Forward-Looking Guidance
In the third quarter of 2008, Trimble expects revenue to grow 13 to 15 percent compared to the third quarter of 2007, with revenue between $335 million and $340 million. Trimble expects third quarter 2008 GAAP earnings per share between $0.26 and $0.28 and non-GAAP earnings per share between $0.34 and $0.36. Non-GAAP guidance for the third quarter of 2008 excludes the amortization of intangibles expected to be $10.9 million related to previous acquisitions, and the anticipated impact of stock-based compensation expense of $3.8 million. Both GAAP and non-GAAP guidance use a 31 percent tax rate and assume 125.7 million shares outstanding.
Trimble has modified its full-year 2008 guidance incorporating the lower tax rate of 31 percent. Revenue for the full year 2008 is expected to grow 15 to 17 percent. Full-year non-GAAP earnings per share are expected to be $1.54 to $1.59, versus previous guidance of $1.50 to $1.55.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on July 24, 2008 at 1:30 p.m. PT to review its second quarter 2008 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 (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or ((706) 645-9291 (international) and the pass code is 54071517. 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 and headquartered in Sunnyvale, Calif., Trimble has a worldwide presence with more than 3,600 employees in over 18 countries.
For more information visit Trimble's Web site at http://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 the revenue, effective tax rate, stock-based compensation, the impact from in-process research and development expense, amortization of purchased intangibles, gross margin and earnings per share estimates for the third quarter and full-year 2008, the impact on operating income for the Company's mobile solutions segment as a new product platform is rolled out, and the potential for the mobile solutions segment to generate significant revenue and profitability in 2009. 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. For example, strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. In addition, the Company's results may be adversely affected if the growth rates and profitability expectations for each of its four segments are not achieved, or its joint ventures and recent acquisitions do not achieve anticipated results, or if the Company is unable to market, manufacture and ship new products. The potential impact of our new mobile solutions product platform and the ability of that segment to generate significant revenue and profitability in 2009 could be adversely affected by any delays in the roll out of the new platform or reduction in capital spending in its target customer base. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the third quarter and full year 2008 will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein. 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
Jun-27, Jun-29, Jun-27, Jun-29,
2008 2007 2008 2007
Revenue $377,767 $327,732 $733,063 $613,464
Cost of sales 190,668 160,563 371,588 303,165
Gross margin 187,099 167,169 361,475 310,299
Gross margin (%) 49.5% 51.0% 49.3% 50.6%
Operating expenses
Research and development 39,405 33,867 76,750 65,030
Sales and marketing 51,904 47,546 103,062 89,693
General and administrative 25,289 24,278 47,979 45,920
Restructuring 2,414 333 2,414 3,025
Amortization of purchased
intangible assets 5,163 5,195 10,306 9,301
In-process research and
development - - - 2,112
Total operating expenses 124,175 111,219 240,511 215,081
Operating income 62,924 55,950 120,964 95,218
Non-operating income, net
Interest income 508 593 965 1,836
Interest expense (413) (2,459) (1,175) (3,859)
Foreign currency transaction
gain (loss), net 1,253 (430) 2,221 (73)
Income from joint ventures,
net 2,618 2,080 4,633 4,502
Other income (expense), net 153 487 (754) 722
Total non-operating income,
net 4,119 271 5,890 3,128
Income before taxes 67,043 56,221 126,854 98,346
Income tax provision 18,444 21,195 38,188 34,637
Net income $48,599 $35,026 $88,666 $63,709
Earnings per share:
Basic $0.40 $0.29 $0.73 $0.54
Diluted $0.39 $0.28 $0.71 $0.52
Shares used in calculating
earnings per share :
Basic 121,523 119,621 121,495 117,535
Diluted 125,712 124,584 125,435 122,539
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
Jun-27, Dec-28,
2008 2007
Assets
Current assets:
Cash and cash equivalents $79,823 $103,202
Accounts receivables, net 267,200 239,884
Other receivables 9,985 10,201
Inventories, net 153,369 143,018
Deferred income taxes 42,257 44,333
Other current assets 17,004 15,661
Total current assets 569,638 556,299
Property and equipment, net 51,615 51,444
Goodwill 713,010 675,850
Other purchased intangible assets, net 186,971 197,777
Other non-current assets 62,598 57,989
Total assets $1,583,832 $1,539,359
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $137 $126
Accounts payable 73,581 67,589
Accrued compensation and benefits 56,149 55,133
Deferred revenue 59,077 49,416
Accrued warranty expense 11,942 10,806
Income taxes payable 14,060 14,802
Other accrued liabilities 36,333 51,980
Total current liabilities 251,279 249,852
Non-current portion of long-term debt 432 60,564
Non-current deferred revenue 10,719 15,872
Deferred income taxes 59,976 47,917
Other non-current liabilities 52,503 56,128
Total liabilities 374,909 430,333
Commitments and contingencies
Shareholders' equity:
Common stock 683,274 660,749
Retained earnings 447,806 388,557
Accumulated other comprehensive
income 77,843 59,720
Total shareholders' equity 1,208,923 1,109,026
Total liabilities and
shareholders' equity $1,583,832 $1,539,359
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Unaudited
Six Months Ended
Jun-27, Jun-29,
2008 2007
Cash flow from operating activities:
Net Income $88,666 $63,709
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation expense 9,274 8,426
Amortization expense 21,811 18,394
Provision for doubtful accounts 119 358
Amortization of debt
issuance cost 113 105
Deferred income taxes (2,791) (8,636)
Non-cash restructuring expense - 1,725
Stock-based compensation 7,777 7,145
In-process research and
development - 2,112
Equity gain from joint
ventures (4,633) (4,502)
Excess tax benefit for
stock-based compensation (5,249) (5,929)
Provision for excess and
obsolete inventories 3,283 1,941
Other non-cash items 1 139
Add decrease (increase) in
assets:
Accounts receivables (26,832) (41,832)
Other receivables 481 2,968
Inventories (8,997) (11,760)
Other current and non-
current assets (464) 9,414
Add increase (decrease) in
liabilities:
Accounts payable 4,637 (6,298)
Accrued compensation and
benefits (303) 80
Accrued liabilities (597) 3,136
Deferred revenue 3,974 12,132
Income taxes payable 10,093 33,630
Net cash provided by operating
activities 100,363 86,457
Cash flows from investing
activities:
Acquisitions of businesses, net
of cash acquired (45,082) (277,743)
Acquisition of property and
equipment (7,932) (6,270)
Dividends received 151 581
Other (14) 378
Net cash used in investing
activities (52,877) (283,054)
Cash flow from financing activities:
Issuance of common stock 15,425 15,761
Excess tax benefit for stock-
based compensation 5,249 5,929
Repurchase and retirement of
common stock (36,293) -
Proceeds from long-term debt
and revolving credit lines - 250,000
Payments on long-term debt and
revolving credit lines (60,314) (127,517)
Other - -
Net cash provided by (used in)
financing activities (75,933) 144,173
Effect of exchange rate changes on
cash and cash equivalents 5,068 (3,437)
Net decrease in cash and cash
equivalents (23,379) (55,861)
Cash and cash equivalents -
beginning of period 103,202 129,621
Cash and cash equivalents - end of
period $79,823 $73,760
NON-GAAP RECONCILIATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
Jun-27, Jun-29, Jun-27, Jun-29,
2008 2007 2008 2007
REVENUE: $377,767 $327,732 $733,063 $613,464
GROSS MARGIN:
GAAP gross margin: $187,099 $167,169 $361,475 $310,299
Restructuring (A) 930 - 930 -
Amortization of purchased
intangibles (B) 5,755 5,237 11,416 9,026
Stock-based compensation (D) 487 429 980 771
Amortization of
acquisition-related
inventory step-up (E) - - 183 -
Non-GAAP gross margin: $194,271 $172,835 $374,984 $320,096
Non-GAAP gross margin (% of
revenue) 51.4% 52.7% 51.2% 52.2%
OPERATING EXPENSES:
GAAP operating expenses: $124,175 $111,219 $240,511 $215,081
Restructuring (A) (2,414) (333) (2,414) (3,025)
Amortization of purchased
intangibles (B) (5,163) (5,195) (10,306) (9,301)
In-process research and
development (C) - - - (2,112)
Stock-based compensation (D) (3,308) (3,363) (6,797) (6,374)
Non-GAAP operating expenses: $113,290 $102,328 $220,994 $194,269
OPERATING INCOME:
GAAP operating income: $62,924 $55,950 $120,964 $95,218
Restructuring (A) 3,344 333 3,344 3,025
Amortization of purchased
intangibles (B) 10,918 10,432 21,722 18,327
In-process research and
development (C) - - - 2,112
Stock-based compensation (D) 3,795 3,792 7,777 7,145
Amortization of
acquisition-related
inventory step-up (E) - - 183 -
Non-GAAP operating income: $80,981 $70,507 $153,990 $125,827
Non-GAAP operating margin (% of
revenue) 21.4% 21.5% 21.0% 20.5%
NET INCOME:
GAAP net income: $48,599 $35,026 $88,666 $63,709
Restructuring (A) 3,344 333 3,344 3,025
Amortization of purchased
intangibles (B) 10,918 10,432 21,722 18,327
In-process research and
development (C) - - - 2,112
Stock-based compensation (D) 3,795 3,792 7,777 7,145
Amortization of
acquisition-related
inventory step-up (E) - - 183 -
Income tax effect on non-
GAAP adjustments (F) (4,966) (5,489) (9,907) (10,610)
Non-GAAP net income: $61,690 $44,094 $111,785 $83,708
DILUTED NET INCOME PER SHARE:
GAAP diluted net income per
share: $0.39 $0.28 $0.71 $0.52
Non-GAAP diluted net income per
share: $0.49 $0.35 $0.89 $0.68
SHARES USED TO COMPUTE DILUTED NET
INCOME PER SHARE:
GAAP and Non-GAAP shares used to
compute net income per share: 125,712 124,584 125,435 122,539
OPERATING LEVERAGE:
Increase in non-GAAP operating
income $10,474 $28,163
Increase in revenue $50,035 $119,599
Operating leverage (increase in
non-GAAP operating income as a
% of increase in revenue) 20.9% 23.5%
The non-GAAP financial measures included in the table above are non-GAAP
gross margin, non-GAAP operating expenses, non-GAAP operating income,
non-GAAP net income and non-GAAP diluted net income per share, which
adjust for the following items: expenses related to acquisitions,
stock-based compensation expense and restructuring charges. Management
uses these non-GAAP measures to assess trends in its business and for
budgeting purposes, as many of these excluded items are non-cash. In
addition, we believe that the presentation of these non-GAAP financial
measures is useful to investors for the reasons associated with each of
the adjusting items as described below.
(A) Restructuring. The amounts recorded are for employee compensation
resulting from reductions in employee headcount in connection with our
company restructurings and we believe they are not directly related to
the operation of our business.
(B) Amortization of purchased intangibles. The amounts recorded as
amortization of purchased intangibles arise from prior acquisitions
and are non-cash in nature. We exclude these expenses because we
believe they are not reflective of ongoing operating results in the
period incurred and are not directly related to the operation of our
business. Approximately $5,755K and $5,237K of the amortization of
purchased intangibles was included in cost of sales for the three
months ended June 27, 2008 and June 29, 2007, and approximately
$5,163K and $5,195K was reported as a separate line within operating
expenses for the three months ended June 27, 2008 and June 29, 2007,
respectively. Approximately $11,416K and $9,026K of the amortization
of purchased intangibles was included in cost of sales for the six
months ended June 27, 2008 and June 29, 2007, and approximately
$10,306K and $9,301K was reported as a separate line within operating
expenses for the six months ended June 27, 2008 and June 29, 2007,
respectively.
(C) In-process research and development. The amounts recorded as
in-process research and development arise from prior acquisitions and
are non-cash in nature. We exclude these expenses because we believe
they are not reflective of ongoing operating results in the period
incurred and not directly related to the operation of our business.
(D) Stock-based Compensation. The amounts consist of expenses for employee
stock options and purchase rights under our employee stock purchase
plan determined in accordance with SFAS 123(R), which became effective
for us on January 1, 2006. We exclude these stock-based compensation
expenses because they are non-cash expenses that we believe are not
reflective of ongoing operation results. For the three and six months
ended June 27, 2008 and June 29, 2007, stock-based compensation was
allocated as follows:
Three Months Ended Six Months Ended
Jun-27, Jun-29, Jun-27, Jun-29,
2008 2007 2008 2007
Cost of sales $487 $429 $980 $771
Research and development 916 1,022 1,833 1,751
Sales and Marketing 931 974 1,961 1,741
General and administrative 1,461 1,367 3,003 2,882
$3,795 $3,792 $7,777 $7,145
(E) 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. The increase in
inventory value is amortized to cost of sales over the period that the
related product is sold. We exclude inventory step-up amortization
from our non-GAAP measures because we do not believe it is reflective
of our ongoing operating results, and it is not used by management to
assess the core profitability of our business operations.
(F) Income tax effect on non-GAAP adjustments. This amounts adjusts the
provision for income taxes to reflect the effect of the non-GAAP
adjustments on non-GAAP operating income.
NON-GAAP RECONCILIATION
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
THREE MONTHS ENDED JUNE 27, 2008:
Revenue $213,019 $90,070 $42,285 $32,393
GAAP operating income before
corporate allocations: $45,161 $34,808 $1,942 $6,578
Stock-based compensation (G) 1,076 199 1,187 315
Non-GAAP operating income before
corporate allocations: $46,237 $35,007 $3,129 $6,893
Non-GAAP operating margin (% of
segment external net revenues) 21.7% 38.9% 7.4% 21.3%
THREE MONTHS ENDED JUNE 29, 2007:
Revenue $198,853 $55,273 $40,927 $32,679
GAAP operating income before
corporate allocations: $52,371 $18,398 $2,906 $5,384
Stock-based compensation (G) 806 164 1,527 303
Non-GAAP operating income before
corporate allocations: $53,177 $18,562 $4,433 $5,687
Non-GAAP operating margin (% of
segment external net revenues) 26.7% 33.6% 10.8% 17.4%
SIX MONTHS ENDED JUNE 27, 2008:
Revenue $407,199 $178,107 $86,296 $61,461
GAAP operating income before
corporate allocations: $82,115 $69,903 $4,395 $11,270
Stock-based compensation (G) 2,047 397 2,595 642
Non-GAAP operating income before
corporate allocations: $84,162 $70,300 $6,990 $11,912
Non-GAAP operating margin (% of
segment external net revenues) 20.7% 39.5% 8.1% 19.4%
SIX MONTHS ENDED JUNE 29, 2007:
Revenue $374,457 $106,235 $70,784 $61,988
GAAP operating income before
corporate allocations: $94,535 $35,026 $3,923 $8,727
Stock-based compensation (G) 1,678 354 2,269 667
Non-GAAP operating income before
corporate allocations: $96,213 $35,380 $6,192 $9,394
Non-GAAP operating margin (% of
segment external net revenues) 25.7% 33.3% 8.7% 15.2%
(G) Stock-based Compensation. The amounts consist of expenses for employee
stock options and purchase rights under our employee stock purchase
plan determined in accordance with SFAS 123(R), which became effective
for us on January 1, 2006. We discuss our operating results by
segment with and with-out stock-based compensation expense, as we
believe it is useful to investors to understand the impact of the
application of SFAS 123(R) to our results of operations. Stock-based
compensation not allocated to the reportable segments was
approximately $1,018K and $992K for the three months ended June 27,
2008 and June 29, 2007, respectively and $2,096K and $2,177K for the
six months ended June 27, 2008 and June 29, 2007, respectively.
