EX-99 2 ex991.txt EXHIBIT 99.1 Trimble Reports Third Quarter Results Ahead of Guidance o Revenues of $170.2 million versus guidance of $165.0 - $168.0 million; o GAAP EPS of $0.33 versus guidance of $0.25 - $0.27; o Non-GAAP EPS were $0.28 versus the mean analyst estimate of $0.24. SUNNYVALE, Calif., Oct. 26, 2004 - Trimble (Nasdaq: TRMB) today announced results for its third fiscal quarter ended October 1, 2004. The Company reported third quarter revenues of approximately $170.2 million, a 22 percent increase over the approximately $139.6 million reported in the third quarter of 2003. GAAP Net Income and EPS GAAP net income for the third quarter of 2004 was approximately $17.9 million, an 80 percent increase over the approximately $9.9 million reported in the third quarter of 2003. GAAP EPS for the third quarter of 2004 were $0.33, a 74 percent increase over the $0.19 reported in the third quarter of 2003. The Company used a 17 percent effective tax rate when calculating GAAP net income and EPS for the third quarter of 2004. Use of Non-GAAP Financial Measures The Company provides non-GAAP financial measures called "non-GAAP net income" and "non-GAAP EPS" to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future and in many cases, are used by analysts and investors to evaluate the Company. Specifically, the Company's third quarter results exclude amortization of purchased intangibles and changes in market valuation of minority investments from non-GAAP EPS because the chief executive officer excludes these items when budgeting and evaluating the business. Also, in the past, the Company has excluded items such as restructuring costs and other acquisition-related expenses and income tax benefits related to the re-valuation of deferred tax assets because they are either infrequent or not essential to evaluating the Company's operations. The Company uses a fully-taxed rate of 35 percent for non-GAAP net income and EPS because it is used by outside analysts and investors, as well as for internal analysis to provide comparable information for use in evaluating Trimble's performance versus prior periods and other companies. However, these non-GAAP financial measures are not intended to supercede or replace the Company's GAAP results. Please see the supplemental financial statements for a reconciliation of non-GAAP to GAAP. Non-GAAP net income for the third quarter of 2004 was approximately $15.2 million, a 64 percent increase over approximately $9.3 million for the third quarter of 2003. Non-GAAP EPS for the third quarter of 2004 were $0.28, a 56 percent increase over $0.18 for the third quarter of 2003. GAAP and non-GAAP EPS for the third quarter of 2004 were calculated on a diluted basis using approximately 55.1 million shares. "We continue to see a strong business environment in most parts of the Company," said Steven W. Berglund, Trimble president and CEO. "Besides our strong revenue and EPS numbers, during the third quarter we generated nearly $24.0 million in cash from operations and paid down $25.0 million in debt which now means we have more cash than debt for the first time in over four years. This performance was particularly impressive because we postponed the initial shipments of our new TrimTrac locator until early 2005 to incorporate new improvements into the design. As a result of the TrimTrac delay, our growth in the fourth quarter is expected to be somewhat below our previous expectations. Nonetheless we expect to meet our EPS guidance for the full year and expect to generate more than 20 percent revenue growth for the full year." Berglund continued, "Looking to next year, we believe the current generally robust business environment will continue and will be augmented by a strong new product pipeline. Therefore, we are looking for strong growth beginning early in 2005." Third Fiscal Quarter Business Segment Highlights Engineering and Construction (E&C) E&C revenues grew by approximately 21 percent versus the third quarter of 2003. All product lines within E&C performed well and showed double-digit, year-over-year growth. Sales of construction machine control products remained particularly robust despite what is traditionally a slower quarter due to seasonality. Demand for survey products was also strong, particularly for GPS-based survey tools and infrastructure solutions. Both product groups achieved record sales levels relative to any historical third quarter. Field Solutions (TFS) - Agriculture and Geographic Information Systems (GIS) TFS revenues grew by 30 percent over the third quarter of 2003. In the agricultural market, trends remained positive despite the seasonally slower period as the Company continued to see strong demand for automated and manual guidance products. The Company has also started to see increased activity from its relationship with CNH Global for both manual and auto guidance products. For the second consecutive quarter, the Company had record sales of GIS products. Sales were driven by continued demand from utilities, strengthened distribution channels in the U.S. and Europe and state and local government spending in the U.S. Component Technologies (CT) Third quarter revenues for CT decreased by approximately 8 percent over the third quarter of 2003. The Company attributed this to a near-term lull in telecommunications infrastructure sales, as well as a postponement in the shipment of its new TrimTrac(TM) locator due to design changes that resulted from customer recommendations after field trial results. The Company expects the new design to be ready before the end of the year with shipments beginning in early 2005. The TrimTrac shipping delay has not caused a loss in orders and the backlog remains strong. Mobile Solutions (TMS) Third quarter revenues for TMS increased by approximately 138 percent over the third quarter of 2003. During the quarter, the total number of subscribers increased by more than 75 percent over the second quarter of 2004 due to strong additions from the Company's construction materials vertical, its strengthened dealer channel, as well as installations and activations related to the Sprint account announced during the quarter. Despite the strength in the construction materials vertical, the Company noted that similar to last year, seasonality restrained customer activations. However, TMS has a strong and growing backlog in the vertical that is expected to take several quarters to work down. Guidance The fourth quarter is typically a seasonally slow period for most of the Company's business areas. For the entire fiscal year ending December 31, 2004, the Company expects revenues will be between $655.0 and $659.0 million. The Company attributes the change in full-year 2004 revenue guidance from previous expectations to the near-term lower revenues in its CT business relating to the lull in telecommunications infrastructure sales and the delay in TrimTrac shipments. Within these revenue guidelines, GAAP operating margins are expected to be between 12.6 and 12.8 percent. Net interest expense is expected to be approximately $3.4 million, and other non-operating expense should be approximately $6.9 million. For GAAP income tax provision, the Company expects a 17 percent effective tax rate for both the fourth quarter and full-year 2004. Within these revenue and expense guidelines, Trimble expects GAAP EPS to be between $1.09 and $1.12, assuming 54.9 million shares outstanding. Full-year GAAP EPS includes approximately $8.2 million for amortization of purchased intangibles, $0.5 million in restructuring charges, $0.5 million for inventory step-ups related to acquisitions, and a net $1.4 million gain related to quarterly valuation of minority investments, that should be excluded when calculating non-GAAP EPS. Quarterly and full-year non-GAAP EPS are taxed at a 35 percent rate. Please note, similar to the fourth quarter of 2003, the Company expects to have an income tax benefit of $5.0 - $10.0 million (approximately $0.09 - $0.18 per share) relating to the revaluation of a portion or all of the Company's deferred tax assets, that is not included in 2004 GAAP guidance at this time, but will be included when fourth quarter earnings are reported. This benefit will not impact non-GAAP EPS. Investor Conference Call / Webcast Details The Company will hold a conference call on Tuesday, October 26, 2004 at 8:00 a.m. Pacific Time to review its third quarter results. It will be broadcast live on the web at http://www.trimble.com/investors.html. A replay of the call will be available for 7 days beginning at 5:00 p.m., Pacific Time. The replay number is (800) 642-1687, and the passcode is 1411403. About Trimble Trimble is a leading innovator of Global Positioning System (GPS) technology. In addition to providing advanced GPS components, Trimble augments GPS with other positioning technologies, as well as wireless communications and software, to create complete customer solutions. Trimble's worldwide presence and unique capabilities position the Company for growth in emerging applications including surveying, automobile navigation, machine guidance, asset tracking, wireless platforms, and telecommunications infrastructure. Founded in 1978 and headquartered in Sunnyvale, California, Trimble has more than 2,000 employees in more than 20 countries worldwide. For an interactive look at Company news and products, visit Trimble's Web site at http://www.trimble.com Forward Looking Statement Certain statements made in this press release are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include the revenue, gross margin, operating expenses, net interest expense, non-operating expense, income tax provision, effective tax rate, restructuring and other non-recurring charges and earnings per share estimates for the fiscal year ending December 31, 2004, as well as the Company's ability to ship TrimTrac. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. For example, recent strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. In addition, the Company's results may be adversely affected if its joint ventures and recent acquisitions do not achieve anticipated results or if the Company is unable to market, manufacture and ship new products such as the TrimTrac locator or new wireline telecommunications products. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the entire fiscal year 2004 will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10-K. Undue reliance should not be placed on any forward-looking statement, contained herein. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- Oct 1, Oct 3, Oct 1, Oct 3, 2004 2003 2004 2003 ---- ---- ---- ---- Revenue $ 170,164 $ 139,569 $ 506,125 $ 405,026 Cost of revenue 86,792 70,457 258,674 203,064 ------ ------ ------- ------- Gross Margin 83,372 69,112 247,451 201,962 ------ ------ ------- ------- Gross Margin (%) 49.0% 49.5% 48.9% 49.9% Operating expenses: Research and development 19,177 17,346 57,962 50,463 Sales and marketing 26,576 25,015 80,238 73,572 General and administrative 10,800 10,306 33,138 28,837 Restructuring charges - 627 327 1,733 Amortization of purchased intangibles 2,019 1,870 6,078 5,390 ----- ----- ----- ----- Total operating expenses 58,572 55,164 177,743 159,995 ------ ------ ------- ------- Operating income 24,800 13,948 69,708 41,967 Non-operating income (expense), net: Interest expense, net (843) (1,059) (2,699) (10,448) Foreign exchange gain (loss), net (317) 166 (446) 649 Other income , net 231 265 1,551 126 Expenses for affiliated operations, net (2,284) (1,984) (6,336) (5,100) ------- ------ ------ ------- Total non-operating expense, net (3,213) (2,612) (7,930) (14,773) ------- ------ ------ -------- Income before income taxes 21,587 11,336 61,778 27,194 Income tax provision 3,670 1,400 10,503 3,800 Net income $ 17,917 $ 9,936 $ 51,275 $ 23,394 ========== ========== ========== ========== Earnings per share : Basic $ 0.35 $ 0.20 $ 1.01 $ 0.50 Diluted $ 0.33 $ 0.19 $ 0.94 $ 0.48 Shares used in calculating earnings per share: Basic 51,412 49,109 50,882 46,764 ====== ====== ====== ====== Diluted 55,056 51,843 54,641 48,926 ====== ====== ====== ======
FULLY TAXED NON-GAAP RECONCILIATION (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- Oct 1, Oct 3, Oct 1, Oct 3, 2004 2003 2004 2003 ---- ---- ---- ---- GAAP income before income taxes $ 21,587 $ 11,336 $ 61,778 $ 27,194 Non-GAAP adjustments : Amortization of purchased intangibles assets 2,019 1,870 6,078 5,390 Amortization of acquisition-related inventory step-up - 470 475 470 Restructuring charges - 627 327 1,733 Debt issuance charges - - - 2,224 Warrants charges - - - 1,332 Investment evaluation, net (201) - (1,444) - ----- ------ Total Non-GAAP adjustments 1,818 2,967 5,436 11,149 ----- ----- ----- ------ Non-GAAP income before income taxes 23,405 14,303 67,214 38,343 Income tax provision - Fully taxed at 35% 8,192 5,006 23,525 13,420 -- ----- ----- ------ ------ Fully-taxed Non-GAAP net income $ 15,213 $ 9,297 $ 43,689 $ 24,923 ======== ======== ========= ======== Diluted Fully-taxed Non-GAAP EPS $ 0.28 $ 0.18 $ 0.80 $ 0.51 ======== ======== ========= ======== Shares used in calculating diluted non-GAAP earnings per share 55,056 51,843 54,641 48,926 ====== ====== ====== ======
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended ------------------ Oct 1, Oct 3, 2004 2003 ---- ---- Cash flow from operating activities: Net Income $ 17,917 $ 9,936 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 2,077 2,187 Amortization expense 2,065 1,972 Provision for doubtful accounts (643) 145 Amortization of debt issuance cost 123 116 Deferred income taxes 1,505 292 Other 317 127 Add decrease (increase) in assets: Accounts receivables, net 9,357 14,527 Inventories (10,995) 2,905 Other current and non-current assets (1,067) 291 Effect of foreign currency translation adjustment (474) 294 Add increase (decrease) in liabilities: Accounts payable (66) (12,090) Accrued compensation and benefits 2,275 (839) Accrued liabilities 1,919 (2,359) Deferred gain on joint venture (205) (140) Income taxes payable (151) 1,326 ---- ----- Net cash provided by operating activities 23,954 18,690 Cash flows from investing activities: Acquisitions, net of cash acquired (1,327) (2,305) Acquisition of property and equipment (2,841) (2,883) Proceeds from disposal of property and equipment 21 129 Cost of capitalized patents (14) (639) ---- ----- Net cash used in investing activities (4,161) (5,698) Cash flow from financing activities: Issuance of common stock 8,891 2,629 Collections (Payments) of notes receivable 153 (150) Payments on long-term debt and revolving credit lines (25,125) (3,210) ------- ------ Net cash provided by (used) in financing activities (16,081) (731) Effect of exchange rate changes on cash and cash equivalents 750 323 Net decrease in cash and cash equivalents 4,462 12,584 Cash and cash equivalents - beginning of period 54,657 30,825 ------ ------ Cash and cash equivalents - end of period $ 59,119 $ 43,409 ========= ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Income taxes, net of refunds $ 2,314 $ 292 ========= ========
CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Oct 1, Jan 2, 2004 2004 ---- ---- Assets Current assets: Cash and cash equivalents $ 59,119 $ 45,416 Accounts and other receivables, net 124,134 103,350 Inventories, net 81,751 70,826 Deferred income taxes 4,525 4,380 Other current assets 10,022 8,885 ------ ----- Total current assets 279,551 232,857 Property and equipment, net 28,974 27,379 Goodwill and other purchased intangible assets, net 267,866 261,166 Deferred income taxes 4,145 4,173 Other assets 23,403 19,328 ------ ------ Total assets $ 603,939 $ 544,903 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $ 12,661 12,885 Accounts payable 44,381 26,019 Accrued compensation and benefits 29,115 25,950 Accrued liabilities 18,782 20,746 Deferred income taxes 1,934 1,136 Income taxes payable 13,728 9,969 ------ ----- Total current liabilities 120,601 96,705 Non-current portion of long-term debt 39,610 77,601 Deferred gain on joint venture 9,489 9,845 Deferred income taxes 5,088 4,229 Other non-current liabilities 10,820 8,279 ------ ----- Total liabilities 185,608 196,659 ------- ------- Shareholders' equity: Common stock 322,303 303,015 Accumulated surplus 66,265 14,990 Accumulated other comprehensive income 29,763 30,239 ------ ------ Total shareholders' equity 418,331 348,244 ------- ------- Total liabilities and shareholders' equity $ 603,939 $ 544,903 ========= =========
Q3'03 % of Q2'04 % of Q3'04 % of Actual Rev Actual Rev Actual Rev ------ --- ------ --- ------ --- Income Statement Metrics Total Revenue $ 139,569 $ 179,451 $ 170,164 ---------- ----------- ---------- Engineering & Construction 93,607 117,236 112,994 Trimble Field Solutions 20,160 30,831 26,293 Component Technologies 16,230 18,616 14,872 Trimble Mobile Solutions 2,672 5,225 6,353 Portfolio Technologies 6,900 7,543 9,652 Gross Margin 49.5% 49.2% 49.0% Total Segment Income $ 21,344 15% $ 34,895 19% $ 32,775 19% Engineering & Construction 14,997 16% 22,836 19% 24,002 21% Trimble Field Solutions 4,111 20% 9,026 29% 5,850 22% Component Technologies 4,625 28% 4,051 22% 2,782 19% Trimble Mobile Solutions (2,118) -79% (1,754) -34% (2,058) -32% Portfolio Technologies (271) -4% 736 10% 2,199 23% Corporate and Other Charges $ (7,396) $ (8,225) $ (7,975) Non-operating expense and income taxes $ (4,012) $ (6,152) $ (6,883) ---------- ----------- ---------- Net Income (loss) $ 9,936 $ 20,518 17,917 ========== =========== ====== GAAP operating margin% 10.0% 14.9% 14.6% Non-GAAP operating margin% 12.1% 16.4% 15.8% GAAP EPS $ 0.19 $ 0.38 $ 0.33 Fully-taxed (35%) Non-GAAP EPS $ 0.18 $ 0.32 $ 0.28 ---------- ----------- ---------- Balance Sheet Metrics Cash & Cash Equivalents $ 43,409 $ 54,657 $ 59,119 Accounts Receivables, Net $ 95,669 $ 127,835 $ 119,275 Inventories, Net $ 72,699 $ 69,836 $ 81,751 Total Debt $ 107,997 $ 77,462 $ 52,271 Short Term Debt 12,767 12,745 12,661 Long Term Debt 95,230 64,717 39,610 Equity $ 318,243 $ 385,572 $ 418,331 ---------- ----------- ---------- Cashflow Metrics Cash Flow from (used in ) Operations* $ 18,690 $ 21,344 $ 23,954 Working Capital $ 135,850 $ 155,966 $ 158,950 Capital Expenditures $ 2,883 3,524 2,841 Cash Interest $ 1,140 777 815 EBITDA $ 16,554 $ 30,061 $ 26,572 Amortization of Intangibles 1,972 2,116 2,065 Depreciation 2,187 1,981 2,077 ----- ----- ----- Financial Ratios Days Sales Outstanding 59 58 56 Days Sales in Inventory 94 70 86 Current ratio 2.5 2.4 2.3 Debt to Equity 0.3 0.2 0.1 --- --- --- Other Headcount 2,096 2,155 2,159 ----- ----- -----
EBITDA RECONCILIATION (In thousands) (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- Oct 1, Oct 3, Oct 1, Oct 3, 2004 2003 2004 2003 ---- ---- ---- ---- GAAP net income $ 17,917 $ 9,936 $ 51,275 $ 23,394 Add back : Interest expenses, net 843 1,059 2,699 10,448 Income tax 3,670 1,400 10,503 3,800 Depreciation expense 2,077 2,187 6,249 6,647 Amortization of purchased intangibles 2,065 1,972 6,216 5,910 ----- ----- ----- ----- EBITDA $ 26,572 $ 16,554 $ 76,942 $ 50,199 =========== ========= ========= ==========