Advanced Devices
Fourth quarter 2008 Advanced Devices revenue was $27.2 million, down approximately 5 percent when compared to the fourth quarter of 2007. Fiscal 2008 Advanced Devices revenue was $119.7 million down approximately one percent compared to 2007. The decline in fourth quarter revenue was due mainly to slower sales of component technology products which are sold to OEMs.
Operating income in Advanced Devices for the fourth quarter 2008 was $6.3 million, or 23.3 percent of revenue, compared to $3.7 million, or 12.7 percent of revenue, in the fourth quarter of 2007. For 2008 operating income in Advanced Devices was $24.4 million, or 20.4 percent of revenue, compared to $17.3 million, or 14.3 percent of revenue, in 2007.
In the fourth quarter of 2008, non-GAAP operating income in Advanced Devices was $6.7 million, or 24.7 percent of revenue, compared to 14.0 percent of revenue in the fourth quarter of 2007. For fiscal 2008, non-GAAP operating income in Advanced Devices was $25.8 million, or 21.6 percent of revenue compared to 15.4 percent of revenue in fiscal 2007. For both the quarter and the full year margin improvement was the result of increased licensing revenue and product mix.
Stock Repurchase Program
As part of its stock repurchase program, in the fourth quarter of 2008, Trimble repurchased 536,000 shares of Trimble stock at an average price of $18.69.
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://www.investor.trimble.com.
Forward Looking Guidance
Trimble assumes that fourth quarter market uncertainty will continue into the first quarter of 2009. The Company currently estimates first quarter 2009 revenue of $300 million. However, given the volatility of current market conditions we believe this revenue estimate could vary plus or minus five percent. Using a $300 million dollar revenue estimate, first quarter 2009 GAAP earnings per share are projected to be $0.12 and non-GAAP earnings per share are projected to be $0.27. Non-GAAP guidance for the first quarter of 2009 excludes the amortization of intangibles of $14.2 million related to previous acquisitions, the anticipated impact of stock-based compensation expense of $4.2 million and $5.5 million in restructuring charges. Both GAAP and non-GAAP guidance use a 28 percent tax rate and assume 122 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on February 3, 2009 at 1:30 p.m. PT to review its fourth quarter and fiscal year 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 80512820. 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 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 expectations for future financial market and economic conditions, engineering and construction market spending, revenue and earnings per share that Trimble expects to report in the first quarter 2009, changes in tax-rate, our estimated restructuring costs and the impact of cost-reduction efforts on financial results in fiscal 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. If the current global economic crisis and recessionary conditions in the U.S. and Europe show no signs of recovery it may negatively impact our customers' purchasing decisions worldwide including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations and other financial results. Whether the Company achieves growth will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
Jan-02, Dec-28, Jan-02, Dec-28,
2009 2007 2009 2007
Revenue $268,084 $312,783 $1,329,234 $1,222,270
Cost of sales 146,046 157,117 680,098 609,365
Gross margin 122,038 155,666 649,136 612,905
Gross margin (%) 45.5% 49.8% 48.8% 50.1%
Operating expenses
Research and development 36,168 34,731 148,265 131,468
Sales and marketing 44,563 51,528 196,290 186,495
General and administrative 23,972 25,390 94,023 92,572
Restructuring 287 - 2,722 3,025
Amortization of purchased
intangible assets 6,608 4,754 22,376 18,966
In-process research and
development - - - 2,112
Total operating
expenses 111,598 116,403 463,676 434,638
Operating income 10,440 39,263 185,460 178,267
Non-operating income
(expense), net
Interest income 675 896 2,044 3,502
Interest expense (1,371) (1,127) (2,760) (6,602)
Foreign currency
transaction gain (loss),
net (829) (819) 1,509 (1,351)
Income from joint
ventures, net 1,185 1,932 7,981 8,377
Minority interests in
consolidated subsidiaries 519 6 540 6
Other income (expense),
net (1,130) 384 (2,812) 1,557
Total non-operating
income (expense), net (951) 1,272 6,502 5,489
Income before taxes 9,489 40,535 191,962 183,756
Income tax provision (benefit) (4,250) 14,244 50,490 66,382
Net income $13,739 $26,291 $141,472 $117,374
Earnings per share :
Basic $0.12 $0.22 $1.17 $0.98
Diluted $0.11 $0.21 $1.14 $0.94
Shares used in calculating
earnings per share :
Basic 119,342 121,428 120,714 119,280
Diluted 121,728 126,532 124,235 124,410
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jan-02, Dec-28,
2009 2007
Assets
Current assets:
Cash and cash equivalents $147,531 $103,202
Accounts receivables, net 204,269 239,884
Other receivables 17,540 10,201
Inventories, net 160,893 143,018
Deferred income taxes 41,810 44,333
Other current assets 16,404 15,661
Total current assets 588,447 556,299
Property and equipment, net 50,175 51,444
Goodwill 715,571 675,850
Other purchased intangible assets,
net 228,901 197,777
Other non-current assets 51,922 57,989
Total assets $1,635,016 $1,539,359
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $124 $126
Accounts payable 49,611 67,589
Accrued compensation and benefits 41,291 55,133
Deferred revenue 55,241 49,416
Accrued warranty expense 13,332 10,806
Income taxes payable - 14,802
Other accrued liabilities 63,719 51,980
Total current liabilities 223,318 249,852
Non-current portion of long-term debt 151,464 60,564
Non-current deferred revenue 12,418 15,872
Deferred income taxes 42,207 47,917
Other non-current liabilities 61,553 56,128
Total liabilities 490,960 430,333
Minority interests in consolidated
subsidiaries 3,655 -
Commitments and contingencies
Shareholders' equity:
Common stock 684,831 660,749
Retained earnings 427,921 388,557
Accumulated other comprehensive
income 27,649 59,720
Total shareholders' equity 1,140,401 1,109,026
Total liabilities and
shareholders' equity $1,635,016 $1,539,359
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
Jan-02, Dec-28,
2009 2007
Cash flow from operating activities:
Net Income $141,472 $117,374
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation expense 19,047 17,212
Amortization expense 45,066 38,744
Provision for doubtful
accounts 2,709 1,410
Amortization of debt
issuance cost 169 218
Deferred income taxes (17,356) 6,368
Non-cash restructuring
expense - 1,725
Stock-based compensation 16,166 15,016
In-process research and
development - 2,112
Equity gain from joint
ventures (7,981) (8,377)
Excess tax benefit for
stock-based compensation (5,970) (12,409)
Provision for excess and
obsolete inventories 4,426 4,352
Other non-cash items (348) 651
Add decrease (increase) in
assets:
Accounts receivables 33,414 (35,696)
Other receivables (7,422) 4,825
Inventories (16,461) (18,678)
Other current and non-
current assets 779 7,650
Add increase (decrease) in
liabilities:
Accounts payable (20,898) (3,521)
Accrued compensation and
benefits (12,487) 1,691
Accrued liabilities 3,183 (4,635)
Deferred revenue (1,320) 32,400
Income taxes payable (114) 18,553
Net cash provided by operating
activities 176,074 186,985
Cash flows from investing
activities:
Acquisitions of businesses, net
of cash acquired (115,137) (295,848)
Acquisition of property and
equipment (16,196) (13,187)
Purchases of debt and equity
securities - (5,576)
Dividends received 10,648 2,888
Capital infusion from minority
investor 4,200 -
Other (5,211) 331
Net cash used in investing
activities (121,696) (311,392)
Cash flow from financing activities:
Issuance of common stock 22,802 31,864
Excess tax benefit for stock-
based compensation 5,970 12,409
Repurchase and retirement of
common stock (125,888) -
Proceeds from long-term debt
and revolving credit lines 151,000 250,000
Payments on long-term debt and
revolving credit lines (60,314) (190,457)
Other (11) -
Net cash provided by (used in)
financing activities (6,441) 103,816
Effect of exchange rate changes on
cash and cash equivalents (3,608) (5,828)
Net increase(decrease) in cash and
cash equivalents 44,329 (26,419)
Cash and cash equivalents -
beginning of period 103,202 129,621
Cash and cash equivalents - end of
period $147,531 $103,202
NON-GAAP RECONCILIATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
Jan-02, Dec-28, Jan-02, Dec-28,
2009 2007 2009 2007
REVENUE: $268,084 $312,783 $1,329,234 $1,222,270
GROSS MARGIN:
GAAP gross margin: $122,038 $155,666 $649,136 $612,905
Restructuring (A) 559 - 1,919 -
Amortization of
purchased
intangibles (B) 5,418 5,330 22,515 19,619
Stock-based
compensation (D) 487 493 1,920 1,733
Amortization of
acquisition-
related inventory
step-up (E) 813 - 1,414 -
Non-GAAP gross margin: $129,315 $161,489 $676,904 $634,257
Non-GAAP gross margin
(% of revenue) 48.2% 51.6% 50.9% 51.9%
OPERATING EXPENSES:
GAAP operating
expenses: $111,598 $116,403 $463,676 $434,638
Restructuring
(A) (287) - (2,722) (3,025)
Amortization of
purchased
intangibles (B) (6,608) (4,754) (22,376) (18,966)
In-process
research and
development (C) - - - (2,112)
Stock-based
compensation (D) (4,076) (3,574) (14,246) (13,283)
Non-GAAP operating
expenses: $100,627 $108,075 $424,332 $397,252
OPERATING INCOME:
GAAP operating income: $10,440 $39,263 $185,460 $178,267
Restructuring
(A) 846 - 4,641 3,025
Amortization of
purchased
intangibles (B) 12,026 10,084 44,891 38,585
In-process
research and
development (C) - - - 2,112
Stock-based
compensation (D) 4,563 4,067 16,166 15,016
Amortization of
acquisition-
related inventory
step-up (E) 813 - 1,414 -
Non-GAAP operating
income: $28,688 $53,414 $252,572 $237,005
Non-GAAP operating
margin (% of revenue) 10.7% 17.1% 19.0% 19.4%
NET INCOME:
GAAP net income: $13,739 $26,291 $141,472 $117,374
Restructuring
(A) 846 - 4,641 3,025
Amortization of
purchased
intangibles (B) 12,026 10,084 44,891 38,585
In-process
research and
development (C) - - - 2,112
Stock-based
compensation (D) 4,563 4,067 16,166 15,016
Amortization of
acquisition-
related inventory
step-up (E) 813 - 1,414 -
Income tax effect
on non-GAAP
adjustments (F) (3,029) (4,973) (17,649) (21,035)
Non-GAAP net income: $28,958 $35,469 $190,935 $155,077
DILUTED NET INCOME PER
SHARE:
GAAP diluted net income
per share: $0.11 $0.21 $1.14 $0.94
Non-GAAP diluted net
income per share: $0.24 $0.28 $1.54 $1.25
SHARES USED TO COMPUTE
DILUTED NET
INCOME PER SHARE:
GAAP and Non-GAAP
shares used to compute
net income per share: 121,728 126,532 124,235 124,410
OPERATING LEVERAGE:
Increase (decrease) in
non-GAAP operating
income $(24,726) $15,567
Increase (decrease) in
revenue $(44,699) $106,964
Operating leverage
(increase in non-GAAP
operating
income as a % of
increase in revenue) N/A 14.6%
