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.
(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. 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 nine
months ended September 26, 2008 and September 28, 2007, stock-based
compensation was allocated as follows:
Three Months Twelve Months
Ended Ended
Jan-02, Dec-28, Jan-02, Dec-28,
2009 2007 2009 2007
Cost of sales $487 $493 $1,920 $1,733
Research and development 860 954 3,489 3,573
Sales and Marketing 1,095 1,091 3,993 3,891
General and administrative 2,121 1,529 6,764 5,819
$4,563 $4,067 $16,166 $15,016
(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 Field Mobile Advanced
and Solutions Solutions Devices
Construction
THREE MONTHS ENDED JANUARY 2,
2009:
Revenue $142,613 $58,245 $39,995 $27,231
GAAP operating income before
corporate allocations: $2,339 $17,528 $3,331 $6,340
Stock-based compensation (G) 1,533 221 1,167 399
Non-GAAP operating income before
corporate allocations: $3,872 $17,749 $4,498 $6,739
Non-GAAP operating margin (% of
segment external net revenues) 2.7% 30.5% 11.2% 24.7%
THREE MONTHS ENDED DECEMBER 28,
2007:
Revenue $186,699 $49,616 $47,685 $28,783
GAAP operating income before
corporate allocations: $36,818 $13,976 $5,739 $3,656
Stock-based compensation (G) 1,073 232 1,306 368
Non-GAAP operating income before
corporate allocations: $37,891 $14,208 $7,045 $4,024
Non-GAAP operating margin (% of
segment external net revenues) 20.3% 28.6% 14.8% 14.0%
TWELVE MONTHS ENDED JANUARY 2,
2009:
Revenue $741,670 $300,706 $167,113 $119,745
GAAP operating income before
corporate allocations: $126,014 $109,489 $11,328 $24,445
Stock-based compensation (G) 4,726 821 4,749 1,378
Non-GAAP operating income before
corporate allocations: $130,740 $110,310 $16,077 $25,823
Non-GAAP operating margin (% of
segment external net revenues) 17.6% 36.7% 9.6% 21.6%
TWELVE MONTHS ENDED DECEMBER 28,
2007:
Revenue $743,291 $200,614 $157,673 $120,692
GAAP operating income before
corporate allocations: $174,177 $60,933 $12,517 $17,276
Stock-based compensation (G) 3,614 763 4,976 1,369
Non-GAAP operating income before
corporate allocations: $177,791 $61,696 $17,493 $18,645
Non-GAAP operating margin (% of
segment external net revenues) 23.9% 30.8% 11.1% 15.4%
(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 $1,243K and $1,088K for
the three months ended January 2, 2009 and December 28, 2007,
respectively and $4,492K and $4,294K for the twelve months ended
January 2, 2009 and December 28, 2007, respectively.
Web site: http://www.trimble.com/
