Forward Looking Guidance
For the second quarter of 2010 Trimble expects revenue between $320 million and $325 million, with GAAP earnings per share of $0.22 to $0.24 and non-GAAP earnings per share of $0.34 to $0.36. Non-GAAP guidance for the second quarter of 2010 excludes the amortization of intangibles of $13.9 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $5.6 million. Both GAAP and non-GAAP earnings per share assume a 28 to 30 percent tax rate and 124.0 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on April 29, 2010 at 1:30 p.m. PT to review its first quarter 2010 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 5679779. 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 the operating margins, revenue, and earnings per share that Trimble has guided for the second quarter and full year 2010, changes in tax-rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions, and the amount and timing of repurchases under the stock repurchase program. The Company may suspend its stock repurchase plan at any time and for any reason without further notice. 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 economic conditions in the U.S. and Europe worsen 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. The Company's financial results 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 |
| |||
|
|
|
|
|
| |
|
| Apr-2, |
| Apr-3, |
| |
|
| 2010 |
| 2009 |
| |
|
|
|
|
|
| |
Revenue |
| $ 319,015 |
| $ 288,954 |
| |
Cost of sales |
| 160,018 |
| 144,996 |
| |
Gross margin |
| 158,997 |
| 143,958 |
| |
Gross margin (%) |
| 49.8% |
| 49.8% |
| |
|
|
|
|
|
| |
Operating expenses |
|
|
|
|
| |
Research and development |
| 35,890 |
| 34,137 |
| |
Sales and marketing |
| 49,768 |
| 48,935 |
| |
General and administrative |
| 28,547 |
| 26,042 |
| |
Restructuring |
| 631 |
| 3,623 |
| |
Amortization of purchased intangible assets |
| 8,046 |
| 6,969 |
| |
Total operating expenses |
| 122,882 |
| 119,706 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Operating income |
| 36,115 |
| 24,252 |
| |
|
|
|
|
|
| |
Non-operating income (loss), net |
|
|
|
|
| |
Interest income |
| 399 |
| 199 |
| |
Interest expense |
| (398) |
| (493) |
| |
Foreign currency transaction gain, net |
| 746 |
| 184 |
| |
Income (loss) from equity method investments, net |
| 2,474 |
| (107) |
| |
Other income (expense), net |
| 314 |
| (439) |
| |
Total non-operating income (loss), net |
| 3,535 |
| (656) |
| |
|
|
|
|
|
| |
Income before taxes |
| 39,650 |
| 23,596 |
| |
|
|
|
|
|
| |
Income tax provision |
| 11,498 |
| 5,899 |
| |
Net income |
| 28,152 |
| 17,697 |
| |
Less: Net income attributable to noncontrolling interests |
| 254 |
| 232 |
| |
Net income attributable to Trimble Navigation Ltd. |
| $ 27,898 |
| $ 17,465 |
| |
|
|
|
|
|
| |
Earnings per share attributable to Trimble Navigation Ltd. |
|
|
|
|
| |
Basic |
| $ 0.23 |
| $ 0.15 |
| |
Diluted |
| $ 0.23 |
| $ 0.14 |
| |
|
|
|
|
|
| |
Shares used in calculating earnings per share: |
|
|
|
|
| |
Basic |
| 120,760 |
| 119,260 |
| |
Diluted |
| 123,829 |
| 120,926 |
| |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(In thousands) | |||||
(Unaudited) | |||||
| |||||
|
| ||||
|
| Apr-2, |
| Jan-1, | |
|
| 2010 |
| 2010 | |
Assets |
|
|
|
| |
|
|
|
|
| |
Current assets: |
|
|
|
| |
Cash and cash equivalents |
| $ 307,073 |
| $ 273,848 | |
Accounts receivables, net |
| 236,788 |
| 202,293 | |
Other receivables |
| 3,893 |
| 11,856 | |
Inventories, net |
| 150,657 |
| 144,012 | |
Deferred income taxes |
| 39,504 |
| 39,686 | |
Other current assets |
| 21,106 |
| 18,383 | |
Total current assets |
| 759,021 |
| 690,078 | |
|
|
|
|
| |
Property and equipment, net |
| 45,250 |
| 44,635 | |
Goodwill |
| 771,046 |
| 764,193 | |
Other purchased intangible assets, net |
| 201,105 |
| 202,782 | |
Other non-current assets |
| 57,231 |
| 51,589 | |
|
|
|
|
| |
Total assets |
| $ 1,833,653 |
| $ 1,753,277 | |
|
|
|
|
| |
Liabilities |
|
|
|
| |
|
|
|
|
| |
Current liabilities: |
|
|
|
| |
Current portion of long-term debt |
| $ 394 |
| $ 445 | |
Accounts payable |
| 81,082 |
| 53,775 | |
Accrued compensation and benefits |
| 47,661 |
| 43,272 | |
Deferred revenue |
| 71,582 |
| 68,968 | |
Accrued warranty expense |
| 14,375 |
| 14,744 | |
Other accrued liabilities |
| 39,383 |
| 42,041 | |
Total current liabilities |
| 254,477 |
| 223,245 | |
|
|
|
|
| |
Non-current portion of long-term debt |
| 151,059 |
| 151,038 | |
Non-current deferred revenue |
| 16,365 |
| 15,599 | |
Deferred income taxes |
| 41,658 |
| 38,857 | |
Other non-current liabilities |
| 65,184 |
| 59,983 | |
Total liabilities |
| 528,743 |
| 488,722 | |
|
|
|
|
| |
Commitments and contingencies |
|
|
|
| |
|
|
|
|
| |
Equity |
|
|
|
| |
|
|
|
|
| |
Shareholders' equity: |
|
|
|
| |
Common stock |
| 735,126 |
| 720,248 | |
Retained earnings |
| 519,265 |
| 491,367 | |
Accumulated other comprehensive income |
| 40,793 |
| 48,297 | |
Total Trimble Navigation Ltd. shareholders' equity |
| 1,295,184 |
| 1,259,912 | |
Noncontrolling interests |
| 9,726 |
| 4,643 | |
Total equity |
| 1,304,910 |
| 1,264,555 | |
|
|
|
|
| |
Total liabilities and equity |
| $ 1,833,653 |
| $ 1,753,277 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
|
| Three Months Ended | ||||
|
| Apr-2, |
| Apr-3, | ||
|
| 2010 |
| 2009 | ||
|
|
|
|
| ||
Cash flow from operating activities: |
|
|
|
| ||
Net Income |
| $ 28,152 |
| $ 17,697 | ||
|
|
|
|
| ||
Adjustments to reconcile net income to net cash provided by |
|
|
|
| ||
operating activities: |
|
|
|
| ||
Depreciation expense |
| 4,451 |
| 4,463 | ||
Amortization expense |
| 13,817 |
| 12,298 | ||
Provision for doubtful accounts |
| 1,038 |
| 2,212 | ||
Amortization of debt issuance cost |
| 57 |
| 56 | ||
Deferred income taxes |
| 103 |
| (1,606) | ||
Stock-based compensation |
| 5,641 |
| 4,226 | ||
(Income) loss from equity method investments |
| (2,474) |
| 107 | ||
Excess tax benefit for stock-based compensation |
| (482) |
| (21) | ||
Provision for excess and obsolete inventories |
| 1,902 |
| 904 | ||
Other non-cash items |
| (1,817) |
| (2,333) | ||
|
|
|
|
| ||
Add decrease (increase) in assets: |
|
|
|
| ||
Accounts receivables |
| (31,546) |
| (18,712) | ||
Other receivables |
| 8,060 |
| 5,486 | ||
Inventories |
| (9,441) |
| (7,327) | ||
Other current and non-current assets |
| (2,103) |
| 730 | ||
|
|
|
|
| ||
Add increase (decrease) in liabilities: |
|
|
|
| ||
Accounts payable |
| 27,319 |
| 12,682 | ||
Accrued compensation and benefits |
| 4,741 |
| 2,391 | ||
Accrued liabilities |
| 2,677 |
| 5,801 | ||
Deferred revenue |
| 5,468 |
| 4,107 | ||
Income taxes payable |
| (583) |
| - | ||
Net cash provided by operating activities |
| 54,980 |
| 43,161 | ||
|
|
|
|
| ||
Cash flow from investing activities: |
|
|
|
| ||
Acquisitions of businesses, net of cash acquired |
| (21,571) |
| (17,294) | ||
Acquisition of property and equipment |
| (5,299) |
| (3,261) | ||
Acquisitions of intangible assets |
| (297) |
| (26,001) | ||
Purchases of equity method investments |
| (2,750) |
| - | ||
Purchases of short-term investments |
| - |
| (1,999) | ||
Other |
| 1 |
| 14 | ||
Net cash used in investing activities |
| (29,916) |
| (48,541) | ||
|
|
|
|
| ||
Cash flow from financing activities: |
|
|
|
| ||
Issuance of common stock |
| 9,172 |
| 4,602 | ||
Excess tax benefit for stock-based compensation |
| 482 |
| 21 | ||
Payments on long-term debt and revolving credit lines |
| (54) |
| - | ||
Net cash provided by financing activities |
| 9,600 |
| 4,623 | ||
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents | (1,439) |
| (1,946) | |||
|
|
|
|
| ||
Net increase in cash and cash equivalents |
| 33,225 |
| (2,703) | ||
Cash and cash equivalents - beginning of period |
| 273,848 |
| 142,531 | ||
|
|
|
|
| ||
Cash and cash equivalents - end of period |
| $ 307,073 |
| $ 139,828 | ||
REPORTING SEGMENTS | |||||||||||
(Dollars in thousands) | |||||||||||
(Unaudited) | |||||||||||
| |||||||||||
| |||||||||||
|
|
|
| Reporting Segments | |||||||
|
|
|
| Engineering |
|
|
|
|
|
| |
|
|
|
| and |
| Field |
| Mobile |
| Advanced | |
|
|
|
| Construction |
| Solutions |
| Solutions |
| Devices | |
|
|
|
|
|
|
|
|
|
|
| |
THREE MONTHS ENDED APRIL 2, 2010: |
|
|
|
|
|
|
|
| |||
| Revenue |
| $ 157,618 |
| $ 95,901 |
| $ 37,959 |
| $ 27,537 | ||
|
|
|
|
|
|
|
|
|
|
| |
| Operating income before corporate allocations: |
| $ 18,807 |
| $ 39,313 |
| $ 1,899 |
| $ 5,625 | ||
|
| Operating margin (% of segment external net revenues) |
| 11.9% |
| 41.0% |
| 5.0% |
| 20.4% | |
|
|
|
|
|
|
|
|
|
|
| |
THREE MONTHS ENDED APRIL 3, 2009: |
|
|
|
|
|
|
|
| |||
| Revenue |
| $ 127,651 |
| $ 99,157 |
| $ 38,288 |
| $ 23,858 | ||
|
|
|
|
|
|
|
|
|
|
| |
| Operating income before corporate allocations: |
| $ 2,509 |
| $ 42,203 |
| $ 3,148 |
| $ 4,312 | ||
|
| Operating margin (% of segment external net revenues) |
| 2.0% |
| 42.6% |
| 8.2% |
| 18.1% | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
GAAP TO NON-GAAP RECONCILIATION | ||||||||||
(Dollars in thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
| ||||||||||
|
|
|
|
| Three Months Ended | |||||
|
|
|
|
| Apr-2, |
| Apr-3, | |||
|
|
|
|
| 2010 |
| 2009 | |||
|
|
|
|
| Dollar | % of |
| Dollar | % of | |
|
|
|
|
| Amount | Revenue |
| Amount | Revenue | |
GROSS MARGIN: |
|
|
|
|
|
|
| |||
| GAAP gross margin: |
|
| $ 158,997 | 49.8% |
| $ 143,958 | 49.8% | ||
|
| Restructuring | ( A ) |
| 43 | 0.0% |
| 865 | 0.3% | |
|
| Amortization of purchased intangibles | ( B ) |
| 5,769 | 1.8% |
| 5,285 | 1.8% | |
|
| Stock-based compensation | ( C ) |
| 501 | 0.2% |
| 438 | 0.2% | |
|
| Amortization of acquisition-related inventory step-up | ( D ) |
| 71 | 0.0% |
| 223 | 0.1% | |
| Non-GAAP gross margin: |
|
| $ 165,381 | 51.8% |
| $ 150,769 | 52.2% | ||
|
|
|
|
|
|
|
|
|
| |
OPERATING EXPENSES: |
|
|
|
|
|
|
| |||
| GAAP operating expenses: |
|
| $ 122,882 |
|
| $ 119,706 |
| ||
|
| Restructuring | ( A ) |
| (631) |
|
| (3,623) |
| |
|
| Amortization of purchased intangibles | ( B ) |
| (8,046) |
|
| (6,969) |
| |
|
| Stock-based compensation | ( C ) |
| (5,140) |
|
| (3,788) |
| |
|
| Non-recurring acquisition costs | ( E ) |
| (738) |
|
| (465) |
| |
| Non-GAAP operating expenses: |
|
| $ 108,327 |
|
| $ 104,861 |
| ||
|
|
|
|
|
|
|
|
|
| |
OPERATING INCOME: |
|
|
|
|
|
|
| |||
| GAAP operating income: |
|
| $ 36,115 | 11.3% |
| $ 24,252 | 8.4% | ||
|
| Restructuring | ( A ) |
| 674 | 0.2% |
| 4,488 | 1.5% | |
|
| Amortization of purchased intangibles | ( B ) |
| 13,815 | 4.4% |
| 12,254 | 4.2% | |
|
| Stock-based compensation | ( C ) |
| 5,641 | 1.8% |
| 4,226 | 1.5% | |
|
| Amortization of acquisition-related inventory step-up | ( D ) |
| 71 | 0.0% |
| 223 | 0.1% | |
|
| Non-recurring acquisition costs | ( E ) |
| 738 | 0.2% |
| 465 | 0.2% | |
| Non-GAAP operating income: |
|
| $ 57,054 | 17.9% |
| $ 45,908 | 15.9% | ||
|
|
|
|
|
|
|
|
|
| |
NET INCOME: |
|
|
|
|
|
|
| |||
| GAAP net income attributable to Trimble Navigation Ltd. |
|
| $ 27,898 |
|
| $ 17,465 |
| ||
|
| Restructuring | ( A ) |
| 674 |
|
| 4,488 |
| |
|
| Amortization of purchased intangibles | ( B ) |
| 13,815 |
|
| 12,254 |
| |
|
| Stock-based compensation | ( C ) |
| 5,641 |
|
| 4,226 |
| |
|
| Amortization of acquisition-related inventory step-up | ( D ) |
| 71 |
|
| 223 |
| |
|
| Non-recurring acquisition costs | ( E ) |
| 538 |
|
| 465 |
| |
|
| Income tax effect on non-GAAP adjustments | ( F ) |
| (6,014) |
|
| (5,414) |
| |
| Non-GAAP net income attributable to Trimble Navigation Ltd. |
|
| $ 42,623 |
|
| $ 33,707 |
| ||
|
|
|
|
|
|
|
|
|
| |
DILUTED NET INCOME PER SHARE: |
|
|
|
|
|
|
| |||
| GAAP diluted net income per share attributable to Trimble Navigation Ltd. |
|
| $ 0.23 |
|
| $ 0.14 |
| ||
|
| Restructuring | ( A ) |
| 0.01 |
|
| 0.04 |
| |
|
| Amortization of purchased intangibles | ( B ) |
| 0.11 |
|
| 0.10 |
| |
|
| Stock-based compensation | ( C ) |
| 0.04 |
|
| 0.04 |
| |
|
| Amortization of acquisition-related inventory step-up | ( D ) |
| - |
|
| - |
| |
|
| Non-recurring acquisition costs | ( E ) |
| - |
|
| - |
| |
|
| Income tax effect on non-GAAP adjustments | ( F ) |
| (0.05) |
|
| (0.04) |
| |
| Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd. |
|
| $ 0.34 |
|
| $ 0.28 |
| ||
|
|
|
|
|
|
|
|
|
| |
OPERATING LEVERAGE: |
|
|
|
|
|
|
| |||
| Increase (decrease) in non-GAAP operating income |
|
| $ 11,146 |
|
| $ (27,101) |
| ||
| Increase (decrease) in revenue |
|
| $ 30,061 |
|
| $ (66,342) |
| ||
| Operating leverage (increase in non-GAAP operating |
|
|
|
|
|
|
| ||
| income as a % of increase in revenue) |
|
| 37.1% |
|
| N/A |
| ||
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| % of Segment |
|
| % of Segment | |
SEGMENT OPERATING INCOME: |
|
|
| Revenue |
|
| Revenue | |||
| Engineering and Construction |
|
|
|
|
|
|
| ||
|
| GAAP operating income before corporate allocations: |
|
| $ 18,807 | 11.9% |
| $ 2,509 | 2.0% | |
|
| Stock-based compensation | ( G ) |
| 1,726 | 1.1% |
| 1,308 | 1.0% | |
|
| Non-GAAP operating income before corporate allocations: |
|
| $ 20,533 | 13.0% |
| $ 3,817 | 3.0% | |
|
|
|
|
|
|
|
|
|
| |
| Field Solutions |
|
|
|
|
|
|
| ||
|
| GAAP operating income before corporate allocations: |
|
| $ 39,313 | 41.0% |
| $ 42,203 | 42.6% | |
|
| Stock-based compensation | ( G ) |
| 455 | 0.5% |
| 222 | 0.2% | |
|
| Non-GAAP operating income before corporate allocations: |
|
| $ 39,768 | 41.5% |
| $ 42,425 | 42.8% | |
|
|
|
|
|
|
|
|
|
| |
| Mobile Solutions |
|
|
|
|
|
|
| ||
|
| GAAP operating income before corporate allocations: |
|
| $ 1,899 | 5.0% |
| $ 3,148 | 8.2% | |
|
| Stock-based compensation | ( G ) |
| 1,202 | 3.2% |
| 1,144 | 3.0% | |
|
| Non-GAAP operating income before corporate allocations: |
|
| $ 3,101 | 8.2% |
| $ 4,292 | 11.2% | |
|
|
|
|
|
|
|
|
|
| |
| Advanced Devices |
|
|
|
|
|
|
| ||
|
| GAAP operating income before corporate allocations: |
|
| $ 5,625 | 20.4% |
| $ 4,312 | 18.1% | |
|
| Stock-based compensation | ( G ) |
| 443 | 1.6% |
| 325 | 1.3% | |
|
| Non-GAAP operating income before corporate allocations: |
|
| $ 6,068 | 22.0% |
| $ 4,637 | 19.4% | |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
| |||||||||
|
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FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION | ||
(Dollars in thousands) | ||
(Unaudited) | ||
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The non-GAAP financial measures included in the previous table are non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP diluted net income per share and operating leverage, and non-GAAP segment operating income before corporate allocations. These non-GAAP measures can be used to evaluate the Company's historical and prospective financial performance, as well as its performance relative to competitors. The Company believes some of its investors track the Company's "core operating performance" as a means of evaluating the Company's performance in the ordinary, ongoing, and customary course of its operations. Management also believes that looking at its core operating performance provides a supplemental way to provide consistency in period to period comparisons. 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 and non-recurring acquisition costs, which the Company believes are not indicative of its core operating performance. | ||
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( A ) | Restructuring. 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 from our non-GAAP measures because we believe they are not indicative of our core operating performance. | |
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( B ) | Amortization of purchased intangibles. Included in our GAAP presentation of cost of sales and operating expenses, amortization of purchased intangibles recorded arise from prior acquisitions and are non-cash in nature. We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance. | |
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( C ) | 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 determined in accordance with SFAS 123(R). 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 ended April 2, 2010 and April 3, 2009, stock-based compensation was allocated as follows: | |
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| Three Months Ended |
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| Apr-2, |
| Apr-3, |
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| 2010 |
| 2009 |
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| Cost of sales |
| $ 501 |
| $ 438 |
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| Research and development |
| 947 |
| 784 |
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| Sales and Marketing |
| 1,383 |
| 1,004 |
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| General and administrative |
| 2,810 |
| 2,000 |
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| $ 5,641 |
| $ 4,226 |
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( D ) | 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 we do not believe it is indicative of our core operating performance. | |
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( E ) | Non-recurring acquisition costs. Included in our GAAP presentation of operating expenses and non-operating income (loss), net, non-recurring acquisition costs consist of external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence and integration costs. Also included are unusual acquisition related items such as adjustments to the fair value of earnout liabilities and payments made to settle earnout and holdback disputes. We exclude these items because they are non-recurring and unique to specific acquisitions and are not indicative of our core operating performance. | |
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( F ) | Income tax effect on non-GAAP adjustments. This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP adjustments on non-GAAP net income. | |
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( G ) | Stock-based Compensation . The amounts consist of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan determined in accordance with SFAS 123(R). As referred to above we exclude stock-based compensation here because investors may view it as not reflective of our core operating performance. 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 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 $1,815 and $1,227 for the three months ended April 2, 2010 and April 3, 2009, respectively. | |