form10k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
fiscal year ended January 2,
2009
OR
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from ___________to______________
Commission
File Number: 001-14845
TRIMBLE
NAVIGATION LIMITED
(Exact
name of Registrant as specified in its charter)
California
|
94-2802192
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
935 Stewart Drive, Sunnyvale,
CA
|
94085
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (408) 481-8000
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
Name
of each exchange on which stock registered
|
|
Common
Stock
|
NASDAQ
Global Select Market
|
|
Preferred
Share Purchase Rights
|
NASDAQ
Global Select Market
|
|
(Title
of Class)
|
|
Securities
registered pursuant to Section 12(g) of the Act: NONE
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
Large
Accelerated Filer x
|
Accelerated
Filer
¨
|
Non-accelerated
Filer ¨ (Do not check if
a smaller reporting company)
|
Smaller
Reporting Company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
As of
June 27, 2008, the aggregate market value of the Common Stock held by
non-affiliates of the registrant was approximately $4.4 billion based on
the closing price as reported on the NASDAQ Global Select Market.
Indicate
the number of share outstanding of each of the issuer’s classes of common stock,
as of the latest practicable date.
Class
|
Outstanding
at February 27, 2009
|
Common
stock, no par value
|
119,093,006
shares
|
DOCUMENTS
INCORPORATED BY REFERENCE
Certain
parts of Trimble Navigation Limited's Proxy Statement relating to the annual
meeting of stockholders to be held on May 19, 2009 (the "Proxy Statement") are
incorporated by reference into Part III of this Annual Report on Form
10-K.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, which are subject to the "safe harbor"
created by those sections. The forward-looking statements regarding future
events and the future results of Trimble Navigation Limited (“Trimble” or “the
Company” or “we” or “our” or “us”) are based on current expectations, estimates,
forecasts, and projections about the industries in which Trimble operates and
the beliefs and assumptions of the management of Trimble. Discussions
containing such forward-looking statements may be found in "Management's
Discussion and Analysis of Financial Condition and Results of Operations." In
some cases, forward-looking statements can be identified by terminology such as
"may," "will," "should," "could," "predicts," "potential," "continue,"
"expects," "anticipates," "future," "intends," "plans," "believes," "estimates,"
and similar expressions. These forward-looking statements involve certain risks
and uncertainties that could cause actual results, levels of activity,
performance, achievements and events to differ materially from those implied by
such forward-looking statements, but are not limited to those discussed in this
Report under the section entitled “ Risk Factors” and elsewhere, and in other
reports Trimble files with the Securities and Exchange Commission (“SEC”),
specifically the most recent reports on Form 8-K and Form 10-Q, each as it
may be amended from time to time. These forward-looking statements are made as
of the date of this Annual Report on Form 10-K. We reserve the right to
update these statements for any reason, including the occurrence of material
events. The risks and uncertainties under the caption "Risks and
Uncertainties" contained herein, among other things, should be considered in
evaluating our prospects and future financial performance. We have attempted to
identify forward-looking statements in this report by placing an asterisk (*)
before paragraphs containing such material.
2008
FORM 10-K ANNUAL REPORT
TABLE
OF CONTENTS
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PART
I
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Item
1
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5
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Item
1A
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17
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Item
1B
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23
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Item
2
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23
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Item
3
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23
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Item
4
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24
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PART
II
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Item
5
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24
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Item
6
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26
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Item
7
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27
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Item
7A
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44
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Item
8
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46
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Item
9
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87
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Item
9A
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87
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Item
9B
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87
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PART
III
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Item
10
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88
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Item
11
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88
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Item
12
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88
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Item
13
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88
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Item
14
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88
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PART
IV
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Item
15
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89
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TRADEMARKS
Trimble,
EZ-Guide, EZ-Boom, EZ-Steer, Proliance, UtilityCenter, TrimWeb, TrimView,
GeoManager, Taskforce, Juno, GeoExplorer, AgGPS, Spectra Precision,
Autopilot, Fieldport, Copernicus, TrimTrac, EZ-Steer, PocketCitation, Trimble
Outdoors, Force, BlueOx, EZ-Office, VX, Vision, VRS, VRSNow, FastMap, Geosite,
Coastal Center, NetR8, FineLock, R-Track, Agriculture Manager, Thunderbolt and
Connected Site, among others are trademarks of Trimble Navigation Limited and
its subsidiaries. All other trademarks are the property of their
respective owners.
PART
I
Trimble
Navigation Limited, a California corporation (“Trimble” or “the Company” or “we”
or “our” or “us”), provides advanced positioning product solutions, typically to
commercial and government users. The principal application areas
include surveying, agriculture, construction, asset management, mapping and
mobile resource management. Our products provide benefits that can include lower
operational costs, higher productivity, and improved quality. Product examples
include agricultural and construction equipment, guidance systems, surveying
instruments, systems that track fleets of vehicles, and data collection systems
that enable the management of large amounts of geo-referenced information. In
addition, we also manufacture components for in-vehicle navigation and
telematics systems, and timing modules used in the synchronization of wireless
networks.
Our
products often combine knowledge of location or position with a wireless link to
provide a solution for a specific application. Position is provided
through a number of technologies including the Global Positioning System, or
GPS, and systems that use laser or optical technologies to establish
position. Wireless communication techniques include both public
networks, such as cellular, and private networks, such as business band radio.
Some of our products are augmented by our software; this includes embedded
firmware that enables the positioning solution and application software that
allows the customer to make use of the positioning information.
We design
and market our own products. Our manufacturing strategy includes a combination
of in-house assembly and third party subcontractors. Our global operations
include major development, manufacturing or logistics operations in the United
States, Sweden, Germany, New Zealand, France, Canada, the United Kingdom, the
Netherlands, China, and India. Products are sold through dealers,
representatives, joint ventures, and other channels throughout the world. These
channels are supported by our sales offices located in 17
countries.
We began
operations in 1978 and incorporated in California in 1981. Our common stock has
been publicly traded on NASDAQ since 1990 under the symbol TRMB.
On
January 17, 2007, our board of directors approved a 2-for-1 split of all
outstanding shares of the Company’s Common Stock, payable February 22, 2007 to
stockholders of record on February 8, 2007. All shares and per share information
presented have been adjusted to reflect the stock split on a retroactive basis
for all periods presented.
Technology
Overview
A
significant portion of our revenue is derived from applying Global Navigation
Satellite System, or GNSS, technology to terrestrial
applications. The GNSS includes the network of 24 orbiting U.S.
Global Positioning System, or GPS, radio navigation satellites and associated
ground control that is funded and maintained by the U.S. Government and is
available worldwide free of direct user fees, and the Russian GLONASS radio
navigation satellite system. Both the European Community and China have
announced plans to establish future operational radio navigation satellite
systems. GNSS positioning is based on a technique that precisely measures
distances from four or more satellites. The satellites continuously
transmit precisely timed radio signals using extremely accurate atomic
clocks. A GNSS receiver measures distances from the satellites in
view by determining the travel time of a signal from the satellite to the
receiver, and then uses those distances to compute its position. Under normal
circumstances, a stand-alone GNSS receiver is able to calculate its position at
any point on earth, in the earth's atmosphere, or in lower earth orbit, to
approximately 10 meters, 24 hours a day. Much better accuracies are possible
through a technique called “differential GNSS.” In addition to providing
position, GNSS provides extremely accurate time measurement.
GNSS
accuracy is dependent upon the locations of the receiver and the number of GNSS
satellites that are above the horizon at any given time. Reception of GNSS
signals requires line-of-sight visibility between the satellites and the
receiver, which can be blocked by buildings, hills, and dense foliage. The
receiver must have a line of sight to at least four satellites to determine its
latitude, longitude, and time. The accuracy of GNSS may also be limited by
distortion of GNSS signals from ionospheric and other atmospheric conditions.
Our GNSS
products are based on proprietary receiver technology. Over time, the advances
in positioning, wireless communications, and information technologies have
enabled us to add more capability to our products and thereby deliver more value
to our users. For example, the developments in wireless technology
and deployments of next generation wireless networks have enabled less expensive
wireless communications. These developments provide the efficient
transfer of position data to locations away from the positioning field device,
allowing the data to be accessed by more users, thereby increasing
productivity. This allows us to integrate visualization and design
software into some of our systems, as well as offer positioning services, all of
which make our customers more efficient at what they do.
Our laser
and optical products either measure distances and angles to provide a position
in three dimensional space or are used as highly accurate laser references from
which a position can be established. The key elements of these
products are typically a laser, which is generally a commercially available
laser diode, and a complex mechanical assembly. These elements are
augmented by software algorithms to provide measurements and
application-specific solutions.
Business Strategy
Our
business strategy is developed around an analysis of several key
elements:
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·
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Attractive markets – We
focus on underserved markets that offer potential for revenue growth,
profitability, and market
leadership.
|
|
·
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Innovative solutions that
provide significant benefits to our customers – We seek to apply
our technology to applications in which position data is important and
where we can create unique value by enabling enhanced productivity in the
field or field to back office. We look for opportunities in
which the rate of technological change is high and which have a
requirement for the integration of multiple technologies into a
solution.
|
|
·
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Distribution channels to best
access our markets – We select distribution channels that best
serve the needs of individual markets. These channels can include
independent dealers, direct sales, joint ventures, OEM sales, and
distribution alliances with key partners. We view international expansion
as an important element of our strategy and seek to develop international
channels.
|
Business
Segments and Markets
We are
organized into four reporting segments encompassing our various applications and
product lines: Engineering and Construction, Field Solutions, Mobile Solutions
and Advanced Devices. Our segments are distinguished by the markets they serve.
Each segment consists of businesses which are responsible for product
development, marketing, sales, strategy, and financial performance.
Engineering
and Construction
Products
in the Engineering and Construction segment improve productivity and accuracy
throughout the entire construction process including the initial survey,
planning, design, site preparation, and building phases. Our products
are intended to both improve the productivity of each phase, as well as
facilitate the entire process by improving information flow from one phase to
the next.
The
product solutions typically include multiple technologies. The elements of these
solutions may incorporate GPS, optical, laser, radio, or cellular
communications.
An
example of the customer benefits provided by our products is our GPS and robotic
optical surveying instruments which enable the surveyor to perform operations in
the field faster, more reliably than conventional surveying instruments and with
a smaller crew. Similarly, our construction machine guidance products
allow the operator to achieve the desired landform while eliminating stakeout
and reducing rework. These steps in the construction process can be readily
linked together with data collection modules to minimize the time and effort
required to maintain data accuracy throughout the entire construction
process.
We sell
and distribute our products in this segment through a global network of
independent dealers that are supported by Trimble personnel. This
channel is supplemented by relationships that create additional channel breadth
including our joint ventures with Caterpillar and Nikon, as well
as private branding arrangements with other companies.
We also
design and market handheld data collectors and data collection software for
field use by surveyors, contractors, and other professionals. These products are
sold directly through dealers and other survey manufacturers.
Competitors
in this segment are typically companies that provide optical, laser, or GPS
positioning products. Our principal competitors are Topcon Corporation, and
Leica Geosystems, Inc. Price points in this segment range from less
than $1,000 for certain laser systems to approximately $100,000 for a
high-precision, three-dimensional, machine control system.
Representative
products sold in this segment include:
Trimble S8 Total Station – Our
S8 Total Station is our most advanced optical instrument designed to deliver
unsurpassed performance for both typical surveying and specialized engineering
applications such as monitoring and tunneling. It features Trimble FineLock™
technology, a smart tracker sensor with a narrow field of view that enables the
Trimble S8 to detect a target without interference from surrounding prisms. Our
S8 combined with our 4D Control software creates a powerful solution for
real-time and post-processed monitoring of permanent structures such as dams,
short-term construction activities, and side slopes in mines.
Trimble I.S. Rover – Our I.S. Rover
combines GNSS and optical data collection on a rover pole, enabling surveyors to
harness the unique strengths of both technologies. With it, surveyors can
increase flexibility and save time by seamlessly switching between technologies
to adapt to local jobsite conditions as well as independently verify
measurements for quality control. Our I.S. Rover is a unique patented
Trimble solution that offers land surveyors increased efficiency, flexibility
and versatility.
Trimble R8 GNSS System – Our R8 GNSS System
is a multi-channel, multi-frequency, Global Navigation Satellite System (GNSS)
receiver, antenna, and data-link radio combined in one compact unit. It features
Trimble R-Track™ technology, powered by the most advanced RTK engine in the
industry, supporting all GPS signals, including GPS Modernization (L2C signal
and L5 signals) as well as GLONASS. Our R8 GNSS combines advanced receiver
technology and a proven system design to provide maximum accuracy and
productivity for a variety of surveying applications.
Trimble VX Spatial Station –
Our Trimble VX™ Spatial
Station is an advanced spatial imaging system that combines optical, 3D
scanning, and video capabilities—Trimble VISION™ technology—to measure objects
in 3D to produce 2D and 3D data sets for spatial imaging projects. It
enables users to blend extremely accurate ground-based information with airborne
data to provide comprehensive datasets for use in the geospatial information
industry. An entry-level model of our VX Spatial Station offers integrated
imaging and surveying functionality only, with a scalable upgrade to 3D
scanning.
SPS Site Positioning Solutions
– The Trimble Site
Positioning Solutions family increases the productivity of construction
professionals and supervisors during site preparation, layout and grade checking
by simplifying workflows, eliminating unnecessary steps, and providing
intelligent data management between the field and the office, creating time
savings by providing data updates to all members of the team.
GCS Family of Grade Control Systems –
Grade control systems meet construction contractors' needs with
productivity-enhancing solutions for earthmoving, site prep, and roadwork. Our
GCS family provides upgrade options that deliver earthmoving contractors the
flexibility to select a system that meets their daily needs today, and later add
on to meet their changing needs. For example, a single control system such as
the GCS300 can provide for low-cost point of entry into grade control, and over
time can be upgraded to the GCS400 dual sensor system or to the full 3D GCS900
Grade Control System.
Spectra Precision Laser Portable
Tools – Our Spectra Precision® Laser family includes a
broad range of laser based tools for the interior, drywall and ceilings, HVAC,
and mechanical contractor. Designed to replace traditional methods of
measurement and leveling for a wide range of interior construction applications,
our laser tools are easy to learn and use. Our Spectra Precision Laser product
portfolio includes rotating lasers for horizontal leveling and vertical
alignment, as well as laser pointers and a laser based distance measuring
device. They are available through independent and national construction supply
houses both in the U.S. and in Europe.
Proliance Software –
Proliance® Software allows infrastructure-intensive organizations to optimize
the Plan-Build-Operate project lifecycle for complex capital projects,
construction and real estate programs, and extensive facility portfolios. Our
Proliance Software was designed for large building owner/operators, real estate
developers, and engineering-driven organizations managing $250 million or more
annually in new project construction or facility renovations.
GeoSpatial Solutions – Our
GeoSpatial Solutions family enables mobile mapping companies to capture
georeferenced data, extract features and attributes, and analyze conditions and
change, thereby generating information to better manage assets and
operations. Aerial LIDAR / Imaging Systems and vehicle-based asset
inventory systems, combined with powerful photogrammetry software, generate high
accuracy as-built drawings for the transportation, and utilities and energy
transmission and distribution industries.
Field
Solutions
Our Field
Solutions segment addresses the agriculture and geographic information system
(GIS) markets.
Our
agriculture products consist of manual and automated navigation guidance for
tractors and other farm equipment used in spraying, planting, cultivation, and
harvesting applications. The benefits to the farmer include faster machine
operation, higher yields, and lower consumption of chemicals than conventional
equipment. We also provide positioning solutions for leveling agricultural
fields in irrigation applications and aligning drainage systems to better manage
water flow in fields. We also provide solutions to automate applications of
pesticide and seeding.
We use
multiple distribution channels to access the agricultural market, including
independent dealers and partners such as CNH Global. Competitors in this market
are either vertically integrated implement companies such as John Deere, or
agricultural instrumentation suppliers such as Raven, Hemisphere GPS and
Novariant.
Our GIS
product line is centered on handheld data collectors that gather information in
the field to be incorporated into GIS databases. Typically this information
includes features, attributes, and positions of fixed infrastructure and natural
resource assets. An example would be a utility company performing a survey of
its transmission poles including the age and condition of each telephone pole.
Our handheld unit enables this data to be collected and automatically stored
while confirming the location of the asset. The data can then be downloaded into
a GIS database. This stored data could later be used to navigate back to any
individual asset or item for maintenance or data update. Our mobile GIS
initiative goes one step further by allowing this information to be communicated
from the field worker to the back-office GIS database through the combination of
wireless technologies, as well as giving the field worker the ability to
download information from the database. This capability provides significant
advantages to users including improved productivity, accuracy, and access to the
information in the field.
Our
Utilities Field Solutions product line is focused on integrated field and back
office software solutions for managing utility mobile workers and their field
work activities, including asset maintenance, GIS mapping, outage response, and
automated vehicle locating (AVL). Our software is typically installed on a
server and on mobile computers that are used by utility field workers for
conducting routine and emergency work, locating and mapping infrastructure, and
performing utility asset maintenance, inspection, and field service.
Through the use of GIS and location-based technologies combined with
mobile and wireless communications, our products connect utility field workers
to the office. Typically our products automate existing manual and paper
based processes and are implemented to meet utility regulatory requirements,
improve efficiency and reduce costs, and improve customer service and
response.
Distribution
for GIS products is primarily through a network of independent dealers and
business partners, supported by Trimble personnel. Primary markets for our GIS
products and solutions include both governmental and commercial users. Users are
most often municipal governments and natural resource
agencies. Commercial users include utility companies. Competitors in
this market are typically survey instrument companies utilizing GPS technology
such as Topcon and Thales.
Sales and
distribution of both our Fieldport® and UtilityCenter® software solutions are
direct to the customer. Installation of both solutions generally
involves a degree of integration and professional services. Primary
markets include government and commercial electric, gas, water and wastewater
utilities. Competitors are typically utility industry GIS software and
service companies.
Approximate
product price points in this segment range from $1,000 for a GIS handheld unit
to $35,000 for a fully automated, farm equipment control
system.
Representative
products sold within this segment include:
AgGPS EZ-Guide 500 – Our AgGPS EZ-Guide 500 is a
lightbar guidance system with a color LCD display, data logging functions and
multiple accuracy options. Lightbar systems provide GPS-based guidance for
vehicle operators to steer tractors, sprayers, fertilizer applicators, air
seeders, and large tillage tools that require consistent pass-to-pass accuracy
to help save fuel, increase efficiency, and reduce input costs for agricultural
operations.
AgGPS EZ-Boom 2010 – Our AgGPS®
EZ-Boom® 2010
automated application control system is designed to help growers cut input costs
and reduce operator fatigue by providing precise automatic control of field
spraying applications. It works with our AgGPS EZ-Guide® Plus
lightbar guidance system, AgGPS EZ-Steer® assisted
steering system, or the AgGPS Autopilot™ automated
steering system.
AgGPS Autopilot System – Our GPS-enabled,
agricultural navigation system connects to a tractor’s steering system and
automatically steers the tractor along a precise path to within three
centimeters or less. This enables both higher machine productivity
and more precise application of seed and chemicals, thereby reducing costs to
the farmer.
AgGPS EZ-Steer System – Our value added
assisted steering system, when combined with our EZ-Guide Plus system,
automatically steers agricultural vehicles along a path within 20 centimeters or
less. This system installs in less than thirty minutes and is
designed to reduce gaps and overlaps in spraying, fertilizing, and other field
applications, as well as reduce operator fatigue.
Juno Series – Our Juno family
includes compact and cost-effective GPS handhelds designed to equip an entire
workforce for data collection and fieldwork. The handhelds have a
high-sensitivity GPS receiver, Bluetooth and Wireless LAN technology, a built-in
3 Megapixel digital camera, a MicroSD/SDHC storage slot and an optional 3.5G
broadband cellular modem for wireless data communications.
GeoExplorer 2008 Series – Our GeoExplorer
family combines a GPS receiver in a rugged handheld unit running industry
standard Microsoft Windows Mobile version 6.0, making it easy to collect and
maintain data about objects in the field. The GeoExplorer® series features three models
ranging in accuracy from a decimeter to 1-3 meters, thereby allowing the user to
select the system most appropriate for their data collection and maintenance
needs.
Fieldport Software – Our
Fieldport Software focuses on automating field service processes, operational
efficiency and profitability for water and wastewater utility customers.
UtilityCenter Software – Our UtilityCenter
Software is a GIS-based enterprise suite of modules oriented towards the
electric and gas utilities market. Modules include Outage Management (OMS),
Mobile Asset Management, Data Collection, Staking, Network Tracing &
Isolation and Field-based Editing.
Mobile
Solutions
Our
Mobile Solutions segment provides both hardware and software applications for
managing mobile work, mobile workers and mobile assets. The software is provided
in both a client server model or web-based. Our software is
provided through our hosted platform for a monthly subscription service fee
or as a perpetual license with annual maintenance and support
fees.
Our
vehicle solutions typically include an onboard proprietary hardware
device consisting of a GPS receiver, business logic, sensor interface, and
a wireless modem. Our solution usually includes the communication service
from/to the vehicle to our data center and access over the internet to the
application software.
Our
mobile worker solutions include a rugged handset device and software designed to
automate service technician work in the field at the point of customer contact.
The mobile worker handset solutions also synchronize to a client
server at the back office for integration with other mission-critical business
applications.
Our
scheduling and dispatch solution is an enterprise software program to optimize
scheduling and routing of field service technicians. For dynamic capacity
management, our capacity planner, capacity controller, and intelligent appointer
modules round out this innovative service delivery automation
technology.
One
element of our market strategy targets opportunities in specific vertical
markets where we believe we can provide a unique value to the end-user by
tailoring our solutions for a particular industry. Sample markets include
Construction Supply, Direct Store Delivery and Public Safety. For example,
our ready mix concrete solution combines a suite of sensors with our in-vehicle
wireless platform providing fleets with updated vehicle status that requires no
driver interaction – referred to as “auto-status.”
We also
sell our vehicle solutions using a horizontal market strategy that
focuses on providing turnkey solutions to a broad range of service fleets that
span a large number of market segments. Here, we leverage our capabilities
without the same level of customization. These solutions are sold to the general
service fleets as well as transportation and distribution fleets both on a
direct basis and through dealer channels.
Our
enterprise strategy focuses on sales to large, enterprise accounts with more
than 1,000 vehicles or routes. Here, in addition to a Trimble-hosted solution,
we can also integrate our service directly into the customer’s IT
infrastructure, giving them improved control of their information. In this
market we sell directly to end-users. Sales cycles tend to be long due to field
trials followed by an extensive decision-making process.
Approximate
prices for hardware fall in the range of $400 to $3,000, while the monthly
subscription service fees range from approximately $25 to approximately $55 per
month per unit, depending on the customer service level.
We have
also entered into new markets by acquisitions of @Road, Inc. (@Road) in
2007, and Eleven Technology, Inc., Advanced Public Safety, Inc. (APS) and Visual
Statement, Inc. (VS) in 2006. @Road is a global provider of solutions
designed to automate the management of mobile resources and to optimize the
service delivery process for customers across a variety of industries under the
GeoManager™ and Taskforce® brand names. Eleven Technology is a mobile
application software company with market and technology position in the Consumer
Packaged Goods (CPG) industry. APS provides mobile and handheld software
products used by law enforcement, fire rescue and other public safety
agencies. VS provides desktop software and enterprise solutions for
collision and crime incident analysis, reporting and workflow
management.
Representative
products sold in this segment include:
Fleet Productivity – Our fleet
productivity solution offerings are comprised of the TrimWeb™, GeoManager and
TrimView™ mobile
platforms. The TrimWeb and GeoManager systems provide different levels of
service that run from snapshots of fleet activity to real-time fleet dispatch
capability via access to the web-based platform through a secure internet
connection. The TrimWeb and GeoManager systems include truck communication
service and computer backbone support of the service. TrimView is sold to fleets
where system integration into back office applications is required for more
robust information flow.
Consumer Packaged Goods (CPG) – This software solution
operates in the Microsoft CE/Pocket or WinMobile PC environment and addresses
the pre-sales, delivery, route sales and full service vending functions
performed by mobile workers. Customers within the CPG market purchase a
combination of both license software and handheld PCs. The software
handles all communications from/to the mobile computer as well as from/to the
host and any other ERP or decision support systems.
Field Service – Our handset-based mobile
solution enables technicians to maintain and repair residential and commercial
appliances, office equipment, medical equipment, refrigeration equipment,
fountain, and manufacturing equipment, and manage a variety of service functions
including wireless dispatching of service calls, real-time messaging, spare
parts management, and work order and workflow management. Trimble
Field Service customers have benefited from increased service calls per day, an
increase in first call resolution and reduction in administrative workload to
name a few results.
Public Safety – We provide a
suite of solutions for the public safety sector including our
PocketCitation™ system,
which is an electronic ticketing system that enables law enforcement
officers to issue traffic citations utilizing a mobile handheld device. This
system scans the traffic offender’s driver’s license and automatically populates
the appropriate information into the citation. We provide a variation
of this solution which enables law enforcement officers to complete
electronic traffic citations within 30 seconds. Within this sector we also
provide desktop software which enables accident investigators and other public
safety professionals to reconstruct and simulate vehicle accidents.
Taskforce – The Taskforce
software solution provides scheduling and dispatch solutions for field service
technicians by synchronizing the right human and physical resources required to
optimize a field service resource network. The system manages
significant numbers of dynamic scheduling resources in an unpredictable field
service environment to increase productivity, field force utilization and
control-to-field employee ratios.
Advanced
Devices
Advanced
Devices includes the product lines from our Component Technologies, Applanix,
Trimble Outdoors, and Military and Advanced Systems (MAS) businesses. With the
exception of Trimble Outdoors and Applanix these businesses share several common
characteristics: they are hardware centric, generally market to
original equipment manufacturers (OEM), system integrators or service providers,
and have products that can be utilized in a number of different end-user markets
and applications. The various operations that comprise this segment were
aggregated on the basis that no single operation accounted for more than 10% of
our total revenue, operating income or assets.
Within
Component Technologies, we supply GPS modules, licensing and complementary
technologies, and GPS-integrated sub-system solutions for applications requiring
precise position, time or frequency. Component Technologies serves a
broad range of vertical markets including telecommunications automotive
electronics, and commercial electronics. Sales are made directly to
OEMs, system integrators,
value-added resellers and service providers who incorporate our components into
a complete system-level solution.
Component
Technologies has developed GPS technologies which it is making available for
license. These technologies can run on certain digital signal processors (DSP)
or microprocessors, removing the need for dedicated GPS baseband signal
processor chips. We have a cooperative licensing deal with Nokia for
our Global Navigation Satellite System (GNSS) patents related to designated
wireless products and services involving location technologies, such as GPS,
assisted GPS or Galileo. The licensing agreement is exclusive to Nokia for the
wireless consumer product and service domain and includes sublicensing rights.
In return, Trimble receives a non-exclusive license to Nokia’s location-based
patents for use in Trimble's commercial products and services. We
also have a licensing agreement with Marvell Semiconductors for our full GPS
Digital Signal Processor software as well as tools for development support and
testing. Access to our GPS technology complements Marvell's wireless and
application processor initiatives for WiFi, Bluetooth, FM, multi-function radio,
application processors and cellular processor devices.
Our MAS
business supplies GPS receivers and embedded modules that use the military’s GPS
advanced capabilities. The modules are principally used in aircraft navigation
and timing applications. Military products are sold directly to either the U.S.
Government or defense contractors. Sales are also made to authorized foreign end
users. Competitors in this market include Rockwell Collins, L3, and
Raytheon.
Our
Trimble Outdoors business utilizes GPS-enabled cell phones to provide
information for outdoor recreational activities. Some of the recreational
activities include hiking, biking, backpacking, boating, and water sports.
Consumers purchase the Trimble Outdoors product through our wireless operator
partners which include Sprint-Nextel, SouthernLINC Wireless and Boost
Mobile.
Our
Applanix business is a leading provider of advanced products and enabling
solutions that maximize productivity through mobile mapping and positioning to
professional markets worldwide. Applanix develops, manufactures, sells and
supports high-value, precision products that combine GPS with inertial sensors
for accurate measurement of position and attitude, flight management systems,
and scalable mobile mapping solutions used in airborne, land and marine
applications. Sales are made by our direct sales force to end users, systems
integrators, and OEMs, and through regional agents. Competitors include Leica,
IGI and Novatel.
Representative
products sold by this segment include:
GPS Receiver Modules – The
Lassen®, Copernicus® , CondorTM and
PandaTM
families of GPS modules are full-function GPS modules in a variety of form
factors, some smaller than your fingertip.
TrimTrac Locator – Our TrimTrac® product is a complete end
user device that combines GPS functionality with global system for mobile
communications (GSM) wireless communications. In 2006, we added to the TrimTrac
locator full quad-band GSM and general packet radio service (GPRS) support along
with several important application level features. The device is suitable for
high volume personal vehicle and commercial asset management applications that
demand a low-cost locator.
TM3000 Asset Tracking Device –
Our TM3000 product
is a flexible, open platform that enables a broad range of applications such as:
fleet management, mobile asset tracking and recovery and driver monitoring and
assistance. This device integrates wireless communications, a
positioning function and an application engine in a package designed to improve
the profits for service-focused businesses.
Thunderbolt GPS Disciplined Clock
– Our Thunderbolt® clock is a fifth-generation product from our GPS
Timing and Synchronization division, which outputs precision time and
frequency. It also serves as the architectural basis for GPS
disciplined clocks sold to manufacturers of CDMA and WiMax
infrastructure.
Applanix POS/AV System – Our integrated
GPS/inertial system for airborne surveying measures aircraft position to an
accuracy of a few centimeters and aircraft attitude (angular orientation) to an
accuracy of 30 arc seconds or better. This system is typically interfaced to
large format cameras and scanning lasers for producing geo-referenced
topographic maps of the terrain.
Applanix DSS Digital Sensor System
– Our digital airborne imaging solution produces
high-resolution orthophoto map products. Certified by the USGS, the
system consists of a mapping grade digital camera that is tightly integrated
with a GNSS/Inertial system, flight management system (FMS) and processing
software for automatic geo-referencing of each pixel. Our DSS can be used
stand-alone or integrated with other airborne mapping sensors. Our DSS has been
used by organizations worldwide in a variety of market segments that include
ortho mapping, utility and transportation corridor mapping and rapid response
applications.
Force 524D Module – This dual frequency,
embedded GPS module is used in a variety of military airborne
applications.
Trimble Outdoors Service – Our trip planning and
navigation software works with GPS-enabled cell phones and conventional GPS
receivers. This software enables consumers to research specific trips on-line as
part of trip pre-planning. In addition, users are able to share outdoor and
off-road experiences on-line with their friends and family.
Acquisitions
and Joint Ventures
Our
growth strategy is centered on developing and marketing innovative and complete
value-added solutions to our existing customers, while also marketing them to
new customers and geographic regions. In some cases, this has led to partnering
with or acquiring companies that bring technologies, products or distribution
capabilities that will allow us to establish a market beach head, penetrate a
market more effectively, or develop solutions more quickly than if we had done
so solely through internal development. Since 1999, this has led us to form four
joint ventures and acquire thirty seven companies through the end of fiscal
2008. Most of these acquisitions have been small, both in dollar
terms and in number of people added to the Trimble employee base. No
assurance can be given that our previous or future acquisitions will be
successful or will not materially adversely affect our financial condition or
operating results. The following companies and joint ventures were
acquired or formed during fiscal 2008 and are combined in the results of
operations since the date of acquisition or formation:
Rawson
Control Systems
On
December 3, 2008, we acquired the assets of privately-held Rawson Control
Systems based in Oelwein, Iowa. Rawson manufactures hydraulic and electronic
controls for the agriculture equipment industry, including variable rate planter
drives and controllers, variable rate fertilizer controllers, mechanical remote
electric control valves and speed reducers. Rawson Control Systems’
performance is reported under our Field Solutions business segment.
FastMap
and GeoSite
On
November 28, 2008, we acquired the FastMap and GeoSite software assets from
Korec, a privately-held Trimble distributor serving the United Kingdom and
Ireland. FastMap and GeoSite performance is reported under our Engineering and
Construction and Field Solutions business segments, respectively.
Callidus
Precision Systems
On
November 28, 2008, we acquired the assets of privately-held Callidus Precision
Systems GmbH of Halle, Germany. Callidus is a provider of 3D laser scanning
solutions for the industrial market. Callidus performance is reported under our
Engineering and Construction business segment.
Toposys
On
November 13, 2008, we acquired TopoSys GmbH of Biberach an der Riss, Germany.
TopoSys is a leading provider of aerial data collection systems comprised of
LiDAR and metric cameras. TopoSys’s performance is reported under our
Engineering and Construction business segment.
TruCount
On
October 30, 2008, we acquired the assets of privately-held TruCount, Inc., of
Ames, Iowa. TruCount is a leading manufacturer of air and electric clutches that
automate individual planter row shut-off. TruCount’s performance is reported
under our Field Solutions business segment.
RolleiMetric
On
October 20, 2008, we acquired the assets of RolleiMetric from Rollei GmbH of
Braunschweig, Germany. RolleiMetric is a leading provider of metric camera
systems for aerial imaging and terrestrial close range photogrammetry.
RolleiMetric is reported within our Engineering and Construction business
segment.
VirtualSite
Solutions
On
October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by
Caterpillar and us began operations. We contributed $7.8 million in
exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35%
ownership in VSS. VSS develops software for fleet management and
connected worksite solutions for both Caterpillar and us, and in turn, sells
software subscription services to Caterpillar and us, which we both sell through
our respective distribution channels. For financial reporting purposes,
VSS’s assets and liabilities are consolidated with ours, as are its results of
operations, which are reported under our Engineering and Construction
segment. Caterpillar’s 35% interest is included in our Consolidated
Financial Statements as minority interests in consolidated
subsidiaries.
SECO
On July
29, 2008, we acquired privately-held SECO Manufacturing Company of Redding,
California. SECO is a leading manufacturer of accessories for the geomatics,
surveying, mapping, and construction industries. SECO’s performance
is reported under our Engineering and Construction business
segment.
Géo-3D
On
January 22, 2008, we acquired privately-held Géo-3D Inc. of Montreal,
Canada. Géo-3D is a leader in roadside infrastructure asset
inventory solutions. Géo-3D’s performance is reported under our
Engineering and Construction business segment.
Crain
Enterprises
On
January 8, 2008, we acquired privately-held Crain Enterprises, Inc. of Mound
City, Illinois. Crain is a leading manufacturer of accessories for the
geomatics, surveying, mapping, and construction industries. Crain
Enterprises is reported under our Engineering and Construction business
segment.
Patents,
Licenses and Intellectual Property
We hold
approximately 720 U.S. issued and enforceable patents and approximately 121
non-U.S. patents, the majority of which cover GPS technology and other
applications such as optical and laser technology.
We prefer
to own the intellectual property used in our products, either directly or
through subsidiaries. From time to time we license technology from third
parties.
There are
approximately 236 trademarks registered to Trimble and its subsidiaries
including "Trimble," "AgGPS," “Spectra Precision,”
and "GeoExplorer," among others that are registered in the United States and
other countries. Additional trademarks are pending registration.
Sales
and Marketing
We tailor
the distribution channel to the needs of our products and regional markets
through a number of sales channel solutions around the world. We sell our
products worldwide primarily through dealers, distributors, and authorized
representatives, occasionally granting exclusive rights to market certain
products within specific countries. This channel is supported and supplemented
(where third party distribution is not available) by our regional sales offices
throughout the world. We also utilize distribution alliances, OEM relationships,
and joint ventures with other companies as a means to serve selected
markets.
During
fiscal 2008, sales to customers in the United States represented 49%, Europe
represented 25%, Asia Pacific represented 14%, and other regions represented 12%
of our total revenue. During fiscal 2007, sales to customers in the United
States represented 50%, Europe represented 27%, Asia Pacific represented 12%,
and other regions represented 11% of our total revenue. During fiscal 2006,
sales to customers in the United States represented 54%, Europe represented 25%,
Asia Pacific represented 12%, and other regions represented 9% of our total
revenue.
Warranty
The
warranty periods for our products are generally between 90 days and three years.
Selected military programs may require extended warranty periods up to 5.5 years
and certain Nikon products have a five-year warranty period. We support our GPS
products through a circuit board replacement program from locations in the
United Kingdom, Germany, Japan, and the United States. The repair and
calibration of our non-GPS products are available from company-owned or
authorized facilities. We reimburse dealers and distributors for all authorized
warranty repairs they perform.
While we
engage in extensive product quality programs and processes, including actively
monitoring and evaluating the quality of component suppliers, our warranty
obligation is affected by product failure rates, material usage, and service
delivery costs incurred in correcting a product failure. Should actual product
failure rates, material usage, or service delivery costs differ from the
estimates, revisions to the estimated warranty accrual and related costs may be
required.
Seasonality
of Business
* Our
individual segment revenue may be affected by seasonal buying patterns.
Typically, the second fiscal quarter has been the strongest quarter for the
Company driven by the construction buying season.
Backlog
In most
of our markets, the time between order placement and shipment is
short. Orders are generally placed by customers on an as-needed
basis. In general, customers may cancel or reschedule orders without
penalty. For these reasons, we do not believe that orders are an
accurate measure of backlog and, therefore, we believe that backlog is not a
meaningful indicator of future revenue or material to understanding our
business.
Manufacturing
Manufacturing
of many of our GPS products is subcontracted to Flextronics International
Limited. We utilize Flextronics for all of our Component Technologies products,
and for some of our Construction and Survey, Field Solutions, and Mobile
Solutions products. We also utilize Flextronics for our high-end GPS products
and new product introduction services. Flextronics is responsible for
substantially all material procurement, assembly, and testing. We continue to
manage product design through pilot production for the subcontracted products,
and we are directly involved in qualifying suppliers and key components used in
all our products. Our current contract with Flextronics continues in effect
until either party gives the other ninety days written notice.
We
manufacture laser and optics-based products at our plants in Dayton, Ohio;
Danderyd, Sweden; Jena and Kaiserslautern, Germany; and Shanghai, China. Some of
these products or portions of these products are also subcontracted to third
parties for assembly.
Our
design and manufacturing sites in Dayton, Ohio; Sunnyvale, California; Danderyd,
Sweden; and Jena and Kaiserslautern, Germany are registered to ISO9001:2000,
covering the design, production, distribution, and servicing of all our
products.
Research
and Development
We
believe that our competitive position is maintained through the development and
introduction of new products that incorporate improved features, better
performance, smaller size and weight, lower cost, or some combination of these
factors. We invest substantially in the development of new products. We also
make significant investment in the positioning, communication, and information
technologies that underlie our products and will likely provide competitive
advantages.
Our
research and development expenditures, net of reimbursed amounts were $148.3
million for fiscal 2008, $131.5 million for fiscal 2007, and $103.8 million for
fiscal 2006.
* We
expect to continue investing in research and development with the goal of
maintaining or improving our competitive position, as well as the goal of
entering new markets.
Employees
As of
January 2, 2009, we employed 3,940 employees, including 24% in manufacturing,
29% in engineering, 35% in sales and marketing, and 12% in general and
administrative positions. Approximately 43% of employees are in locations
outside the United States.
Our
employees are not represented by unions except for those in
Sweden. Some employees in Germany are represented by works councils.
We also employ temporary and contract personnel that are not included in the
above headcount numbers. We have not experienced work stoppages or similar labor
actions.
Available
Information
The
Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports are available free of
charge on the Company’s web site through www.trimble.com/investors.html, as
soon as reasonably practicable after such material is electronically filed with
or furnished to the Securities and Exchange Commission. Information contained on
our web site is not part of this annual report on Form 10-K.
In
addition, you may request a copy of these filings (excluding exhibits) at no
cost by writing or telephoning us at our principal executive offices at the
following address or telephone number:
Trimble
Navigation Limited
935
Stewart Drive, Sunnyvale, CA 94085
Attention:
Investor Relations Telephone: 408-481-8000
Executive
Officers
The
names, ages, and positions of the Company's executive officers as of February
21, 2009 are as follows:
Name
|
Age
|
Position
|
Steven
W. Berglund
|
57
|
President
and Chief Executive Officer
|
Rajat
Bahri
|
44
|
Chief
Financial Officer
|
Rick
Beyer
|
51
|
Vice
President
|
Bryn
A. Fosburgh
|
46
|
Vice
President
|
Mark
A. Harrington
|
53
|
Vice
President
|
Jürgen Kliem
|
51
|
Vice
President
|
James
A. Kirkland
|
49
|
Vice
President and General Counsel
|
Julie
Shepard
|
51
|
Vice
President, Finance
|
Dennis
L. Workman
|
64
|
Vice
President and Chief Technical
Officer
|
Steven W.
Berglund – Steven Berglund has served as president and chief executive
officer of Trimble since March 1999. Prior to joining Trimble, Mr. Berglund was
president of Spectra Precision, a group within Spectra Physics AB, and a pioneer
in the development of laser systems. He spent 14 years at Spectra Physics in a
variety of senior leadership positions. In the early 1980s, Mr.
Berglund spent a number of years at Varian Associates in Palo Alto, where he
held a variety of planning and manufacturing roles. Mr. Berglund
began his career as a process engineer at Eastman Kodak in Rochester, New York.
He attended the University of Oslo and the University of Minnesota where he
received a B.S. in chemical engineering. He later received his M.B.A.
from the University of Rochester. In December 2007, Mr. Berglund was
elected to the board of directors of Verigy Ltd. a semiconductor test equipment
manufacturer.
Rajat
Bahri – Rajat Bahri joined Trimble as chief financial officer in January
2005. Prior to joining Trimble, Mr. Bahri served for more than 15
years in various capacities within the financial organization of several
subsidiaries of Kraft Foods, Inc. and General Foods Corporation. Most
recently, he served as the chief financial officer for Kraft Canada,
Inc. From June 2000 to June 2001, he served as chief financial
officer of Kraft Pizza Company. From 1997 to 2000, Mr. Bahri was
Operations Controller for Kraft Jacobs Suchard Europe. Mr. Bahri holds a
Bachelor of Commerce from the University of Delhi in 1985 and an M.B.A. from
Duke University in 1987. In 2005, he was elected to the board of STEC, Inc., a
memory storage manufacturer.
Richard A. Beyer –
Rick Beyer joined Trimble in March 2004 as president of Trimble Mobile
Solutions and in May 2006, Mr. Beyer was appointed a vice president of
Trimble. In October 2007 his role was expanded to include
responsibility for a number of Trimble’s mobile solutions business divisions.
Prior to joining Trimble, Mr. Beyer held senior executive positions within
the wireless mobile solutions industry since 1987. Part of the original senior
executive team that launched Qualcomm's OmniTRAC's mobile satellite
communication solution, Mr. Beyer also held the positions of general manager at
Rockwell Collins, on-board computing division, from 1994 to 1995; executive vice
president of Norcom Networks from 1995 to 1999; president of Husky Technologies,
now part of Itronix, from 1999 to 2000; and CEO of TracerNet, which was acquired
by Trimble, from 2002 to 2004. Mr. Beyer holds a B.A. from
Olivet College.
Bryn A.
Fosburgh – Bryn Fosburgh joined
Trimble in 1994 as a technical service manager for surveying, mining, and
construction. In 1997, Mr. Fosburgh was appointed director of development for
the Company’s land survey business unit where he oversaw the development of
field and office software that enabled the interoperability of Trimble survey
products. From October 1999 to July 2002, he served as division vice president
of survey and infrastructure. From 2002 to 2005, Mr. Fosburgh served as vice
president and general manager of Trimble's Geomatics and Engineering business
area, with responsibility for all the division-level activities associated with
survey, construction, and infrastructure solutions. In January 2005, he was
appointed vice president and general manager of the Engineering and Construction
Division. In October 2007 his role was expanded to include a number
of divisions, including construction and agriculture, as well as a
responsibility for a number of corporate functions and geographical
regions. Prior to Trimble, he was a civil engineer with the Wisconsin
Department of Transportation responsible for coordinating the planning, data
acquisition, and data analysis for statewide GPS surveying projects in support
of transportation improvement projects. He has also held various engineering,
research and operational positions for the U.S. Army Corps of Engineers and
Defense Mapping Agency. Mr. Fosburgh received a B.S. in geology from the
University of Wisconsin in Green Bay in 1985 and an M.S. in civil engineering
from Purdue University in 1989.
Mark A.
Harrington – Mark Harrington joined Trimble in January 2004 as a vice
president, primarily responsible for strategy and business
development. In October 2007 his responsibilities were expanded to
include a number of divisions, including survey and mapping and geographical
information systems, as well as the responsibility for a number of corporate
functions and geographical regions. Prior to joining Trimble, Mr.
Harrington served as vice president of finance at Finisar Corporation and chief
financial officer for Cielo Communications, Inc., a photonics components
manufacturer, from February 1998 to September 2002, and Vixel Corporation, a
photonics manufacturer, from April 2003 to December 2003. His experience also
includes 11 years at Spectra-Physics where he served in a variety of roles
including vice president of finance for Spectra-Physics Lasers, Inc. and vice
president of finance for Spectra-Physics Analytical, Inc. Mr. Harrington began
his career at Varian Associates, Inc. where he held a variety of management and
individual positions in finance, operations and IT. Mr. Harrington received his
B.S. in Business Administration from the University of
Nebraska-Lincoln.
Jürgen Kliem
– Jürgen Kliem was appointed vice president of strategy and business
development in October 2008. From 2002 to 2008, Mr. Kliem served as general
manager of Trimble’s Survey Division. Mr. Kliem joined Trimble in
July 2000 as part of the Spectra Precision acquisition. From 2000 to 2002, he
was responsible for the Engineering and Construction segment’s European
operations. Prior to Spectra Precision, Mr. Kliem held various leadership roles
at Geotronics, a company acquired by Spectra Precision, directing the European
sales and marketing activities. Before joining Geotronics, Mr. Kliem worked in a
privately-held surveying firm addressing cadastral, construction, plant and
engineering projects. Mr. Kliem received a Diplom Ingenieur degree
from the University of Essen, Germany in 1982.
James A.
Kirkland –
James A. Kirkland joined Trimble as vice president and general counsel
in July 2008. Prior to joining Trimble, he worked for SpinVox Ltd. from October
2007 to January 2008 as Senior Vice President, Corporate
Development. From October 2003 to September 2007, he served as
general counsel and executive vice president, strategic development at Covad
Communications. Mr. Kirkland also served as senior vice president of
spectrum development and general counsel at Clearwire Technologies, Inc. from
March 2001 to October 2003. Mr. Kirkland began his career in 1984 as an
associate at Mintz Levin and in 1992 he was promoted to partner.
Mr. Kirkland received his BA from Georgetown University in Washington,
D.C. in 1981 and his J.D. from Harvard Law School in
1984.
Julie
Shepard –
Julie Shepard joined Trimble in December of 2006 as vice president of
finance, and was appointed principal accounting officer in May 2007. Ms.
Shepard brings with her over 20 years of experience in a broad range of finance
roles. She is responsible for Trimble's worldwide finance operations
including financial planning, accounting, and external
reporting. Prior to joining Trimble, Ms. Shepard served as vice
president of finance and corporate controller at Quantum Corporation, from 2005
to 2006, and prior to that, from 2004 to 2005, as an independent consultant to
Quantum Corporation. She was vice president of finance at Nishan
Systems from 2000 to 2003. Ms. Shepard began her career at Price
Waterhouse and is a Certified Public Accountant. She received a B.S from
California State University where she majored in Accounting.
Dennis L. Workman
– Dennis
Workman has served as vice president of various business divisions, currently
including Component Technologies and Applanix since September
1999. He was appointed Trimble’s chief technical officer in March
2006. From 1998 to 1999, Mr. Workman was senior director and
chief technical officer of the newly formed Mobile and Timing Technologies
business group, also serving as general manager of Trimble's Automotive and
Timing group. In 1997, he was director of engineering for Software
& Component Technologies. Mr. Workman joined Trimble in 1995 as director of
the newly created Timing vertical market. Prior to Trimble, Mr.
Workman held various senior-level technical positions at Datum Inc. During his
nine year tenure at Datum, he held the position of CTO. Mr. Workman
received a B.S. in mathematics and physics from St. Mary’s College in
1967.
RISKS AND
UNCERTAINTIES
You
should carefully consider the following risk factors, in addition to the other
information contained in this Form 10-K and in any other documents to which we
refer you in this Form 10-K, before purchasing our securities. The risks and
uncertainties described below are not the only ones we face.
Current
Economic Conditions and the Global Financial Crisis May Have an Impact on Our
Business and Financial Condition in Ways that We Currently Cannot
Predict.
The
Company’s operations and performance depend on worldwide economic conditions and
their impact on levels of business spending, which have deteriorated
significantly in many countries and regions and may remain depressed for the
foreseeable future. Uncertainties in the financial and credit markets have
caused our customers to postpone purchases, and continued uncertainties may
reduce future sales of our products and services. Continued adverse
economic conditions are likely to depress tax revenue of federal, state and
local government entities, which are significant purchasers of the Company’s
products. Protectionist trade measures that may be adopted in response to the
economic downturn could reduce demand for our products and services overseas.
With the
exception of our Mobile Solutions and Advanced Devices segments, our products
are generally sold through a dealer channel, and our dealers depend on the
availability of credit to finance purchases of our products for their
inventory.
Customer
collections are our primary source of cash. While we believe we have a
strong customer base and have experienced strong collections in the past, if the
current market conditions continue to deteriorate we may experience increased
collection times or greater write-offs, which could have a material adverse
effect on our cash flow. In addition, the Company's results may be
adversely affected if the Company is unable to market, manufacture and ship new
products. Any write-off of goodwill could also negatively impact our financial
results. Finally, our ability to access the capital markets may be
restricted at a time when we would like, or need, to do so, which could have an
impact on our flexibility to pursue additional expansion opportunities and
maintain our desired level of revenue growth in the future. These and other
economic factors could have a material adverse effect on demand for the
Company’s products and services and on the Company’s financial condition and
operating results.
Our
Inability to Accurately Predict Orders and Shipments May Subject Our Results of
Operations to Significant Fluctuations From Quarter to Quarter
We have
not been able in the past to consistently predict when our customers will place
orders and request shipments so that we cannot always accurately plan our
manufacturing requirements. As a result, if orders and shipments differ from
what we predict, we may incur additional expense and build excess inventory,
which may require additional reserves and allowances. Accordingly, we have
limited visibility into future changes in demand and our results of operations
may be subject to significant fluctuations from quarter to
quarter.
Our
Operating Results in Each Quarter May Be Affected by Special Conditions, such as
Seasonality, Late Quarter Purchases, Weather, and Other Potential
Issues
Due in
part to the buying patterns of our customers, a significant portion of our
quarterly revenue occurs from orders received and immediately shipped to
customers in the last few weeks and days of each quarter, although our operating
expense tends to remain fairly predictable. Engineering and construction
purchases tend to occur in early spring, and governmental agencies tend to
utilize funds available at the end of the government’s fiscal year for
additional purchases at the end of our third fiscal quarter in September of each
year. Concentrations of orders sometimes also occur at the end of our other two
fiscal quarters. Additionally, a majority of our sales force earns commissions
on a quarterly basis which may cause concentrations of orders at the end of any
fiscal quarter. It could harm our operating results if for any reason expected
sales are deferred, orders are not received, or shipments are delayed a few days
at the end of a quarter.
We
Are Dependent on a Specific Manufacturer and Assembler for Many of Our Products
and on Specific Suppliers of Critical Parts for Our Products
We are
substantially dependent upon Flextronics International Limited as our preferred
manufacturing partner for many of our GPS products. Under the agreement, we
provide to Flextronics a twelve-month product forecast and place purchase orders
with Flextronics at least thirty calendar days in advance of the scheduled
delivery of products to our customers depending on production lead time.
Although purchase orders placed with Flextronics are cancelable, the terms of
the agreement would require us to purchase from Flextronics all inventory not
returnable or usable by other Flextronics customers. Accordingly, if we
inaccurately forecast demand for our products, we may be unable to obtain
adequate manufacturing capacity from Flextronics to meet customers’ delivery
requirements or we may accumulate excess inventories, if such inventories are
not usable by other Flextronics customers. Our current contract with Flextronics
continues in effect until either party gives the other ninety days written
notice.
In
addition, we rely on specific suppliers for a number of our critical components.
We have experienced shortages of components in the past. Our current reliance on
specific or a limited group of suppliers involves several risks, including a
potential inability to obtain an adequate supply of required components, reduced
control over pricing, and economic conditions which may adversely impact the
viability of our suppliers. Any inability to obtain adequate deliveries or any
other circumstance that would require us to seek alternative sources of supply
or to manufacture such components internally could significantly delay our
ability to ship our products, which could damage relationships with current and
prospective customers and could harm our reputation and brand as well as our
operating results.
Our
Annual and Quarterly Performance May Fluctuate Which Could Negatively Impact Our
Operations and Our Stock Price
Our
operating results have fluctuated and can be expected to continue to fluctuate
in the future on a quarterly and annual basis as a result of a number of
factors, many of which are beyond our control. Results in any period could be
affected by:
·
|
changes
in market demand,
|
·
|
competitive
market conditions,
|
·
|
fluctuations
in foreign currency exchange rates,
|
·
|
the
cost and availability of
components,
|
·
|
the
mix of our customer base and sales
channels,
|
·
|
the
mix of products sold,
|
·
|
our
ability to expand our sales and marketing organization
effectively,
|
·
|
our
ability to attract and retain key technical and managerial employees,
and
|
·
|
general
global economic conditions.
|
In
addition, demand for our products in any quarter or year may vary due to the
seasonal buying patterns of our customers in the agricultural and engineering
and construction industries. The price of our common stock could decline
substantially in the event such fluctuations result in our financial performance
being below the expectations of public market analysts and investors, which are
based primarily on historical models that are not necessarily accurate
representations of the future.
Our
Gross Margin Is Subject to Fluctuation
Our gross
margin is affected by a number of factors, including product mix, product
pricing, cost of components, foreign currency exchange rates, and manufacturing
costs. For example, sales of Nikon-branded products generally have lower gross
margin as compared to our GPS survey products. Absent other factors, a shift in
sales towards Nikon-branded products would lead to a reduction in our overall
gross margin. A decline in gross margin could harm our results of operations and
financial condition.
We
Are Dependent on New Products and if We are Unable to Successfully Introduce
Them Into The Market Our Customer Base May Decline or Fail to Grow as
Anticipated
Our
future revenue stream depends to a large degree on our ability to bring new
products to market on a timely basis. We must continue to make significant
investments in research and development in order to continue to develop new
products, enhance existing products, and achieve market acceptance of such
products. We may incur problems in the future in innovating and introducing new
products. Our development stage products may not be successfully completed or,
if developed, may not achieve significant customer acceptance. If we were unable
to successfully define, develop and introduce competitive new products, and
enhance existing products, our future results of operations would be adversely
affected. Development and manufacturing schedules for technology products are
difficult to predict, and we might not achieve timely initial customer shipments
of new products. The timely availability of these products in volume and their
acceptance by customers are important to our future success. If we are unable to
introduce new products, if other companies develop similar technology products,
or if we do not develop compelling new products, our number of customers may not
grow as anticipated, or may decline, which could harm our operating
results.
We
Are Dependent on Proprietary Technology, which Could Result in Litigation that
Could Divert Significant Valuable Resources
Our
future success and competitive position is dependent upon our proprietary
technology, and we rely on patent, trade secret, trademark, and copyright law to
protect our intellectual property. The patents owned or licensed by us may be
invalidated, circumvented, and challenged. The rights granted under these
patents may not provide competitive advantages to us. Any of our pending or
future patent applications may not be issued within the scope of the claims
sought by us, if at all.
Others
may develop technologies that are similar or superior to our technology,
duplicate our technology or design around the patents owned by us. In addition,
effective copyright, patent, and trade secret protection may be unavailable,
limited or not applied for in certain countries. The steps taken by us to
protect our technology might not prevent the misappropriation of such
technology.
The value
of our products relies substantially on our technical innovation in fields in
which there are many current patent filings. We recognize that as new patents
are issued or are brought to our attention by the holders of such patents, it
may be necessary for us to withdraw products from the market, take a license
from such patent holders, or redesign our products. We do not believe any of our
products currently infringe patents or other proprietary rights of third
parties, but we cannot be certain they do not do so. In addition, the legal
costs and engineering time required to safeguard intellectual property or to
defend against litigation could become a significant expense of operations. Any
such litigation could require us to incur substantial costs and divert
significant valuable resources, including the efforts of our technical and
management personnel, which harm our results of operations and financial
condition.
Investing
in and Integrating New Acquisitions Could be Costly and May Place a Significant
Strain on Our Management Systems and Resources Which Could Negatively Impact Our
Operating Results
We have
recently acquired a number of companies, and intend to continue to acquire other
companies. Acquisitions of companies entail numerous risks,
including:
·
|
potential
inability to successfully integrate acquired operations and products or to
realize cost savings or other anticipated benefits from
integration;
|
·
|
loss
of key employees of acquired
operations;
|
·
|
the
difficulty of assimilating geographically dispersed operations and
personnel of the acquired
companies;
|
·
|
the
potential disruption of our ongoing
business;
|
·
|
unanticipated
expense related to acquisitions; including significant transactions costs
which under the new accounting rules, are required to be expensed rather
than capitalized;
|
·
|
the
correct assessment of the relative percentages of in-process research and
development expense that can be immediately written off as compared to the
amount which must be amortized over the appropriate life of the
asset;
|
·
|
the
impairment of relationships with employees and customers of either an
acquired company or our own business;
and
|
·
|
the
potential unknown liabilities associated with acquired
business.
|
As a
result of such acquisitions, we have significant assets that include goodwill
and other purchased intangibles. The testing of this goodwill and intangibles
for impairment under established accounting guidelines requires significant use
of judgment and assumptions. Changes in business conditions could require
adjustments to the valuation of these assets. In addition, losses incurred by a
company in which we have an investment may have a direct impact on our financial
statements or could result in our having to write-down the value of such
investment. Any such problems in integration or adjustments to the value of the
assets acquired could harm our growth strategy, and could be costly and place a
significant strain on our management systems and resources.
Our
Products May Contain Errors or Defects, which Could Result in Damage to Our
Reputation, Lost Revenue, Diverted Development Resources and Increased Service
Costs, Warranty Claims, and Litigation
We
warrant that our products will be free of defect for various periods of time,
depending on the product. In addition, certain of our contracts include epidemic
failure clauses. If invoked, these clauses may entitle the customer to return or
obtain credits for products and inventory, or to cancel outstanding purchase
orders even if the products themselves are not defective.
We must
develop our products quickly to keep pace with the rapidly changing market, and
we have a history of frequently introducing new products. Products and services
as sophisticated as ours could contain undetected errors or defects, especially
when first introduced or when new models or versions are released. In general,
our products may not be free from errors or defects after commercial shipments
have begun, which could result in damage to our reputation, lost revenue,
diverted development resources, increased customer service and support costs and
warranty claims and litigation.
We
Are Dependent on the Availability of Allocated Bands within the Radio Frequency
Spectrum
Our GNSS
technology is dependent on the use of satellite signals from space and on
terrestrial communication bands. International allocations of radio
frequency are made by the International Telecommunications Union (ITU), a
specialized technical agency of the United Nations. These allocations are
further governed by radio regulations that have treaty status and which may be
subject to modification every two to three years by the World Radio
Communication Conference. Each country also has regulatory authority
on how each band is used.
Any ITU
or local reallocation of radio frequency bands, including frequency band
segmentation or sharing of spectrum, may materially and adversely affect the
utility and reliability of our products. Many of our products use other radio
frequency bands, together with the GNSS signal, to provide enhanced GNSS
capabilities, such as real-time kinematics precision. The continuing
availability of these non-GNSS radio frequencies is essential to provide
enhanced GNSS products to our precision survey, agriculture and construction
machine controls markets. Any regulatory changes in spectrum allocation or in
allowable operating conditions could have a material adverse effect on our
business, results of operations, and financial condition.
We have
certain products, such as GPS RTK systems, and surveying and mapping systems
that use integrated radio communication technology requiring access to available
radio frequencies allocated to local government. Some bands are
experiencing congestion. In the U.S., the FCC announced that it will require
migration of radio technology from wideband to narrowband operations in these
bands. The rules require migration of users to narrowband channels by 2011. In
the meantime, congestion could cause FCC coordinators to restrict or refuse
licenses. An inability to obtain access to these radio frequencies by end users
could have a material adverse effect on our business, results of operations, and
financial condition.
Many
of Our Products Rely on GNSS technology, the GPS, and other Satellite Systems,
Which May Become Inoperable and Result in Lost Revenue
GNSS
technology, GPS satellites and their ground support systems are complex
electronic systems subject to electronic and mechanical failures and possible
sabotage. Many of the GPS satellites currently in orbit were
originally designed to have lives of 7.5 years and are subject to damage by the
hostile space environment in which they operate. However, of the current
deployment of 30 satellites in place, some have already been in operation for
more than 12 years. To repair damaged or malfunctioning satellites is currently
not economically feasible. If a significant number of satellites were to become
inoperable, there could be a substantial delay before they are replaced with new
satellites. A reduction in the number of operating satellites may impair the
current utility of the GPS system and the growth of current and additional
market opportunities.
As the
only complete GNSS currently in operation, we are dependent on continued
operation of GPS. GPS is operated by the U. S. Government, which is
committed to maintenance and improvement of GPS; however if the policy were to
change, and GPS were no longer supported by the U. S. Government, or if user
fees were imposed, it could have a material adverse effect on our business,
results of operations, and financial condition.
Many of
our products also use signals from systems that augment GPS, such as the Wide
Area Augmentation System (WAAS) and National Differential GPS System (NDGPS).
Many of these augmentation systems are operated by the federal government and
rely on continued funding and maintenance of these systems. In addition, some of
our products also use satellite signals from the Russian GLONASS System. Any
curtailment of the operating capability of these systems could result in
decreased user capability thereby impacting our markets.
The
European community has begun development of an independent radio navigation
satellite system, known as Galileo. We have access to the preliminary signal
design, which is subject to change and which requires a commercial license from
Galileo authorities. Although an operational Galileo system is several years
away, if we are unable to develop a timely commercial product, or obtain a
timely commercial license, it could result in lost revenue which could harm our
results of operations and financial condition.
Our
Business is Subject to Disruptions and Uncertainties Caused by War or
Terrorism
Acts of
war or acts of terrorism, especially any directed at the GPS signals, could have
a material adverse impact on our business, operating results, and financial
condition. The threat of terrorism and war and heightened security and military
response to this threat, or any future acts of terrorism, may invoke a
redeployment of the satellites used in GPS or interruptions of the system. To
the extent that such interruptions result in delays or cancellations of orders,
or the manufacture or shipment of our products, it could have a material adverse
effect on our business, results of operations, and financial
condition.
We
Are Exposed to Fluctuations in Currency Exchange Rates and Although We Hedge
Against These Risks, Our Attempts to Hedge Could be Unsuccessful and Expose Us
to Losses
A
significant portion of our business is conducted outside the U.S., and as such,
we face exposure to movements in non-U.S. currency exchange rates. These
exposures may change over time as business practices evolve and could have a
material adverse impact on our financial results and cash flows. Fluctuation in
currency impacts our operating results.
Currently,
we hedge only those currency exposures associated with certain assets and
liabilities denominated in non-functional currencies. The hedging activities
undertaken by us are intended to offset the impact of currency fluctuations on
certain non-functional currency assets and liabilities. Our attempts to hedge
against these risks could be unsuccessful and expose us to losses.
Our
Debt Could Adversely Affect Our Cash Flow and Prevent Us from Fulfilling Our
Financial Obligations
We have
an existing unsecured revolving credit agreement, under which we have an ability
to borrow an aggregate amount of up to $300 million. As of January 2,
2009, $151.0 million was outstanding under this line of credit. Debt incurred
under this agreement could have important consequences, such as:
·
|
requiring
us to dedicate a portion of our cash flow from operations and other
capital resources to debt service, thereby reducing our ability to fund
working capital, capital expenditures, and other cash
requirements;
|
·
|
increasing
our vulnerability to adverse economic and industry
conditions;
|
·
|
limiting
our flexibility in planning for, or reacting to, changes and opportunities
in, our industry, which may place us at a competitive disadvantage;
and
|
·
|
limiting
our ability to incur additional debt on acceptable terms, if at
all.
|
Additionally,
if we were to default under our amended credit agreement and were unable to
obtain a waiver for such a default, interest on the obligations would
accrue at an increased rate and the lenders could accelerate our
obligations under the amended credit agreement, however that acceleration
will be automatic in the case of bankruptcy and insolvency events of
default. Additionally, our subsidiaries that have guaranteed the amended
credit agreement could be required to pay the full amount of our
obligations under the amended credit agreement. Any such action on
the part of the lenders against us could harm our financial
condition.
We
May Not Be Able to Enter Into or Maintain Important Alliances
We
believe that in certain business opportunities our success will depend on our
ability to form and maintain alliances with industry participants, such as
Caterpillar, Nikon, and CNH Global. Our failure to form and maintain such
alliances, or the pre-emption of such alliances by actions of competitors or us,
will adversely affect our ability to penetrate emerging markets. If we
experience problems from current or future alliances it could harm our operating
results and we may not be able to realize value from any such strategic
alliances.
We
Face Competition in Our Markets Which Could Decrease Our Revenue and Growth
Rates or Impair Our Operating Results and Financial Condition
Our
markets are highly competitive and we expect that both direct and indirect
competition will increase in the future. Our overall competitive position
depends on a number of factors including the price, quality and performance of
our products, the level of customer service, the development of new technology
and our ability to participate in emerging markets. Within each of our markets,
we encounter direct competition from other GPS, optical and laser suppliers and
competition may intensify from various larger U.S. and non-U.S. competitors and
new market entrants, particularly from emerging markets such as China and India.
The competition in the future may, in some cases, result in price reductions,
reduced margins or loss of market share, any of which could decrease our revenue
and growth rates or impair our operating results and financial condition. We
believe that our ability to compete successfully in the future against existing
and additional competitors will depend largely on our ability to execute our
strategy to provide systems and products with significantly differentiated
features compared to currently available products. We may not be able to
implement this strategy successfully, and our products may not be competitive
with other technologies or products that may be developed by our competitors,
many of whom have significantly greater financial, technical, manufacturing,
marketing, sales and other resources than we do.
We
Are Subject to the Impact of Governmental and Other Similar Certifications and
Failure to Obtain the Requisite Certifications Could Harm Our Operating
Results
We market
certain products that are subject to governmental and similar certifications
before they can be sold. For example, CE certification for radiated emissions is
required for most GPS receiver and data communications products sold in the
European community. An inability to obtain such certifications in a timely
manner could have an adverse effect on our operating results. Also, some of our
products that use integrated radio communication technology require product type
certification and some products require an end user to obtain licensing from the
FCC for frequency-band usage. These are secondary licenses that are subject to
certain restrictions. An inability or delay in obtaining such certifications or
changes to the rules by the FCC could adversely affect our ability to bring our
products to market which could harm our customer relationships and therefore,
our operating results. Any failure to obtain the requisite certifications could
also harm our operating results.
The
Volatility of Our Stock Price Could Adversely Affect Your Investment in Our
Common Stock
The
market price of our common stock has been, and may continue to be, highly
volatile. During fiscal 2008, our stock price ranged from $14.43 to $41.42, on a
post-split basis. We believe that a variety of factors could cause
the price of our common stock to fluctuate, perhaps substantially,
including:
·
|
announcements
and rumors of developments related to our business or the industry in
which we compete;
|
·
|
quarterly
fluctuations in our actual or anticipated operating results and order
levels;
|
·
|
general
conditions in the worldwide
economy;
|
·
|
acquisition
announcements;
|
·
|
new
products or product enhancements by us or our
competitors;
|
·
|
developments
in patents or other intellectual property rights and
litigation;
|
·
|
developments
in our relationships with our customers and suppliers;
and
|
·
|
any
significant acts of terrorism.
|
In
addition, in recent years the stock market in general and the markets for shares
of "high-tech" companies in particular, have experienced extreme price
fluctuations which have often been unrelated to the operating performance of
affected companies. Any such fluctuations in the future could adversely affect
the market price of our common stock, and the market price of our common stock
may decline.
Changes
in Our Effective Tax Rate May Reduce Our Net Income in Future
Periods
A number
of factors may increase our future effective tax rates, including:
·
|
the
jurisdictions in which profits are determined to be earned and
taxed;
|
·
|
the
resolution of issues arising from tax audits with various tax
authorities;
|
·
|
changes
in the valuation of our deferred tax assets and
liabilities;
|
·
|
increases
in expense not deductible for tax purposes, including write-offs of
acquired in-process
|
|
R&D
and impairments of goodwill in connection with
acquisitions;
|
·
|
changes
in available tax credits;
|
·
|
changes
in share-based compensation;
|
·
|
changes
in tax laws or the interpretation of such tax laws, and changes in
generally accepted
|
·
|
the
repatriation of non-U.S. earnings for which we have not previously
provided for U.S. taxes; and
|
·
|
challenges
to the transfer pricing policies related to our global supply chain
management structure.
|
The
Company is currently in various stages of multiple year examinations by federal,
state, and foreign taxing authorities, including an audit of its 2005 through
2007 tax years by the U.S. Internal Revenue Service (IRS). If the IRS or
the taxing authorities of any other jurisdiction were to successfully challenge
a material tax position, we could become subject to higher taxes and our
earnings would be adversely affected. In addition, proposals for changes in U.S.
tax laws that may be considered or adopted in the future could subject the
Company to higher taxes or result in changes to tax law provisions that
currently provide favorable tax treatment.
None
The
following table sets forth the significant real property that we own or lease as
of February 21, 2009:
Location
|
|
Segment(s)
served
|
|
Size
in Sq. Feet
|
|
Commitment
|
Sunnyvale,
California
|
|
All
|
|
160,000
|
|
Leased,
expiring in 2012
3
buildings
|
Huber
Heights (Dayton), Ohio
|
|
Engineering
& Construction
Field
Solutions
Mobile
Solutions
|
|
150,000
57,200
55,200
|
|
Owned,
no encumbrances
Leased,
expiring in 2011
Leased,
expiring in 2009
|
Westminster,
Colorado
|
|
Engineering
& Construction, Field Solutions
|
|
86,000
|
|
Leased,
expiring in 2013
|
Corvallis,
Oregon
|
|
Engineering
& Construction
|
|
20,000
38,000
|
|
Owned,
no encumbrances
Leased,
expiring in 2009
|
Richmond
Hill, Canada
|
|
Advanced
Devices
|
|
50,200
|
|
Leased,
expiring in 2010
|
Danderyd,
Sweden
|
|
Engineering
& Construction
|
|
93,900
|
|
Leased,
expiring in 2010
|
Christchurch,
New Zealand
|
|
Engineering
& Construction, Mobile Solutions, Field Solutions
|
|
65,000
|
|
Leased,
expiring in 2010
2
buildings
|
Fremont,
California (@Road)
|
|
Mobile
Solutions
|
|
102,544
|
|
Leased,
expiring in 2010
2
buildings
|
Chennai,
India
(@Road)
|
|
Mobile
Solutions
|
|
37,910
|
|
Leased,
expiring in
2012
|
In
addition, we lease a number of smaller offices around the world primarily for
sales and manufacturing functions. For financial information regarding
obligations under leases, see Note 10 of the Notes to the Consolidated Financial
Statements.
* We
believe that our facilities are adequate to support current and near-term
operations.
From time
to time, the Company is involved in litigation arising out of the ordinary
course of its business. There are no known claims or pending litigation expected
to have a material adverse effect on our business, results of operations, and
financial condition.
No
matters were submitted to a vote of security holders during the fourth quarter
of 2008.
PART
II
Our
common stock is traded on the NASDAQ under the symbol "TRMB." The
table below sets forth, during the periods indicated, the high and low per share
sale prices for our common stock as reported on the NASDAQ.
|
|
2008
|
|
|
2007
|
|
|
|
Sales
Price
|
|
|
Sales
Price
|
|
Quarter
Ended
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
First
quarter
|
|
$ |
30.97 |
|
|
$ |
21.47 |
|
|
$ |
57.41 |
|
|
$ |
25.47 |
|
Second
quarter
|
|
|
41.42 |
|
|
|
26.09 |
|
|
|
32.65 |
|
|
|
26.83 |
|
Third
quarter
|
|
|
36.34 |
|
|
|
27.66 |
|
|
|
41.33 |
|
|
|
32.24 |
|
Fourth
quarter
|
|
|
28.04 |
|
|
|
14.43 |
|
|
|
43.15 |
|
|
|
30.40 |
|
Stock
Repurchase Program
In
January 2008, our board of directors authorized a stock repurchase program
(“2008 Stock Repurchase Program”), authorizing us to repurchase up to $250
million of Trimble’s common stock under this program. We repurchased
approximately 4,243,000 shares of common stock in open market purchases at an
average price of $29.67 per share in 2008. The total purchase price
of $125.9 million was reflected as a decrease to common stock based on the
average stated value per share with the remainder to retained
earnings. Common stock repurchases under the program were recorded
based upon the trade date for accounting purposes. All common shares
repurchased under this program have been retired. As of January 2, 2009, the
2008 Stock Repurchase Program had remaining authorized funds of $124.1
million. The timing and actual number of future shares repurchased
will depend on a variety of factors including price, regulatory requirements,
capital availability, and other market conditions. The program does
not require the purchase of any minimum number of shares and may be suspended or
discontinued at any time without public notice.
The
following table provides information relating to our purchases of equity
securities for the fourth quarter of fiscal 2008:
|
|
Total
Number of
Shares
Purchased
|
|
|
Average
Price
Paid
per
Share
|
|
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Program
|
|
|
Maximum
Dollar
Value
of Shares that
May
Yet Be
Purchased
Under
the
Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
27, 2008 – October 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
134,149,431 |
|
October
31, 2008 – November 28, 2008
|
|
|
357,617 |
|
|
$ |
19.35 |
|
|
|
357,617 |
|
|
|
127,231,086 |
|
November
29, 2008 – January 2, 2009
|
|
|
178,759 |
|
|
|
17.45 |
|
|
|
178,759 |
|
|
|
124,111,572 |
|
Total
Activities
|
|
|
536,376 |
|
|
$ |
18.71 |
|
|
|
536,376 |
|
|
|
|
|
As of
February 27, 2009, there were approximately 961 holders of
record of our common stock.
Dividend
Policy
We have
not declared or paid any cash dividends on our common stock during any period
for which financial information is provided in this Annual Report on
Form 10-K. At this time, we intend to retain future earnings, if any, to
fund the development and growth of our business and do not anticipate paying any
cash dividends on our common stock in the foreseeable future.
Under the
existing terms of our credit facility, we are allowed to pay dividends and
repurchase shares of our common stock without limitation so long as no default
or unmatured default then existed, the leverage ratio for the two most recently
completed periods was less than 2.00:1.00 and after giving pro forma effect to
such dividend or share repurchase, the leverage ratio will be less than
2.00:1.00. Should the leverage ratio be equal to or greater than 2.00:1.00
without exceeding a leverage ratio of 3.00:1.00, we can pay dividends and
repurchase shares of our common stock in any twelve (12) month period, in an
aggregate amount equal to fifty percent (50%) of net income (plus, to the extent
deducted in determining net income for such period, non-cash expenses in respect
of stock options) for the previous twelve-month period, plus an additional $50
million over the term of the credit facility subject to pro forma compliance
with our fixed charge coverage ratio covenant. Otherwise, dividends and share
repurchases are restricted by our Credit Agreement.
The
following selected consolidated financial data should be read in conjunction
with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our consolidated financial statements and related notes
appearing elsewhere in this annual report. Historical results are not
necessarily indicative of future results. In particular, because the results of
operations and financial condition related to our acquisitions are included in
our Consolidated Statements of Income and Consolidated Balance Sheets data
commencing on those respective acquisition dates, comparisons of our results of
operations and financial condition for periods prior to and subsequent to those
acquisitions are not indicative of future results. In February 2007
we acquired @Road, Inc. Please refer to Note 4 to the Consolidated Financial
Statements for more information.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
As
of And For the Fiscal Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
(Dollar
in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
1,329,234 |
|
|
$ |
1,222,270 |
|
|
$ |
940,150 |
|
|
$ |
774,913 |
|
|
$ |
668,808 |
|
Gross
margin
|
|
$ |
649,136 |
|
|
$ |
612,905 |
|
|
$ |
461,081 |
|
|
$ |
389,805 |
|
|
$ |
324,810 |
|
Gross
margin percentage
|
|
|
48.8 |
% |
|
|
50.1 |
% |
|
|
49.0 |
% |
|
|
50.3 |
% |
|
|
48.6 |
% |
Income
from continuing operations
|
|
$ |
141,472 |
|
|
$ |
117,374 |
|
|
$ |
103,658 |
|
|
$ |
84,855 |
|
|
$ |
67,680 |
|
Net
income
|
|
$ |
141,472 |
|
|
$ |
117,374 |
|
|
$ |
103,658 |
|
|
$ |
84,855 |
|
|
$ |
67,680 |
|
Per
common share (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
$ |
1.17 |
|
|
$ |
0.98 |
|
|
$ |
0.94 |
|
|
$ |
0.80 |
|
|
$ |
0.66 |
|
-
Diluted
|
|
$ |
1.14 |
|
|
$ |
0.94 |
|
|
$ |
0.89 |
|
|
$ |
0.75 |
|
|
$ |
0.62 |
|
Shares
used in calculating basic earnings per share (1)
|
|
|
120,714 |
|
|
|
119,280 |
|
|
|
110,044 |
|
|
|
106,432 |
|
|
|
102,326 |
|
Shares
used in calculating diluted earnings per share (1)
|
|
|
124,235 |
|
|
|
124,410 |
|
|
|
116,072 |
|
|
|
113,638 |
|
|
|
109,896 |
|
Cash
dividends per share
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
1,635,016 |
|
|
$ |
1,539,359 |
|
|
$ |
983,477 |
|
|
$ |
749,265 |
|
|
$ |
657,975 |
|
Non-current
portion of long term debt and other non-current
liabilities
|
|
$ |
213,017 |
|
|
$ |
116,692 |
|
|
$ |
28,000 |
|
|
$ |
19,474 |
|
|
$ |
38,226 |
|
|
(1)
|
2-for-1
Stock Split - On January 17, 2007, Trimble’s board of directors approved a
2-for-1 split of all outstanding shares of the Company’s Common Stock,
payable February 22, 2007 to stockholders of record on February 8, 2007.
All shares and per share information presented has been adjusted to
reflect the stock split on a retroactive basis for all periods
presented.
|
The
following discussion should be read in conjunction with the consolidated
financial statements and the related notes. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include, but are not limited to, those discussed below and those
listed under "Risks Factors." We have attempted to identify forward-looking
statements in this report by placing an asterisk (*) before paragraphs
containing such material.
EXECUTIVE
LEVEL OVERVIEW
Trimble’s
focus is on combining positioning technology with wireless communication and
application capabilities to create system-level solutions that enhance
productivity and accuracy for our customers. The majority of our markets are
end-user markets, including engineering and construction firms, governmental
organizations, public safety workers, farmers and companies who must manage
fleets of mobile workers and assets. In our Advanced Devices segment, we also
provide components to original equipment manufacturers to incorporate into their
products. In the end user markets, we provide a system that includes
a hardware platform that may contain software and customer support. Some
examples of our solutions include products that automate and simplify the
process of surveying land, products that automate the utilization of equipment
such as tractors and bulldozers, products that enable a company to manage its
mobile workforce and assets, and products that allow municipalities to manage
their fixed assets. In addition, we also provide software applications on a
stand-alone basis. For example, we provide software for project management on
construction sites.
Solutions
targeted at the end-user make up a significant majority of our revenue. To
create compelling products, we must attain an understanding of the end users’
needs and work flow, and how location-based technology can enable that end user
to work faster, more efficiently, and more accurately. We use this knowledge to
create highly innovative products that change the way work is done by the
end-user. With the exception of our Mobile Solutions and Advanced Devices
segments, our products are generally sold through a dealer channel, and it is
crucial that we maintain a proficient global, third-party distribution
channel.
We
continued to execute our strategy with a series of actions that can be
summarized in four categories.
Reinforcing
our position in existing markets
* We
believe these markets provide us with additional, substantial potential for
substituting our technology for traditional methods. We are continuing to
develop new products and to strengthen our distribution channels in order to
expand our market opportunity. In our Field Solutions Segment, we introduced the
AgGPS EZ-Guide 250
Lightbar Guidance System, GPS Pathfinder ProXRT Receiver, Trimble GeoExplorer
2008 Series and the new Juno™ Series. We announced that the
City of Joliet, Illinois Public Utilities Department and the Baton Rouge Water
Company in Louisiana selected Trimble’s Fieldport software to enhance utility
field operations. In our Engineering and Construction segment, we
introduced the Trimble MEP layout solution, Trimble Coastal Center™
Software, and Trimble NetR8™ GNSS Reference Receiver. We also introduced
further enhancements to our complete surveying portfolio as part of its
Connected Site™ solutions: new models of the Trimble S8 Total Station with
options for monitoring and tunneling applications; a new version of Trimble
Business Center; a scalable Trimble VX Spatial Station; and improved field to
office solutions for German surveyors. In our Mobile Solutions segment, we
announced that Carrier Corporation is rolling out Trimble's Mobile Resource
Management (MRM) solution within its fleet. All of these products strengthened
our competitive position and created new value for the user.
Extending
our position in existing markets through new product categories
* We are
utilizing the strength of the Trimble brand in our markets to expand our revenue
by bringing new products to existing users. In our Field Solutions segment, we
introduced Agriculture Manager™ Asset Management System AgGPS EZ-Office™
Software. In our Engineering and Construction segment, we introduced new
products, such as a new sensor for the Trimble CCS900 Compaction Control System
that provides real-time material density information to earthworks operators. We
were also chosen to supply Trimble VRS™ technology to establish a
nationwide GNSS infrastructure network for Turkey called CORS-TR (Continuous
Operating Reference Station-Turkey or TUSAGA AKTIF) and the Republic of
Croatia called the CROatian POsitioning System (CROPOS). We launched
Trimble VRS Now™ Service in Madrid, Spain and in the state of Florida to provide
surveyors, civil engineers and geospatial professionals in the area with instant
access to real-time kinematic (RTK) GNSS corrections without the need for a base
station. These are all examples of bringing new products to existing
markets.
Bringing
existing technology to new markets
* We
continue to reinforce our position in existing markets and position ourselves in
newer markets that will serve as important sources of future growth. Our efforts
in Africa, China, India, the Middle-East and Russia reflected improving
financial results. We announced a GPS software technology licensing
agreement with Marvell, a leader in the development of storage, communications
and consumer silicon. The licensing agreement will enable Marvell to provide
customers with comprehensive GPS solutions based on innovative architectures
that are tailored for high performance and low overall system power
consumption.
Entering
new market segments
* During
2008 we acquired companies, technologies or introduced new product categories
that have allowed us to enter new market segments. In our Engineering and
Construction segment, we acquired two accessory companies, Crain and SECO, whose
products complement our existing construction product
offerings. Additionally, we acquired three companies, Géo-3D,
RolleiMetric and Toposys, which through new product offerings, expand the
emerging Geospatial markets. In our Field Solutions segment, we acquired
TruCount and Rawson Control Systems, which through new products, expand our
agricultural market segment. We also acquired the FastMap and GeoSite software
assets from Korec, which expand our GIS solutions.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Our
accounting policies are more fully described in Note 2 of the Notes to the
Consolidated Financial Statements. The preparation of financial statements and
related disclosures in conformity with accounting principles generally accepted
in the United States requires us to make judgments, assumptions, and estimates
that affect the amounts reported in the Consolidated Financial Statements and
accompanying Notes to the Consolidated Financial Statements. We consider the
accounting polices described below to be our critical accounting polices. These
critical accounting policies are impacted significantly by judgments,
assumptions, and estimates used in the preparation of the Consolidated Financial
Statements, and actual results could differ materially from the amounts reported
based on these policies.
Revenue
Recognition
We
recognize product revenue when persuasive evidence of an arrangement exists,
shipment has occurred, the fee is fixed or determinable, and collectibility is
reasonably assured. In instances where final acceptance of the product is
specified by the customer or is uncertain, revenue is deferred until all
acceptance criteria have been met.
Contracts
and/or customer purchase orders are used to determine the existence of an
arrangement. Shipping documents and customer acceptance, when applicable, are
used to verify delivery. We assess whether the fee is fixed or determinable
based on the payment terms associated with the transaction and whether the sales
price is subject to refund or adjustment. We assess collectibility based
primarily on the creditworthiness of the customer as determined by credit checks
and analysis, as well as the customer’s payment history.
Revenue
for orders is not recognized until the product is shipped and title has
transferred to the buyer. We bear all costs and risks of loss or damage to the
goods up to that point. Our shipment terms for U.S. orders and international
orders fulfilled from our European distribution center typically provide that
title passes to the buyer upon delivery of the goods to the carrier named by the
buyer at the named place or point. If no precise point is indicated by the
buyer, we may choose within the place or range stipulated where the carrier will
take the goods into carrier’s charge. Other shipment terms may provide that
title passes to the buyer upon delivery of the goods to the
buyer. Shipping and handling costs are included in the cost of goods
sold.
Revenue
to distributors and resellers is recognized upon shipment, assuming all other
criteria for revenue recognition have been met. Distributors and resellers do
not have a right of return.
Revenue
from purchased extended warranty and support agreements is deferred and
recognized ratably over the term of the warranty/support period.
We
present revenue net of sales taxes and any similar assessments.
We apply
Statement of Position (SOP) No. 97-2, “Software Revenue Recognition,” to
products where the embedded software is more than incidental to the
functionality of the hardware. This determination requires significant judgment
including a consideration of factors such as marketing, research and development
efforts and any post-customer contract support (PCS) relating to the embedded
software.
Our
software arrangements generally consist of a perpetual license fee and PCS. We
have established vendor-specific objective evidence (VSOE) of fair value for our
PCS contracts based on renewal rates. The remaining value of the software
arrangement is allocated to the license fee using the residual
method. License revenue is primarily recognized when the software has
been delivered and there are no remaining obligations. Revenue from PCS is
recognized ratably over the term of the PCS agreement.
We apply
EITF Issue 00-3, "Application of AICPA Statement of Position 97-2 to
Arrangements That Include the Right to Use Software Stored on Another Entity's
Hardware," for hosted arrangements which the customer does not have the
contractual right to take possession of the software at any time during the
hosting period without incurring a significant penalty and it is not feasible
for the customer to run the software either on its own hardware or on a
third-party’s hardware. Subscription revenue related to our hosted arrangements
is recognized ratably over the contract period. Upfront fees for our hosted
solution primarily consist of amounts for the in-vehicle enabling hardware
device and peripherals, if any. For upfront fees relating to proprietary
hardware where the firmware is more than incidental to the functionality of the
hardware in accordance with SOP No. 97-2, “Software Revenue Recognition,” we
defer the upfront fees at installation and recognize them ratably over the
minimum service contract period, generally one to five years. Product costs are
also deferred and amortized over such period.
In
accordance with EITF Issue 00-21, “Accounting for Revenue Arrangements with
Multiple Deliverables,” when a non-software sale involves multiple elements the
entire fee from the arrangement is allocated to each respective element based on
its relative fair value and recognized when revenue recognition criteria for
each element is met.
Allowance
for Doubtful Accounts and Sales Returns
Our
accounts receivable balance, net of allowance for doubtful accounts and sales
returns reserve, was $204.3 million as of January 2, 2009, as compared with
$239.9 million as of December 28, 2007. The allowance for doubtful accounts was
$6.0 million and $5.2 million as of January 2, 2009 and December 28, 2007,
respectively. We evaluate ongoing collectibility of our trade
accounts receivable based on a number of factors such as age of the accounts
receivable balances, credit quality, historical experience, and current economic
conditions that may affect a customer’s ability to pay. In circumstances where
we are aware of a specific customer’s inability to meet its financial
obligations to us, a specific allowance for bad debts is estimated and recorded
which reduces the recognized receivable to the estimated amount we believe will
ultimately be collected. In addition to specific customer identification of
potential bad debts, bad debt charges are recorded based on our recent past loss
history and an overall assessment of past due trade accounts receivable amounts
outstanding.
A reserve
for sales returns is established based on historical trends in product return
rates experienced in the ordinary course of business. The reserve for sales
returns as of January 2, 2009 and December 28, 2007 was $1.8 million and $1.7
million, respectively, for estimated future returns that were recorded as a
reduction of our accounts receivable and revenue. If the actual future returns
were to deviate from the historical data on which the reserve had been
established, our revenue could be adversely affected.
Inventory
Valuation
Our
inventories, net balance was $160.9 million as of January 2, 2009
as compared with $143.0 million as of December 28, 2007. Our inventory
allowances as of January 2, 2009 were $29.8 million, as compared with $29.6
million as of December 28, 2007. Our inventories are stated at the lower of
standard cost (which approximates actual cost on a first-in, first-out basis) or
market. Adjustments to reduce the cost of inventory to its net
realizable value, if required, are made for estimated excess, obsolescence, or
impaired balances. Factors influencing these adjustments include
decline in demand, technological changes, product life cycle and development
plans, component cost trends, product pricing, physical deterioration, and
quality issues. If actual factors are less favorable than those projected by us,
additional inventory write-downs may be required.
Income
Taxes
Income
taxes are accounted for under the liability method whereby deferred tax assets
or liability account balances are calculated at the balance sheet date using
current tax laws and rates in effect for the year in which the differences are
expected to affect taxable income. A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets if it is more likely than not such
assets will not be realized.
Our
valuation allowance is attributable to, primarily, acquisition related net
operating loss and research and development credit carryforwards.
Management believes that it is more likely than not that we will not realize
these deferred tax assets, and, accordingly, a valuation allowance has been
provided for such amounts. When SFAS 141(R), “Business Combinations”,
becomes effective, any valuation allowance adjustment associated with an
acquisition that closed prior to January 3, 2009 (and after the measurement
period) will be recorded through income tax expense whereas the current
accounting treatment (under SFAS 141) would require any adjustment to be
recognized through the purchase price.
Goodwill
and Purchased Intangible Assets
Goodwill
represents the excess of the purchase price over the fair value of the net
tangible, identifiable intangible assets, and in-process research and
development acquired in a business combination. Intangible assets acquired
individually, with a group of other assets, or in a business combination are
recorded at fair value. Identifiable intangible assets are comprised of
distribution channels and distribution rights, patents, licenses, technology,
acquired backlog and trademarks. Identifiable intangible assets are being
amortized over the period of estimated benefit using the straight-line method,
reflecting the pattern of economic benefits associated with these assets, and
have estimated useful lives ranging from one to twelve years with a weighted
average useful life of 6.5 years. Goodwill is not subject to amortization,
but is subject to at least an annual assessment for impairment, applying a
fair-value based test.
Impairment
of Goodwill, Intangible Assets and Other Long-Lived Assets
We
evaluate goodwill, at a minimum, on an annual basis and whenever events and
changes in circumstances suggest that the carrying amount may not be
recoverable. The annual goodwill impairment testing is performed in the fourth
fiscal quarter of each year. Goodwill is reviewed for impairment
utilizing a two-step process. First, impairment of goodwill is tested at
the reporting unit level by comparing the reporting unit’s carrying amount,
including goodwill, to the fair value of the reporting unit. The
fair values of the reporting units are estimated using a discounted cash flow
approach. If the carrying amount of the reporting unit exceeds its fair
value, a second step is performed to measure the amount of impairment loss, if
any. In step two, the implied fair value of goodwill is calculated as the excess
of the fair value of a reporting unit over the fair values assigned to its
assets and liabilities. If the implied fair value of goodwill is less than the
carrying value of the reporting unit’s goodwill, the difference is recognized as
an impairment loss.
Depreciation
and amortization of the intangible assets and other long-lived assets is
provided using the straight-line method over their estimated useful lives,
reflecting the pattern of economic benefits associated with these assets.
Changes in circumstances such as technological advances, changes to our business
model, or changes in the capital strategy could result in the actual useful
lives of intangible assets or other long-lived assets differing from initial
estimates. In those cases where we determine that the useful life of an asset
should be revised, the net book value in excess of the estimated residual value
will be expensed and the residual value is depreciated over its revised
remaining useful life. These assets are evaluated for impairment whenever events
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable based on their future cash flows. The estimated future cash
flows are based upon, among other things, assumptions about expected future
operating performance and may differ from actual cash flows. The assets
evaluated for impairment are grouped with other assets to the lowest level for
which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities. If the sum of the projected undiscounted cash
flows (excluding interest) is less than the carrying value of the assets, the
assets will be written down to the estimated fair value.
Warranty
Costs
The
liability for product warranties was $13.3 million as of January 2, 2009, as
compared with $10.8 million as of December 28, 2007. We accrue for warranty
costs as part of cost of sales based on associated material product costs,
technical support labor costs, and costs incurred by third parties performing
work on our behalf. Our expected future cost is primarily estimated based upon
historical trends in the volume of product returns within the warranty period
and the cost to repair or replace the equipment. The products sold
are generally covered by a warranty for periods ranging from 90 days to three
years, and in some instances up to 5.5 years.
While we
engage in extensive product quality programs and processes, including actively
monitoring and evaluating the quality of our component suppliers, our warranty
obligation is affected by product failure rates, material usage, and service
delivery costs incurred in correcting a product failure. Should actual product
failure rates, material usage, or service delivery costs differ from our
estimates, revisions to the estimated warranty accrual and related costs may be
required.
Stock-Based
Compensation
Beginning
in fiscal 2006, we adopted Statement of Financial
Accounting Standards (SFAS) No. 123(R), “Share-Based Payment” (SFAS
123(R)), which requires the measurement and recognition of compensation expense
for all share-based payment awards made to our employees and directors, based on
estimated fair values. Stock-based compensation expense recognized in our
Consolidated Statements of Income for fiscal 2008, 2007 and 2006 includes
compensation expense for awards granted prior to, but not yet vested as of
December 30, 2005 based on the grant date fair value estimated using the Black-Scholes options-pricing
model in accordance with the provisions of SFAS 123 and compensation
expense for awards granted subsequent to December 30, 2005 based on the grant
date fair value estimated using a
binomial valuation model in accordance with the provisions of SFAS
123(R). The fair value of rights to purchase shares under stock participation
plans was estimated using the Black-Scholes option-pricing model.
The
determination of fair value of share-based payment awards on the date of grant
using an option-pricing model is affected by our stock price as well as
assumptions regarding a number of highly complex and subjective
variables. These variables include our expected stock price
volatility over the term of the awards, actual and projected employee stock
option exercise behaviors, risk-free interest rates, and expected
dividends. In addition, the binomial model incorporates actual
option-pricing behavior and changes in volatility over the option’s contractual
term.
Beginning
in fiscal 2006, our expected stock price volatility for stock purchase rights
has been based on implied volatilities of traded options on our stock and our
expected stock price volatility for stock options is based on a combination of
our historical stock price volatility for the period commensurate with the
expected life of the stock option and the implied volatility of traded
options. The use of implied volatilities was based upon the
availability of actively traded options on our stock with terms similar to our
awards and also upon our assessment that implied volatility is more
representative of future stock price trends than historical
volatility. However, because the expected life of our stock options
is greater than the terms of our traded options, we used a combination of our
historical stock price volatility commensurate with the expected life of our
stock options and implied volatility of traded options.
We
estimated the expected life of the awards based on an analysis of our historical
experience of employee exercise and post-vesting termination behavior considered
in relation to the contractual life of the options and purchase
rights. The risk-free interest rate assumption is based upon observed
interest rates appropriate for the expected term of the awards.
We do not
currently pay cash dividends on our common stock and do not anticipate doing so
in the foreseeable future. Accordingly, our expected dividend yield
is zero.
Because
stock-based compensation expense recognized in the Consolidated Statement of
Operations for fiscal 2008, 2007 and 2006 is based on awards ultimately expected
to vest, it has been reduced for estimated forfeitures. SFAS 123(R)
requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those
estimates. Forfeitures were estimated based on historical
experience.
If
factors change and we employ different assumptions in the application of SFAS
123(R) in future periods, the compensation expense that we record under SFAS
123(R) may differ significantly from what we have recorded in the current
period. In addition, valuation models, including the Black-Scholes
and binomial models, may not provide reliable measures of the fair values of our
stock-based compensation. Consequently, there is a risk that our
estimates of the fair values of our stock-based compensation awards on the grant
dates may bear little resemblance to the actual values realized upon the
exercise, expiration, early termination, or forfeiture of those stock-based
payments in the future. Certain stock-based payments, such as
employee stock options, may expire worthless or otherwise result in zero
intrinsic value as compared to the fair values originally estimated on the grant
date and reported in our financial statements. Alternatively, value
may be realized from these instruments that are significantly higher than the
fair values originally estimated on the grant date and reported in our financial
statements.
See Note
2 and Note 14 to the Consolidated Financial Statements for additional
information.
RECENT
BUSINESS DEVELOPMENTS
The
following companies and joint ventures were acquired or formed during fiscal
2008 and are combined in our results of operations since the date
of acquisition or formation:
Rawson
Control Systems
On
December 3, 2008, we acquired the assets of privately-held Rawson Control
Systems based in Oelwein, Iowa. Rawson manufactures hydraulic and electronic
controls for the agriculture equipment industry, including variable rate planter
drives and controllers, variable rate fertilizer controllers, mechanical remote
electric control valves and speed reducers. Rawson Control Systems’
performance is reported under our Field Solutions business segment.
FastMap
and GeoSite
On
November 28, 2008, we acquired the FastMap and GeoSite software assets from
Korec, a privately-held Trimble distributor serving the United Kingdom and
Ireland. FastMap and GeoSite performance is reported under our Engineering and
Construction and Field Solutions business segments, respectively.
Callidus
Precision Systems
On
November 28, 2008, we acquired the assets of privately-held Callidus Precision
Systems GmbH of Halle, Germany. Callidus is a provider of 3D laser scanning
solutions for the industrial market. Callidus performance is reported under our
Engineering and Construction segment.
Toposys
On
November 13, 2008, we acquired TopoSys GmbH of Biberach an der Riss, Germany.
TopoSys is a leading provider of aerial data collection systems comprised of
LiDAR and metric cameras. TopoSys’s performance is reported under our
Engineering and Construction business segment.
TruCount
On
October 30, 2008, we acquired the assets of privately-held TruCount, Inc., of
Ames, Iowa. TruCount is a leading manufacturer of air and electric clutches that
automate individual planter row shut-off. TruCount’s performance is reported
under our Field Solutions business segment.
RolleiMetric
On
October 20, 2008, we acquired the assets of RolleiMetric from Rollei GmbH of
Braunschweig, Germany. RolleiMetric is a leading provider of metric camera
systems for aerial imaging and terrestrial close range photogrammetry.
RolleiMetric is reported within our Engineering and Construction business
segment.
VirtualSite
Solutions
On
October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by
Caterpillar and us began operations. We contributed $7.8 million in
exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35%
ownership in VSS. VSS develops software for fleet management and
connected worksite solutions for both Caterpillar and us, and in turn, sells
software subscription services to Caterpillar and us, which we both sell through
our respective distribution channels. For financial reporting purposes,
VSS’s assets and liabilities are consolidated with ours, as are its results of
operations, which are reported under our Engineering and Construction
segment. Caterpillar’s 35% interest is included in our Consolidated
Financial Statements as minority interests in consolidated
subsidiaries.
SECO
On July
29, 2008, we acquired privately-held SECO Manufacturing Company of Redding,
California. SECO is a leading manufacturer of accessories for the geomatics,
surveying, mapping, and construction industries. SECO’s performance
is reported under our Engineering and Construction business
segment.
Géo-3D
On
January 22, 2008, we acquired privately-held Géo-3D Inc. of Montreal,
Canada. Géo-3D is a leader in roadside infrastructure asset
inventory solutions. Géo-3D’s performance is reported under our
Engineering and Construction business segment.
Crain
Enterprises
On
January 8, 2008, we acquired privately-held Crain Enterprises, Inc. of Mound
City, Illinois. Crain is a leading manufacturer of accessories for the
geomatics, surveying, mapping, and construction industries. Crain
Enterprises is reported under our Engineering and Construction business
segment.
RESULTS
OF OPERATIONS
Overview
The
following table is a summary of revenue, gross margin and operating income for
the periods indicated and should be read in conjunction with the narrative
descriptions below.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
consolidated revenue
|
|
$ |
1,329,234 |
|
|
$ |
1,222,270 |
|
|
$ |
940,150 |
|
Gross
margin
|
|
$ |
649,136 |
|
|
$ |
612,905 |
|
|
$ |
461,081 |
|
Gross
margin %
|
|
|
48.8 |
% |
|
|
50.1 |
% |
|
|
49.0 |
% |
Total
consolidated operating income
|
|
$ |
185,460 |
|
|
$ |
178,267 |
|
|
$ |
135,366 |
|
Operating
income %
|
|
|
14.0 |
% |
|
|
14.6 |
% |
|
|
14.4 |
% |
Basis
of Presentation
We have a
52-53 week fiscal year, ending on the Friday nearest to December 31, which for
fiscal 2008 was January 2, 2009. Fiscal 2008 was a 53-week year.
Fiscal 2007 and 2006 were both 52-week years.
Revenue
In fiscal
2008, total revenue increased by $107.0 million, or 9%, to $1.33 billion from
$1.22 billion in fiscal 2007. The increase in fiscal 2008 was due to
stronger performances in the Field Solutions and Mobile Solutions segments.
Engineering and Construction revenue decreased $1.6 million, or 0.2%; Field
Solutions increased $100.1 million, or 50%; Mobile Solutions increased $9.4
million, or 6%; and Advanced Devices decreased $0.9 million, or 1%, as compared
to fiscal 2007. In fiscal 2008, revenue growth was primarily driven
by new products, a strong agricultural environment, as well as the impact of
acquisitions partially offset by softness in European and U.S. markets in
Engineering and Construction.
*
Although revenue increased by 17% on a year over year basis for the first nine
months of the year, our revenue in the fourth quarter declined by 14% over the
corresponding quarter in the prior year. Although we have limited
visibility into fiscal 2009, due to the current economic crisis, we expect that
there will be continued softness in our revenue in the first quarter of 2009 as
compared to the corresponding period in the prior year, particularly in our
Engineering and Construction segment.
In fiscal
2007, total revenue increased by $282.1 million, or 30%, to $1.22 billion from
$940.2 million in fiscal 2006. The increase in fiscal 2007 was due to stronger
performances across all our operating segments. Engineering and Construction
revenue increased $106.2 million, or 17%; Field Solutions increased $61.4
million, or 44%; Mobile Solutions increased $96.8 million, or 159%; and Advanced
Devices increased $17.7 million, or 17%, as compared to fiscal
2006. Revenue growth within these segments was primarily driven by
new products, a robust agricultural environment, strong international growth, as
well as the impact of acquisitions, partially offset by regional pockets of
softness in the U.S. markets.
* During
fiscal 2008, sales to customers in the United States represented 49%, Europe
represented 25%, Asia Pacific represented 14%, and other regions represented 12%
of our total revenue. During the 2007 fiscal year, sales to customers in the
United States represented 50%, Europe represented 27%, Asia Pacific represented
12%, and other regions represented 11% of our total revenue. During fiscal 2006,
sales to customers in the United States represented 54%, Europe represented 25%,
Asia Pacific represented 12%, and other regions represented 9% of our total
revenue. We anticipate that sales to international customers will continue to
account for a major portion of our revenue.
* No
single customer accounted for 10% or more of our total revenue in fiscal 2008,
2007, and 2006. It is possible, however, that in future periods the failure of
one or more large customers to purchase products in quantities anticipated by us
may adversely affect the results of operations.
Gross
Margin
Our gross
margin varies due to a number of factors including product mix, pricing,
distribution channel used, effects of production volumes, new product start-up
costs, and foreign currency translations.
In fiscal
2008, our gross margin increased by $36.2 million as compared to fiscal 2007
primarily due to higher revenue. Gross margin as a percentage of total revenue
was 48.8% in fiscal 2008 and 50.1% in fiscal 2007. The decrease in the gross
margin percentage was driven primarily by increased amortization of purchased
intangibles, and product mix.
In fiscal
2007, our gross margin increased by $151.8 million as compared to fiscal 2006
due to higher revenue, higher margin products, including software and
subscription revenue, and improved manufacturing utilization, partially offset
by an increase in amortization of purchased intangibles primarily due to the
acquisition of @Road. Gross margin as a percentage of total revenue
was 50.1% in fiscal 2007 and 49.0% in fiscal 2006. The increase in the gross
margin percentage was due to higher margin products.
* Because
of potential product mix changes within and among the industry markets, market
pressures on unit selling prices, fluctuations in unit manufacturing costs,
including increases in component prices and other factors, current level gross
margin cannot be assured.
Operating
Income
Operating
income increased by $7.2 million for fiscal 2008 as compared to fiscal
2007. Operating income as a percentage of total revenue for fiscal
2008 was 14.0% as compared to 14.6% for fiscal 2007. The increase in operating
income was primarily driven by higher revenue and associated gross margin. The
decrease in operating income percentage was primarily due by increased
amortization of purchased intangibles, product mix and foreign
exchange.
*
Although our operating income increased on a year over year basis for the first
nine months of the year, our operating income in the fourth quarter declined as
compared to the corresponding quarter in the prior year. Although we are
reducing expenses, due to the current economic crisis, we may experience
operating income decline in the first quarter of fiscal 2009 as compared to the
corresponding period in the prior year.
Operating
income increased by $42.9 million for fiscal 2007 as compared to fiscal
2006. Operating income as a percentage of total revenue for fiscal
2007 was 14.6% as compared to 14.4% for fiscal 2006. The increase in operating
income was due to higher revenue and associated gross margin and software and
subscription revenue, partially offset by additional amortization of purchased
intangibles.
Results
by Segment
To
achieve distribution, marketing, production, and technology advantages in our
targeted markets, we manage our operations in the following four segments:
Engineering and Construction, Field Solutions, Mobile Solutions, and Advanced
Devices. Operating income (loss) equals net revenue less cost of sales and
operating expense, excluding general corporate expense, amortization of
purchased intangible assets, in-process research and development expense,
restructuring charges, non-operating income (expense) net, and income tax
provision.
The
following table is a breakdown of revenue and operating income by segment for
the periods indicated and should be read in conjunction with the narrative
descriptions below.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering
and Construction
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
741,668 |
|
|
$ |
743,291 |
|
|
$ |
637,118 |
|
Segment
revenue as a percent of total revenue
|
|
|
56 |
% |
|
|
61 |
% |
|
|
68 |
% |
Operating
income
|
|
$ |
126,014 |
|
|
$ |
174,177 |
|
|
$ |
136,157 |
|
Operating
income as a percent of segment revenue
|
|
|
17 |
% |
|
|
23 |
% |
|
|
21 |
% |
Field
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
300,708 |
|
|
$ |
200,614 |
|
|
$ |
139,230 |
|
Segment
revenue as a percent of total revenue
|
|
|
22 |
% |
|
|
16 |
% |
|
|
15 |
% |
Operating
income
|
|
$ |
109,489 |
|
|
$ |
60,933 |
|
|
$ |
37,377 |
|
Operating
income as a percent of segment revenue
|
|
|
36 |
% |
|
|
30 |
% |
|
|
27 |
% |
Mobile
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
167,113 |
|
|
$ |
157,673 |
|
|
$ |
60,854 |
|
Revenue
as a percent of total consolidated revenue
|
|
|
13 |
% |
|
|
13 |
% |
|
|
6 |
% |
Operating
income
|
|
$ |
11,328 |
|
|
$ |
12,517 |
|
|
$ |
2,550 |
|
Operating
income as a percent of segment revenue
|
|
|
7 |
% |
|
|
8 |
% |
|
|
4 |
% |
Advanced
Devices
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
119,745 |
|
|
$ |
120,692 |
|
|
$ |
102,948 |
|
Segment
revenue as a percent of total revenue
|
|
|
9 |
% |
|
|
10 |
% |
|
|
11 |
% |
Operating
income
|
|
$ |
24,445 |
|
|
$ |
17,276 |
|
|
$ |
10,084 |
|
Operating
income as a percent of segment revenue
|
|
|
20 |
% |
|
|
14 |
% |
|
|
10 |
% |
A
reconciliation of our consolidated segment operating income to consolidated
income before income taxes follows:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
segment operating income
|
|
$ |
271,276 |
|
|
$ |
264,903 |
|
|
$ |
186,168 |
|
Unallocated
corporate expense
|
|
|
(36,284 |
) |
|
|
(42,914 |
) |
|
|
(35,798 |
) |
Restructuring
charges
|
|
|
(4,641 |
) |
|
|
(3,025 |
) |
|
|
- |
|
Amortization
of purchased intangible assets
|
|
|
(44,891 |
) |
|
|
(38,582 |
) |
|
|
(13,074 |
) |
In-process
research and development expense
|
|
|
- |
|
|
|
(2,112 |
) |
|
|
(1,930 |
) |
Consolidated
operating income
|
|
|
185,460 |
|
|
|
178,267 |
|
|
|
135,366 |
|
Non-operating
income, net
|
|
|
6,502 |
|
|
|
5,489 |
|
|
|
12,726 |
|
Consolidated
income before taxes
|
|
$ |
191,962 |
|
|
$ |
183,756 |
|
|
$ |
148,092 |
|
Engineering
and Construction
Engineering
and Construction revenue decreased by $1.6 million, or 0.2%, while segment
operating income decreased by $48.0 million, or 28%, for fiscal 2008 as compared
to fiscal 2007. The revenue decrease was primarily due to recessionary
conditions in the U.S. and European markets partially offset by strength in the
rest of world markets. Operating income decreased as a result of the slight
decline in revenue, product mix and operating expense associated with
acquisitions in the last twelve months.
Engineering
and Construction revenue increased by $106.2 million, or 17%, while segment
operating income increased by $38.0 million, or 28%, for fiscal 2007 as compared
to fiscal 2006. The revenue growth was driven by all business units within the
segment, strong international markets, acquisitions made during fiscal 2007 and
foreign exchange gains. Segment operating income increased as a
result of higher revenue and increased sales of higher margin products including
software revenue and operating expense control.
Field
Solutions revenue increased by approximately $100.1 million, or 50%, while
segment operating income increased by $48.6 million, or 80%, for fiscal year
2008 as compared to fiscal 2007. The increase in revenue was driven
primarily by strong sales of agriculture products, both in the U.S. and
internationally. Operating income increased primarily due to
increased revenue, as well as improvement in product costs.
Field
Solutions revenue increased by approximately $61.4 million, or 44%, while
segment operating income increased by $23.6 million, or 63%, for fiscal year
2007 as compared to fiscal 2006. The increase in revenue was driven primarily by
the introduction of new agricultural products and a robust agricultural market,
both in the U.S. and internationally. Operating income increased
primarily due to higher revenue and operating expense
control.
Mobile
Solutions revenue increased by $9.4 million, or 6%, while segment operating
income decreased by $1.2 million, or 9%, for fiscal 2008 as compared to fiscal
2007. Revenue grew due to increased subscription revenue and a full first
quarter of @Road revenue as compared to a partial first quarter of @Road revenue
in fiscal 2007. Operating income decreased primarily due to increased
research and development and sales expense for our new Field Service software,
partially offset by a reduction in marketing and general and administrative
expenses.
Mobile
Solutions revenue increased by $96.8 million, or 159%, while segment operating
income increased by $10.0 million, or 391%, for fiscal 2007 as compared to
fiscal 2006. Revenue grew due to increased subscription revenue due
primarily to the @Road acquisition. Operating income increased
primarily due to higher subscription revenue and associated gross
margin.
Advanced
Devices
Advanced
Devices revenue decreased by $0.9 million, or 1%, and segment operating income
increased by $7.2 million, or 42%, for fiscal 2008 as compared to fiscal
2007. The decrease in revenue was primarily driven by slower sales of
Component Technologies products. Operating income increased due to
product mix, royalty and licensing revenue.
Advanced
Devices revenue increased by $17.7 million, or 17%, and segment operating income
increased by $7.2 million, or 71%, for fiscal 2007 as compared to fiscal 2006.
The increase in revenue was primarily driven by stronger performance in our
Component Technologies timing and embedded product revenue. Operating
income increased due to strong timing and embedded product revenue, licensing
revenue associated with a Nokia intellectual property agreement signed in the
third quarter of 2006, and strong operating expense control.
Research
and Development, Sales and Marketing, and General and Administrative
Expenses
The
following table shows research and development (“R&D”), sales and marketing,
and general and administrative (“G&A”) expenses in absolute dollars and as a
percentage of total revenue for fiscal years 2008, 2007 and 2006 and should be
read in conjunction with the narrative descriptions of those operating expense
below.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
$ |
148,265 |
|
|
$ |
131,468 |
|
|
$ |
103,840 |
|
Percentage
of revenue
|
|
|
11 |
% |
|
|
11 |
% |
|
|
11 |
% |
Sales
and marketing
|
|
|
196,290 |
|
|
|
186,495 |
|
|
|
143,623 |
|
Percentage
of revenue
|
|
|
15 |
% |
|
|
15 |
% |
|
|
15 |
% |
General
and administrative
|
|
|
94,023 |
|
|
|
92,572 |
|
|
|
68,416 |
|
Percentage
of revenue
|
|
|
7 |
% |
|
|
8 |
% |
|
|
7 |
% |
Total
|
|
$ |
438,578 |
|
|
$ |
410,535 |
|
|
$ |
315,879 |
|
Percentage
of revenue
|
|
|
33 |
% |
|
|
34 |
% |
|
|
33 |
% |
Overall,
R&D, sales and marketing, and G&A expenses increased by approximately
$28.0 million in fiscal 2008 compared to fiscal 2007.
Research
and development expense increased by $16.8 million in fiscal 2008, as compared
to fiscal 2007, primarily due to the impact of new R&D expense as a result
of acquisitions, an increase in compensation related expense, an increase in
R&D materials and an increase due to foreign currency exchange rates. All of
our R&D costs have been expensed as incurred. Overall research and
development spending remained relatively constant at approximately 11% of
revenue.
Research
and development expense increased by $27.6 million in fiscal 2007 compared to
fiscal 2006 primarily due to the impact of new R&D expense as a result of
acquisitions, an increase in compensation related expense, and an increase due
to foreign currency exchange rates, partially offset by decreased consulting
fees. All of our R&D costs have been expensed as incurred. Overall research
and development spending remained relatively constant at approximately 11% of
revenue.
* We
believe that the development and introduction of new products are critical to
our future success and we expect to continue active development of new
products.
Sales and
marketing expense increased by $9.8 million in fiscal 2008 as compared to fiscal
2007. The increase was primarily due to new sales and marketing
expenses as a result of acquisitions, an increase in compensation related
expense and an increase in trade shows and marketing literature
expense. Spending overall remained relatively constant at approximately 15%
of revenue.
Sales and
marketing expense increased by $42.9 million in fiscal 2007 as compared to
fiscal 2006. The increase was primarily due to new sales and
marketing expenses as a result of acquisitions, an increase in
compensation-related expense, an increase due to foreign currency exchange rates
and an increase in marketing expense. Spending overall remained relatively
constant at approximately 15% of revenue.
* Our
future growth will depend in part on the timely development and continued
viability of the markets in which we currently compete as well as our ability to
continue to identify and develop new markets for our products.
General
and administrative expense increased by $1.5 million in fiscal 2008 compared to
fiscal 2007 primarily due to new G&A expenses as a result of acquisitions,
partially offset by decreased compensation related expense and reduced deferred
compensation liabilities. Spending overall was at approximately 7% of revenue in
fiscal 2008 compared to 8% in fiscal 2007.
General
and administrative expense increased by $24.2 million in fiscal 2007 compared to
fiscal 2006 primarily due to new G&A expenses as a result of acquisitions,
an increase in compensation-related expense, and an increase in tax and legal
fees. Spending overall was at approximately 8% of revenue in fiscal 2007
compared to 7% in fiscal 2006.
Other
Operating Expenses
Restructuring
Charges
Restructuring
expense for the three years ended January 2, 2009 was as follows:
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
and benefits
|
|
$ |
4,641 |
|
|
$ |
3,025 |
|
|
$ |
- |
|
During
fiscal 2008, restructuring expense of $4.6 million was related to decisions to
streamline processes and reduce the cost structure of the Company, with
approximately 100 employees affected worldwide. Of the total restructuring
expense, $2.7 million is shown as a separate line within Operating expense on
our Consolidated Statements of Income, and $1.9 million is included within Cost
of sales. Additionally, $4.1 million is related to the Engineering
and Construction segment and $0.5 million is related to the Mobile Solutions
segment. As a result of the above decisions, we expect restructuring activities
in the Engineering and Construction segment to result in additional
restructuring expense totaling approximately $1.8 million through the first
quarter of 2010. Additional restructuring activities have been announced in the
first fiscal quarter of 2009.
During
fiscal, 2007, restructuring expense of $3.0 million was for charges associated
with the Company’s acquisition of @Road. The restructuring expense was related
to the acceleration of vesting of employee stock options for certain terminated
@Road employees, of which $1.4 million was settled in cash and $1.6 million was
recorded as shareholders’ equity.
Restructuring
costs associated with a business combination:
In
addition to the restructuring expense in fiscal 2008, costs associated with
exiting activities of companies we acquired in fiscal 2008 was $0.4 million,
consisting of severance and benefits costs. These costs were recognized as a
liability assumed in the business combinations and were included in the
allocation of the cost to acquisitions and accordingly, resulted in an increase
to goodwill rather than an expense in fiscal 2008. The Company also had $0.9
million in restructuring activity reversals related to costs associated with
exiting activities of pre-merger @Road. The reversals were primarily
due to severance and benefits costs for employees whose positions were retained
in a variety of functions. The reversals were recognized in the first quarter of
fiscal 2008 as a reduction of the liability assumed in the purchase business
combination that had been included in the allocation of the cost to acquire
@Road and, accordingly, resulted in a decrease to goodwill rather than an
expense reduction in fiscal 2008.
In
addition to the restructuring expense in fiscal 2007, costs associated with
exiting activities of pre-merger @Road of $3.6 million, consisted of severance
and benefits costs. These costs were recognized as a liability
assumed in the purchase business combination and were included in the allocation
of the cost to acquire @Road and accordingly, resulted in an increase to
goodwill rather than an expense in fiscal 2007.
Restructuring
liability:
The
following table summarizes the restructuring activity for 2007 and 2008 (in
thousands):
Balance
as of December 30, 2006
|
|
$ |
744
|
|
Acquisition
related
|
|
|
3,547
|
|
Charges
|
|
|
3,025
|
|
Payments
|
|
|
(6,004)
|
|
Adjustment
|
|
|
14
|
|
Balance
as of December 28, 2007
|
|
$ |
1,326
|
|
Acquisition
related
|
|
|
355
|
|
Charges
|
|
|
4,641
|
|
Payments
|
|
|
(3,351)
|
|
Adjustment
|
|
|
(1,054)
|
|
Balance
as of January 2, 2009
|
|
$ |
1,917
|
|
As of
January 2, 2009, the $1.9 million restructuring accrual consists of severance
and benefits. Of the $1.9 million restructuring accrual, $0.7 million
is included in Other current liabilities and is expected to be settled by the
first half of fiscal 2009. The remaining balance of $1.2 million is
included in Other non-current liabilities and is expected to be settled by the
first quarter of fiscal 2010.
In-Process
Research and Development
We
recorded in-process research and development (IPR&D) expense of $2.1 million
and $1.9 million related to acquisitions made in fiscal 2007 and 2006,
respectively. No IPR&D expense was recorded in fiscal 2008. At
the date of each acquisition, the projects associated with the IPR&D efforts
had not yet reached technological feasibility and the research and development
in process had no alternative future uses. The value of the IPR&D was
determined using a discounted cash flow model similar to the income approach,
focusing on the income producing capabilities of the in-process technologies.
Accordingly, the value assigned to these IPR&D amounts were charged to
expense on the respective acquisition date of each of the acquired
companies.
Amortization
of Purchased and Other Intangible Assets
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
$ |
22,690 |
|
|
$ |
19,778 |
|
|
$ |
5,353 |
|
Operating
expenses
|
|
|
22,376 |
|
|
|
18,966 |
|
|
|
7,906 |
|
Total
|
|
$ |
45,066 |
|
|
$ |
38,744 |
|
|
$ |
13,259 |
|
Total
amortization expense of purchased and other intangible assets was $45.1 million
in fiscal 2008, of which $22.7 million was recorded in cost of sales and $22.4
million was recorded in operating expense. Total amortization expense of
purchased and other intangibles represented 3.4% of revenue in fiscal 2008, an
increase of $6.3 million from fiscal 2007 when it represented 3.2% of
revenue. The increase was primarily due to the acquisition of certain
technology and patent intangibles as a result of acquisitions made in fiscal
2008, as well as fiscal 2007 acquisition intangibles that included a full year
impact of amortization expense in fiscal 2008.
Total
amortization expense of purchased and other intangible assets was $38.7 million
in fiscal 2007, of which $19.8 million was recorded in cost of sales and $19.0
million was recorded in operating expense. Total amortization expense
of purchased and other intangibles represented 3.2% of revenue in fiscal 2007,
an increase of $25.5 million from fiscal 2006 when it represented 1.4% of
revenue. The increase was primarily due to the acquisition of certain technology
and patent intangibles as a result of acquisitions made in fiscal 2007,
primarily @Road, and to a lesser extent, fiscal 2006 acquisition intangibles
that included a full year impact of amortization expense in fiscal
2007.
Non-operating
Income (Expense), Net
The
following table shows non-operating income (expense), net for the periods
indicated and should be read in conjunction with the narrative descriptions of
those expenses below:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
2,044 |
|
|
$ |
3,502 |
|
|
$ |
3,799 |
|
Interest
expense
|
|
|
(2,760 |
) |
|
|
(6,602 |
) |
|
|
(558 |
) |
Foreign
currency transaction gain (loss), net
|
|
|
1,509 |
|
|
|
(1,351 |
) |
|
|
1,719 |
|
Income
from joint ventures
|
|
|
7,981 |
|
|
|
8,377 |
|
|
|
6,989 |
|
Minority
interests in consolidated subsidiaries
|
|
|
540 |
|
|
|
- |
|
|
|
- |
|
Other
income (expense), net
|
|
|
(2,812 |
) |
|
|
1,563 |
|
|
|
777 |
|
Total
non-operating income (expense), net
|
|
$ |
6,502 |
|
|
$ |
5,489 |
|
|
$ |
12,726 |
|
Total
non-operating income (expense), net increased by $1.0 million during fiscal
2008 compared with fiscal 2007. The increase was due to lower
interest expense due to lower average outstanding debt balances and interest
rates, fluctuations in foreign currencies, largely offset by a decrease in
interest income and losses on assets in our deferred compensation
plan.
Total
non-operating income (expense), net decreased by $7.2 million during fiscal
2007 compared with fiscal 2006. The decrease was due to higher
interest expense due to an increase in debt associated with the @Road
acquisition, fluctuations in foreign currencies, partially offset by increased
profits from our CTCT joint venture.
Income
Tax Provision
Our
effective income tax rate for fiscal years 2008, 2007 and 2006 was 26%, 36% and
30% respectively. The 2008 rate was less than the U.S. federal statutory
rate of 35% primarily due to the implementation of a global supply chain
management structure. In 2006 and 2007, we licensed our US intellectual
property to a foreign affiliated legal entity and implemented a global supply
chain management structure which streamlined our worldwide operations. We
believe that the licensing of intellectual property was effected for
consideration that was equivalent to arms-length negotiated pricing. This
resulted, beginning in 2008, in a tax savings due to a lower foreign tax
rate. For financial statement purposes and the Company’s policy with
respect to its undistributed foreign subsidiaries’ earnings some of those
earnings are to be indefinitely reinvested and, accordingly, no related
provision for U.S. federal and state income taxes has been provided. The
2007 rate was greater than the U.S. federal statutory rate of 35% due to impacts
resulting from SFAS 123(R). The 2006 rate was less than the US federal statutory
rate primarily due to operations in foreign jurisdictions subject to an
effective tax rate lower than the U.S. and the Extraterritorial Income Exclusion
(ETI) deduction.
The
Emergency Economic Stabilization Act of 2008, Energy Improvement and Extension
Act of 2008 and Tax Extenders and Alternative Minimum Tax Relief Act of 2008
(HR1424) was signed into law on October 3, 2008. This legislation includes a
provision that retroactively extends the research tax credit from January 1,
2008 to December 31, 2009. The Company has included the $2.4 million benefit of
the current year research credits in the quarter ended January 2,
2009.
Litigation
Matters
* From
time to time, we are involved in litigation arising out of the ordinary course
of our business. There are no known claims or pending litigation that are
expected to have a material effect on our overall financial position, results of
operations, or liquidity.
OFF-BALANCE
SHEET ARRANGEMENTS
Other
than lease commitments incurred in the normal course of business (see
Contractual Obligations table below), we do not have any off-balance sheet
financing arrangements or liabilities, guarantee contracts, retained or
contingent interests in transferred assets, or any obligation arising out of a
material variable interest in an unconsolidated entity. We do not have any
majority-owned subsidiaries that are not included in the consolidated financial
statements. Additionally, we do not have any interest in, or relationship with,
any special purpose entities.
In the
normal course of business to facilitate sales of its products, we indemnify
other parties, including customers, lessors, and parties to other transactions
with us, with respect to certain matters. We have agreed to hold the other party
harmless against losses arising from a breach of representations or covenants,
or out of intellectual property infringement or other claims made against
certain parties. These agreements may limit the time within which an
indemnification claim can be made and the amount of the claim. In addition, we
have entered into indemnification agreements with our officers and directors,
and our bylaws contain similar indemnification obligations to our
agents.
It is not
possible to determine the maximum potential amount under these indemnification
agreements due to the limited history of prior indemnification claims and the
unique facts and circumstances involved in each particular agreement.
Historically, payments made by us under these agreements were not material and
no liabilities have been recorded for these obligations on the Consolidated
Balance Sheets as of January 2, 2009 and December 28, 2007.
LIQUIDITY
AND CAPITAL RESOURCES
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
As
of and for the Fiscal Year Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
147,531 |
|
|
$ |
103,202 |
|
|
$ |
129,621 |
|
As
a percentage of total assets
|
|
|
9.0 |
% |
|
|
6.7 |
% |
|
|
13.2 |
% |
Total
debt
|
|
$ |
151,588 |
|
|
$ |
60,690 |
|
|
$ |
481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
provided by operating activities
|
|
$ |
176,074 |
|
|
$ |
186,985 |
|
|
$ |
135,843 |
|
Cash
used in investing activities
|
|
$ |
(121,696 |
) |
|
$ |
(311,392 |
) |
|
$ |
(114,188 |
) |
Cash
provided by (used in) financing activities
|
|
$ |
(6,441 |
) |
|
$ |
103,816 |
|
|
$ |
34,162 |
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
$ |
(3,608 |
) |
|
$ |
(5,828 |
) |
|
$ |
(49 |
) |
Net
increase (decrease) in cash and cash equivalents
|
|
$ |
44,329 |
|
|
$ |
(26,419 |
) |
|
$ |
55,768 |
|
Cash
and Cash Equivalents
As of
January 2, 2009, cash and cash equivalents totaled $147.5 million compared to
$103.2 million at December 28, 2007. We had debt of $151.6 million at
January 2, 2009 compared to $60.7 million at December 28, 2007.
* Our
ability to continue to generate cash from operations will depend in large part
on profitability, the rate of collections of accounts receivable, our inventory
turns, and our ability to manage other areas of working capital.
* We
believe that our cash and cash equivalents, together with our revolving credit
facilities will be sufficient to meet our anticipated operating cash needs and
stock purchases under the stock repurchase program for at least the next twelve
months.
* We
anticipate that planned capital expenditures primarily for computer equipment,
software, manufacturing tools and test equipment, and leasehold improvements
associated with business expansion, will constitute a partial use of our cash
resources. Decisions related to how much cash is used for investing
are influenced by the expected amount of cash to be provided by
operations.
Operating
Activities
Cash
provided by operating activities was $176.1 million for fiscal 2008, as compared
to $187.0 million for fiscal 2007. This decrease of $10.9 million was due
to a decrease in accounts payable, deferred revenue, income taxes
payable, and accrued compensation and benefits, partially offset by an
increase in net income before non-cash depreciation and amortization and a
decrease in accounts receivable.
Cash
provided by operating activities was $187.0 million for fiscal 2007, as compared
to $135.8 million for fiscal 2006. This increase of $51.1 million was primarily
driven by an increase in net income before non-cash depreciation and
amortization and increases in deferred revenue and income taxes
payable. This was partially offset by an increase in accounts
receivable due to increased revenue.
Investing
Activities
Cash used
in investing activities was $121.7 million for fiscal 2008, as compared to
$311.4 million for fiscal 2007. The decrease was due to cash used for
acquisitions, attributable primarily to @Road which was acquired in the first
quarter of fiscal 2007.
Cash used
in investing activities was $311.4 million for fiscal 2007, as compared to
$114.2 million for fiscal 2006. The increase was primarily
attributable to cash used for the @Road acquisition.
Financing
Activities
Cash used
in financing activities was $6.4 million for fiscal 2008, as compared to cash
provided of $103.8 million during fiscal 2007, primarily due to stock repurchase
activities, partially offset by net cash borrowed from the company’s credit
facilities.
Cash
provided by financing activities was $103.8 million for fiscal 2007, as compared
to $34.2 million for fiscal 2006, primarily related to outstanding debt that was
incurred for the @Road acquisition.
Accounts
Receivable and Inventory Metrics
|
|
January 2,
|
|
|
December 28,
|
|
As
of
|
|
2009
|
|
|
2007
|
|
|
|
|
|
|
|
|
Accounts
receivable days sales outstanding
|
|
|
69 |
|
|
|
70 |
|
Inventory
turns per year
|
|
|
4.2 |
|
|
|
4.3 |
|
Accounts
receivable days sales outstanding were relatively flat at 69 days as of January
2, 2009, as compared to 70 days as of December 28, 2007. Our accounts
receivable days sales outstanding are calculated based on ending accounts
receivable, net, divided by revenue for the fourth fiscal quarter, times a
quarterly average of 91 days. The actual fiscal quarter contained 98 days;
however the Company was shut down an additional week during the quarter. Our
inventory turns were at 4.2 for fiscal 2008 as compared to 4.3 for fiscal 2007.
Our inventory turnover is based on the total cost of sales for the fiscal period
over the average inventory for the corresponding fiscal period.
Debt
At the
end of fiscal 2008, our total debt was comprised primarily of our revolving
credit line in the amount of $151.0 million. At the end of fiscal 2007, out
total debt was primarily comprised of a term loan in the amount of $60.0
million, which was repaid during fiscal 2008. As of January 2, 2009
and December 28, 2007, there were also notes payable totaling approximately
$588,000 and $690,000, respectively, consisting of government loans to
foreign subsidiaries.
On July
28, 2005, we entered into a $200 million unsecured revolving credit agreement
(the 2005 Credit Facility) with a syndicate of 10 banks with The Bank of Nova
Scotia as the administrative agent. On February 16, 2007, we amended
our existing $200 million unsecured revolving credit agreement with a syndicate
of 11 banks with The Bank of Nova Scotia as the administrative agent (the 2007
Credit Facility). Under the 2007 Credit Facility, we exercised the option in the
existing credit agreement to increase the availability under the revolving
credit line by $100 million, for an aggregate availability of up to $300
million, and extended the maturity date of the revolving credit line by 18
months, from July 2010 to February 2012. Up to $25 million of the
availability under the revolving credit line may be used to issue letters of
credit, and up to $20 million may be used for paying off other debts or
loans. The maximum leverage ratio under the 2007 Credit Facility is
3.00:1.00. The funds available under the new 2007 Credit
Facility may be used by us for acquisitions, stock repurchases, and general
corporate purposes. As of August 20, 2008, we amended the 2007 Credit
Facility to allow us to redeem, retire or purchase Trimble common
stock. In addition, the definition of the fixed charge was amended to
exclude the impact of redemptions, retirements, or purchases of Trimble
common stock from the fixed charges coverage ratio. For additional discussion of
our debt, see Note 9 of Notes to the Consolidated Financial
Statements.
In
addition, during the first quarter of fiscal 2007 we incurred a five-year term
loan under the 2007 Credit Facility in an aggregate principal amount of $100
million, which was repaid in full during fiscal 2008.
We may
borrow funds under the 2007 Credit Facility in U.S. Dollars or in certain other
currencies, and borrowings will bear interest, at our option, at either: (i) a
base rate, based on the administrative agent's prime rate, plus a margin of
between 0% and 0.125%, depending on our leverage ratio as of our most recently
ended fiscal quarter, or (ii) a reserve-adjusted rate based on the London
Interbank Offered Rate (LIBOR), Euro Interbank Offered Rate (EURIBOR), Stockholm
Interbank Offered Rate (STIBOR), or other agreed-upon rate, depending on the
currency borrowed, plus a margin of between 0.625% and 1.125%, depending on our
leverage ratio as of the most recently ended fiscal quarter. Our obligations
under the 2007 Credit Facility are guaranteed by certain of our domestic
subsidiaries.
The 2007
Credit Facility contains customary affirmative, negative and financial covenants
including, among other requirements, negative covenants that restrict our
ability to dispose of assets, create liens, incur indebtedness, repurchase
stock, pay dividends, make acquisitions, make investments, enter into mergers
and consolidations and make capital expenditures, within certain limitations,
and financial covenants that require the maintenance of leverage and fixed
charge coverage ratios. The 2007 Credit Facility contains events of default that
include, among others, non-payment of principal, interest or fees, breach of
covenants, inaccuracy of representations and warranties, cross defaults to
certain other indebtedness, bankruptcy and insolvency events, material
judgments, and events constituting a change of control. Upon the occurrence and
during the continuance of an event of default, interest on the obligations will
accrue at an increased rate and the lenders may accelerate our obligations under
the 2007 Credit Facility, however that acceleration will be automatic in the
case of bankruptcy and insolvency events of default. As of January 2,
2009 we were in compliance with all financial debt covenants.
CONTRACTUAL
OBLIGATIONS
The
following table summarizes our contractual obligations at January 2,
2009:
|
|
Payments
Due By Period
|
|
|
|
|
|
|
Less
than
|
|
|
1-3
|
|
|
3-5
|
|
|
More
than
|
|
|
|
Total
|
|
|
1
year
|
|
|
years
|
|
|
years
|
|
|
5
years
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
debt including interest (1)
|
|
$ |
177,258 |
|
|
$ |
5,258 |
|
|
$ |
15,866 |
|
|
$ |
156,134 |
|
|
$ |
- |
|
Operating
leases
|
|
|
44,179 |
|
|
|
17,598 |
|
|
|
19,750 |
|
|
|
6,675 |
|
|
|
156 |
|
Other
purchase obligations and commitments
|
|
|
68,722 |
|
|
|
58,026 |
|
|
|
10,692 |
|
|
|
- |
|
|
|
4 |
|
Total
|
|
$ |
290,159 |
|
|
$ |
80,882 |
|
|
$ |
46,308 |
|
|
$ |
162,809 |
|
|
$ |
160 |
|
(1) We
may borrow funds under the 2007 Credit Facility in U.S. Dollars or in certain
other currencies, and will bear interest as described under Note 9 of Notes to
the Consolidated Financial Statements. Our obligations under the 2007 Credit
Facility are guaranteed by certain of our domestic subsidiaries. We estimate the
interest to be 3.4% per annum, based upon a historical average.
Total
debt consists of a revolving credit line of $151.0 million under our credit
facilities and government loans of $0.6 million to foreign
subsidiaries. (See Note 9 of the Notes to the Consolidated Financial
Statements for further financial information regarding long-term
debt)
Other
purchase obligations and commitments represent open non-cancelable purchase
orders for material purchases with our vendors. Purchase obligations exclude
agreements that are cancelable without penalty. Our pension obligation, which is
not included in the table above, is included in “Other current liabilities” and
“Other non-current liabilities” on our Consolidated Balance
Sheets. Additionally, as of January 2, 2009, we had acquisition
earn-outs of $6.3 million and holdbacks of $20.8 million recorded in “Other
current liabilities” and “Other non-current liabilities.” The maximum
remaining payments, including the $6.3 million and $20.8 million recorded, will
not exceed $71.7 million. The remaining earn-outs and holdbacks are
payable through 2012.
We
adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes,” (FIN 48), on December 30, 2006. A total of $37.3 million,
including interest and penalties, represents the FIN 48 liability at January 2,
2009. At this time, we cannot make a reasonably reliable estimate of
the period of cash settlement with tax authorities regarding this
liability.
EFFECT
OF NEW ACCOUNTING PRONOUNCEMENTS
The
impact of recent accounting pronouncements is disclosed in Note 2 of the
Notes to Consolidated Financial Statements.
We are
exposed to market risk related to changes in interest rates and foreign currency
exchange rates. We use certain derivative financial instruments to manage these
risks. We do not use derivative financial instruments for speculative purposes.
All financial instruments are used in accordance with policies approved by our
board of directors.
Market
Interest Rate Risk
Our cash
equivalents consisted primarily of money market funds, treasury bills,
commercial paper (FDIC insured), interest and non-interest bearing bank deposits
as well as bank time deposits for fiscal 2008 and 2007. The main objective of
these instruments was safety of principal and liquidity while maximizing return,
without significantly increasing risk.
* Due to
the short-term nature of our cash equivalents, we do not anticipate any material
effect on our portfolio due to fluctuations in interest rates.
We are
exposed to market risk due to the possibility of changing interest rates under
our senior secured credit facilities. Our credit facility is comprised of an
unsecured revolving credit agreement with a maturity date of February 2012. We
may borrow funds under the revolving credit agreement in U.S. Dollars or in
certain other currencies and borrowings will bear interest as described under
Note 9 of Notes to the Consolidated Financial Statements.
As
of January 2, 2009, we had an outstanding balance on the revolving
credit line of $151.0 million and during fiscal 2008, we repaid the remaining
outstanding principal balance on our term loan. A
hypothetical 10% increase in the three-month LIBOR rates could result
in approximately $0.2 million annual increase in interest expense on the
existing principal balances.
*
The hypothetical changes and assumptions made above will be
different from what actually occurs in the future.
Furthermore, the computations do not anticipate actions that may
be taken by our management should the hypothetical market changes actually
occur over time. As a result, actual earnings effects in the future will differ
from those quantified above.
Foreign
Currency Exchange Rate Risk
We enter
into foreign exchange forward contracts to minimize the short-term impact of
foreign currency fluctuations on certain trade and inter-company receivables and
payables, primarily denominated in Australian, Canadian, Japanese, New Zealand,
South African and Swedish currencies, the Euro, and the British pound. These
contracts reduce the exposure to fluctuations in exchange rate movements as the
gains and losses associated with foreign currency balances are generally offset
with the gains and losses on the forward contracts. These instruments are marked
to market through earnings every period and generally range from one to three
months in original maturity. We do not enter into foreign exchange forward
contracts for trading purposes.
Foreign
exchange forward contracts outstanding as of January 2, 2009 and December 28,
2007 are summarized as follows (in thousands):
|
January 2,
2009
|
|
December 28,
2007
|
|
|
Nominal
Amount
|
|
Fair
Value
|
|
Nominal
Amount
|
|
Fair
Value
|
|
Forward
contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased
|
|
$ |
(22,012 |
) |
|
$ |
512 |
|
|
$ |
(34,865 |
) |
|
$ |
374 |
|
Sold
|
|
$ |
24,960 |
|
|
$ |
(1,660 |
) |
|
$ |
34,946 |
|
|
$ |
(552 |
) |
* We do
not anticipate any material adverse effect on our consolidated financial
position utilizing our current hedging strategy.
TRIMBLE
NAVIGATION LIMITED
INDEX
TO FINANCIAL STATEMENTS
Consolidated
Balance Sheets at January 2, 2009 and December 28, 2007
|
46
|
|
|
Consolidated
Statements of Income for the fiscal years ended January
2, 2009, December 28, 2007 and December 29, 2006
|
47
|
|
|
Consolidated
Statements of Shareholders' Equity for the fiscal years ended January
2, 2009, December 28, 2007 and December 29, 2006
|
48
|
|
|
Consolidated
Statements of Cash Flows for the fiscal years ended January
2, 2009, December 28, 2007 and December 29, 2006
|
49
|
|
|
Notes
to Consolidated Financial Statements
|
50
|
|
|
Reports
of Independent Registered Public Accounting Firm
|
85
|
CONSOLIDATED
BALANCE SHEETS
|
|
January 2,
|
|
December 28,
|
|
|
2009
|
|
2007
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
147,531
|
|
$
|
103,202
|
Accounts
receivable, less allowance for doubtful accounts of $5,999 and $5,221, and
sales return reserve of $1,819and $1,683 at January 2, 2009 and December
28, 2007, respectively
|
|
|
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
current 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:
|
|
|
|
|
|
|
Preferred
stock no par value; 3,000 shares authorized; none outstanding Common
stock, no par value; 180,000 shares authorized; 119,051 and 121,596 shares
issued and outstanding at January 2, 2009 and December 28, 2007,
respectively
|
|
|
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
|
See accompanying Notes to the
Consolidated Financial Statements.
CONSOLIDATED
STATEMENTS OF INCOME
|
|
January 2,
|
|
December 28,
|
|
December 29,
|
|
|
2009
|
|
2007
|
|
2006
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (1)
|
|
$
|
1,329,234
|
|
$
|
1,222,270
|
|
$
|
940,150
|
Cost
of sales (1)
|
|
|
680,098
|
|
|
609,365
|
|
|
479,069
|
Gross
margin
|
|
|
649,136
|
|
|
612,905
|
|
|
461,081
|
|
|
|
|
|
|
|
|
|
|
Operating
expense
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
148,265
|
|
|
131,468
|
|
|
103,840
|
Sales
and marketing
|
|
|
196,290
|
|
|
186,495
|
|
|
143,623
|
General
and administrative
|
|
|
94,023
|
|
|
92,572
|
|
|
68,416
|
Restructuring
charges
|
|
|
2,722
|
|
|
3,025
|
|
|
-
|
Amortization
of purchased intangible assets
|
|
|
22,376
|
|
|
18,966
|
|
|
7,906
|
In-process
research and development
|
|
|
-
|
|
|
2,112
|
|
|
1,930
|
Total
operating expense
|
|
|
463,676
|
|
|
434,638
|
|
|
325,715
|
Operating
income
|
|
|
185,460
|
|
|
178,267
|
|
|
135,366
|
Non-operating
income (expense), net
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,044
|
|
|
3,502
|
|
|
3,799
|
Interest
expense
|
|
|
(2,760)
|
|
|
(6,602)
|
|
|
(558)
|
Foreign
currency transaction gain (loss), net
|
|
|
1,509
|
|
|
(1,351)
|
|
|
1,719
|
Income
from joint ventures
|
|
|
7,981
|
|
|
8,377
|
|
|
6,989
|
Minority
interests in consolidated subsidiaries
|
|
|
540
|
|
|
-
|
|
|
-
|
Other
income (expense), net
|
|
|
(2,812)
|
|
|
1,563
|
|
|
777
|
Total
non-operating income (expense), net
|
|
|
6,502
|
|
|
5,489
|
|
|
12,726
|
Income
before taxes
|
|
|
191,962
|
|
|
183,756
|
|
|
148,092
|
Income
tax provision
|
|
|
50,490
|
|
|
66,382
|
|
|
44,434
|
Net
income
|
|
$
|
141,472
|
|
$
|
117,374
|
|
$
|
103,658
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
1.17
|
|
$
|
0.98
|
|
$
|
0.94
|
Shares
used in calculating basic earnings per share
|
|
|
120,714
|
|
|
119,280
|
|
|
110,044
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
1.14
|
|
$
|
0.94
|
|
$
|
0.89
|
Shares
used in calculating diluted earnings per share
|
|
|
124,235
|
|
|
124,410
|
|
|
116,072
|
(1) Sales
to Caterpillar Trimble Control Technologies Joint Venture (CTCT) and
Nikon-Trimble Joint Venture (Nikon-Trimble) were $27.0 million, $24.1 million
and $22.3 million in fiscal 2008, 2007 and 2006, respectively, with associated
cost of sales of $21.5 million, $17.0 million and $13.9 million for fiscal 2008,
2007 and 2006, respectively. In addition, cost of sales associated
with CTCT net inventory purchases was $21.4 million, $25.1 million and $19.5
million in fiscal 2008, 2007 and 2006, respectively. See Note 5 to
these Consolidated Financial Statements regarding joint ventures for further
discussion.
See
accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Accumulative
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
stock
|
|
|
|
|
|
Comprehensive
|
|
|
Shareholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Earnings
|
|
|
Income/(Loss)
|
|
|
Equity
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 30, 2005
|
|
$ |
107,820 |
|
|
$ |
384,196 |
|
|
$ |
167,525 |
|
|
$ |
19,534 |
|
|
$ |
571,255 |
|
Components
of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
103,658 |
|
|
|
|
|
|
|
103,658 |
|
Unrealized
loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
4 |
|
Foreign
currency translation adjustments, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,709 |
|
|
|
21,709 |
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,371 |
|
Adjustment
to initially apply FASB Statement No. 158, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(136 |
) |
|
|
(136 |
) |
Issuance
of common stock in connection with acquisitions and joint
venture, net
|
|
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Issuance
of common stock under employee plans and exercise of
warrants
|
|
|
3,846 |
|
|
|
26,781 |
|
|
|
|
|
|
|
|
|
|
|
26,781 |
|
Stock
based compensation
|
|
|
|
|
|
|
12,705 |
|
|
|
|
|
|
|
|
|
|
|
12,705 |
|
Tax
benefit from stock option exercises
|
|
|
|
|
|
|
11,689 |
|
|
|
|
|
|
|
|
|
|
|
11,689 |
|
Balance
at December 29, 2006
|
|
|
111,718 |
|
|
$ |
435,371 |
|
|
$ |
271,183 |
|
|
$ |
41,111 |
|
|
$ |
747,665 |
|
Components
of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
117,374 |
|
|
|
|
|
|
|
117,374 |
|
Unrealized
loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33 |
) |
|
|
(33 |
) |
Foreign
currency translation adjustments, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,655 |
|
|
|
18,655 |
|
Unrecognized
actuarial loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
(13 |
) |
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,983 |
|
Issuance
of common stock in connection with acquisitions and
joint venture, net
|
|
|
5,876 |
|
|
|
163,678 |
|
|
|
|
|
|
|
|
|
|
|
163,678 |
|
Issuance
of common stock under employee plans and exercise of
warrants
|
|
|
4,002 |
|
|
|
31,913 |
|
|
|
|
|
|
|
|
|
|
|
31,913 |
|
Stock
based compensation
|
|
|
|
|
|
|
15,099 |
|
|
|
|
|
|
|
|
|
|
|
15,099 |
|
Tax
benefit from stock option exercises
|
|
|
|
|
|
|
14,637 |
|
|
|
|
|
|
|
|
|
|
|
14,637 |
|
Minority
interest
|
|
|
|
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
51 |
|
Balance
at December 28, 2007
|
|
$ |
121,596 |
|
|
$ |
660,749 |
|
|
$ |
388,557 |
|
|
$ |
59,720 |
|
|
$ |
1,109,026 |
|
Components
of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
141,472 |
|
|
|
|
|
|
|
141,472 |
|
Unrealized
loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(392 |
) |
|
|
(392 |
) |
Foreign
currency translation adjustments, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,722 |
) |
|
|
(31,722 |
) |
Unrecognized
actuarial gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43 |
|
|
|
43 |
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,401 |
|
Issuance
of common stock under employee plans and exercise of
warrants
|
|
|
1,698 |
|
|
|
22,804 |
|
|
|
|
|
|
|
|
|
|
|
22,804 |
|
Stock
repurchase
|
|
|
(4,243 |
) |
|
|
(23,780 |
) |
|
|
(102,108 |
) |
|
|
|
|
|
|
(125,888 |
) |
Stock
based compensation
|
|
|
|
|
|
|
16,293 |
|
|
|
|
|
|
|
|
|
|
|
16,293 |
|
Tax
benefit from stock option exercises
|
|
|
|
|
|
|
8,765 |
|
|
|
|
|
|
|
|
|
|
|
8,765 |
|
Balance
at January 2, 2009
|
|
|
119,051 |
|
|
$ |
684,831 |
|
|
$ |
427,921 |
|
|
$ |
27,649 |
|
|
$ |
1,140,401 |
|
See
accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
141,472 |
|
|
$ |
117,374 |
|
|
$ |
103,658 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
19,047 |
|
|
|
17,212 |
|
|
|
13,523 |
|
Amortization
|
|
|
45,066 |
|
|
|
38,744 |
|
|
|
13,259 |
|
Provision
for doubtful accounts
|
|
|
2,709 |
|
|
|
1,410 |
|
|
|
163 |
|
Amortization
of debt issuance cost
|
|
|
169 |
|
|
|
218 |
|
|
|
180 |
|
Deferred
income taxes
|
|
|
(17,356 |
) |
|
|
6,368 |
|
|
|
10,368 |
|
Non-cash
restructuring expense
|
|
|
- |
|
|
|
1,725 |
|
|
|
- |
|
Stock-based
compensation
|
|
|
16,166 |
|
|
|
15,016 |
|
|
|
12,571 |
|
In-process
research and development
|
|
|
- |
|
|
|
2,112 |
|
|
|
1,930 |
|
Equity
gain from joint ventures
|
|
|
(7,981 |
) |
|
|
(8,377 |
) |
|
|
(6,989 |
) |
Excess
tax benefit for stock-based compensation
|
|
|
(5,970 |
) |
|
|
(12,409 |
) |
|
|
(8,761 |
) |
Provision
for excess and obsolete inventories
|
|
|
4,426 |
|
|
|
4,352 |
|
|
|
7,376 |
|
Other
|
|
|
(348 |
) |
|
|
651 |
|
|
|
720 |
|
Add
decrease (increase) in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
33,414 |
|
|
|
(35,696 |
) |
|
|
(12,185 |
) |
Other
receivables
|
|
|
(7,422 |
) |
|
|
4,825 |
|
|
|
(51 |
) |
Inventories
|
|
|
(16,461 |
) |
|
|
(18,678 |
) |
|
|
(7,588 |
) |
Other
current and non-current assets
|
|
|
779 |
|
|
|
7,650 |
|
|
|
(18,936 |
) |
Add
increase (decrease) in liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(20,898 |
) |
|
|
(3,521 |
) |
|
|
(4,487 |
) |
Accrued
compensation and benefits
|
|
|
(12,487 |
) |
|
|
1,691 |
|
|
|
7,807 |
|
Accrued
liabilities
|
|
|
3,183 |
|
|
|
(4,635 |
) |
|
|
9,790 |
|
Deferred
revenue
|
|
|
(1,320 |
) |
|
|
32,400 |
|
|
|
3,263 |
|
Income
taxes payable
|
|
|
(114 |
) |
|
|
18,553 |
|
|
|
10,232 |
|
Net
cash provided by operating activities
|
|
|
176,074 |
|
|
|
186,985 |
|
|
|
135,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
of businesses, net of cash acquired
|
|
|
(115,137 |
) |
|
|
(295,848 |
) |
|
|
(99,887 |
) |
Acquisition
of property and equipment
|
|
|
(16,196 |
) |
|
|
(13,187 |
) |
|
|
(16,529 |
) |
Purchase
of debt and equity securities
|
|
|
- |
|
|
|
(5,576 |
) |
|
|
- |
|
Proceeds
from dividends
|
|
|
10,648 |
|
|
|
2,888 |
|
|
|
2,244 |
|
Capital
infusion from minority investor
|
|
|
4,200 |
|
|
|
- |
|
|
|
- |
|
Other
|
|
|
(5,211 |
) |
|
|
331 |
|
|
|
(16 |
) |
Net
cash used in investing activities
|
|
|
(121,696 |
) |
|
|
(311,392 |
) |
|
|
(114,188 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock and warrants
|
|
|
22,802 |
|
|
|
31,864 |
|
|
|
26,566 |
|
Excess
tax benefit for stock-based compensation
|
|
|
5,970 |
|
|
|
12,409 |
|
|
|
8,761 |
|
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 |
) |
|
|
- |
|
|
|
(1,165 |
) |
Net
cash provided by (used in) financing activities
|
|
|
(6,441 |
) |
|
|
103,816 |
|
|
|
34,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
(3,608 |
) |
|
|
(5,828 |
) |
|
|
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
44,329 |
|
|
|
(26,419 |
) |
|
|
55,768 |
|
Cash
and cash equivalents, beginning of fiscal year
|
|
|
103,202 |
|
|
|
129,621 |
|
|
|
73,853 |
|
Cash
and cash equivalents, end of fiscal year
|
|
$ |
147,531 |
|
|
$ |
103,202 |
|
|
$ |
129,621 |
|
See
accompanying Notes to the Consolidated Financial Statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1: DESCRIPTION OF BUSINESS
Trimble
Navigation Limited (Trimble or the Company) began operations in 1978 and
incorporated in California in 1981. The Company provides positioning product
solutions, most typically to commercial and government users. The principal
applications served include surveying, construction, agriculture, urban and
resource management, military, transportation and telecommunications. The
Company’s products typically provide its customers benefits that can include
lower operational costs, higher productivity, and improved quality. Examples of
products include systems that guide agricultural and construction equipment,
surveying instruments, systems that track fleets of vehicles, and data
collection systems that enable the management of large amounts of geo-referenced
information. In addition, the Company also manufactures components for
in-vehicle navigation and telematics systems, and timing modules used in the
synchronization of wireless networks.
NOTE 2: ACCOUNTING
POLICIES
Use
of Estimates
The
preparation of financial statements in accordance with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Estimates are used for allowances for doubtful accounts, sales returns reserve,
allowances for inventory valuation, warranty costs, investments, goodwill
impairments, stock-based compensation, and income taxes among others. Management
bases its estimates on historical experience and various other assumptions
believed to be reasonable. Although these estimates are based on management’s
best knowledge of current events and actions that may impact the company in the
future, actual results may differ materially from management’s
estimates.
Basis
of Presentation
The
Company has a 52-53 week fiscal year, ending on the Friday nearest to December
31. Fiscal 2008 was a 53-week year and ended on January 2, 2009.
Fiscal 2007 and fiscal 2006 were both 52-week years, and ended on December 28,
2007 and December 29, 2006, respectively. Unless otherwise stated,
all dates refer to the Company’s fiscal year.
These
Consolidated Financial Statements include the results of the Company and its
majority-owned subsidiaries. Inter-company accounts and transactions have been
eliminated. Minority interests in consolidated subsidiaries represent the
minority shareholders’ proportionate share of the net assets and results of
operations of the Company’s majority-owned subsidiaries.
On
January 17, 2007, the Company’s board of directors approved a 2-for-1 split of
all outstanding shares of the Company’s Common Stock, payable February 22, 2007
to stockholders of record on February 8, 2007. All shares and per share
information presented has been adjusted to reflect the stock split on a
retroactive basis for all periods presented.
Foreign
Currency Translation
Assets
and liabilities of non-U.S. subsidiaries that operate in local currencies are
translated to U.S. dollars at exchange rates in effect at the balance sheet
date, with the resulting translation adjustments directly recorded to a separate
component of accumulated other comprehensive income, net of tax in accumulated
other comprehensive income within the shareholders’ equity section of the
Consolidated Balance Sheets. Income and expense accounts are translated at
average exchange rates during the year.
Cash
and Cash Equivalents
Cash and
cash equivalents include all cash and highly liquid investments with
insignificant interest rate risk and maturities of three months or less at the
date of purchase. The carrying amount of cash and cash equivalents approximates
fair value because of the short maturity of those instruments.
Fair
Value of Financial Instruments
The fair
value of certain of the Company’s financial instruments, including cash and cash
equivalents, and other accrued liabilities approximate cost because of their
short maturities. The fair value of investments is determined using quoted
market prices for those securities or similar financial
instruments.
Concentration
of Risk
Cash and
cash equivalents are maintained with several financial institutions. Deposits
held with banks may exceed the amount of insurance provided on such deposits.
Generally, these deposits may be redeemed upon demand and are maintained with
financial institutions of reputable credit and therefore bear minimal credit
risk.
The
Company is also exposed to credit risk in the Company’s trade receivables, which
are derived from sales to end user customers in diversified industries as well
as various resellers. The Company performs ongoing credit evaluations of its
customers’ financial condition and limits the amount of credit extended when
deemed necessary, but generally does not require collateral.
With the
selection of Flextronics Corporation in August 1999 as an exclusive
manufacturing partner for many of its GPS products, the Company became dependent
upon a sole supplier for the manufacture of many of its products. In
addition, the Company relies on sole suppliers for a number of its critical
components.
Allowance
for Doubtful Accounts
The
Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required
payments.
The
Company evaluates the ongoing collectibility of its trade accounts
receivable based on a number of factors such as age of the accounts receivable
balances, credit quality, historical experience, and current economic conditions
that may affect a customer’s ability to pay. In circumstances where the Company
is aware of a specific customer’s inability to meet its financial obligations to
the Company, a specific allowance for bad debts is estimated and recorded which
reduces the recognized receivable to the estimated amount that the Company
believes will ultimately be collected. In addition to specific customer
identification of potential bad debts, bad debt charges are recorded based on
the Company’s recent past loss history and an overall assessment of past due
trade accounts receivable amounts outstanding.
Inventories
Inventories
are stated at the lower of standard cost (which approximates actual cost on a
first-in, first-out basis) or market. Adjustments to reduce the cost of
inventory to its net realizable value, if required, are made for estimated
excess, obsolescence or impaired balances. Factors influencing these adjustments
include declines in demand, technological changes, product life cycle and
development plans, component cost trends, product pricing, physical
deterioration and quality issues. If actual factors are less favorable than
those projected by us, additional inventory write-downs may be
required.
Internal-Use
Software Development Costs
The
Company capitalizes material software development costs for internal use
pursuant to Statement of Position No. 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use.”
Goodwill
and Purchased Intangible Assets
Goodwill
represents the excess of the purchase price over the fair value of the net
tangible, identifiable intangible assets, and in-process research and
development acquired in a business combination. Intangible assets acquired
individually, with a group of other assets, or in a business combination are
recorded at fair value. Identifiable intangible assets are comprised of
distribution channels and distribution rights, patents, licenses, technology,
acquired backlog and trademarks. Identifiable intangible assets are being
amortized over the period of estimated benefit using the straight-line method,
reflecting the pattern of economic benefits associated with these assets, and
have estimated useful lives ranging from one to twelve years with a weighted
average useful life of 6.5 years. Goodwill is not subject to amortization, but
is subject to at least an annual assessment for impairment, applying a
fair-value based test.
Impairment
of Goodwill, Intangible Assets and Other Long-Lived Assets
The
Company evaluates goodwill, at a minimum, on an annual basis and whenever events
and changes in circumstances suggest that the carrying amount may not be
recoverable. The Company performs its annual goodwill impairment testing in the
fourth fiscal quarter of each year. Goodwill is reviewed for
impairment utilizing a two-step process. First, impairment of goodwill is
tested at the reporting unit level by comparing the reporting unit’s carrying
amount, including goodwill, to the fair value of the reporting unit.
The fair values of the reporting units are estimated using a discounted cash
flow approach. If the carrying amount of the reporting unit exceeds its
fair value, a second step is performed to measure the amount of impairment loss,
if any. In step two, the implied fair value of goodwill is calculated as the
excess of the fair value of a reporting unit over the fair values assigned to
its assets and liabilities. If the implied fair value of goodwill is less than
the carrying value of the reporting unit’s goodwill, the difference is
recognized as an impairment loss.
Depreciation
and amortization of the Company’s intangible assets and other long-lived assets
is provided using the straight-line method over their estimated useful lives,
reflecting the pattern of economic benefits associated with these assets.
Changes in circumstances such as technological advances, changes to the
Company’s business model, or changes in the capital strategy could result in the
actual useful lives differing from initial estimates. In those cases where the
Company determines that the useful life of an asset should be revised, the
Company will depreciate the net book value in excess of the estimated residual
value over its revised remaining useful life. These assets are evaluated for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. The estimated future cash
flows are based upon, among other things, assumptions about expected future
operating performance and may differ from actual cash flows. The assets
evaluated for impairment are grouped with other assets to the lowest level for
which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities. If the sum of the projected undiscounted cash
flows (excluding interest) is less than the carrying value of the assets, the
assets will be written down to the estimated fair value.
Revenue
Recognition
The
Company recognizes product revenue when persuasive evidence of an arrangement
exists, shipment has occurred, the fee is fixed or determinable, and
collectibility is reasonably assured. In instances where final acceptance of the
product is specified by the customer or is uncertain, revenue is deferred until
all acceptance criteria have been met.
Contracts
and/or customer purchase orders are used to determine the existence of an
arrangement. Shipping documents and customer acceptance, when applicable, are
used to verify delivery. The Company assesses whether the fee is fixed or
determinable based on the payment terms associated with the transaction and
whether the sales price is subject to refund or adjustment. The Company assesses
collectibility based primarily on the creditworthiness of the customer as
determined by credit checks and analyses, as well as the customer’s payment
history.
Revenue
for orders is not recognized until the product is shipped and title has
transferred to the buyer. The Company bears all costs and risks of loss or
damage to the goods up to that point. The Company’s shipment terms for U.S.
orders and international orders fulfilled from the Company’s European
distribution center typically provide that title passes to the buyer upon
delivery of the goods to the carrier named by the buyer at the named place or
point. If no precise point is indicated by the buyer, the Company may choose
within the place or range stipulated where the carrier will take the goods into
carrier’s charge. Other shipment terms may provide that title passes to the
buyer upon delivery of the goods to the buyer. Shipping and handling
costs are included in the cost of goods sold.
Revenue
to distributors and resellers is recognized upon shipment, assuming all other
criteria for revenue recognition have been met. Distributors and resellers do
not have a right of return.
Revenue
from purchased extended warranty and support agreements is deferred and
recognized ratably over the term of the warranty/support period.
The
Company presents revenue net of sales taxes and any similar
assessments.
The
Company applies Statement of Position (SOP) No. 97-2, “Software Revenue
Recognition,” to products where the embedded software is more than incidental to
the functionality of the hardware. This determination requires significant
judgment including a consideration of factors such as marketing, research and
development efforts and any post contract support (PCS) relating to the embedded
software.
The
Company’s software arrangements generally consist of a perpetual license fee and
PCS. The Company has established vendor-specific objective evidence (VSOE) of
fair value for the Company’s PCS contracts based on the renewal rate. The
remaining value of the software arrangement is allocated to the license fee
using the residual method. License revenue is primarily recognized
when the software has been delivered and there are no remaining obligations.
Revenue from PCS is recognized ratably over the term of the PCS
agreement.
The
Company applies Emerging Issues Task Force (EITF) Issue 00-3, “Application of
AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use
Software Stored on Another Entity’s Hardware.” for hosted arrangements which the
customer does not have the contractual right to take possession of the software
at any time during the hosting period without incurring a significant penalty
and it is not feasible for the customer to run the software either on its own
hardware or on a third-party’s hardware. Subscription revenue related to the
Company’s hosted arrangements is recognized ratably over the contract period.
Upfront fees for the Company’s hosted solution primarily consist of amounts for
the in-vehicle enabling hardware device and peripherals, if any. For upfront
fees relating to proprietary hardware where the firmware is more than incidental
to the functionality of the hardware in accordance with SOP No. 97-2, the
Company defers the upfront fees at installation and recognizes them ratably over
the minimum service contract period, generally one to five years. Product costs
are also deferred and amortized over such period.
In
accordance with EITF Issue 00-21, “Accounting for Revenue Arrangements with
Multiple Deliverables,” when a non-software sale involves multiple elements the
entire fee from the arrangement is allocated to each respective element based on
its relative fair value and recognized when revenue recognition criteria for
each element is met.
Warranty
The
Company accrues for warranty costs as part of its cost of sales based on
associated material product costs, technical support labor costs, and costs
incurred by third parties performing work on the Company’s behalf. The Company’s
expected future cost is primarily estimated based upon historical trends in the
volume of product returns within the warranty period and the cost to repair or
replace the equipment. The products sold are generally covered by a
warranty for periods ranging from 90 days to three years, and in some instances
up to 5.5 years.
While the
Company engages in extensive product quality programs and processes, including
actively monitoring and evaluating the quality of component suppliers, its
warranty obligation is affected by product failure rates, material usage, and
service delivery costs incurred in correcting a product failure. Should actual
product failure rates, material usage, or service delivery costs differ from the
estimates, revisions to the estimated warranty accrual and related costs may be
required.
Changes
in the Company’s product warranty liability during the fiscal years ended
January 2, 2009 and December 28, 2007, are as follows:
|
|
January 2,
|
|
|
December 28,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
10,806 |
|
|
$ |
8,607 |
|
Acquired
warranties
|
|
|
930 |
|
|
|
67 |
|
Accruals
for warranties issued
|
|
|
22,214 |
|
|
|
15,883 |
|
Changes
in estimates
|
|
|
- |
|
|
|
- |
|
Warranty
settlements (in cash or in kind)
|
|
|
(20,618 |
) |
|
|
(13,751 |
) |
Ending
Balance
|
|
$ |
13,332 |
|
|
$ |
10,806 |
|
Guarantees,
Including Indirect Guarantees of Indebtedness of Others
In the
normal course of business to facilitate sales of its products, the Company
indemnifies other parties, including customers, lessors, and parties to other
transactions with the Company, with respect to certain matters. The Company has
agreed to hold the other party harmless against losses arising from a breach of
representations or covenants, or out of intellectual property infringement or
other claims made against certain parties. These agreements may limit the time
within which an indemnification claim can be made and the amount of the claim.
In addition, the Company has entered into indemnification agreements with its
officers and directors, and the Company’s bylaws contain similar indemnification
obligations to the Company’s agents.
It is not
possible to determine the maximum potential amount under these indemnification
agreements due to the limited history of prior indemnification claims and the
unique facts and circumstances involved in each particular agreement.
Historically, payments made by the Company under these agreements were not
material and no liabilities have been recorded for these obligations on the
Consolidated Balance Sheets as of January 2, 2009 and December 28,
2007.
Advertising
Costs
The
Company expenses all advertising costs as incurred. Advertising expense was
approximately $22.6 million, $21.2 million, and $16.1 million, in fiscal 2008,
2007, and 2006, respectively.
Research
and Development Costs
Research
and development costs are charged to expense as incurred. Cost of software
developed for external sale subsequent to reaching technical feasibility were
not significant and were expensed as incurred. The Company received third party
funding of approximately $9.2 million, $8.5 million, and $7.8 million in fiscal
2008, 2007, and 2006, respectively. The Company offsets research and development
expense with any third party funding received. The Company retains the rights to
any technology developed under such arrangements.
Stock-Based
Compensation
In fiscal
2006 the Company adopted, and currently accounts for stock-based compensation
under Statement of Financial Accounting Standards (SFAS) No 123(R), “Share Based
Payment” (SFAS 123(R)). The following table summarizes stock-based
compensation expense, net of tax, related to employee stock-based compensation
included in the Consolidated Statements of Income in accordance with SFAS
123(R).
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
$ |
1,920 |
|
|
$ |
1,733 |
|
|
$ |
1,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
3,489 |
|
|
|
3,573 |
|
|
|
2,554 |
|
Sales
and marketing
|
|
|
3,993 |
|
|
|
3,891 |
|
|
|
2,815 |
|
General
and administrative
|
|
|
6,764 |
|
|
|
5,819 |
|
|
|
6,029 |
|
Total
operating expenses
|
|
|
14,246 |
|
|
|
13,283 |
|
|
|
11,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stock-based compensation expense
|
|
|
16,166 |
|
|
|
15,016 |
|
|
|
12,571 |
|
Tax
benefit (1)
|
|
|
(2,636 |
) |
|
|
(1,857 |
) |
|
|
(1,185 |
) |
Total
stock-based compensation expense, net of tax
|
|
$ |
13,530 |
|
|
$ |
13,159 |
|
|
$ |
11,386 |
|
(1) Tax
benefit related to U.S. incentive and non-qualified stock options, employee
stock purchase plan (ESPP) and restricted stock units, applying a Federal
statutory and State (Federal effected) tax rate for the year ended January 2,
2009 and December 28, 2007.
Options
Stock
option expense recognized in the Consolidated Statements of Income is based on
the value of the portion of share-based payment awards that is expected to vest
during the period and is net of estimated forfeitures. For fiscal 2008, 2007 and
2006 the stock option expense includes compensation expense for stock options
granted prior to, but not yet vested as of December 30, 2005 based on the grant
date fair value estimated in accordance with the provisions of SFAS 123 and
compensation expense for the stock options granted subsequent to December 30,
2005 based on the grant date fair value estimated in accordance with the
provisions of SFAS 123(R). In conjunction with the adoption of SFAS 123(R), the
Company changed its method of attributing the value of stock options to expense
from the accelerated multiple-option approach to the straight-line single option
method. Compensation expense for all stock options granted on or prior to
December 30, 2005 will continue to be recognized using the accelerated
multiple-option approach while compensation expense for all stock options
granted subsequent to December 30, 2005 is recognized using the straight-line
single-option method.
For
options granted prior to October 1, 2005, the fair value for these options was
estimated at the date of grant using the Black-Scholes option-pricing model. For
stock options granted on or after October 1, 2005, the fair value of each
award is estimated on the date of grant using a binomial valuation model.
Similar to the Black-Scholes model, the binomial model takes into account
variables such as volatility, dividend yield rate, and risk free interest rate.
In addition, the binomial
model incorporates actual option-pricing behavior and changes in volatility over
the option’s contractual term.
Under the
binomial model, the weighted average grant-date fair value of stock options
granted during fiscal years 2008, 2007 and 2006 were $8.80, $12.37 and $8.04,
respectively. For options granted for the three years ending January 2, 2009,
the following weighted-average assumptions were used:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
Expected
dividend yield
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Expected
stock price volatility
|
|
|
45 |
% |
|
|
37 |
% |
|
|
42 |
% |
Risk
free interest rate
|
|
|
2.50 |
% |
|
|
4.20 |
% |
|
|
4.80 |
% |
Expected
life of options after vesting
|
|
1.3
years
|
|
|
1.3
years
|
|
|
1.3
years
|
|
Expected Dividend Yield – The
dividend yield assumption is based on the Company’s history and expectation of
dividend payouts.
Expected Stock Price
Volatility – The Company’s computation of expected volatility is based on
a combination of implied volatilities from traded options on the Company’s stock
and historical volatility. The Company used implied and historical volatility as
the combination was more representative of future stock price trends than
historical volatility alone.
Expected Risk Free Interest
Rate – The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant for the expected term of the
option.
Expected Life Of Option – The
Company’s expected term represents the period that the Company’s stock options
are expected to be outstanding and was determined based on historical experience
of similar stock options with consideration to the contractual terms of the
stock options, vesting schedules and expectations of future employee
behavior.
Restricted
Stock Units
Restricted
stock units are converted into shares of Trimble common stock upon vesting on a
one-for-one basis. Vesting of restricted stock units is subject to
the employee’s continuing service to the Company. The compensation
expense related to these awards was determined using the fair value of Trimble’s
common stock on the date of grant, and the expense is recognized on a
straight-line basis over the vesting period. Restricted stock units
typically vest at the end of three years.
Employee
Stock Purchase Plan
Under the
Employee Stock Purchase Plan, rights to purchase shares are generally granted
during the second and fourth quarter of each year. The fair value of rights
granted under the Employee Stock Purchase Plan was estimated at the date of
grant using the Black-Scholes option-pricing model. The estimated weighted
average value of rights granted under the Employee Stock Purchase Plan during
fiscal years 2008, 2007 and 2006 were $8.30, $7.54 and $5.16, respectively. The
fair value of rights granted during 2008, 2007 and 2006 was estimated at the
date of grant using the following weighted-average assumptions:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
Expected
dividend yield
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Expected
stock price volatility
|
|
|
44.0 |
% |
|
|
36.5 |
% |
|
|
35.5 |
% |
Risk
free interest rate
|
|
|
2.70 |
% |
|
|
4.90 |
% |
|
|
4.80 |
% |
Expected
life of purchase
|
|
0.5
years
|
|
|
0.5
years
|
|
|
0.6years
|
|
Expected Dividend Yield – The
dividend yield assumption is based on the Company’s history and expectation of
dividend payouts.
Expected Stock Price
Volatility – The Company’s computation of expected volatility is based on
implied volatilities from traded options on the Company’s stock. The Company
used implied volatility because it is representative of future stock price
trends during the purchase period.
Expected Risk Free Interest
Rate – The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant for the expected term of the purchase
period.
Expected Life Of Purchase –
The Company’s expected life of the purchase is based on the term of the offering
period of the purchase plan.
Property
and Equipment, Net
Property
and equipment, net is stated at cost less accumulated depreciation. Depreciation
of property and equipment owned is computed using the straight-line method over
the shorter of the estimated useful lives or the lease terms. Useful lives
include a range from two to six years for machinery and equipment, five years
for furniture and fixtures, two to five years for computer equipment and
software, and the life of the lease for leasehold improvements. The costs of
repairs and maintenance are expensed when incurred, while expenditures for
refurbishments and improvements that significantly add to the productive
capacity or extend the useful life of an asset are capitalized. Depreciation
expense was $19.0 million in fiscal 2008, $17.2 million in fiscal 2007 and $13.5
million in fiscal 2006.
Derivative
Financial Instruments
The
Company enters into foreign exchange forward contracts to minimize the
short-term impact of foreign currency fluctuations on certain trade and
inter-company receivables and payables, primarily denominated in Australian,
Canadian, Japanese, New Zealand, South African and Swedish currencies, the Euro,
and the British pound. These contracts reduce the exposure to fluctuations in
exchange rate movements as the gains and losses associated with foreign currency
balances are generally offset with the gains and losses on the forward
contracts. These instruments are marked to market through earnings every period
and generally range from one to three months in original maturity. We do not
enter into foreign exchange forward contracts for trading purposes.
Income
Taxes
Income
taxes are accounted for under the liability method whereby deferred tax assets
or liability account balances are calculated at the balance sheet date using
current tax laws and rates in effect for the year in which the differences are
expected to affect taxable income. A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets if it is more likely than not such
assets will not be realized. The Company adopted the provisions of
FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN
48), on December 30, 2006. See Note 12 to the Consolidated Financial
Statements for additional information.
Computation
of Earnings Per Share
The
number of shares used in the calculation of basic earnings per share represents
the weighted average common shares outstanding during the period and excludes
any dilutive effects of options, non-vested restricted stock units and
restricted stock awards, warrants, and convertible securities. The dilutive
effects of options, non-vested restricted stock units and restricted stock
awards, warrants, and convertible securities are included in diluted earnings
per share.
Recent
Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R)." SFAS 158 requires companies to
recognize the over-funded or under-funded status of a defined benefit
post-retirement plan as an asset or liability in its balance sheet, recognize as
a component of accumulated other comprehensive income, net of tax, amounts
accumulated at the date of adoption due to delayed recognition of actuarial
gains and losses, prior service costs and credits, and transition assets and
obligations, and provide additional disclosures. SFAS 158 is effective for
fiscal years ending after December 15, 2006. On December 28, 2006, the Company
adopted the recognition and disclosure provisions of SFAS 158. The
effect of adopting these provisions of SFAS 158 on the Company’s financial
condition at December 29, 2006, December 28, 2007 and January 2, 2009 has been
included in the accompanying consolidated financial statements. SFAS
158 also requires companies to measure the funded status of the plan as of the
date of its fiscal year-end, with limited exceptions, effective for fiscal years
ending after December 15, 2008. This provision of SFAS 158 was effective for the
fiscal year ended 2008. The adoption of SFAS No. 158 did not have a
material impact on the Company’s financial position, results of operations or
cash flows. See Note 15 to the Notes to Consolidated Financial Statements
for additional information.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
clarifies the definition of fair value, establishes a framework for measuring
fair value within GAAP and expands the disclosures regarding fair value
measurements. In February 2008, the FASB issued FASB Staff Position
No. FAS 157-2 deferring the effective date of SFAS No. 157 to fiscal years
beginning after November 15, 2008, and interim periods within those fiscal years
for nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis. The Company adopted SFAS No. 157 in its first quarter of
fiscal 2008, except for those items specifically deferred under FSP No. FAS
157-2. The adoption of SFAS No. 157 did not have a material impact,
nor does the Company expect that the full adoption in fiscal 2009 will have a
material impact, on the Company’s financial position, results of operations or
cash flows.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115.” SFAS No. 159 allows an entity the irrevocable
option to elect fair value for the initial and subsequent measurement for
certain financial assets and liabilities under an instrument-by-instrument
election. Subsequent measurements for the financial assets and liabilities an
entity elects to fair value will be recognized in earnings. SFAS No. 159 also
establishes additional disclosure requirements. SFAS No. 159 became effective
for the Company at the beginning of its first quarter of fiscal
2008. The Company did not elect the fair value option for any of its
financial assets or liabilities. However, the Company may decide to
elect the fair value option on new items in the future. The adoption did not
have a material impact on the Company’s financial position, results of
operations or cash flows.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. SFAS
No. 141(R) establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree and recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase. SFAS No. 141(R) also
sets forth the disclosures required to be made in the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. Accordingly, the Company will adopt this standard
in fiscal 2009. The Company continues to evaluate the impact of the
adoption of SFAS No. 141(R) on its financial position, results of
operations and cash flows, which will be largely dependent on the size and
nature of the business combinations subject to this statement. When
SFAS 141(R) becomes effective, any tax related adjustments associated with
acquisition that closed prior to January 3, 2009 (and after the measurement
period) will be recorded through income tax expense, whereas the current
accounting treatment (under SFAS 141) would require any adjustment to be
recognized through the purchase price.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160
will change the accounting and reporting for minority interests, which will be
recharacterized as non-controlling interests (NCI) and classified as a component
of equity. This new consolidation method will significantly change the
accounting for transactions with minority interest
holders. SFAS 160 requires retroactive adoption of the
presentation and disclosure requirements for existing minority interests. All
other requirements of SFAS 160 shall be applied
prospectively. SFAS 160 is effective for fiscal years beginning
after December 15, 2008 and, as such, the Company will adopt this standard
in fiscal 2009. The Company continues to evaluate the impact of the
adoption of SFAS No. 160 on its financial position, results of
operations and cash flows, which will be largely dependent on the size and
nature of the non-controlling interests subject to this
statement.
In March
2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments
and Hedging Activities - An Amendment of FASB Statement No. 133”, which requires
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company
does not expect the adoption of SFAS No. 161 will have a material impact on the
Company’s financial position, results of operations or cash flows.
In May
2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. This Statement identifies the sources of
accounting principles and the framework for selecting principles to be used in
the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement shall be
effective November 16, 2008. The adoption did not have a material
impact on the Company’s financial position, results of operations or cash
flows.
NOTE
3: EARNINGS PER SHARE
The
following data shows the amounts used in computing earnings per share and the
effect on the weighted-average number of shares of potentially dilutive common
stock.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Income
available to common shareholders:
|
|
$ |
141,472 |
|
|
$ |
117,374 |
|
|
$ |
103,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares used in basic earnings per
share
|
|
|
120,714 |
|
|
|
119,280 |
|
|
|
110,044 |
|
Effect
of dilutive securities (using treasury stock method):
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock options and restricted stock units
|
|
|
3,516 |
|
|
|
4,907 |
|
|
|
5,134 |
|
Common
stock warrants
|
|
|
5 |
|
|
|
223 |
|
|
|
894 |
|
Weighted
average number of common shares and dilutive potential
common shares used in diluted earnings per
share
|
|
|
124,235 |
|
|
|
124,410 |
|
|
|
116,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$ |
1.17 |
|
|
$ |
0.98 |
|
|
$ |
0.94 |
|
Diluted
earnings per share
|
|
$ |
1.14 |
|
|
$ |
0.94 |
|
|
$ |
0.89 |
|
For
fiscal 2008, 2007, and 2006 the Company excluded 2.2 million shares, 514,311
shares and 323,035 shares of outstanding stock options, respectively, from the
calculation of diluted earnings per share because the exercise prices of these
stock options were greater than or equal to the average market value of the
common shares during the respective periods. Inclusion of these
shares would be antidilutive. These options could be included in the
calculation in the future if the average market value of the common shares
increases and is greater than the exercise price of these
options.
NOTE
4: BUSINESS COMBINATIONS
@Road,
Inc.
On
December 10, 2006, the Company and @Road, Inc. (@Road) entered into a
definitive merger agreement. The acquisition became effective on
February 16, 2007. @Road is a global provider of solutions designed
to automate the management of mobile resources and to optimize the service
delivery process for customers across a variety of industries. The acquisition
of @Road has expanded the Company’s investment and reinforces the existing
growth strategy for its Mobile Solutions segment. @Road’s results of
operations since February 17, 2007 have been included in the Company’s
Consolidated Statements of Income within the Mobile Solutions business
segment.
Purchase
Price
Under the
terms of the agreement, the Company acquired all of the outstanding shares of
@Road common stock for $7.50 per share. The Company elected to issue
$2.50 per share of the consideration in the form of the Company’s common stock
(Common Stock) to be based upon the five-day average closing price of the
Company’s shares six trading days prior to the closing of the transaction and
the remaining $5.00 per share consideration was paid in cash. Further, each
share of Series A-1 and Series A-2 Redeemable Preferred Stock, par value
$0.001 per share, of @Road was converted into the right to receive an amount in
cash equal to $100.00 plus all declared or accumulated but unpaid dividends with
respect to such shares outstanding immediately prior to the effective time of
the merger and each share of Series B-1 and B-2 Redeemable Preferred
Stock, par value $0.001 per share, of @Road was converted into the right to
receive an amount in cash equal to $831.39 plus all declared or accumulated but
unpaid dividends with respect to such shares as of immediately prior to the
effective time of the merger. In addition, all @Road vested stock options were
terminated and the holders of each such options were entitled to receive the
excess, if any, of the aggregate consideration over the exercise price. At the
effective time of the merger, all unvested @Road stock options with an exercise
price in excess of $7.50 were terminated and all unvested stock options that had
exercise prices of $7.50 or less were assumed by the Company.
Concurrent
with the merger, the Company amended its existing $200 million unsecured
revolving credit agreement with a syndicate of 11 banks with The Bank of Nova
Scotia as the administrative agent (the 2007 Credit Facility) and incurred a
five-year term loan under the 2007 Credit Facility. See Note 9 to the
Consolidated Financial Statements for additional information.
The
Company paid approximately $327.4 million in cash from debt and existing cash,
and issued approximately 5.9 million shares of the Company’s common stock
based on an exchange ratio of 0.0893 shares of the Company’s common stock
for each outstanding share of @Road common stock as of February 16, 2007. The
common stock issued had a fair value of $161.9 million and was valued using
the average closing price of the Company’s common stock of $27.69 over a range
of two trading days (February 14, 2007 through February 15, 2007) prior to, and
including, the close date (February 16, 2007) of the transaction, which is also
the date that the amount of the Company’s shares to be issued in accordance with
the merger agreement was settled. The total purchase price was estimated as
follows (in thousands):
Cash
consideration
|
|
$ |
327,370 |
|
Common
stock consideration
|
|
|
161,947 |
|
Merger
costs *
|
|
|
5,712 |
|
Total
purchase price
|
|
$ |
495,029 |
|
* Merger
costs consist of legal, advisory, accounting and administrative
fees.
Purchase
Price Allocation
In
accordance with SFAS 141, "Business Combinations,” the total purchase price was
allocated to @Road net tangible assets, identifiable intangible assets and
in-process research and development based upon their estimated fair values as of
February 16, 2007. The excess purchase price over the net tangible, identifiable
intangible assets and in-process research and development was recorded as
goodwill.
The total
purchase price has been allocated as follows (in thousands):
Value
to be allocated to assets, based upon merger consideration
|
|
$ |
495,029 |
|
Less:
value of @Road’s assets acquired:
|
|
|
|
|
Net
tangible assets acquired
|
|
|
137,492 |
|
|
|
|
|
|
Amortizable
intangibles assets:
|
|
|
|
|
Developed
product technology
|
|
|
66,600 |
|
Customer
relationships
|
|
|
75,300 |
|
Trademarks
and tradenames
|
|
|
5,200 |
|
Subtotal
|
|
|
147,100 |
|
|
|
|
|
|
In-process
research and development
|
|
|
2,100 |
|
Deferred
tax liability
|
|
|
(56,855 |
) |
|
|
|
|
|
Goodwill
|
|
$ |
265,192 |
|
Net
Tangible Assets
|
|
As
of
|
|
|
|
February 16,
|
|
(in
thousands)
|
|
2007
|
|
Cash
and cash equivalents
|
|
$ |
74,729 |
|
Accounts
receivable, net
|
|
|
14,255 |
|
Other
receivables
|
|
|
8,774 |
|
Inventories,
net
|
|
|
15,272 |
|
Other
current assets
|
|
|
12,627 |
|
Property
and equipment, net
|
|
|
5,854 |
|
Deferred
income taxes
|
|
|
40,435 |
|
Other
non-current assets
|
|
|
7,935 |
|
|
|
|
|
|
Total
assets acquired
|
|
$ |
179,881 |
|
|
|
|
|
|
Accounts
payable
|
|
|
19,285 |
|
Deferred
revenue
|
|
|
7,365 |
|
Other
current liabilities
|
|
|
15,739 |
|
|
|
|
|
|
Total
liabilities assumed
|
|
$ |
42,389 |
|
|
|
|
|
|
Total
net assets acquired
|
|
$ |
137,492 |
|
The
Company reviewed and adjusted @Road's net tangible assets and liabilities to
fair value, as necessary, as of February 16, 2007, including the following
adjustments:
Fixed
assets – the Company decreased @Road's historical value of fixed assets by
$2.1 million to adjust fixed assets to an amount equivalent to fair
value.
Deferred
revenue and cost of sales – the Company reduced @Road's historical value of
deferred revenue by $39.6 million to adjust deferred revenue to the fair value
of the direct cost associated with servicing the underlying obligation plus a
reasonable margin. @Road’s deferred revenue balance consists of upfront payments
of its hosted product, licensed product, extended warranty and maintenance. The
Company reduced @Road's historical value of deferred product cost by $47.1
million to adjust deferred product cost to the asset's underlying fair value.
The deferred product costs adjustment to fair value related to deferral of cost
of sales of hardware that have shipped, resulting in no fair value relating to
the associated deferred product costs.
Other
receivables and non-current assets – Other receivables and non-current assets
were increased by $15.4 million to adjust for the fair value of future cash
collections from customer contracts assumed for products delivered prior to the
acquisition date. As the
products were delivered prior to the acquisition date, revenue is not
recognizable in the Company’s Consolidated Statements of Income.
Intangible
Assets
Developed
product technology, which is comprised of products that have reached
technological feasibility, includes products in @Road's current product
offerings. @Road's technology includes hardware, software and services that
serve the mobile resource management market internationally. The Company expects
to amortize the developed and core technology over a weighted average estimated
life of seven years.
Customer
relationships represent the value placed on @Road’s distribution channels and
end users. The Company expects to amortize the fair value of these assets over a
weighted average estimated life of seven years.
Trademarks
and trade names represent the value placed on the @Road brand and recognition in
the mobile resource management market. The Company expects to amortize the fair
value of these assets over a weighted average estimated life of eight
years.
In-process Research and
Development
The
Company recorded an expense of $2.1 million relating to in-process research and
development projects in @Road’s license business. In-process research
and development represents incomplete @Road research and development projects
that had not reached technological feasibility and had no alternative future use
as of the consummation of the merger.
Goodwill
The
excess purchase price over the net tangible, identifiable intangible assets and
in-process research and development was recorded as goodwill. The goodwill was
attributed to the premium paid for the opportunity to expand and better serve
the global mobile resource management market and achieve greater long-term
growth opportunities than either company had operating alone. The Company
believes these opportunities could include accelerating the rate at which
products are brought to market and increasing the diversity and global reach of
those products. In addition, the Company expects that the combined companies may
be able to obtain greater operating leverage by reducing costs in areas of
redundancy. Of the total $265.2 million assigned to goodwill,
approximately $6.7 million is expected to be deductible for tax
purposes.
Restructuring
Liabilities
related to restructuring @Road's operations that meet the requirements of EITF
95-3, “Recognition of Liabilities in Connection with a Purchase Business
Combination,” were recorded as adjustments to the purchase price and an increase
in goodwill. Liabilities related to restructuring the Company's operations were
recorded as expense in the Company's Consolidated Statements of Income in the
period that the costs were incurred.
Deferred Income Tax
Assets/Liabilities
The
Company recognized $56.9 million in
net deferred tax liabilities for the tax effects of differences between assigned
values in the purchase price and the tax bases of assets acquired and
liabilities assumed.
@Road Stock Options
Assumed
In
accordance with the merger agreement, the Company assumed all @Road unvested
stock options that had exercise prices of $7.50 or less. The Company
issued approximately 795,000 stock options based on an exchange ratio of
0.268 shares of the Company’s common stock for each unvested stock option
with exercise prices of $7.50 or less as of February 16, 2007. The
fair value of these assumed options was determined to be $10.1 million which
will be expensed over the remaining vesting terms of the assumed options which
is approximately three to four years. The assumed options were valued
using the binomial model similar to previously granted Trimble stock
options.
Pro-Forma
Results
The
following table presents pro-forma results of operations of the Company and
@Road, as if the companies had been combined as of December 31,
2005. The unaudited pro-forma results of operations are not
necessarily indicative of results that would have occurred had the acquisition
taken place on December 31, 2005 or of future results. Included
in the pro-forma results are fair value adjustments based on the fair values of
assets acquired and liabilities assumed as of the acquisition date of February
16, 2007 and adjustments for interest expense related to debt and stock options
assumed as part of the merger consideration.
The
Company excluded the effect of non-recurring items for both periods presented as
the impact is short-term in nature. The pro-forma information is as
follows:
|
|
Fiscal
Years Ended
|
|
|
|
December 28,
|
|
|
December 29,
|
|
|
|
2007
(a)
|
|
|
2006
(b)
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
Pro-forma
revenue
|
|
$ |
1,239,319 |
|
|
$ |
1,017,852 |
|
Pro-forma
net income
|
|
|
114,835 |
|
|
|
69,959 |
|
Pro-forma
basic net income per share
|
|
$ |
0.96 |
|
|
$ |
0.60 |
|
Pro-forma
diluted net income per share
|
|
$ |
0.92 |
|
|
$ |
0.57 |
|
(a)
|
The
pro-forma results of operations represent the Company’s results for fiscal
2007 together with @Road’s historical results through the acquisition date
of February 16, 2007 as though they had been combined as of December 31,
2005. Pro-forma adjustments have been made based on the fair
values of assets acquired and liabilities assumed as of February 16,
2007. Pro-forma revenue includes a $2.8 million
increase due to the timing of recognizing deferred revenue write-downs and
customer contracts where the product was delivered prior to the
acquisition date. Pro-forma net income includes a $0.7
million increase due to the timing of recognizing revenue write-downs and
related deferred cost of sales write-downs, amortization of intangible
assets related to the acquisition of $2.2 million, and interest
expense for debt used to purchase @Road of $1.4 million. The year to
date amounts provided herein include adjustments to previously filed
pro-forma numbers in the Company’s
10-Q’s.
|
(b)
|
The
pro-forma results of operations represent the Company’s results for fiscal
2006 together with @Road’s historical results had they been combined as of
December 31, 2005. Pro-forma adjustments have been made based
on the fair values of assets acquired and liabilities assumed as of the
acquisition date of February 16, 2007. Pro-forma revenue for
fiscal 2006 includes a $22.0 million
decrease due to deferred revenue write-downs and customer contracts for
which the product was delivered prior to the acquisition
date. Pro-forma net income for fiscal 2006 includes revenue
write-downs and related deferred cost of sales write-downs of $3.1 million,
amortization of intangible assets related to the acquisition of
$18.3 million, and interest expense for debt used to purchase @Road
of $11.2 million.
|
Other
Acquisitions
The
following is a summary of business combinations other than @Road made by the
Company during fiscal 2008, 2007 and 2006:
Acquisition
|
|
Primary
Service or Product
|
|
Operating
Segment
|
|
Acquisition
Date
|
Rawson
Control Systems
|
|
Hydraulic
and electronic controls for the agriculture equipment
industry
|
|
Field
Solutions
|
|
December
3, 2008
|
FastMap
and
GeoSite
|
|
Field-based
software suite for GIS and software solution for land surveyors and
construction professionals
|
|
Field
Solutions
and
Engineering
& Construction
|
|
November
28, 2008
|
Callidus
Precision Systems Assets
|
|
3D
laser scanning solutions
|
|
Engineering
& Construction
|
|
November
28, 2008
|
Toposys
|
|
Aerial
data collection systems comprised of LiDAR and metric
cameras
|
|
Engineering
& Construction
|
|
November
13, 2008
|
TruCount
|
|
Air
and electric clutches that automate individual planter row
shut-off
|
|
Field
Solutions
|
|
October
30, 2008
|
RolleiMetric
|
|
Metric
camera systems for aerial imaging and terrestrial close range
photogrammetry
|
|
Engineering
& Construction
|
|
October
20, 2008
|
SECO
|
|
Accessories
for the geomatics, surveying, mapping, and construction
industries
|
|
Engineering
& Construction
|
|
July
29, 2008
|
Géo-3D
|
|
Roadside
infrastructure asset inventory solutions
|
|
Engineering
& Construction
|
|
January
22, 2008
|
Crain
Enterprises
|
|
Accessories
for the geomatics, surveying, mapping, and construction
industries
|
|
Engineering
& Construction
|
|
January
8, 2008
|
HHK
Datentechnik GmbH
|
|
Office
and field software solutions for the cadastral survey
market
|
|
Engineering
& Construction
|
|
December
19, 2007
|
UtilityCenter
|
|
Field
service management software for utilities
|
|
Field
Solutions
|
|
November
8, 2007
|
Ingenieurbüro
Breining GmbH
|
|
Office
and field software solutions for the cadastral survey
market
|
|
Engineering
& Construction
|
|
September
19, 2007
|
Inpho
GmbH
|
|
Photogrammetry
and digital surface modeling software for aerial surveying, mapping and
remote sensing applications
|
|
Engineering
& Construction
|
|
February
13, 2007
|
Spacient
Technologies, Inc.
|
|
Enterprise
field service management and mobile mapping solutions
|
|
Field Solutions
|
|
November
21, 2006
|
Meridian
Project Systems, Inc.
|
|
Enterprise
project management and lifecycle software
|
|
Engineering
& Construction
|
|
November
7, 2006
|
XYZ
Solutions, Inc.
|
|
Real-time,
interactive 3D intelligence software
|
|
Engineering
& Construction
|
|
October
27, 2006
|
Visual
Statement, Inc.
|
|
Desktop
software tools
|
|
Mobile
Solutions
|
|
October
11, 2006
|
Intransix
|
|
Mobile
GPS applications
|
|
Advanced
Devices
|
|
April
21, 2006
|
BitWyse
Solutions, Inc.
|
|
Engineering
and construction information management software
|
|
Engineering
& Construction
|
|
May
1, 2006
|
Eleven
Technology, Inc.
|
|
Mobile
application software
|
|
Mobile
Solutions
|
|
April
28, 2006
|
Quantm
International, Inc.
|
|
Transportation
route optimization solution
|
|
Engineering
& Construction
|
|
April
5, 2006
|
XYZs
of GPS, Inc.
|
|
Real-time
Global Navigation Satellite System
|
|
Engineering
& Construction
|
|
February
26, 2006
|
Advanced
Public Safety, Inc.
|
|
Mobile
and handheld software for public safety
|
|
Mobile
Solutions
|
|
December
29,
2006
|
The
Consolidated Financial Statements include the operating results of each of these
businesses from the date of acquisition. Pro-forma results of operations have
not been presented because the effects of each of these acquisitions were not
material to the Company’s results.
The total
purchase consideration for each of the above acquisitions was allocated to the
assets acquired and liabilities assumed based on their estimated fair values as
of the date of acquisition. The fair value of intangible assets acquired is
generally determined based on a discounted cash flow analysis. Acquisition costs
directly related to the acquisitions were capitalized.
At the
date of each acquisition, the projects associated with in-process research and
development (IPR&D) efforts had not yet reached technological feasibility
and the research and development in process had no alternative future uses.
Accordingly, the value assigned to these IPR&D amounts were charged to
expense on the respective acquisition date of each of the acquired companies.
The Company recorded IPR&D expense of $1.9 million relating to acquisitions
made in fiscal 2006. The IPR&D of $2.1 million recorded
during fiscal 2007 related entirely to the acquisition of @Road. There was no
IPR&D associated with acquisitions in fiscal 2008.
The
following table summarizes the Company’s business combinations completed during
fiscal years 2008, 2007 and 2006 other than @Road (in thousands):
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
price
|
|
$ |
99,948 |
|
|
$ |
49,311 |
|
|
$ |
114,442 |
|
Acquisition
costs *
|
|
|
2,623 |
|
|
|
956 |
|
|
|
2,650 |
|
Total
purchase price
|
|
$ |
102,571 |
|
|
$ |
50,267 |
|
|
$ |
117,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
price allocation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of net assets acquired
|
|
$ |
7,238 |
|
|
$ |
9,504 |
|
|
$ |
7,960 |
|
Identified
intangible assets
|
|
|
50,242 |
|
|
|
19,937 |
|
|
|
51,613 |
|
In-process
research and development
|
|
|
- |
|
|
|
- |
|
|
|
1,930 |
|
Deferred
tax liability
|
|
|
(3,426 |
) |
|
|
(2,763 |
) |
|
|
(14,723 |
) |
Goodwill
|
|
|
48,517 |
|
|
|
23,589 |
|
|
|
70,312 |
|
Total
|
|
$ |
102,571 |
|
|
$ |
50,267 |
|
|
$ |
117,092 |
|
*
Acquisition costs consist of legal, advisory, and accounting fees as well as
$0.4 million of restructuring related liabilities in fiscal 2008.
None of
the amounts assigned to goodwill above are expected to be deductible for tax
purposes.
Certain
acquisitions include additional earn-out cash payments based on future revenue
derived from existing products and other product milestones. These earn-out
payments are considered additional purchase price consideration. Earn-out cash
payments made for fiscal 2008, fiscal 2007 and fiscal 2006 were $7.2 million,
$11.8 million and $4.5 million respectively. Earn-outs and changes in purchase
price allocation estimates were recorded as purchase price adjustments and
goodwill adjustments. Acquisitions made by the Company have additional
potential earn-out cash payments in excess of that recorded on the Company’s
Consolidated Balance Sheet not to exceed approximately $44.7
million.
Intangible
Assets
The
following tables present details of the Company’s total intangible
assets:
|
|
January 2,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Net
Carrying
|
|
(in
thousands)
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
Developed
product technology
|
|
$ |
188,391 |
|
|
$ |
(78,867 |
) |
|
$ |
109,524 |
|
Trade
names and trademarks
|
|
|
20,254 |
|
|
|
(13,100 |
) |
|
|
7,154 |
|
Customer
relationships
|
|
|
124,596 |
|
|
|
(40,263 |
) |
|
|
84,333 |
|
Distribution
rights and other intellectual properties (*)
|
|
|
37,913 |
|
|
|
(10,023 |
) |
|
|
27,890 |
|
|
|
$ |
371,154 |
|
|
$ |
(142,253 |
) |
|
$ |
228,901 |
|
(*)
Included within Other intellectual properties is a $25.0 million distribution
right that the Company bought from Caterpillar, a related party, during fiscal
2008. The fair value of the distribution right was estimated
using a discounted cash flow analysis. The distribution right will be
amortized over its estimated economic life of eight years. Since the
distribution right became effective at year end, there is no accumulated
amortization recorded as of January 2, 2009.
|
|
December 28,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Net
Carrying
|
|
(in
thousands)
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
Developed
product technology
|
|
$ |
157,394 |
|
|
$ |
(58,273 |
) |
|
$ |
99,121 |
|
Trade
names and trademarks
|
|
|
19,192 |
|
|
|
(12,490 |
) |
|
|
6,702 |
|
Customer
relationships
|
|
|
110,802 |
|
|
|
(24,435 |
) |
|
|
86,367 |
|
Distribution
rights and other intellectual properties
|
|
|
13,479 |
|
|
|
(7,892 |
) |
|
|
5,587 |
|
|
|
$ |
300,867 |
|
|
$ |
(103,090 |
) |
|
$ |
197,777 |
|
The
weighted-average amortization period is six years for developed product
technology, eight years for trade names and trademarks, seven years for customer
relationships and seven years for distribution rights and other intellectual
properties.
The
following table presents details of the amortization expense of purchased and
other intangible assets as reported in the Consolidated Statements of
Income:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
as:
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
$ |
22,690 |
|
|
$ |
19,778 |
|
|
$ |
5,353 |
|
Operating
expenses
|
|
|
22,376 |
|
|
|
18,966 |
|
|
|
7,906 |
|
Total
|
|
$ |
45,066 |
|
|
$ |
38,744 |
|
|
$ |
13,259 |
|
The
estimated future amortization expense of intangible assets as of January 2,
2009, is as follows (in thousands):
2009
|
|
$ |
50,329 |
|
2010
|
|
|
48,164 |
|
2011
|
|
|
43,474 |
|
2012
|
|
|
34,727 |
|
2013
|
|
|
31,146 |
|
Thereafter
|
|
|
21,061 |
|
Total
|
|
$ |
228,901 |
|
Goodwill
The
changes in the carrying amount of goodwill for fiscal 2008 are as follows (in
thousands):
|
|
Engineering
and Construction
|
|
|
Field
Solutions
|
|
|
Mobile
Solutions
|
|
|
Advanced
Devices
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 28, 2007
|
|
$
|
317,886
|
|
|
$
|
5,224
|
|
|
$
|
337,661
|
|
|
$
|
15,079
|
|
$
|
675,850
|
Additions
due to acquisitions
|
|
|
44,999
|
|
|
|
3,518
|
|
|
|
-
|
|
|
|
-
|
|
|
48,517
|
Purchase
price adjustments
|
|
|
15,280
|
|
|
|
1,909
|
|
|
|
(4,675)
|
|
|
|
-
|
|
|
12,514
|
Foreign
currency translation adjustments
|
|
|
(14,257)
|
|
|
|
-
|
|
|
|
(4,265)
|
|
|
|
(2,788)
|
|
|
(21,310)
|
Balance
as of January 2, 2009
|
|
$
|
363,908
|
|
|
$
|
10,651
|
|
|
$
|
328,721
|
|
|
$
|
12,291
|
|
$
|
715,571
|
The
purchase price adjustments relate entirely to business acquisitions prior to
fiscal 2008. Total purchase price adjustments of $12.5 million
recorded during fiscal 2008 are comprised of earn-out payments of $7.2 million,
tax adjustments of $4.4 million, and $0.9 million for changes in purchase price
allocation estimates.
NOTE
5: JOINT VENTURES
Caterpillar
Trimble Control Technologies Joint Venture
On April
1, 2002, Caterpillar Trimble Control Technologies LLC (CTCT), a joint venture
formed by the Company and Caterpillar began operations. CTCT develops advanced
electronic guidance and control products for earth moving machines in the
construction and mining industries. The joint venture is 50% owned by the
Company and 50% owned by Caterpillar, with equal voting rights. The joint
venture is accounted for under the equity method of accounting. Under the equity
method, the Company’s share of profits and losses are included in Income from
joint ventures in the Non-operating income, net section of the Consolidated
Statements of Income. The Company recorded a profit of $8.0 million, $7.8
million and $5.7 million as its proportionate share of CTCT net income (loss) in
fiscal 2008, 2007 and 2006, respectively. During fiscal 2008, 2007
and 2006, dividends received from CTCT, amounted to $10.5 million, $2.3 million
and $2.0 million, and were recorded against Other non-current assets on the
Consolidated Balance Sheets. The carrying amount of the investment in
CTCT was $7.0 million at January 2, 2009 and $9.6 million at December 28, 2007,
and is included in Other non-current assets on the Consolidated Balance
Sheets.
The
Company acts as a contract manufacturer for CTCT. Products are manufactured
based on orders received from CTCT and are sold at direct cost plus a mark-up
for the Company’s overhead costs to CTCT. CTCT then resells products at cost
plus a mark-up in consideration for CTCT’s research and development efforts to
both Caterpillar and to the Company for sales through their respective
distribution channels. Generally, the Company sells products through its
after-market dealer channel, and Caterpillar sells products for factory and
dealer installation. CTCT does not have net inventory on its balance sheet in
that the resale of products to Caterpillar and the Company occur simultaneously
when the products are purchased from the Company. In fiscal 2008, 2007 and 2006,
the Company recorded $11.7 million, $11.5 million and $8.4 million of revenue,
respectively, and $10.5 million, $10.3 million and $7.3 million of cost of
sales, respectively, for the manufacturing of products sold by the Company to
CTCT and then sold through the Caterpillar distribution channel. In
addition, in fiscal 2008, 2007 and 2006, the Company recorded $21.4 million,
$25.1 million and $19.5 million in net cost of sales for the manufacturing of
products sold by the Company to CTCT and then repurchased by the Company upon
sale through the Company’s distribution channel.
In
addition, the Company received reimbursement of employee-related costs from CTCT
for company employees dedicated to CTCT or performance of work for CTCT totaling
$13.6 million, $13.7 million and $13.5 million for fiscal 2008, 2007 and 2006,
respectively. The reimbursements were offset against operating
expense.
At
January 2, 2009 and December 28, 2007, the Company had amounts due to and from
CTCT. Receivables and payables to CTCT are settled individually with
terms comparable to other non-related parties. The amounts due to and
from CTCT are presented on a gross basis in the Consolidated Balance
Sheets. At January 2, 2009 and December 28, 2007, the receivables
from CTCT were $4.1 million and $5.6 million, respectively, and are included
within Accounts receivable, net, on the Consolidated Balance
Sheets. As of the same dates, the payables due to CTCT were
$3.1million and $5.2 million, respectively, and are included within Accounts
payable on the Consolidated Balance Sheets.
Nikon-Trimble
Joint Venture
On March
28, 2003, Nikon-Trimble Co., Ltd (Nikon-Trimble), a joint venture was formed by
the Company and Nikon Corporation. The joint venture began operations in July
2003 and is 50% owned by the Company and 50% owned by Nikon, with equal voting
rights. It focuses on the design and manufacture of surveying instruments
including mechanical total stations and related products.
The joint
venture is accounted for under the equity method of accounting. Under the equity
method, the Company’s share of profits and losses are included in Income from
joint ventures in the Non-operating income (expense) section of the Consolidated
Statements of Income. In fiscal 2008, 2007 and 2006, the Company recorded a
profit of $23,000, $0.6 million and $1.3 million, respectively, as its
proportionate share of Nikon-Trimble net income (loss). During fiscal 2008, 2007
and 2006, dividends received from Nikon-Trimble, amounted to $0.2 million, $0.6
million and $0.3 million, and were recorded against Other non-current assets on
the Consolidated Balance Sheets. The carrying amount of the investment in
Nikon-Trimble was approximately $13.9 million at January 2, 2009 and $13.4
million at December 28, 2007, and is included in Other non-current assets on the
Consolidated Balance Sheets.
Nikon-Trimble
is the distributor in Japan for Nikon and the Company’s products. The Company is
the exclusive distributor outside of Japan for Nikon branded survey products.
For products sold by the Company to Nikon-Trimble, revenue is recognized by the
Company on a sell-through basis from Nikon-Trimble to the end customer. Profits
from these inter-company sales are eliminated.
The terms
and conditions of the sales of products from the Company to Nikon-Trimble are
comparable with those of the standard distribution agreements which the Company
maintains with its dealer channel and margins earned are similar to those from
third party dealers. Similarly, the purchases of product by the Company from
Nikon-Trimble are made on terms comparable with the arrangements which Nikon
maintained with its international distribution channel prior to the formation of
the joint venture with the Company. The Company recorded $15.3
million, $12.6 million and $13.9 million of revenue, and $11.0 million, $6.7
million and $6.6 million of cost of sales for the manufacturing of products sold
by the Company to Nikon-Trimble.
At
January 2, 2009 and December 28, 2007, the Company had amounts due to and from
Nikon-Trimble. Receivables and payables to Nikon-Trimble are settled
individually with terms comparable to other non-related parties. The
amounts due to and from Nikon-Trimble are presented on a gross basis in the
Consolidated Balance Sheets. At January 2, 2009 and December 28, 2007, the
amounts due from Nikon-Trimble were $2.0 million and $3.3 million, respectively,
and are included within Accounts receivable, net on the Consolidated Balance
Sheets. As of the same dates, the amounts due to Nikon-Trimble were
$2.3 million and $5.7 million, respectively, and are included within Accounts
payable on the Consolidated Balance Sheets.
VirtualSite
Solutions Joint Venture
On
October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by the
Company and Caterpillar began operations. The Company contributed
$7.8 million in exchange for a 65% ownership and Caterpillar contributed $4.2
million for a 35% ownership in VSS. VSS develops software for fleet
management and connected worksite solutions for both Caterpillar and Trimble and
in turn, sells software subscription services to Caterpillar and Trimble, which
are sold through Caterpillar's and the Company's respective distribution
channels. For financial reporting purposes, VSS’s assets and liabilities
are consolidated with those of the Company, as are its results of operations,
which are reported under the Engineering and Construction
segment. Caterpillar’s 35% interest is included in the overall
Consolidated Financial Statements as minority interests in consolidated
subsidiaries.
NOTE
6: CERTAIN BALANCE SHEET COMPONENTS
The
following tables provide details of selected balance sheet items:
|
|
January 2,
|
|
December 28,
|
As
of
|
|
2009
|
|
2007
|
(in
thousands)
|
|
|
|
|
|
|
Inventories:
|
|
|
|
|
Raw
materials
|
|
$
|
71,319
|
|
$
|
63,465
|
Work-in-process
|
|
|
5,551
|
|
|
9,267
|
Finished
goods
|
|
|
84,023
|
|
|
70,286
|
Total
inventories, net
|
|
$
|
160,893
|
|
$
|
143,018
|
Deferred
costs of revenue are included within finished goods and were $15.4 million
at January 2, 2009 and $11.0 million at December 28, 2007.
|
|
January 2,
|
|
December 28,
|
As
of
|
|
2009
|
|
2007
|
(in
thousands)
|
|
|
|
|
|
|
Property
and equipment, net:
|
|
|
|
|
|
|
Machinery
and equipment
|
|
$
|
88,067
|
|
$
|
79,956
|
Furniture
and fixtures
|
|
|
12,140
|
|
|
10,974
|
Leasehold
improvements
|
|
|
16,432
|
|
|
15,391
|
Buildings
|
|
|
6,519
|
|
|
6,527
|
Land
|
|
|
1,383
|
|
|
1,384
|
|
|
|
124,541
|
|
|
114,232
|
Less
accumulated depreciation
|
|
|
(74,366)
|
|
|
(62,788)
|
Total
|
|
$
|
50,175
|
|
$
|
51,444
|
|
|
January 2,
|
|
|
December 28,
|
|
As
of
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Other
Non-Current Liabilities:
|
|
|
|
|
|
|
Deferred
compensation
|
|
$
|
6,631
|
|
|
$
|
8,646
|
|
Pension
|
|
|
5,439
|
|
|
|
6,646
|
|
Deferred
rent
|
|
|
4,303
|
|
|
|
5,215
|
|
Unrecognized
tax benefits
|
|
|
34,275
|
|
|
|
25,774
|
|
Other
non-current liabilities
|
|
|
10,905
|
|
|
|
9,847
|
|
Total
|
|
$
|
61,553
|
|
|
$
|
56,128
|
|
As of
January 2, 2009, the Company has $34.3 million of unrecognized tax benefits
included in Other non-current liabilities that, if recognized, would favorably
impact the effective income tax rate in future periods and interest and/or
penalties related to income tax matters.
NOTE
7: REPORTING SEGMENT AND GEOGRAPHIC INFORMATION
Trimble
is a designer and distributor of positioning products and applications enabled
by GPS, optical, laser, and wireless communications technology. The Company
provides products for diverse applications in its targeted
markets.
To
achieve distribution, marketing, production, and technology advantages, the
Company manages its operations in the following four segments:
|
·
|
Engineering
and Construction — Consists of products currently used by survey and
construction professionals in the field for positioning, data collection,
field computing, data management, and machine guidance and control. The
applications served include surveying, road, runway, construction, site
preparation and building
construction.
|
|
·
|
Field
Solutions — Consists of products that provide solutions in a variety of
agriculture and geographic information systems (GIS) applications. In
agriculture these include precise land leveling and machine guidance
systems. In GIS they include handheld devices and software that enable the
collection of data on assets for a variety of governmental and private
entities.
|
|
·
|
Mobile
Solutions — Consists of products that enable end users to monitor and
manage their mobile assets by communicating location and activity-relevant
information from the field to the office. Trimble offers a range of
products that address a number of sectors of this market including truck
fleets, security, and public safety
vehicles.
|
|
·
|
Advanced
Devices — The various operations that comprise this segment were
aggregated on the basis that no single operation accounted for more than
10% of Trimble’s total revenue, operating income or assets. This
segment is comprised of the Component Technologies, Military and Advanced
Systems, Applanix and Trimble Outdoors
businesses.
|
Trimble
evaluates each of its segment's performance and allocates resources based on
segment operating income from operations before income taxes, and some corporate
allocations. Trimble and each of its segments employ consistent accounting
policies.
The
following table presents revenue, operating income (loss), and identifiable
assets for the four segments. Operating income (loss) is net revenue less
operating expense, excluding general corporate expense, amortization of
intangibles, amortization of inventory step-up charges, in-process research and
development expense, restructuring charges, non-operating income (expense), and
income taxes. The identifiable assets that Trimble's Chief Operating Decision
Maker, its Chief Executive Officer, views by segment are accounts receivable and
inventories.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Engineering
& Construction
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
741,668 |
|
|
$ |
743,291 |
|
|
$ |
637,118 |
|
Operating
income
|
|
|
126,014 |
|
|
|
174,177 |
|
|
|
136,157 |
|
Field
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
300,708 |
|
|
$ |
200,614 |
|
|
$ |
139,230 |
|
Operating
income
|
|
|
109,489 |
|
|
|
60,933 |
|
|
|
37,377 |
|
Mobile
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
167,113 |
|
|
$ |
157,673 |
|
|
$ |
60,854 |
|
Operating
income
|
|
|
11,328 |
|
|
|
12,517 |
|
|
|
2,550 |
|
Advanced
Devices
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
119,745 |
|
|
$ |
120,692 |
|
|
$ |
102,948 |
|
Operating
income
|
|
|
24,445 |
|
|
|
17,276 |
|
|
|
10,084 |
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
1,329,234 |
|
|
$ |
1,222,270 |
|
|
$ |
940,150 |
|
Operating
income
|
|
|
271,276 |
|
|
|
264,903 |
|
|
|
186,168 |
|
Engineering
& Construction
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
125,734 |
|
|
$ |
158,913 |
|
|
|
|
|
Inventories
|
|
|
104,934 |
|
|
|
89,780 |
|
|
|
|
|
Goodwill
|
|
|
363,908 |
|
|
|
317,886 |
|
|
|
|
|
Field
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
37,791 |
|
|
$ |
37,294 |
|
|
|
|
|
Inventories
|
|
|
21,778 |
|
|
|
15,745 |
|
|
|
|
|
Goodwill
|
|
|
10,651 |
|
|
|
5,224 |
|
|
|
|
|
Mobile
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
23,736 |
|
|
$ |
25,469 |
|
|
|
|
|
Inventories
|
|
|
16,391 |
|
|
|
18,781 |
|
|
|
|
|
Goodwill
|
|
|
328,721 |
|
|
|
337,661 |
|
|
|
|
|
Advanced
Devices
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
17,008 |
|
|
$ |
18,208 |
|
|
|
|
|
Inventories
|
|
|
17,790 |
|
|
|
18,712 |
|
|
|
|
|
Goodwill
|
|
|
12,291 |
|
|
|
15,079 |
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable (1)
|
|
$ |
204,269 |
|
|
$ |
239,884 |
|
|
|
|
|
Inventories
|
|
|
160,893 |
|
|
|
143,018 |
|
|
|
|
|
Goodwill
|
|
|
715,571 |
|
|
|
675,850 |
|
|
|
|
|
(1) As
presented, accounts receivable represents trade receivables, net, which are
specified between segments.
A
reconciliation of the Company’s consolidated segment operating income to
consolidated income before income taxes is as follows:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Consolidated
segment operating income
|
|
$ |
271,276 |
|
|
$ |
264,903 |
|
|
$ |
186,168 |
|
Unallocated
corporate expense
|
|
|
(36,284 |
) |
|
|
(42,914 |
) |
|
|
(35,798 |
) |
Restructuring
charges
|
|
|
(4,641 |
) |
|
|
(3,025 |
) |
|
|
- |
|
Amortization
of purchased intangible assets
|
|
|
(44,891 |
) |
|
|
(38,585 |
) |
|
|
(13,074 |
) |
In-process
research and development
|
|
|
- |
|
|
|
(2,112 |
) |
|
|
(1,930 |
) |
Consolidated
operating income
|
|
|
185,460 |
|
|
|
178,267 |
|
|
|
135,366 |
|
Non-operating
expense, net
|
|
|
6,502 |
|
|
|
5,489 |
|
|
|
12,726 |
|
Consolidated
income before income taxes
|
|
$ |
191,962 |
|
|
$ |
183,756 |
|
|
$ |
148,092 |
|
The
geographic distribution of Trimble’s revenue and identifiable assets is
summarized in the tables below. Other foreign countries include Canada, and
countries in South and Central America, the Middle East, and
Africa. Revenue is defined as revenue from external
customers. Identifiable assets indicated in the table below exclude
inter-company receivables, investments in subsidiaries, goodwill, and
intangibles assets.
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(1):
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$ |
646,734 |
|
|
$ |
608,137 |
|
|
$ |
511,030 |
|
Europe
|
|
|
333,436 |
|
|
|
325,888 |
|
|
|
231,428 |
|
Asia
Pacific
|
|
|
182,952 |
|
|
|
146,545 |
|
|
|
112,465 |
|
Other
non-US countries
|
|
|
166,112 |
|
|
|
141,700 |
|
|
|
85,227 |
|
Total
consolidated revenue
|
|
$ |
1,329,234 |
|
|
$ |
1,222,270 |
|
|
$ |
940,150 |
|
(1)
Revenue attributed to countries based on the location of the
customer.
Transfers
between U.S. and non-U.S. geographic areas are made at prices based on total
costs and contributions of the supplying geographic area. The Company's
subsidiaries in Asia have derived revenue from commissions from U.S. operations
in each of the periods presented. This commission revenue and expense is
excluded from total revenue in the preceding table. No single customer or
country other than the United States accounted for 10% or more of Trimble's
total revenue in fiscal years 2008, 2007, and 2006.
|
|
January 2,
|
|
|
December 28,
|
|
As
of
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable
assets:
|
|
|
|
|
|
|
United
States
|
|
$ |
441,947 |
|
|
$ |
381,755 |
|
Europe
|
|
|
179,350 |
|
|
|
217,422 |
|
Asia
Pacific and other non-US countries
|
|
|
42,649 |
|
|
|
36,167 |
|
Total
identifiable assets
|
|
$ |
663,946 |
|
|
$ |
635,344 |
|
NOTE
8: RESTRUCTURING CHARGES
Restructuring
expense for the three years ended January 2, 2009 was as follows:
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
and benefits
|
|
$ |
4,641 |
|
|
$ |
3,025 |
|
|
$ |
- |
|
During
fiscal 2008, restructuring expense of $4.6 million was related to decisions to
streamline processes and reduce the cost structure of the Company, with
approximately 100 employees affected worldwide. Of the total restructuring
expense, $2.7 million is shown as a separate line within Operating expense on
the Company’s Consolidated Statements of Income, and $1.9 million is included
within Cost of sales. Additionally, $4.1 million is related to the
Engineering and Construction segment and $0.5 million is related to the Mobile
Solutions segment. As a result of above decisions, the Company expects
restructuring activities in the Engineering and Construction segment to result
in additional restructuring expense totaling approximately $1.8 million through
the first quarter of 2010.
During
fiscal 2007, restructuring expense of $3.0 million was for charges associated
with the Company’s acquisition of @Road. The restructuring expense was related
to the acceleration of vesting of employee stock options for certain terminated
@Road employees, of which $1.4 million was settled in cash and $1.6 million was
recorded as Shareholders’ equity.
Restructuring
costs associated with business combinations:
In
addition to the restructuring expense in fiscal 2008, costs associated with
exiting activities of companies the Company acquired in fiscal 2008 was $0.4
million, consisting of severance and benefits costs. These costs were recognized
as a liability assumed in the purchase business combinations and were included
in the allocation of the cost to acquisitions and accordingly, resulted in an
increase to goodwill rather than an expense in fiscal 2008. The Company also had
$0.9 million in restructuring activity reversals related to costs associated
with exiting activities of pre-merger @Road. The reversals were
primarily due to severance and benefits costs for employees whose positions were
retained in a variety of functions. The reversals were recognized in the first
quarter of fiscal 2008 as a reduction of the liability assumed in the purchase
business combination that had been included in the allocation of the cost to
acquire @Road and, accordingly, resulted in a decrease to goodwill rather than
an expense reduction in fiscal 2008.
In
addition to the restructuring expense in fiscal 2007, costs associated with
exiting activities of pre-merger @Road of $3.6 million, consisted of severance
and benefits costs. These costs were recognized as a liability
assumed in the purchase business combination and were included in the allocation
of the cost to acquire @Road and accordingly, resulted in an increase to
goodwill rather than an expense in fiscal 2007.
Restructuring
liability:
The
following table summarizes the restructuring activity for 2007 and 2008 (in
thousands):
Balance
as of December 30, 2006
|
|
$ |
744 |
|
Acquisition
related
|
|
|
3,547 |
|
Charges
|
|
|
3,025 |
|
Payments
|
|
|
(6,004 |
) |
Adjustment
|
|
|
14 |
|
Balance
as of December 28, 2007
|
|
$ |
1,326 |
|
Acquisition
related
|
|
|
355 |
|
Charges
|
|
|
4,641 |
|
Payments
|
|
|
(3,351 |
) |
Adjustment
|
|
|
(1,054 |
) |
Balance
as of January 2, 2009
|
|
$ |
1,917 |
|
As of
January 2, 2009, the $1.9 million restructuring accrual consists of severance
and benefits. Of the $1.9 million restructuring accrual, $0.7 million
is included in Other current liabilities and is expected to be settled by the
first half of fiscal 2009. The remaining balance of $1.2 million is
included in Other non-current liabilities and is expected to be settled by the
first quarter of fiscal 2010.
NOTE
9: LONG-TERM DEBT
Long-term
debt consisted of the following:
|
|
January 2,
|
|
|
December 28,
|
|
As
of
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Facilities:
|
|
|
|
|
|
|
Term
loan
|
|
$ |
- |
|
|
$ |
60,000 |
|
Revolving
credit facility
|
|
|
151,000 |
|
|
|
- |
|
Promissory
notes and other
|
|
|
588 |
|
|
|
690 |
|
Total
debt
|
|
|
151,588 |
|
|
|
60,690 |
|
|
|
|
|
|
|
|
|
|
Less
current portion of long-term debt
|
|
|
124 |
|
|
|
126 |
|
Non-current
portion
|
|
$ |
151,464 |
|
|
$ |
60,564 |
|
On July
28, 2005, the Company entered into a $200 million unsecured revolving credit
agreement (the 2005 Credit Facility) with a syndicate of 10 banks with The Bank
of Nova Scotia as the administrative agent. On February 16, 2007, the
Company amended its existing $200 million unsecured revolving credit agreement
with a syndicate of 11 banks with The Bank of Nova Scotia as the administrative
agent (the 2007 Credit Facility). Under the 2007 Credit Facility, the Company
exercised the option in the existing credit agreement to increase the
availability under the revolving credit line by $100 million, for an aggregate
availability of up to $300 million, and extended the maturity date of the
revolving credit line by 18 months, from July 2010 to February
2012. Up to $25 million of the availability under the revolving
credit line may be used to issue letters of credit, and up to $20 million may be
used for paying off other debts or loans. The maximum leverage ratio
under the 2007 Credit Facility is 3.00:1.00. The funds
available under the new 2007 Credit Facility may be used by the Company for
acquisitions, stock repurchases, and general corporate purposes. As of August
20, 2008, the Company amended its 2007 Credit Facility
to allow it to redeem, retire or purchase common stock of the Company.
In addition, the definition of the fixed charge was amended to exclude the
impact of redemptions, retirements, or purchases common stock of the
Company from the fixed charges coverage ratio.
In
addition, during the first quarter of fiscal 2007 the Company incurred a
five-year term loan under the 2007 Credit Facility in an aggregate principal
amount of $100 million, which was repaid in full during fiscal
2008. As of January 2, 2009, the Company had an outstanding balance
on the revolving credit line of $151.0 million.
The
Company may borrow funds under the 2007 Credit Facility in U.S. Dollars or in
certain other currencies, and borrowings will bear interest, at the Company's
option, at either: (i) a base rate, based on the administrative agent's prime
rate, plus a margin of between 0% and 0.125%, depending on the Company's
leverage ratio as of its most recently ended fiscal quarter, or (ii) a
reserve-adjusted rate based on the London Interbank Offered Rate (LIBOR), Euro
Interbank Offered Rate (EURIBOR), Stockholm Interbank Offered Rate (STIBOR), or
other agreed-upon rate, depending on the currency borrowed, plus a margin of
between 0.625% and 1.125%, depending on the Company's leverage ratio as of the
most recently ended fiscal quarter. The Company's obligations under the 2007
Credit Facility are guaranteed by certain of the Company's domestic
subsidiaries.
The 2007
Credit Facility contains customary affirmative, negative and financial covenants
including, among other requirements, negative covenants that restrict the
Company's ability to dispose of assets, create liens, incur indebtedness,
repurchase stock, pay dividends, make acquisitions, make investments, enter into
mergers and consolidations and make capital expenditures, within certain
limitations, and financial covenants that require the maintenance of leverage
and fixed charge coverage ratios. The 2007 Credit Facility contains events of
default that include, among others, non-payment of principal, interest or fees,
breach of covenants, inaccuracy of representations and warranties, cross
defaults to certain other indebtedness, bankruptcy and insolvency events,
material judgments, and events constituting a change of control. Upon the
occurrence and during the continuance of an event of default, interest on the
obligations will accrue at an increased rate and the lenders may accelerate the
Company's obligations under the 2007 Credit Facility, however that acceleration
will be automatic in the case of bankruptcy and insolvency events of default. As
of January 2, 2009 the Company was in compliance with all financial debt
covenants.
Notes
Payable
As of
January 2, 2009 and December 28, 2007, the Company had notes payable totaling
approximately $588,000 and $690,000, respectively, consisting of government
loans to foreign subsidiaries.
NOTE
10: COMMITMENTS AND CONTINGENCIES
Operating
Leases
On
February 16, 2007, the Company acquired @Road and assumed the lease for its
primary facility in Fremont, California. The lease agreement has a
five year term, commencing February 1, 2005 and ending May 16,
2010.
On
January 13, 2006, the Company entered into a lease agreement for the lease of
real property located in Westminster, Colorado. The lease
agreement has a seven year term, commencing June 1, 2006 and ending May 31,
2013.
On May
13, 2005, the Company entered into a lease agreement for the lease of real
property located in Sunnyvale, California. The lease agreement has a seven year
term, commencing January 1, 2006 and ending December 31,
2012.
The
Company's principal facilities in the United States are leased under various
cancelable and non-cancelable operating leases that expire at various dates
through 2013. For tenant improvement allowances and rent holidays, Trimble
records a deferred rent liability on the Consolidated Balance Sheets and
amortizes the deferred rent over the terms of the leases as reductions to rent
expense on the consolidated statements of income. The Company has options to
renew certain of these leases for an additional five years.
Future
minimum payments required under non-cancelable operating leases are as follows
(in thousands):
2009
|
|
$ |
17,598 |
|
2010
|
|
|
12,084 |
|
2011
|
|
|
7,666 |
|
2012
|
|
|
5,631 |
|
2013
|
|
|
1,044 |
|
Thereafter
|
|
|
156 |
|
Total
|
|
$ |
44,179 |
|
Net rent
expense under operating leases was $16.2 million in fiscal 2008, $14.2 million
in fiscal 2007, and $10.5 million in fiscal 2006. Sublease income was $49,000,
$39,000 and $44,000 for fiscal 2008, 2007, and 2006, respectively.
Additionally,
as of January 2, 2009, the Company had acquisition earn-outs of $6.3 million and
holdbacks of $20.8 million recorded in “Other current liabilities” and “Other
non-current liabilities.” The maximum remaining payments, including the $6.3
million and $20.8 million recorded, will not exceed $71.7 million. The remaining
payments are based upon targets achieved or events occurring over time that
would result in amounts paid that may be lower than the maximum remaining
payments. The remaining earn-outs and holdbacks are payable through
2012.
At
January 2, 2009, the company had unconditional purchase obligations of
approximately $68.7 million. These unconditional purchase obligations primarily
represent open non-cancelable purchase orders for material purchases with our
vendors. Purchase obligations exclude agreements that are cancelable
without penalty.
NOTE
11: FAIR VALUE OF FINANCIAL INSTRUMENTS
As
discussed in Note 2, SFAS No. 157, which defines fair value, establishes a
framework for measuring fair value, and requires enhanced disclosures about
assets and liabilities measured at fair value, became effective for the Company
beginning in its first quarter of fiscal 2008. Fair value is defined as the
price at which an asset could be exchanged in a current transaction between
knowledgeable, willing parties. A liability’s fair value is defined as the
amount that would be paid to transfer the liability to a new obligor, not the
amount that would be paid to settle the liability with the creditor. Where
available, fair value is based on observable market prices or parameters or
derived from such prices or parameters. Where observable prices or inputs are
not available, valuation models are applied. These valuation techniques involve
some level of management estimation and judgment, the degree of which is
dependent on the price transparency for the instruments or market and the
instruments’ complexity.
Assets
and liabilities recorded at fair value on a recurring basis in the Condensed
Consolidated Balance Sheets are categorized based upon the level of judgment
associated with the inputs used to measure their fair value. Hierarchical
levels, defined by SFAS No. 157 and directly related to the amount of
subjectivity associated with the inputs to fair valuation of these assets and
liabilities, are as follows:
Level I –
Observable inputs such as unadjusted, quoted prices in active markets for
identical assets or liabilities at the measurement date.
Level II
– Inputs (other than quoted prices included in Level I) are either directly or
indirectly observable for the asset or liability. These include
quoted prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are not
active.
Level III
– Unobservable inputs that reflect management’s best estimate of what market
participants would use in pricing the asset or liability at the measurement
date. Consideration is given to the risk inherent in the valuation technique and
the risk inherent in the inputs to the model.
Fair
Value on a Recurring Basis
Assets
and liabilities measured at fair value on a recurring basis are categorized in
the tables below based upon the lowest level of significant input to the
valuations.
|
|
Fair
Values as of January 2, 2009
|
|
(in
thousands)
|
|
Level
I
|
|
|
Level
II
|
|
|
Level
III
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Money
market funds (1)
|
|
$ |
16,246 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
16,246 |
|
Commercial
paper (2)
|
|
|
- |
|
|
|
12,000 |
|
|
|
- |
|
|
|
12,000 |
|
Deferred
compensation plan assets (3)
|
|
|
- |
|
|
|
6,679 |
|
|
|
- |
|
|
|
6,679 |
|
Derivative
assets (4)
|
|
|
- |
|
|
|
627 |
|
|
|
- |
|
|
|
627 |
|
Total
|
|
$ |
16,246 |
|
|
$ |
19,306 |
|
|
$ |
- |
|
|
$ |
35,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation plan liabilities (3)
|
|
$ |
- |
|
|
$ |
6,631 |
|
|
$ |
- |
|
|
$ |
6,631 |
|
Derivative
liabilities (4)
|
|
|
- |
|
|
|
1,775 |
|
|
|
- |
|
|
|
1,775 |
|
Total
|
|
$ |
- |
|
|
$ |
8,406 |
|
|
$ |
- |
|
|
$ |
8,406 |
|
(1)
|
The
Company may invest some of its cash and cash equivalents in highly liquid
investments such as money market funds. The fair values are determined
using observable quoted prices.
|
(2)
|
The
Company may invest some of its cash and cash equivalents in highly liquid
investments such as commercial paper. The fair values are determined using
observable quoted prices for similar assets in active markets. The
Company’s investment in commercial paper is part of the Federal Deposit
Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program
(TLGP), which is fully guaranteed by
FDIC.
|
(3)
|
The
Company maintains a self-directed, non-qualified deferred compensation
plan for certain executives and other highly compensated employees. The
investment assets and liabilities included in Level II are valued using
quoted prices for similar assets or liabilities in active markets and
quoted prices for identical or similar assets or liabilities in markets
that are not active.
|
(4)
|
Derivative
assets and liabilities included in Level II primarily represent
forward currency exchange contracts. The fair values are determined using
inputs based on observable quoted
prices.
|
Additional
Fair Value Information
The
following table provides additional fair value information relating to the
Company’s financial instruments outstanding:
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
As
of
|
|
January 2,
2009
|
|
|
December 28,
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
147,531 |
|
|
$ |
147,531 |
|
|
$ |
103,202 |
|
|
$ |
103,202 |
|
Forward
foreign currency exchange contracts
|
|
|
627 |
|
|
|
627 |
|
|
|
374 |
|
|
|
374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
facility
|
|
$ |
151,000 |
|
|
$ |
127,754 |
|
|
$ |
60,000 |
|
|
$ |
49,000 |
|
Forward
foreign currency exchange contracts
|
|
|
1,775 |
|
|
|
1,775 |
|
|
|
552 |
|
|
|
552 |
|
Promissory
note and other
|
|
|
588 |
|
|
|
554 |
|
|
|
690 |
|
|
|
630 |
|
The fair
value of the bank borrowings and promissory notes has been calculated using an
estimate of the interest rate the Company would have had to pay on the issuance
of notes with a similar maturity and discounting the cash flows at that rate.
The fair values do not give an indication of the amount that Trimble would
currently have to pay to extinguish any of this debt.
NOTE
12: INCOME TAXES
The
components of income before income taxes are as follows:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$ |
89,696 |
|
|
$ |
126,768 |
|
|
$ |
123,800 |
|
Foreign
|
|
|
102,266 |
|
|
|
57,362 |
|
|
|
24,300 |
|
Total
|
|
$ |
191,962 |
|
|
$ |
184,130 |
|
|
$ |
148,100 |
|
The
Company's income tax provision consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
Federal:
|
|
|
|
|
|
|
|
|
|
Current
|
|
$ |
42,473 |
|
|
$ |
48,833 |
|
|
$ |
47,795 |
|
Deferred
|
|
|
(7,024 |
) |
|
|
(1,658 |
) |
|
|
(2,972 |
) |
|
|
|
35,449 |
|
|
|
47,175 |
|
|
|
44,823 |
|
US
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
5,165 |
|
|
|
6,374 |
|
|
|
2,967 |
|
Deferred
|
|
|
(2,271 |
) |
|
|
(3,669 |
) |
|
|
(2,168 |
) |
|
|
|
2,894 |
|
|
|
2,705 |
|
|
|
799 |
|
Foreign:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
13,976 |
|
|
|
10,403 |
|
|
|
(1,493 |
) |
Deferred
|
|
|
(1,829 |
) |
|
|
6,099 |
|
|
|
305 |
|
|
|
|
12,147 |
|
|
|
16,502 |
|
|
|
(1,188 |
) |
Income
tax provision
|
|
$ |
50,490 |
|
|
$ |
66,382 |
|
|
$ |
44,434 |
|
The
income tax provision differs from the amount computed by applying the statutory
US federal income tax rate to income before taxes. The sources and tax effects
of the differences are as follows:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
tax from continuing operations at 35% in all years
|
|
$ |
67,187 |
|
|
$ |
64,446 |
|
|
$ |
51,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
State income taxes
|
|
|
3,339 |
|
|
|
1,654 |
|
|
|
(110 |
) |
Export
sales incentives
|
|
|
- |
|
|
|
(365 |
) |
|
|
(4,138 |
) |
Foreign
tax rate differential
|
|
|
(23,553 |
) |
|
|
(711 |
) |
|
|
(7,682 |
) |
US
Federal and California research and development
credits
|
|
|
(3,651 |
) |
|
|
(2,206 |
) |
|
|
(662 |
) |
Stock
option compensation
|
|
|
3,550 |
|
|
|
3,889 |
|
|
|
3,626 |
|
Other
|
|
|
3,618 |
|
|
|
(325 |
) |
|
|
1,568 |
|
Income
tax provision
|
|
$ |
50,490 |
|
|
$ |
66,382 |
|
|
$ |
44,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
tax rate
|
|
|
26 |
% |
|
|
36 |
% |
|
|
30 |
% |
Deferred
income taxes reflect the net effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the
Company’s deferred tax assets and liabilities are as follows:
|
|
January 2,
|
|
|
December 28,
|
|
As
of
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax liabilities:
|
|
|
|
|
|
|
Purchased
intangibles
|
|
$ |
64,737 |
|
|
$ |
68,561 |
|
Depreciation
and amortization
|
|
|
24,085 |
|
|
|
26,720 |
|
Other
|
|
|
568 |
|
|
|
183 |
|
Total
deferred tax liabilities
|
|
|
89,390 |
|
|
|
95,464 |
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
Inventory
valuation differences
|
|
|
8,298 |
|
|
|
7,359 |
|
Expenses
not currently deductible
|
|
|
8,091 |
|
|
|
10,044 |
|
US
Federal credit carryforwards
|
|
|
2,314 |
|
|
|
2,313 |
|
Deferred
revenue
|
|
|
10,850 |
|
|
|
8,000 |
|
US
State credit carryforwards
|
|
|
11,350 |
|
|
|
10,011 |
|
Warranty
|
|
|
2,418 |
|
|
|
2,177 |
|
US
Federal net operating loss carryforward
|
|
|
16,272 |
|
|
|
24,765 |
|
Net
foreign tax credits on undistributed foreign
earnings
|
|
|
19,689 |
|
|
|
12,857 |
|
Accruals
not currently deductible
|
|
|
15,280 |
|
|
|
17,104 |
|
Total
deferred tax assets
|
|
|
94,562 |
|
|
|
94,630 |
|
Valuation
allowance
|
|
|
(5,787 |
) |
|
|
(6,471 |
) |
Total
deferred tax assets
|
|
|
88,775 |
|
|
|
88,159 |
|
|
|
|
|
|
|
|
|
|
Total
net deferred tax liabilities
|
|
$ |
(615 |
) |
|
$ |
(7,305 |
) |
The
Company has $15.3 million, $0.6 million and $7.7 million of tax effected U.S.
federal, state and foreign net operating loss carryforwards (expiring in years
2020 through 2028 for federal and state carryovers, no expiration for foreign
carryovers) from acquisitions. Utilization of the Company’s net operating loss
carryforwards are subject to annual limitations due to ownership changes
provided by the Internal Revenue Code of 1986, as amended. The Company has
federal research and development credit carryforwards of $2.0 million (expiring
in years 2019 through 2024) and state research and development credit
carryforwards of approximately $15.2 million that can be carried over
indefinitely.
The
Company’s valuation allowance is primarily attributable to acquisition related
net operating loss and research and development credit carryforwards.
Management believes that it is more likely than not that the Company will not
realize these deferred tax assets, and, accordingly, a valuation allowance has
been established for such amounts.
On
September 30, 2008, the State of California enacted Assembly Bill 1452 into law
which among other provisions, suspends net operating loss deductions for 2008
and 2009 and extends the carryforward period of any net operating losses not
utilized due to such suspension; adopts the federal 20-year net operating loss
carryforward period; phases-in the federal two-year net operating loss carryback
periods beginning in 2011 and limits the utilization of tax credits to the
extent of 50 percent of a taxpayer’s taxable income. The Company
recorded additional state tax provision, net of federal benefits as a result of
this law change in the fourth quarter of 2008.
The U.S.
Federal Tax Extenders and Alternative Minimum Tax Relief Act of 2008 was signed
into law on October 3, 2008. Under this law, the federal research and
development tax credit was retroactively extended for amounts paid or incurred
after December 31, 2007 and before January 1, 2010. The effect of the change in
this law for the Company was an increase of $2.4 million in credits for the
quarter ended January 2, 2009.
The
Company’s policy with respect to its undistributed foreign subsidiaries’
earnings is to consider some of those earnings to be indefinitely reinvested
and, accordingly, no related provision for U.S. federal and state income taxes
has been provided. Upon distribution of those earnings in the form of
dividends or otherwise, the Company may be subject to both U.S. income taxes
(subject to an adjustment for foreign tax credits) and foreign withholding
taxes. As of January 2, 2009 the Company’s foreign subsidiary
accumulated undistributed earnings that are intended to be indefinitely
reinvested outside the U.S. is approximately $58.3 million. The
amount of the unrecognized deferred tax liability on this amount is
approximately $19.2 million.
A
reconciliation of the change in the unrecognized tax balances (UTB) from
December 28, 2007 to January 2, 2009 is as follows:
(in
thousands)
|
|
Federal,
State and Foreign Tax
|
|
|
Accrued
Interest and Penalties
|
|
|
Unrecognized
Income Tax Benefits
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 29, 2006
|
|
$ |
21,500 |
|
|
$ |
2,200 |
|
|
$ |
23,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
for tax positions related to the current year
|
|
|
2,800 |
|
|
|
1,000 |
|
|
|
3,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
for tax positions related to prior years
|
|
|
800 |
|
|
|
- |
|
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
reductions for tax positions related to prior years
|
|
|
(400 |
) |
|
|
(100 |
) |
|
|
(500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange
|
|
|
600 |
|
|
|
- |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 28, 2007
|
|
$ |
25,300 |
|
|
$ |
3,100 |
|
|
$ |
28,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
UTBs that, if recognized, would impact the effective tax rate as of
December 28, 2007
|
|
$ |
25,300 |
|
|
$ |
3,100 |
|
|
$ |
28,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
for tax positions related to the current year
|
|
|
5,300 |
|
|
|
1,320 |
|
|
|
6,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
for tax positions related to prior years
|
|
|
3,800 |
|
|
|
- |
|
|
|
3800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
reductions for tax positions related to prior years
|
|
|
(900 |
) |
|
|
(20 |
) |
|
|
(920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange
|
|
|
(600 |
) |
|
|
- |
|
|
|
(600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 2, 2009
|
|
$ |
32,900 |
|
|
$ |
4,400 |
|
|
|
37,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
UTBs that, if recognized, would impact the effective tax rate as of
January 2, 2009
|
|
$ |
32,900 |
|
|
$ |
4,400 |
|
|
|
37,300 |
|
The
Company and its subsidiaries are subject to U.S. federal, state, and foreign
income taxes. The Company has substantially concluded all U.S.
federal and state income tax matters for years through 1992. Non-U.S.
income tax matters have been concluded for years through 2000. The Company is
currently in various stages of multiple year examinations by Federal, State, and
foreign taxing authorities. The Company does not anticipate a
significant impact to the unrecognized tax benefits balance with respect to
current tax examinations. Although the timing of the resolution and/or closure
on audits is highly uncertain, the Company does not believe that the
unrecognized tax benefits would materially change in the next twelve months.
The
Company’s continuing practice is to recognize interest and/or penalties related
to income tax matters in income tax expense. The Company’s liability includes
interest and penalties at January 2, 2009 and December 30, 2007, of $4.4 million
and $3.1 million, respectively, which were recorded in Other non-current
liabilities in the accompanying Consolidated Balance Sheets.
NOTE
13: COMPREHENSIVE INCOME
The
components of comprehensive income and related tax effects are as
follows:
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
141,472 |
|
|
$ |
117,374 |
|
|
$ |
103,658 |
|
Foreign
currency translation adjustments, net of tax of $583 in 2008 and $(636) in
2007
|
|
|
(31,722 |
) |
|
|
18,655 |
|
|
|
21,709 |
|
Net
unrealized actuarial gain (loss)
|
|
|
43 |
|
|
|
(13 |
) |
|
|
- |
|
Net
unrealized gain (loss) on investments
|
|
|
(392 |
) |
|
|
(33 |
) |
|
|
4 |
|
Total
comprehensive income
|
|
$ |
109,401 |
|
|
$ |
135,983 |
|
|
$ |
125,371 |
|
The
components of accumulated other comprehensive income, net of related tax were as
follows:
|
|
January 2,
|
|
|
December 28,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
Accumulated
foreign currency translation adjustments
|
|
$ |
28,147 |
|
|
$ |
59,869 |
|
Net
unrealized loss on investments
|
|
|
(392 |
) |
|
|
- |
|
Net
unrealized actuarial losses
|
|
|
(106 |
) |
|
|
(149 |
) |
Total
accumulated other comprehensive income
|
|
$ |
27,649 |
|
|
$ |
59,720 |
|
NOTE
14: EMPLOYEE STOCK BENEFIT PLANS
Employee
Stock Purchase Plan
The
Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an
aggregate of 11,550,000 shares of Common Stock have been reserved for sale to
eligible employees as approved by the shareholders to date. The plan permits
full-time employees to purchase Common Stock through payroll deductions at 85%
of the lower of the fair market value of the Common Stock at the beginning or at
the end of each offering period, which is generally six months. The amended
Purchase Plan terminates on September 30, 2018. In fiscal 2008, 2007 and 2006,
the shares issued under the Purchase Plan were 437,833, 430,068 and 195,398
shares, respectively. Compensation expense recognized during fiscal 2008, 2007
and 2006 related to shares granted under the Employee Stock Purchase Plan was
$3.4 million, $2.6 million and $1.8 million, respectively. At January 2, 2009,
the number of shares reserved for future purchases by eligible employees was
572,217.
Restricted
Stock Award
Trimble
did not grant any restricted stock awards in fiscal 2008 or fiscal
2007. During the second quarter of fiscal 2006, the Company granted
40,000 shares of restricted common stock. The award vests 20% on June 30, 2005
and an additional 20% each June 30 thereafter. The Company recorded compensation
expense in the Consolidated Statements of Income of $155,000, $191,000 and
$191,000 for fiscal 2008, 2007 and 2006, respectively.
2002
Stock Plan
In 2002,
Trimble’s board of directors adopted the 2002 Stock Plan (“2002 Plan”). The 2002
Plan approved by the shareholders provides for the granting of incentive and
non-statutory stock options and stock awards for up to 12,000,000 shares plus
any shares currently reserved but unissued to employees, consultants, and
directors of Trimble. Incentive stock options may be granted at exercise prices
that are not less than 100% of the fair market value of Common Stock on the date
of grant. Employee stock options granted under the 2002 Plan generally have
84-120 month terms, and vest at a rate of 20% at the first anniversary of grant
and monthly thereafter at an annual rate of 20%, with full vesting occurring at
the fifth anniversary of the grant. In certain instances, grants vest at a rate
of 40% at the second anniversary of grant and monthly thereafter at an annual
rate of 20% with full vesting occurring at the fifth anniversary of the grant.
The Company issues new shares for option exercises. The majority of the
restricted share units granted under this plan vest 100% after three
years. As of January 2, 2009, options to purchase 8,651,279 shares
were outstanding, 156,497 restricted stock units were unvested, and 1,928,329
were available for future grant under the 2002 Plan.
@Road
Plan
In
connection with the acquisition of @Road in February 2007, the Company assumed
all of the outstanding stock options of @Road’s 2000 Stock Option Plan (“@Road
Plan”) as well as the plan itself. The @Road Plan provides for the
granting of incentive and non-statutory stock options. Incentive
stock options may be granted at exercise prices that are not less than 100% of
the fair market value of Common Stock on the date of grant. Employee
stock options granted under the @Road Plan generally have 120-month terms, and
vest at a rate of 20% at the first anniversary of grant and monthly thereafter
at an annual rate of 20%, with full vesting occurring at the fifth anniversary
of the grant. The Company issues new shares for option
exercises. As of January 2, 2009 options to purchase 581,342 shares
were outstanding under the @Road Plan. Shares under this plan are no
longer available for grant due to the Merger of @Road into Trimble.
1993
Stock Option Plan
In 1992,
Trimble's board of directors adopted the 1993 Stock Option Plan (“1993 Plan”).
The 1993 Plan, as amended to date and approved by shareholders, provided for the
granting of incentive and non-statutory stock options for up to 19,125,000
shares of Common Stock to employees, consultants, and directors of Trimble.
Incentive stock options may be granted at exercise prices that are not less than
100% of the fair market value of Common Stock on the date of grant. Employee
stock options granted under the 1993 Plan have 120-month terms, and vest at a
rate of 20% at the first anniversary of grant, and monthly thereafter at an
annual rate of 20%, with full vesting occurring at the fifth anniversary of
grant. The Company issues new shares for option exercises. As of January 2, 2009
options to purchase 1,088,594 shares were outstanding and no shares were
available for future grant.
1992
Employee Stock Bonus Plan
In 1992,
Trimble's board of directors approved the 1992 Employee Stock Bonus Plan ("Bonus
Plan"). As of January 2, 2009, there were no options outstanding to purchase
shares and 5,578 were available for future grant under the 1992 Employee
Stock Bonus Plan.
1990
Director Stock Option Plan
In
December 1990, Trimble adopted a Director Stock Option Plan under which an
aggregate of 1,140,000 shares of Common Stock have been reserved for issuance to
non-employee directors as approved by the shareholders to date. At January 2,
2009, options to purchase 135,000 shares were outstanding, and no shares were
available for future grants under the Director Stock Option Plan.
Options
Outstanding and Exercisable
Exercise
prices for options outstanding as of January 2, 2009, ranged from $2.67 to
$40.59. In view of the wide range of exercise prices, Trimble considers it
appropriate to provide the following additional information with respect to
options outstanding at January 2, 2009:
|
|
|
Options
Outstanding
|
|
|
Options
Exercisable
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
|
Range
|
|
|
|
|
|
|
|
|
Contractual
Life (Years)
|
|
|
|
|
|
|
|
(in
thousands, except for per share data)
|
|
|
|
|
$2.67
– $5.82
|
|
|
|
1,263 |
|
|
$ |
5.05 |
|
|
|
2.78 |
|
|
|
1,263 |
|
|
$ |
5.05 |
|
|
$6.00
– $7.85
|
|
|
|
281 |
|
|
|
6.77 |
|
|
|
2.30 |
|
|
|
281 |
|
|
|
6.77 |
|
|
$8.02
– $8.50
|
|
|
|
1,077 |
|
|
|
8.50 |
|
|
|
4.46 |
|
|
|
1,078 |
|
|
|
8.50 |
|
|
$8.77
– $14.53
|
|
|
|
1534 |
|
|
|
13.65 |
|
|
|
4.78 |
|
|
|
1305 |
|
|
|
13.56 |
|
|
$14.56
– $17.00
|
|
|
|
1,514 |
|
|
|
16.59 |
|
|
|
6.58 |
|
|
|
967 |
|
|
|
16.49 |
|
|
$17.06
– $19.78
|
|
|
|
339 |
|
|
|
18.66 |
|
|
|
6.44 |
|
|
|
247 |
|
|
|
18.73 |
|
|
$19.96
|
|
|
|
1,280 |
|
|
|
19.96 |
|
|
|
6.77 |
|
|
|
- |
|
|
|
- |
|
|
$20.04
– $23.36
|
|
|
|
227 |
|
|
|
21.80 |
|
|
|
6.87 |
|
|
|
154 |
|
|
|
21.91 |
|
|
$23.44
|
|
|
|
1,206 |
|
|
|
23.44 |
|
|
|
4.74 |
|
|
|
499 |
|
|
|
23.44 |
|
|
$23.55
– $40.59
|
|
|
|
1,735 |
|
|
|
32.96 |
|
|
|
6.07 |
|
|
|
200 |
|
|
|
30.00 |
|
Total
|
|
|
|
10,456 |
|
|
$ |
17.76 |
|
|
|
5.25 |
|
|
|
5,994 |
|
|
$ |
12.81 |
|
|
|
Number
Of
Shares (in
thousands)
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (in years) |
|
Aggregate
Intrinsic
Value
(in
thousands)
|
|
|
|
|
|
Options
outstanding
|
|
|
10,456 |
|
$ |
17.76 |
|
|
5.27 |
|
$ |
67,317 |
|
Options
outstanding and expected to vest
|
|
|
9,696 |
|
|
17.26 |
|
|
5.20 |
|
|
65,915 |
|
Options
exercisable
|
|
|
5,594 |
|
|
12.81 |
|
|
4.60 |
|
|
59,012 |
|
Options
outstanding and expected to vest are adjusted for expected forfeitures. The
aggregate intrinsic value is the total pretax intrinsic value based on the
Company’s closing stock price of $22.30 as of January 2, 2009, which would have
been received by the option holders had all option holders exercised their
options as of that date.
As of
January 2, 2009, the total unamortized stock option expense is $31.3 million
with a weighted-average recognition period of 3.3 years.
Option
Activity
Activity
during fiscal 2008, under the combined plans was as follows:
|
|
Options
|
|
|
Weighted
average exercise price
|
|
(in
thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at beginning of year
|
|
|
10,123 |
|
|
$ |
15.88 |
|
Granted
|
|
|
1,998 |
|
|
|
23.32 |
|
Assumed
from @Road
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
(1,262 |
) |
|
|
9.99 |
|
Cancelled
|
|
|
(403 |
) |
|
|
22.49 |
|
Outstanding
at end of year
|
|
|
10,456 |
|
|
$ |
17.76 |
|
|
|
|
|
|
|
|
|
|
Available
for grant
|
|
|
1,934 |
|
|
|
|
|
The total
intrinsic value of options exercised during fiscal 2008, 2007 and 2006 was $28.3
million, $68.4 million and $48.8 million, respectively. Compensation
expense recognized during fiscal 2008, 2007 and 2006 related to stock options
was $11.8 million, $12.3 million and $10.7 million, respectively.
Restricted
Stock Unit Activity
Activity
during fiscal 2008 was as follows:
|
|
Restricted
Stock Units
|
|
|
Weighted
Average Grant-Date Fair Value
|
|
(in
thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested
at beginning of year
|
|
|
63 |
|
|
$ |
40.55 |
|
Granted
|
|
|
99 |
|
|
$ |
20.19 |
|
Vested
|
|
|
- |
|
|
|
- |
|
Cancelled
|
|
|
(6 |
) |
|
$ |
38.56 |
|
Nonvested
at end of year
|
|
|
156 |
|
|
$ |
27.78 |
|
Compensation
expense recognized during fiscal 2008 and 2007 related to restricted stock units
was $1.0 million and $65,000, respectively. There were no restricted stock units
granted prior to fiscal 2007. As of January 2, 2009, there was $2.9 million of
total unamortized restricted stock unit compensation expense related to
nonvested restricted stock units, with a weighted-average recognition period of
2.42 years.
Warrants
On April
12, 2002, the Company issued to Spectra-Physics Holdings USA, Inc., a warrant to
purchase up to 1,128,700 shares of Trimble’s Common Stock over a fixed period of
time. Initially, Spectra-Physics’ warrant entitled it to purchase 600,000 shares
of Common Stock over a five-year period at an exercise price of $5.04 per share.
On a quarterly basis beginning July 14, 2002, Spectra-Physics’ warrant became
exercisable for an additional 750 shares of Common Stock for every $1 million of
principal and interest outstanding to Spectra-Physics until the obligation was
paid off in full. These shares are purchasable at a price equal to the average
of Trimble’s closing price for the five days immediately proceeding the last
trading day of each quarter. On July 14, 2002 an additional 52,092 shares became
exercisable at an exercise price of $4.82 per share. On October 14, 2002 an
additional 53,472 shares became exercisable at an exercise price of $3.06. On
January 14, 2003, an additional 54,852 shares became exercisable at an exercise
price of $4.52. On April 14, 2003, an additional 28,623 shares became
exercisable at an exercise price of $6.69. The approximate fair value of the
warrants of $2.4 million was determined using the Black-Scholes pricing model
with the following assumptions: contractual life of 5-year period, risk-free
interest rate of 4%; volatility of 65%; and no dividends during the contractual
term. The additional shares are exercisable over a 5-year period. No additional
shares will be issuable under the warrant as the underlying obligation has been
paid off in full. During fiscal 2008 there were 28,623 shares
exercised related to the warrants. For fiscal 2007, 760,416 shares
were exercised and for fiscal 2006, no shares were exercised. As of
January 2, 2009, there are no shares
outstanding and exercisable under the warrants.
NOTE
15: BENEFIT PLANS
401(k)
Plan
Under the
Company’s 401(k) Plan, U.S. employee participants (including employees of
certain subsidiaries) may direct the investment of contributions to their
accounts among certain mutual funds and the Trimble Navigation Limited Common
Stock Fund. The Trimble Fund sold 106,931 net shares of Common Stock for an
aggregate of $3.2 million in fiscal 2008. The Company, at its discretion,
matches individual employee 401(k) Plan contributions at a rate of fifty cents
of every dollar that the employee contributes to the 401(k) Plan up to 5% of the
employee’s annual salary to an annual maximum of $2,500. The Company’s matching
contributions to the 401(k) Plan were $3.3 million in fiscal 2008, 3.1 million
in fiscal 2007, and $2.5 million in fiscal 2006.
Defined
Contribution Pension Plans
Certain
of the Company’s European subsidiaries participate in state sponsored pension
plans. Contributions are based on specified percentages of employee
salaries. For these plans, the Company contributed and charged to
expense approximately $0.9 million for fiscal 2008, $0.8 million for fiscal 2007
and $0.7 million for fiscal 2006.
Defined
Benefit Pension Plan
The
Company provides defined benefit pension plans in Sweden and Germany. The
largest of these plans is provided by the Swedish subsidiary which has an
unfunded defined benefit pension plan that covered substantially all of its
full-time employees through 1993. Benefits are based on a percentage of eligible
earnings. The employee must have had a projected period of pensionable service
of at least 30 years as of 1993. If the period was shorter, the pension benefits
were reduced accordingly. Active employees do not accrue any future benefits;
therefore, there is no service cost and the liability will only increase for
interest cost.
On
December 28, 2007, the Company adopted the recognition and disclosure provisions
of SFAS 158. The Company adopted the measurement date provision in fiscal year
2008. SFAS 158 required the Company to recognize the funded status (i.e., the
difference between the fair value of plan assets and the projected benefit
obligations) of its pension plan in the
Consolidated Balance Sheet, with a corresponding adjustment to accumulated other
comprehensive income, net of tax. The adjustment to accumulated other
comprehensive income at adoption represents the net unrecognized actuarial
losses and unrecognized transition obligation remaining from the initial
adoption of SFAS 87, all of which were previously netted against the plan’s
funded status in the Company’s Consolidated Balance Sheets pursuant to the
provisions of Statement 87. These amounts will be subsequently recognized as net
periodic pension cost pursuant to the Company’s historical accounting policy for
amortizing such amounts. Further, actuarial gains and losses that arise in
subsequent periods and are not recognized as net periodic pension cost in the
same periods will be recognized as a component of other comprehensive income.
Those amounts will be subsequently recognized as a component of net periodic
pension cost on the same basis as the amounts recognized in accumulated other
comprehensive income at adoption of SFAS 158. The adoption of SFAS
158 did not have a material impact on the Company’s consolidated statement of
income for any period presented.
The
pension related balances on the Company’s Consolidated Balance Sheet at January
2, 2009 and December 28, 2007 are presented in the following table.
Fiscal
Years Ended
|
|
January
2, 2009
|
|
|
December
28, 2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
accrued pension liability
|
|
$ |
140 |
|
|
$ |
276 |
|
Non-current
accrued pension liability
|
|
|
5,439 |
|
|
|
6,646 |
|
|
|
|
|
|
|
|
|
|
Unrecognized
actuarial loss
|
|
|
(106 |
) |
|
|
(149 |
) |
The
changes in the benefit obligations and plan assets of the significant non-U.S.
defined benefit pension plans for fiscal 2008 and 2007 were as
follows:
Fiscal
Years Ended
|
|
January 2,
2009
|
|
|
December 28,
2007
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in benefit obligation:
|
|
|
|
|
|
|
Benefit
obligation at beginning of year
|
|
$ |
10,231 |
|
|
$ |
9,398 |
|
Adjustment
to (exclude)/include benefit obligation for the Netherlands
subsidiary*
|
|
|
(2,334 |
) |
|
|
336 |
|
Benefit
obligation at beginning of year (restated)
|
|
|
7,897 |
|
|
|
9,734 |
|
Service
cost
|
|
|
33 |
|
|
|
411 |
|
Interest
cost
|
|
|
337 |
|
|
|
460 |
|
Benefits
paid
|
|
|
(303 |
) |
|
|
(359 |
) |
Foreign
exchange impact
|
|
|
(963 |
) |
|
|
173 |
|
Actuarial
(gains) losses
|
|
|
(62 |
) |
|
|
(188 |
) |
Benefit
obligation at end of year
|
|
|
6,939 |
|
|
|
10,231 |
|
Change
in plan assets:
|
|
|
|
|
|
|
|
|
Fair
value of plan assets at beginning of year
|
|
|
3,309 |
|
|
|
2,913 |
|
Adjustment
to include fair value of plan assets for the Netherlands
subsidiary
|
|
|
(1,984 |
) |
|
|
(13 |
) |
Fair
value of plan assets at beginning of year (restated)
|
|
|
1,325 |
|
|
|
2,900 |
|
Actual
return on plan assets
|
|
|
38 |
|
|
|
(92 |
) |
Employer
contribution
|
|
|
68 |
|
|
|
355 |
|
Plan
participants’ contributions
|
|
|
- |
|
|
|
- |
|
Benefits
paid
|
|
|
(59 |
) |
|
|
(123 |
) |
Foreign
exchange impact
|
|
|
(12 |
) |
|
|
269 |
|
Fair
value of plan assets at end of year
|
|
|
1,360 |
|
|
|
3,309 |
|
|
|
|
|
|
|
|
|
|
Benefit
obligation in excess of plan assets at end of year
|
|
$ |
5,579 |
|
|
$ |
6,922 |
|
|
|
|
|
|
|
|
|
|
Current
portion (included in accrued compensation and benefits)
|
|
|
140 |
|
|
|
276 |
|
Non-current
portion (included in other non-current liabilities)
|
|
|
5,439 |
|
|
|
6,646 |
|
*The
Company changed its defined benefit pension plan in Netherlands to a defined
contribution plan in fiscal 2008.
The
under-funded status of the plan of $5.6 million at January 2, 2009 is recognized
in the accompanying Consolidated Balance Sheets as a short-term and a long-term
accrued pension liability. No plan assets are expected to be returned
to Trimble during fiscal 2008.
Net
periodic benefit cost in fiscal 2008 was not material.
Actuarial
assumptions used to determine the net periodic pension costs for fiscal 2008
were as follows:
|
|
Swedish
Subsidiary
|
|
|
German
Subsidiaries
|
|
Discount
rate
|
|
|
4.8 |
% |
|
|
6.5 |
% |
Rate
of compensation increase
|
|
|
2.0 |
% |
|
|
2.0 |
% |
Measurement
Date
|
|
1/2/2009
|
|
|
1/2/2009
|
|
The
Company’s accumulated benefits obligation was approximately $6.9 million and
$10.2 million for fiscal 2008 and fiscal 2007, respectively.
The
Company’s plan assets are primarily located in the Company's German
subsidiaries. For German subsidiaries, for fiscal 2008, the asset allocation
of the total plan assets was approximately as follows: 89% local
government bonds, 7% real estate and 4% equity securities. Long-term asset
allocation and expected return on assets assumptions are derived from detailed
annual studies conducted by the Company's asset management group and actuaries.
The Company’s asset management group limits allocation to equity securities
and real estate to a maximum of 10% and 25%, respectively, with the remaining
assets to be allocated to local government bonds. While the asset allocation
give appropriate consideration to recent performance and historical returns, the
strategy is focused primarily on conservative and sustainable long-term returns.
Based on historical returns, the Company expects future return on
assets to be approximately 4%.
The
Company expects to contribute approximately $372,000 to plan assets in fiscal
year ended 2009.
The
following benefit payments, which reflect estimated future employee service, as
appropriate, are expected to be paid (in thousands):
|
2009
|
|
$ |
390 |
|
|
2010
|
|
|
422 |
|
|
2011
|
|
|
431 |
|
|
2012
|
|
|
434 |
|
|
2013
|
|
|
465 |
|
|
Thereafter
|
|
|
6,457 |
|
Total
|
|
|
$ |
8,599 |
|
NOTE
16: STATEMENT OF CASH FLOW DATA
|
|
January 2,
|
|
|
December 28,
|
|
|
December 29,
|
|
Fiscal
Years Ended
|
|
2009
|
|
|
2007
|
|
|
2006
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
2,451 |
|
|
$ |
6,250 |
|
|
$ |
8 |
|
Income
taxes paid
|
|
$ |
73,756 |
|
|
$ |
35,170 |
|
|
$ |
36,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares to acquire @Road
|
|
$ |
- |
|
|
$ |
161,947 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
17: LITIGATION
From time
to time, the Company is involved in litigation arising out of the ordinary
course of its business. There are no known claims or pending litigation expected
to have a material effect on the Company’s overall financial position, results
of operations, or liquidity.
NOTE
18: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
March 28,
|
|
|
June 27,
|
|
|
September 26,
|
|
|
January 2,
|
|
Fiscal
period ended
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
355,296 |
|
|
$ |
377,767 |
|
|
$ |
328,087 |
|
|
$ |
268,084 |
|
Gross
margin
|
|
|
174,376 |
|
|
|
187,099 |
|
|
|
165,623 |
|
|
|
122,038 |
|
Net
income
|
|
|
40,067 |
|
|
|
48,599 |
|
|
|
39,067 |
|
|
|
13,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
|
0.33 |
|
|
|
0.40 |
|
|
|
0.32 |
|
|
|
0.12 |
|
Diluted
net income per share
|
|
|
0.32 |
|
|
|
0.39 |
|
|
|
0.31 |
|
|
|
0.11 |
|
|
|
March 30,
|
|
|
June 29,
|
|
|
September 28,
|
|
|
December 28,
|
|
Fiscal
period ended
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
285,732 |
|
|
$ |
327,732 |
|
|
$ |
296,023 |
|
|
$ |
312,783 |
|
Gross
margin
|
|
|
143,130 |
|
|
|
167,169 |
|
|
|
146,940 |
|
|
|
155,666 |
|
Net
income
|
|
|
28,683 |
|
|
|
35,026 |
|
|
|
27,374 |
|
|
|
26,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
|
0.25 |
|
|
|
0.29 |
|
|
|
0.23 |
|
|
|
0.22 |
|
Diluted
net income per share
|
|
|
0.24 |
|
|
|
0.28 |
|
|
|
0.22 |
|
|
|
0.21 |
|
Trimble
has a 52-53 week fiscal year, ending on the Friday nearest to December 31.
Fiscal 2008 was a 53-week year and fiscal 2007 was a 52-week year. As a result
of the extra week, year-over-year results may not be comparable. The Company was
shut down an additional week during the fourth quarter of fiscal 2008. Thus, due
to the inherent nature of adopting a 52-53 week fiscal year, the Company,
analysts, shareholders, investors, and others will have to make appropriate
adjustments to any analysis performed when comparing our activities and
results.
Report
of Independent Registered Public Accounting Firm
The
Board of Directors and Shareholders of Trimble Navigation Limited
We have
audited the accompanying consolidated balance sheets of Trimble Navigation
Limited as of January 2, 2009 and December 28, 2007, and the related
consolidated statements of income, shareholders’ equity, and cash flows for each
of the three years in the period ended January 2, 2009. Our audits also included
the financial statement schedule listed in the index at Item 15 (a) Schedule II.
These financial statements and schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Trimble Navigation
Limited at January 2, 2009 and December 28, 2007, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended January 2, 2009, in conformity with U.S generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
As
discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for uncertain tax positions as of December 30,
2006.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Trimble Navigation Limited’s internal control
over financial reporting as of January 2, 2009, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 27, 2009,
expressed an unqualified opinion thereon.
/s/ Ernst
& Young LLP
San Jose,
California
February
27, 2009
Report
of Independent Registered Public Accounting Firm
The
Board of Directors and Shareholders of Trimble Navigation Limited
We have
audited Trimble Navigation Limited's internal control over financial reporting
as of January 2, 2009, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (the COSO criteria). Trimble Navigation Limited’s
management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management's
Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting
based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our
opinion, Trimble Navigation Limited maintained, in all material respects,
effective internal control over financial reporting as of January 2, 2009, based
on the COSO criteria.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Trimble
Navigation Limited as of January 2, 2009 and December 28, 2007, and the related
consolidated statements of income, shareholders’ equity, and cash flows for each
of the three years in the period ended January 2, 2009 and our report dated
February 27, 2009 expressed an unqualified opinion thereon.
/s/ Ernst
& Young LLP
San Jose,
California
February
27, 2009
None
(a)
Evaluation of Disclosure Controls and Procedures
The
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this report. Based on such evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that, as
of the end of such period, our disclosure controls and procedures are
effective.
Inherent
Limitations on Effectiveness of Controls
The
Company’s management, including the CEO and CFO, does not expect that our
internal control over financial reporting will prevent or detect all error and
all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control system’s
objectives will be met. The design of any system of controls is based in part on
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.
(b)
Management’s Report on Internal Control over Financial Reporting
The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Our internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
The
Company’s management, including the CEO and CFO, conducted an evaluation of the
effectiveness of its internal control over financial reporting based on the
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the results of this
evaluation, the Company’s management concluded that its internal control over
financial reporting was effective as of January 2, 2009.
The
effectiveness of our internal control over financial reporting as of January 2,
2009 has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their report which is included elsewhere
herein.
Changes
in Internal Control over Financial Reporting
During
the quarter ended January 2, 2009, there were no changes in the Company’s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
None.
PART
III
The
information required by this item, insofar as it relates to Trimble’s directors,
will be contained under the captions “Election of Directors” and
“Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy
Statement and is incorporated herein by reference. The information required by
this item relating to executive officers is set forth above in Item 1 Business
Overview under the caption “Executive Officers.”
The
information required by this item in so far as it relates to the nominating and
audit committees will be contained in the Proxy Statement under the caption
“Board Meetings and Committees.”
Code
of Ethics
The
Company’s Business Ethics and Conduct Policy applies to, among others, to the
Company’s Chief Executive Officer, Chief Financial Officer, Vice President of
Finance, Corporate Controller, and other finance organization employees. The
Business Ethics and Conduct Policy is available on the Company’s website at
www.trimble.com under the heading “Corporate Governance and Policies” on the
Investor Information page of our website. A copy will be provided, without
charge, to any shareholder who requests one by written request addressed to
General Counsel, Trimble Navigation Limited, 935 Stewart Drive, Sunnyvale, CA
94085.
If any
substantive amendments to the Business Ethics and Conduct Policy are made or any
waivers are granted, including any implicit waiver, from a provision of the
Business Ethics and Conduct Policy, to its Chief Executive Officer, Chief
Financial Officer, Vice President of Finance, or Corporate Controller, the
Company will disclose the nature of such amendment or waiver on the Company’s
website at www.trimble.com or in a report on Form 8-K.
The
information required by this item will be contained in the Proxy Statement under
the caption “Executive Compensation” and is incorporated herein by
reference.
The
information required by this item will be contained in the Proxy Statement under
the caption “Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters” and is incorporated herein by
reference.
The
information required by this item will be contained in the Proxy Statement under
the caption “Certain Relationships and Related Transactions, and Director
Independence” and is incorporated herein by reference.
The
information required by this item will be contained in the Proxy Statement under
the caption “Principal Accounting Fees and Services” and is incorporated herein
by reference.
PART
IV
(a)
(1) Financial Statements
The
following consolidated financial statements required by this item are included
in Part II Item 8 hereof under the caption “Financial Statements and
Supplementary Data.”
|
|
Page
in this Annual Report on
Form
10-K
|
|
Consolidated
Balance Sheets at January 2, 2009 and December 28, 2007
|
|
|
46
|
|
|
|
|
|
|
Consolidated
Statements of Income for the fiscal years ended January 2, 2009,
December 28, 2007 and December 29, 2006
|
|
|
47
|
|
|
|
|
|
|
Consolidated
Statement of Shareholders’ Equity for the fiscal years ended
January 2, 2009, December 28, 2007 and December 29,
2006
|
|
|
48
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the fiscal years ended January 2,
2009, December 28, 2007 and December 29, 2006
|
|
|
49
|
|
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
|
|
50
|
|
|
|
|
|
|
Reports
of Independent Registered Public Accounting Firm
|
|
|
85
|
|
(2) Financial Statement
Schedules
The
following financial statement schedule is filed as part of this
report:
|
|
Page
in this Annual
Report
on Form 10-K
|
|
Schedule
II – Valuation and Qualifying Accounts
|
|
|
S-1
|
|
All other
schedules have been omitted as they are either not required or not applicable,
or the required information is included in the consolidated financial statements
or the notes thereto.
(b)
Exhibits
Exhibit
Number
3.1
|
Restated
Articles of Incorporation of the Company filed June 25, 1986.
(5)
|
3.2
|
Certificate
of Amendment of Articles of Incorporation of the Company filed October 6,
1988. (6)
|
3.3
|
Certificate
of Amendment of Articles of Incorporation of the Company filed July 18,
1990. (7)
|
3.4
|
Certificate
of Determination of the Company filed February 19, 1999.
(8)
|
3.5
|
Certificate
of Amendment of Articles of Incorporation of the Company filed May 29,
2003. (14)
|
3.6
|
Certificate
of Amendment of Articles of Incorporation of the Company filed March 4,
2004. (16)
|
3.7
|
Certificate
of Amendment of Articles of Incorporation of the Company filed February
21, 2007. (23)
|
3.8
|
Bylaws
of the Company (amended and restated through July 20, 2006).
(15)
|
4.1
|
Specimen
copy of certificate for shares of Common Stock of the Company.
(1)
|
4.2
|
Preferred
Shares Rights Agreement dated as of February 18, 1999.
(4)
|
4.3
|
Agreement
of Substitution and Amendment of Preferred Shares Rights Agreement dated
September 10, 2004. (17)
|
10.1+
|
Form
of Indemnification Agreement between the Company and its officers and
directors. (19)
|
10.
2+
|
1990
Director Stock Option Plan, as amended, and form of Outside Director
Non-statutory Stock Option Agreement. (3)
|
10.3+
|
1992
Management Discount Stock Option and form of Non-statutory Stock Option
Agreement. (2)
|
10.4+
|
1993
Stock Option Plan, as amended October 24, 2003. (11)
|
10.5+
|
Trimble
Navigation 1988 Employee Stock Purchase Plan, as amended January 17, 2007.
(25)
|
10.6+
|
Employment
Agreement between the Company and Steven W. Berglund dated March 17, 1999.
(9)
|
10.7+
|
Trimble
Navigation Limited Deferred Compensation Plan effective December 30, 2004,
as amended and restated October 19, 2007. (10)
|
10.8+
|
Australian
Addendum to the Trimble Navigation Limited 1988 Employee Stock Purchase
Plan. (12)
|
10.9+
|
Trimble
Navigation Limited 2002 Stock Plan (as amended and restated December 31,
2008), including forms of option and restricted stock unit agreements.
(27)
|
10.10
|
Amended
and Restated Credit Agreement dated February 16, 2007 (amending and
restating the Credit Agreement dated as of July 28, 2005) among
Trimble Navigation Limited, the Subsidiary Borrowers, The Bank of Nova
Scotia (Administrative Agent, Issuing Bank and Swing Line Bank), Citibank
N.A. and BMO Capital Markets (Co-Syndication Agents), Bank of
America, N.A. and Wells Fargo Bank N.A. (Co-Documentation Agents), The
Bank of Nova Scotia and BNY Capital Markets, Inc. (Joint Lead Arrangers),
and The Bank of Nova Scotia (Sole Book Runner). (13)
|
10.11+
|
Employment
Agreement between the Company and Rajat Bahri dated December 6, 2004.
(18)
|
10.12+
|
Board
of Directors Compensation Policy effective July 1, 2007.
(26)
|
10.13+
|
Amended
and Restated form of Change in Control severance agreement between the
Company and certain Company officers. (27)
|
10.14+
|
Amendment
to Employment Agreement between the Company and Steven W. Berglund dated
December 19, 2008. (27)
|
10.15+
|
Amendment
to letter of employment between the Company and Rajat Bahri dated December
31, 2008. (27)
|
10.16
|
Lease
dated May 11, 2005 between CarrAmerica Realty Operating Partnership, L.P.
and the Company. (22)
|
10.17+
|
Trimble
Navigation Limited 2007 Management Incentive Plan Description.
(20)
|
10.18+
|
@Road,
Inc. 2000 Stock Option Plan, as amended May 16, 2000.
(24)
|
10.19
|
Amendment
No. 1 to the Amended and Restated Credit Agreement.
(27)
|
10.20+
|
Trimble
Navigation Limited Annual Management Incentive Plan Description.
(21)
|
21.1
|
Subsidiaries
of the Company. (27)
|
23.1
|
Consent
of Independent Registered Public Accounting Firm. (27)
|
24.1
|
Power
of Attorney included on signature page herein.
|
31.1
|
Certification
of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(27)
|
31.2
|
Certification
of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(27)
|
32.1
|
Certification
of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(27)
|
32.2
|
Certification
of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(27)
|
|
|
+
|
Management
contract or compensatory plan or arrangement.
|
(1)
|
Incorporated
by reference to exhibit number 4.1 to the Company’s Registration Statement
on Form S-1, as amended (File No. 33-35333), which became effective July
19, 1990.
|
(2)
|
Incorporated
by reference exhibit number 10.46 to the Company’s Registration Statement
on Form S-1 (File No. 33-45990), which was filed February 25,
1992.
|
(3)
|
Incorporated
by reference to exhibit number 10.32 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
|
(4)
|
Incorporated
by reference to exhibit number 1 to the Company’s Registration Statement
on Form 8-A, which was filed on February 18, 1999.
|
(5)
|
Incorporated
by reference to exhibit number 3.1 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(6)
|
Incorporated
by reference to exhibit number 3.2 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(7)
|
Incorporated
by reference to exhibit number 3.3 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(8)
|
Incorporated
by reference to exhibit number 3.4 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(9)
|
Incorporated
by reference to exhibit number 10.67 to the Company’s Annual Report on
Form 10-K for the fiscal year ended January 1, 1999.
|
(10)
|
Incorporated
by reference to exhibit number 10.2 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 28, 2007.
|
(11)
|
Incorporated
by reference to exhibit number 10.3 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended October 3,
2003.
|
(12)
|
Incorporated
by reference to exhibit number 10.77 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 29, 2000.
|
(13)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 30, 2007.
|
(14)
|
Incorporated
by reference to exhibit number 3.5 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended July 4, 2003.
|
(15)
|
Incorporated
by reference to exhibit number 3.7 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 29, 2006.
|
(16)
|
Incorporated
by reference to exhibit number 3.6 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended April 2, 2004.
|
(17)
|
Incorporated
by reference to exhibit number 4.3 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2004.
|
(18)
|
Incorporated
by reference to exhibit number 10.13 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2004.
|
(19)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Annual Report on Form
10-K for the year ended December 30, 2005.
|
(20)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Current Report on
Form 8-K filed on January 30, 2007.
|
(21)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Current Report on
Form 8-K filed on April 24, 2008.
|
(22)
|
Incorporated
by reference to exhibit number 10.17 to the Company’s Annual Report on
Form 10-K for the year ended December 30, 2005.
|
(23)
|
Incorporated
by reference to exhibit number 3.7 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 30, 2007.
|
(24)
|
Incorporated
by reference to exhibit number 10.19 to the Company’s Annual Report on
Form 10-K for the year ended December 29, 2006.
|
(25)
|
Incorporated
by reference to exhibit 10.5 to the Company’s Annual Report on Form 10-K
for the year ended December 29, 2006.
|
(26)
|
Incorporated
by reference to exhibit 10.12 to the Company’s Annual Report on Form 10-K
for the year ended December 28, 2007.
|
(27)
|
Filed
herewith.
|
EXHIBIT
LIST
Exhibit
Number
3.1
|
Restated
Articles of Incorporation of the Company filed June 25, 1986.
(5)
|
3.2
|
Certificate
of Amendment of Articles of Incorporation of the Company filed October 6,
1988. (6)
|
3.3
|
Certificate
of Amendment of Articles of Incorporation of the Company filed July 18,
1990. (7)
|
3.4
|
Certificate
of Determination of the Company filed February 19, 1999.
(8)
|
3.5
|
Certificate
of Amendment of Articles of Incorporation of the Company filed May 29,
2003. (14)
|
3.6
|
Certificate
of Amendment of Articles of Incorporation of the Company filed March 4,
2004. (16)
|
3.7
|
Certificate
of Amendment of Articles of Incorporation of the Company filed February
21, 2007. (23)
|
3.8
|
Bylaws
of the Company (amended and restated through July 20, 2006).
(15)
|
4.1
|
Specimen
copy of certificate for shares of Common Stock of the Company.
(1)
|
4.2
|
Preferred
Shares Rights Agreement dated as of February 18, 1999.
(4)
|
4.3
|
Agreement
of Substitution and Amendment of Preferred Shares Rights Agreement dated
September 10, 2004. (17)
|
10.1+
|
Form
of Indemnification Agreement between the Company and its officers and
directors. (19)
|
10.
2+
|
1990
Director Stock Option Plan, as amended, and form of Outside Director
Non-statutory Stock Option Agreement. (3)
|
10.3+
|
1992
Management Discount Stock Option and form of Non-statutory Stock Option
Agreement. (2)
|
10.4+
|
1993
Stock Option Plan, as amended October 24, 2003. (11)
|
10.5+
|
Trimble
Navigation 1988 Employee Stock Purchase Plan, as amended January 17, 2007.
(25)
|
10.6+
|
Employment
Agreement between the Company and Steven W. Berglund dated March 17, 1999.
(9)
|
10.7+
|
Trimble
Navigation Limited Deferred Compensation Plan effective December 30, 2004,
as amended and restated October 19, 2007. (10)
|
10.8+
|
Australian
Addendum to the Trimble Navigation Limited 1988 Employee Stock Purchase
Plan. (12)
|
|
Trimble
Navigation Limited 2002 Stock Plan (as amended and restated December 31,
2008), including forms of option and restricted stock unit agreements.
(27)
|
10.10
|
Amended
and Restated Credit Agreement dated February 16, 2007 (amending and
restating the Credit Agreement dated as of July 28, 2005) among
Trimble Navigation Limited, the Subsidiary Borrowers, The Bank of Nova
Scotia (Administrative Agent, Issuing Bank and Swing Line Bank), Citibank
N.A. and BMO Capital Markets (Co-Syndication Agents), Bank of
America, N.A. and Wells Fargo Bank N.A. (Co-Documentation Agents), The
Bank of Nova Scotia and BNY Capital Markets, Inc. (Joint Lead Arrangers),
and The Bank of Nova Scotia (Sole Book Runner). (13)
|
10.11+
|
Employment
Agreement between the Company and Rajat Bahri dated December 6, 2004.
(18)
|
10.12+
|
Board
of Directors Compensation Policy effective July 1, 2007.
(26)
|
|
Amended
and Restated form of Change in Control severance agreement between the
Company and certain Company officers. (27)
|
|
Amendment
to Employment Agreement between the Company and Steven W. Berglund dated
December 19, 2008. (27)
|
|
Amendment
to letter of employment between the Company and Rajat Bahri dated December
31, 2008. (27)
|
10.16
|
Lease
dated May 11, 2005 between CarrAmerica Realty Operating Partnership, L.P.
and the Company. (22)
|
10.17+
|
Trimble
Navigation Limited 2007 Management Incentive Plan Description.
(20)
|
10.18+
|
@Road,
Inc. 2000 Stock Option Plan, as amended May 16, 2000.
(24)
|
|
Amendment
No. 1 to the Amended and Restated Credit Agreement.
(27)
|
10.20+
|
Trimble
Navigation Limited Annual Management Incentive Plan Description.
(21)
|
|
Subsidiaries
of the Company. (27)
|
|
Consent
of Independent Registered Public Accounting Firm. (27)
|
24.1
|
Power
of Attorney included on signature page herein.
|
|
Certification
of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(27)
|
|
Certification
of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(27)
|
|
Certification
of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(27)
|
|
Certification
of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(27)
|
|
|
+
|
Management
contract or compensatory plan or arrangement.
|
(1)
|
Incorporated
by reference to exhibit number 4.1 to the Company’s Registration Statement
on Form S-1, as amended (File No. 33-35333), which became effective July
19, 1990.
|
(2)
|
Incorporated
by reference exhibit number 10.46 to the Company’s Registration Statement
on Form S-1 (File No. 33-45990), which was filed February 25,
1992.
|
(3)
|
Incorporated
by reference to exhibit number 10.32 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
|
(4)
|
Incorporated
by reference to exhibit number 1 to the Company’s Registration Statement
on Form 8-A, which was filed on February 18, 1999.
|
(5)
|
Incorporated
by reference to exhibit number 3.1 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(6)
|
Incorporated
by reference to exhibit number 3.2 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(7)
|
Incorporated
by reference to exhibit number 3.3 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(8)
|
Incorporated
by reference to exhibit number 3.4 to the Company’s Annual Report on Form
10-K for the fiscal year ended January 1, 1999.
|
(9)
|
Incorporated
by reference to exhibit number 10.67 to the Company’s Annual Report on
Form 10-K for the fiscal year ended January 1, 1999.
|
(10)
|
Incorporated
by reference to exhibit number 10.2 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 28, 2007.
|
(11)
|
Incorporated
by reference to exhibit number 10.3 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended October 3, 2003.
|
(12)
|
Incorporated
by reference to exhibit number 10.77 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 29, 2000.
|
(13)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 30, 2007.
|
(14)
|
Incorporated
by reference to exhibit number 3.5 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended July 4, 2003.
|
(15)
|
Incorporated
by reference to exhibit number 3.7 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 29, 2006.
|
(16)
|
Incorporated
by reference to exhibit number 3.6 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended April 2, 2004.
|
(17)
|
Incorporated
by reference to exhibit number 4.3 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2004.
|
(18)
|
Incorporated
by reference to exhibit number 10.13 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2004.
|
(19)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Annual Report on Form
10-K for the year ended December 30, 2005.
|
(20)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Current Report on
Form 8-K filed on January 30, 2007.
|
(21)
|
Incorporated
by reference to exhibit number 10.1 to the Company’s Current Report on
Form 8-K filed on April 24, 2008.
|
(22)
|
Incorporated
by reference to exhibit number 10.17 to the Company’s Annual Report on
Form 10-K for the year ended December 30, 2005.
|
(23)
|
Incorporated
by reference to exhibit number 3.7 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 30, 2007.
|
(24)
|
Incorporated
by reference to exhibit number 10.19 to the Company’s Annual Report on
Form 10-K for the year ended December 29, 2006.
|
(25)
|
Incorporated
by reference to exhibit 10.5 to the Company’s Annual Report on Form 10-K
for the year ended December 29, 2006.
|
(26)
|
Incorporated
by reference to exhibit 10.12 to the Company’s Annual Report on Form 10-K
for the year ended December 28, 2007.
|
(27)
|
Filed
herewith.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Report on Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRIMBLE
NAVIGATION LIMITED
By: /s/ Steven W.
Berglund
Steven W.
Berglund,
President
and Chief Executive Officer
February
27, 2009
POWER
OF ATTORNEY
Know all
persons by these presents, that each person whose signature appears below
constitutes and appoints Steven W. Berglund as his attorney-in-fact, with the
power of substitution, for him in any and all capacities, to sign any amendments
to this Report on Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report
on Form 10-K has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature
|
|
Capacity
in which Signed
|
|
|
|
|
|
|
|
|
|
/s/
Steven W. Berglund |
|
President,
Chief Executive Officer, Director
|
February
27, 2009
|
Steven W. Berglund
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Rajat Bahri |
|
Chief
Financial Officer and Assistant
|
February
27, 2009
|
Rajat Bahri
|
|
Secretary
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/
Julie Shepard |
|
Vice
President of Finance and
|
February
27, 2009
|
Julie Shepard
|
|
Principal
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
John B. Goodrich
|
|
|
|
|
|
|
|
|
|
|
|
/s/
William Hart |
|
Director
|
March
2, 2009
|
William Hart
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Ulf J. Johansson |
|
Director
|
March
2, 2009
|
Ulf J. Johansson
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Bradford W. Parkinson |
|
Director
|
February
25, 2009
|
Bradford W. Parkinson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Nickolas W. Vande Steeg
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Merit E. Janow |
|
Director
|
February
26, 2009
|
Merit E.
Janow |
|
|
|
SCHEDULE
II
TRIMBLE
NAVIGATION LIMITED
VALUATION
AND QUALIFYING ACCOUNTS
(in
thousands, except for per share data)
Allowance
for doubtful accounts:
|
|
January 2,
2009
|
|
|
December 28,
2007
|
|
|
December 29,
2006
|
|
Balance
at beginning of period
|
|
$ |
5,221 |
|
|
$ |
4,063 |
|
|
$ |
5,230 |
|
Acquired
allowance
|
|
|
131 |
|
|
|
1,812 |
|
|
|
494 |
|
Bad
debt expense
|
|
|
2,667 |
|
|
|
1,303 |
|
|
|
163 |
|
Write-offs,
net of recoveries
|
|
|
(2,020 |
) |
|
|
(1,957 |
) |
|
|
(1,824 |
) |
Balance
at end of period
|
|
$ |
5,999 |
|
|
$ |
5,221 |
|
|
$ |
4,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of period
|
|
$ |
29,626 |
|
|
$ |
28,582 |
|
|
$ |
23,238 |
|
Acquired
allowance
|
|
|
1,720 |
|
|
|
560 |
|
|
|
1 |
|
Additions
to allowance
|
|
|
4,892 |
|
|
|
4,524 |
|
|
|
7,061 |
|
Write-offs,
net of recoveries
|
|
|
(6,481 |
) |
|
|
(4,040 |
) |
|
|
(1,718 |
) |
Balance
at end of period
|
|
$ |
29,757 |
|
|
$ |
29,626 |
|
|
$ |
28,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
return reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of period
|
|
$ |
1,684 |
|
|
$ |
859 |
|
|
$ |
1,500 |
|
Acquired
allowance
|
|
|
- |
|
|
|
295 |
|
|
|
55 |
|
Additions
(Reductions) to allowance
|
|
|
162 |
|
|
|
465 |
|
|
|
(586 |
) |
Write-offs,
net of recoveries
|
|
|
(27 |
) |
|
|
64 |
|
|
|
(110 |
) |
Balance
at end of period
|
|
$ |
1,819 |
|
|
$ |
1,683 |
|
|
$ |
859 |
|
96