. Non-GAAP operating margin was 15.9 percent in the first quarter of 2009, compared to 20.5 percent in the first quarter of 2008 and 10.7 percent in the fourth quarter of 2008.
First quarter 2009 net income was $17.5 million, down 56 percent compared to the first quarter of 2008. Diluted earnings per share for the first quarter of 2009 was $0.14 compared to diluted earnings per share of $0.32 in the first quarter of 2008.
Adjusting for the items noted above, non-GAAP net income of $33.7 million for the first quarter of 2009 was down 33 percent compared to the first quarter of 2008. Non-GAAP earnings per share for the first quarter of 2009 was $0.28 compared to non-GAAP earnings per share of $0.40 in the first quarter of 2008.
"The first quarter results were in line with our expectations. We continue to see considerable uncertainty in our markets with the resulting financial impact focused within our Engineering & Construction segment," said Steven W. Berglund, Trimble's president and chief executive officer. "Although the level of interest in our productivity improving technology remains high in the E&C markets, underlying business confidence did not improve during the quarter which impacted demand. Our Field Solutions segment demonstrated year over year growth in revenue and profits as a result of relatively strong performance in agriculture. While our Mobile Solutions segment did not grow year over year, the outlook for booking a number of enterprise level accounts in the first half of the year remains good," Berglund continued. "Overall, until some level of business confidence is restored, full year 2009 results will remain difficult to forecast. We took cost reduction actions in the quarter, and will take additional steps as conditions require, to align our costs with the lower revenue level. Beyond short term actions to improve profitability, our other focus is to take advantage of our strong balance sheet, cash flow, and organizational capabilities to enhance our market leadership."
Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of inventory step-up charge, merger and acquisition charges, and the impact of stock-based compensation expense.
Engineering and Construction (E&C)
First quarter 2009 E&C revenue was $127.7 million, down approximately 34 percent when compared to the first quarter of 2008. The decline in demand continued to primarily be driven by recessionary conditions in the U.S. and Europe.
Operating income in E&C for the first quarter 2009 was $ 2.5 million, or 2.0 percent of revenue, compared to $37.0 million, or 19.0 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in E&C was $3.8 million, or 3.0 percent of revenue, compared to $37.9 million, or 19.5 percent of revenue, in the first quarter of 2008. The decline in operating margin was largely due to the drop in revenue.
Field Solutions
First quarter 2009 Field Solutions revenue was $99.2 million, up 13 percent when compared to the first quarter of 2008. Growth was driven by sales of agriculture products and acquisitions.
Operating income in Field Solutions for the first quarter 2009 was $42.2 million, or 42.6 percent of revenue, compared to $35.1 million, or 39.9 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Field Solutions was $42.4 million, or 42.8 percent of revenue, compared to $35.3 million, or 40.1 percent of revenue in the first quarter of 2008. Growth in Field Solutions' margin was driven by operating leverage resulting from increased revenue and product mix.
Mobile Solutions
First quarter 2009 Mobile Solutions revenue was $38.3 million, down approximately 13 percent when compared to the first quarter of 2008. The year over year decline in revenue was primarily attributable to the fact that the first quarter of 2008 benefitted from the completion of deliverables for two large contracts.
Operating income in Mobile Solutions for the first quarter 2009 was $3.1 million, or 8.2 percent of revenue, compared to $2.5 million, or 5.6 percent of revenue in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Mobile Solutions was $4.3 million, or 11.2 percent of revenue, up from 8.8 percent of revenue in the first quarter of 2008. The improvement is primarily due to reduced operating expenses from restructuring.
Advanced Devices
First quarter 2009 Advanced Devices revenue was $23.9 million, down approximately 18 percent when compared to the first quarter of 2008. The decline in first quarter revenue was due to slower sales of components which are sold to OEMs.
Operating income in Advanced Devices for the first quarter 2009 was $4.3 million, or 18.1 percent of revenue, compared to $4.7 million, or 16.1 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Advanced Devices was $4.6 million, or 19.4 percent of revenue, compared to 17.3 percent of revenue in the first quarter of 2008. Margin improvement was the result of product mix.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at
http://investor.trimble.com .
