8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report: July 27, 2010

Trimble Navigation Limited

(Exact name of registrant as specified in its charter)

California	001-14845	94-2802192
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer I.D. No.)

935 Stewart Drive, Sunnyvale, California,  94085

(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code:(408) 481-8000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On July 27, 2010, Trimble Navigation Limited (“Trimble”) issued a press release reporting its financial results for the quarter ended July 2, 2010.  A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by this reference.

The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (“Exchange Act”), or otherwise subject to the liabilities of that section.  The information in this Current Report on Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1     Press Release dated July 27, 2010 relating to Trimble’s financial results for the quarter ended July 2, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TRIMBLE NAVIGATION LIMITED
	a California corporation
Dated: July 27, 2010	By:	/s/ Rajat Bahri
	Rajat Bahri
	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated July 27, 2010 relating to Trimble’s financial results for the quarter ended July 2, 2010.

 

EX-99.1

EXHIBIT 99.1

Trimble Second Quarter 2010 Revenue $333.4 Million, Up 15 Percent;

Non-GAAP EPS $0.42, Up 35 Percent

SUNNYVALE, Calif., July 27, 2010 – Trimble (NASDAQ: TRMB) today announced revenue of $333.4 million for its second quarter ended July 2, 2010, up approximately 15 percent as compared to revenue of $290.1 million in the second quarter of 2009.

Operating income for the second quarter of 2010 was $40.6 million, up approximately 41 percent as compared to the second quarter of 2009. Operating margin in the second quarter of 2010 was 12.2 percent, as compared to an operating margin of 9.9 percent in the second quarter of 2009.

Amortization of intangibles was $13.9 million in the second quarter of 2010, as compared to $13.0 million in the second quarter of 2009. The impact of stock-based compensation expense was $5.0 million, as compared to $4.6 million in the second quarter of 2009. There was also $0.4 million of restructuring expense and $1.8 million of non-recurring acquisition costs in the second quarter of 2010. This compares to a $3.5 million restructuring expense, a $0.2 million acquisition-related inventory step-up charge, and $2.3 million of non-recurring acquisition costs in the second quarter of 2009.

Excluding these items, second quarter 2010 non-GAAP operating income of $61.7 million was up 18 percent, as compared to the second quarter of 2009. Non-GAAP operating margin was 18.5 percent in the second quarter of 2010, as compared to 18.1 percent in the second quarter of 2009.

As previously announced on May 11, 2010, Trimble made an agreement with the IRS that resulted in a one-time charge of approximately $27.5 million in the second quarter of 2010 and a reduced annual ongoing tax rate guidance of 22 to 24 percent. The second quarter 2010 tax rate, excluding the one-time charge, was 16 percent.

Because of the above one-time $27.5 million charge, second quarter 2010 net income was $6.4 million, down 70 percent, as compared to the second quarter of 2009. Diluted earnings per share for the second quarter of 2010 were $0.05, as compared to diluted earnings per share of $0.17 for the second quarter of 2009.

Adjusting for the items noted above and excluding the $27.5 million charge, non-GAAP net income of $51.6 million for the second quarter of 2010 was up 38 percent, as compared to the second quarter of 2009. Diluted non-GAAP earnings per share for the second quarter of 2010 were $0.42, as compared to diluted non-GAAP earnings per share of $0.31 in the second quarter of 2009. The tax rate for the second quarter of 2010 was 16 percent compared to 29 percent in the second quarter of 2009.

“Second quarter results demonstrated continuing improvement in market conditions and reinforced our earlier expectations for full year results,” said Steven W. Berglund, Trimble’s president and chief executive officer. “Engineering and Construction revenue and profitability were significantly stronger than the prior year, in spite of inconsistent market conditions in the residential and commercial markets. The relative strength of the segment is primarily a result of the growing engagement of the SITECH channel, general improvement in the heavy and highway market, improving conditions in the market for surveying instruments, and continuing strength in international markets. As expected, Field Solutions was relatively unchanged compared to the prior year with agriculture sales down modestly and GIS revenue growing at a double digit rate. Mobile Solutions’ segment performance was unimpressive due to the loss of a major account. We have rationalized the segment’s cost base to restore profitability and anticipate growth in the second half based on identified pipeline,” Berglund continued. “Overall, the uncertainties in the environment will require us to remain careful in our outlook. However, our recent ability to produce meaningful improvement in our overall financial performance without the full participation of all our businesses allows us to anticipate an improving trend as the lagging businesses begin to contribute more fully,” Berglund concluded.

Trimble Results by Business Segment

Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges, non-recurring acquisition costs, and the impact of stock-based compensation expense.

Engineering and Construction (E&C)

Second quarter 2010 E&C revenue was $188.4 million, up approximately 28 percent as compared to the second quarter of 2009, due to strong sales of both survey and machine control products across most geographies and strengthened distribution through the new SITECH channel.

Operating income in E&C for the second quarter 2010 was $33.9 million, or 18.0 percent of revenue, as compared to $19.2 million, or 13.0 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $35.8 million, or 19.0 percent of revenue, as compared to $20.6 million, or 14.0 percent of revenue, in the second quarter of 2009. The improvement in non-GAAP operating margin was due to operating leverage from increased revenue.

Field Solutions

Second quarter 2010 Field Solutions revenue was $80.2 million, approximately flat with the second quarter of 2009. Sales of agricultural products were down, offset by strong sales of geographical information system (GIS) products.

Operating income in Field Solutions for the second quarter 2010 was $29.0 million, or 36.2 percent of revenue, as compared to $30.1 million, or 37.8 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $29.5 million, or 36.7 percent of revenue, as compared to $30.4 million, or 38.1 percent of revenue, in the second quarter of 2009. The decrease in non-GAAP operating margin was due primarily to increased investment in research and development.

Mobile Solutions

Second quarter 2010 Mobile Solutions revenue was $38.2 million, down 2 percent as compared to the second quarter of 2009.

Operating income in Mobile Solutions for the second quarter 2010 was $0.3 million, or 0.8 percent of revenue, as compared to $3.6 million, or 9.3 percent of revenue, in the second quarter of 2009. Non-GAAP operating income was $0.5 million, or 1.4 percent of revenue, as compared to $4.8 million or 12.2 percent of revenue, in the second quarter of 2009. The decline in non-GAAP operating margin was due to the previously disclosed loss of a large customer.

Advanced Devices

Second quarter 2010 Advanced Devices revenue was $26.6 million, up approximately 11 percent as compared to the second quarter of 2009.

Operating income in Advanced Devices for the second quarter 2010 was $5.2 million, or 19.5 percent of revenue, as compared to $4.8 million, or 20.2 percent of revenue, in the second quarter of 2009. Non-GAAP operating income in Advanced Devices was $5.6 million, or 21.2 percent of revenue, as compared to $5.2 million, or 21.6 percent of revenue, in the second quarter of 2009.

Stock Repurchase Program

Trimble repurchased $67.7 million in stock at an average price of $28.67 during the second quarter of 2010.

Use of Non-GAAP Financial Information

To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.

Forward Looking Guidance

For the third quarter of 2010 Trimble expects revenue between $303 million and $308 million, with GAAP earnings per share of $0.19 to $0.21 and non-GAAP earnings per share of $0.32 to $0.34. Non-GAAP guidance for the third quarter of 2010 excludes the amortization of intangibles of $14.0 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $5.7 million. Both GAAP and non-GAAP earnings per share assume a 22 to 24 percent tax rate and 123.0 million shares outstanding.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on Jul. 27, 2010 at 1:30 p.m. PT to review its second quarter 2010 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 86612820. The replay will also be available on the Web at the address above.

About Trimble

Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location—including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif.

For more information visit www.trimble.com.

Safe Harbor

Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, the ability to deliver revenue, earnings per share that Trimble has guided for the third quarter and full year 2010, the expected tax-rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions, the amount and timing of repurchases under the stock repurchase program, and the return to profitability of the mobile solutions segment. The Company may suspend its stock repurchase plan at any time and for any reason without further notice. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. If the current economic conditions in Europe or elsewhere worsen it may negatively impact our customers’ purchasing decisions worldwide, including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products or obtain new customers for its mobile solutions segment. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company’s financial results will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.

FTRMB

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	Jul-2,			Jul-3,			Jul-2,			Jul-3,
	2010			2009			2010			2009
Revenue	$	333,363		$	290,063		$	652,378		$	579,017
Cost of sales		169,937			147,263			329,955			292,259
Gross margin		163,426			142,800			322,423			286,758
Gross margin (%)		49.0	%		49.2	%		49.4	%		49.5	%
Operating expenses
Research and development		36,552			33,457			72,442			67,594
Sales and marketing		50,522			45,163			100,290			94,098
General and administrative		27,290			26,622			55,837			52,664
Restructuring		375			1,302			1,006			4,925
Amortization of purchased intangible assets		8,126			7,530			16,172			14,499
Total operating expenses		122,865			114,074			245,747			233,780
Operating income		40,561			28,726			76,676			52,978
Non-operating income, net
Interest income		244			223			643			422
Interest expense		(411	)		(465	)		(809	)		(958	)
Foreign currency transaction loss, net		(1,869	)		(216	)		(1,123	)		(32	)
Income from equity method investments, net		3,147			586			5,621			479
Other income (expense), net		(825	)		927			(511	)		488
Total non-operating income, net		286			1,055			3,821			399
Income before taxes		40,847			29,781			80,497			53,377
Income tax provision		34,076			8,631			45,574			14,530
Net income		6,771			21,150			34,923			38,847
Less: Net income attributable to noncontrolling interests		418			293			672			525
Net income attributable to Trimble Navigation Ltd.	$	6,353		$	20,857		$	34,251		$	38,322
Earnings per share attributable to Trimble Navigation Ltd.
Basic	$	0.05		$	0.17		$	0.28		$	0.32
Diluted	$	0.05		$	0.17		$	0.28		$	0.32
Shares used in calculating earnings per share:
Basic		120,654			119,551			120,707			119,406
Diluted		124,099			121,897			123,964			121,411

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	Jul-2,		Jan-1
	2010		2010
Assets
Current assets:
Cash and cash equivalents	$	261,660	$	273,848
Restricted cash		17,151		-
Accounts receivables, net		219,583		202,293
Other receivables		3,916		11,856
Inventories, net		159,179		144,012
Deferred income taxes		38,694		39,686
Other current assets		19,761		18,383
Total current assets		719,944		690,078
Property and equipment, net		46,058		44,635
Goodwill		769,438		764,193
Other purchased intangible assets, net		190,803		202,782
Other non-current assets		54,290		51,589
Total assets	$	1,780,533	$	1,753,277
Liabilities
Current liabilities:
Current portion of long-term debt	$	2,004	$	445
Accounts payable		70,756		53,775
Accrued compensation and benefits		49,958		43,272
Deferred revenue		68,161		68,968
Accrued warranty expense		14,266		14,744
Income taxes payable		43,727		-
Other accrued liabilities		44,916		42,041
Total current liabilities		293,788		223,245
Non-current portion of long-term debt		151,018		151,038
Non-current deferred revenue		13,636		15,599
Deferred income taxes		36,261		38,857
Other non-current liabilities		43,422		59,983
Total liabilities		538,125		488,722
Commitments and contingencies
Equity
Shareholders' equity:
Common stock		735,861		720,248
Retained earnings		472,386		491,367
Accumulated other comprehensive income		20,670		48,297
Total Trimble Navigation Ltd. shareholders' equity		1,228,917		1,259,912
Noncontrolling interests		13,491		4,643
Total equity		1,242,408		1,264,555
Total liabilities and equity	$	1,780,533	$	1,753,277

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	Jul-2,			Jul-3,
	2010			2009
Cash flow from operating activities:
Net Income	$	34,923		$	38,847
Adjustments to reconcile net income  to net cash provided by operating activities:
Depreciation expense		8,736			9,071
Amortization expense		27,733			25,348
Provision for doubtful accounts		2,596			3,053
Amortization of debt issuance cost		113			113
Deferred income taxes		(4,461	)		(3,406	)
Stock-based compensation		10,625			8,780
Income from equity method investments		(5,621	)		(479	)
Gain on bargain purchase		-			(386	)
Excess tax benefit for stock-based compensation		(1,412	)		(304	)
Provision for excess and obsolete inventories		3,173			2,933
Other non-cash items		(3,447	)		(2,401	)
Add decrease (increase) in assets:
Accounts receivables		(15,398	)		4,117
Other receivables		7,647			5,242
Inventories		(19,747	)		(7,556	)
Other current and non-current assets		1,003			2,289
Add increase (decrease) in liabilities:
Accounts payable		17,315			4,790
Accrued compensation and benefits		8,142			2,808
Accrued liabilities		(21,680	)		8,591
Deferred revenue		676			7,224
Income taxes payable		44,393			-
Net cash provided by operating activities		95,309			108,674
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired		(33,605	)		(39,029	)
Acquisition of property and equipment		(11,030	)		(7,415	)
Acquisitions of intangible assets		(297	)		(26,839	)
Purchases of equity method investments		(3,692	)		-
Net purchases of debt and equity securities		-			(6,995	)
Increase in restricted cash for business acquisition		(17,151	)		-
Dividends received		5,000			-
Other		67			(513	)
Net cash used in investing activities		(60,708	)		(80,791	)
Cash flow from financing activities:
Issuance of common stock		17,867			5,775
Repurchase and retirement of common stock		(60,510	)		-
Excess tax benefit for stock-based compensation		1,412			304
Payments on long-term debt and revolving credit lines		(94	)		(149	)
Net cash provided by financing activities		(41,325	)		5,930
Effect of exchange rate changes on cash and cash equivalents		(5,464	)		1,815
Net increase in cash and cash equivalents		(12,188	)		35,628
Cash and cash equivalents - beginning of period		273,848			142,531
Cash and cash equivalents - end of period	$	261,660		$	178,159

 

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)

	Reporting Segments
	Engineering
	and			Field			Mobile			Advanced
	Construction			Solutions			Solutions			Devices
THREE MONTHS ENDED JULY 2, 2010:
Revenue	$	188,441		$	80,158		$	38,188		$	26,576
Operating income before corporate allocations:	$	33,921		$	28,980		$	324		$	5,181
Operating margin (% of segment external net revenues)		18.0	%		36.2	%		0.8	%		19.5	%
THREE MONTHS ENDED JULY 3, 2009:
Revenue	$	147,240		$	79,787		$	39,065		$	23,971
Operating income before corporate allocations:	$	19,160		$	30,148		$	3,648		$	4,833
Operating margin (% of segment external net revenues)		13.0	%		37.8	%		9.3	%		20.2	%
SIX MONTHS ENDED JULY 2, 2010:
Revenue	$	346,059		$	176,059		$	76,147		$	54,113
Operating income before corporate allocations:	$	52,728		$	68,293		$	2,223		$	10,806
Operating margin (% of segment external net revenues)		15.2	%		38.8	%		2.9	%		20.0	%
SIX MONTHS ENDED JULY 3, 2009:
Revenue	$	274,891		$	178,944		$	77,353		$	47,829
Operating income before corporate allocations:	$	21,669		$	72,351		$	6,796		$	9,145
Operating margin (% of segment external net revenues)		7.9	%		40.4	%		8.8	%		19.1	%

 

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)

		Three Months Ended												Six Months Ended
		Jul-2,						Jul-3,						Jul-2,						Jul-03,
		2010						2009						2010						2009
		Dollar			% of			Dollar			% of						% of						% of
		Amount			Revenue			Amount			Revenue						Revenue						Revenue
GROSS MARGIN:
GAAP gross margin:		$	163,426			49.0	%	$	142,800			49.2	%	$	322,423			49.4	%	$	286,758			49.5	%
Restructuring	(A)		55			0.0	%		2,198			0.7	%		98			0.0	%		3,063			0.5	%
Amortization of purchased intangibles	(B)		5,790			1.7	%		5,475			1.9	%		11,559			1.8	%		10,760			1.9	%
Stock-based compensation	(C)		486			0.2	%		477			0.2	%		987			0.2	%		915			0.2	%
Amortization of acquisition-related inventory step-up	(D)		-			0.0	%		247			0.1	%		71			0.0	%		470			0.1	%
Non-GAAP gross margin:		$	169,757			50.9	%	$	151,197			52.1	%	$	335,138			51.4	%	$	301,966			52.2	%
OPERATING EXPENSES:
GAAP operating expenses:		$	122,865					$	114,074					$	245,747					$	233,780
Restructuring	(A)		(375	)					(1,302	)					(1,006	)					(4,925	)
Amortization of purchased intangibles	(B)		(8,126	)					(7,530	)					(16,172	)					(14,499	)
Stock-based compensation	(C)		(4,498	)					(4,077	)					(9,638	)					(7,865	)
Non-recurring acquisition costs	(E)		(1,764	)					(2,340	)					(2,502	)					(2,805	)
Non-GAAP operating expenses:		$	108,102					$	98,825					$	216,429					$	203,686
OPERATING INCOME:
GAAP operating income:		$	40,561			12.2	%	$	28,726			9.9	%	$	76,676			11.7	%	$	52,978			9.1	%
Restructuring	(A)		430			0.1	%		3,500			1.2	%		1,104			0.2	%		7,988			1.4	%
Amortization of purchased intangibles	(B)		13,916			4.2	%		13,005			4.5	%		27,731			4.3	%		25,259			4.4	%
Stock-based compensation	(C)		4,984			1.5	%		4,554			1.6	%		10,625			1.6	%		8,780			1.5	%
Amortization of acquisition-related inventory step-up	(D)		-			0.0	%		247			0.1	%		71			0.0	%		470			0.1	%
Non-recurring acquisition costs	(E)		1,764			0.5	%		2,340			0.8	%		2,502			0.4	%		2,805			0.5	%
Non-GAAP operating income:		$	61,655			18.5	%	$	52,372			18.1	%	$	118,709			18.2	%	$	98,280			17.0	%
NET INCOME:
GAAP net income attributable to Trimble Navigation Ltd.		$	6,353					$	20,857					$	34,251					$	38,322
Restructuring	(A)		430						3,500						1,104						7,988
Amortization of purchased intangibles	(B)		13,916						13,005						27,731						25,259
Stock-based compensation	(C)		4,984						4,554						10,625						8,780
Amortization of acquisition-related inventory step-up	(D)		-						247						71						470
Non-recurring acquisition costs	(E)		1,774						1,954						2,312						2,419
Income tax effect on non-GAAP adjustments	(F)		24,165						(6,741	)					18,151						(12,155	)
Non-GAAP net income attributable to Trimble Navigation Ltd.		$	51,622					$	37,376					$	94,245					$	71,083
DILUTED NET INCOME PER SHARE:
GAAP diluted net income per share attributable to Trimble Navigation Ltd.		$	0.05					$	0.17					$	0.28					$	0.32
Restructuring	(A)		-						0.03						0.01						0.07
Amortization of purchased intangibles	(B)		0.11						0.11						0.22						0.21
Stock-based compensation	(C)		0.04						0.04						0.09						0.07
Amortization of acquisition-related inventory step-up	(D)		-						-						-						-
Non-recurring acquisition costs	(E)		0.02						0.02						0.02						0.02
Income tax effect on non-GAAP adjustments	(F)		0.20						(0.06	)					0.14						(0.10	)
Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd.		$	0.42					$	0.31					$	0.76					$	0.59
OPERATING LEVERAGE:
Increase (decrease) in non-GAAP operating income		$	9,283											$	20,429
Increase (decrease) in revenue		$	43,300											$	73,361
Operating leverage (increase in non-GAAP operating income as a % of increase in revenue)			21.4	%											27.8	%
					% of Segment						% of Segment						% of Segment						% of Segment
					Revenue						Revenue						Revenue						Revenue
SEGMENT OPERATING INCOME:
Engineering and Construction
GAAP operating income before corporate allocations:		$	33,921			18.0	%	$	19,160			13.0	%	$	52,728			15.2	%	$	21,669			7.9	%
Stock-based compensation	(G)		1,878			1.0	%		1,431			1.0	%		3,603			1.1	%		2,739			1.0	%
Non-GAAP operating income before corporate allocations:		$	35,799			19.0	%	$	20,591			14.0	%	$	56,331			16.3	%	$	24,408			8.9	%
Field Solutions
GAAP operating income before corporate allocations:		$	28,980			36.2	%	$	30,148			37.8	%	$	68,293			38.8	%	$	72,351			40.4	%
Stock-based compensation	(G)		477			0.5	%		260			0.3	%		933			0.5	%		482			0.3	%
Non-GAAP operating income before corporate allocations:		$	29,457			36.7	%	$	30,408			38.1	%	$	69,226			39.3	%	$	72,833			40.7	%
Mobile Solutions
GAAP operating income before corporate allocations:		$	324			0.8	%	$	3,648			9.3	%	$	2,223			2.9	%	$	6,796			8.8	%
Stock-based compensation	(G)		217			0.6	%		1,103			2.9	%		1,419			1.9	%		2,247			2.9	%
Non-GAAP operating income before corporate allocations:		$	541			1.4	%	$	4,751			12.2	%	$	3,642			4.8	%	$	9,043			11.7	%
Advanced Devices
GAAP operating income before corporate allocations:		$	5,181			19.5	%	$	4,833			20.2	%	$	10,806			20.0	%	$	9,145			19.1	%
Stock-based compensation	(G)		457			1.7	%		346			1.4	%		900			1.6	%		671			1.4	%
Non-GAAP operating income before corporate allocations:		$	5,638			21.2	%	$	5,179			21.6	%	$	11,706			21.6	%	$	9,816			20.5	%

 

FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

(Unaudited)

The non-GAAP financial measures included in the previous table are non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP diluted net income per share and operating leverage, and non-GAAP segment operating income before corporate allocations.  These non-GAAP measures can be used to evaluate the Company's historical and prospective financial performance, as well as its performance relative to competitors.  The Company believes some of its investors track the Company's "core operating performance" as a means of evaluating the Company's performance in the ordinary, ongoing, and customary course of its operations.  Management also believes that looking at its core operating performance provides a supplemental way to provide consistency in period to period comparisons.  Accordingly, management excludes from non-GAAP those items relating to restructuring, amortization of purchased intangibles, stock based compensation, amortization of acquisition-related inventory step-up and non-recurring acquisition costs, which the Company believes are not indicative of its core operating performance.

(A) Restructuring. Included in our GAAP presentation of cost of sales and operating expenses, restructuring costs recorded are primarily for employee compensation resulting from reductions in employee headcount in connection with our company restructurings.  We exclude restructuring from our non-GAAP measures because we believe it is not indicative of our core operating performance.

(B) Amortization of purchased intangibles.  Included in our GAAP presentation of cost of sales and operating expenses, amortization of purchased intangibles recorded arise from prior acquisitions and are non-cash in nature.  We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.

(C) Stock-based compensation. Included in our GAAP presentation of cost of sales and operating expenses, stock-based compensation consists of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan.  We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.   For the three months and six months ended July 2, 2010 and July 3, 2009, stock-based compensation was allocated as follows:

	Three Months Ended				Six Months Ended
	Jul-2,		Jul-3,		Jul-2,		Jul-3,
(Dollars in thousands)	2010		2009		2010		2009
Cost of sales	$	486	$	477	$	987	$	915
Research and development		984		854		1,931		1,638
Sales and Marketing		1,347		1,062		2,730		2,066
General and administrative		2,167		2,161		4,977		4,161
	$	4,984	$	4,554	$	10,625	$	8,780

(D) Amortization of acquisition-related inventory step-up.  The purchase accounting entries associated with our business acquisitions require us to record inventory at its fair value, which is sometimes greater than the previous book value of the inventory.  Included in our GAAP presentation of cost of sales, the increase in inventory value is amortized to cost of sales over the period that the related product is sold.  We exclude inventory step-up amortization from our non-GAAP measures because we do not believe it is indicative of our core operating performance.

(E) Non-recurring acquisition costs.  Included in our GAAP presentation of operating expenses and non-operating income, net, non-recurring acquisition costs consist of external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence and integration costs.  Also included are unusual acquisition related items such as adjustments to the fair value of earnout liabilities and payments made to settle earnout and holdback disputes.  We exclude these items because they are non-recurring and unique to specific acquisitions and are not indicative of our core operating performance.

(F) Income tax effect on non-GAAP adjustments. This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP adjustments on non-GAAP net income.

(G) Stock-based Compensation. The amounts consist of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan. As referred to above we exclude stock-based compensation here because investors may view it as not reflective of our core operating performance.  However, management does include stock-based compensation for budgeting and incentive plans as well as for reviewing internal financial reporting. We discuss our operating results by segment with and without stock-based compensation expense, as we believe it is useful to investors.  Stock-based compensation not allocated to the reportable segments was approximately $2.0 million and $1.4 million for the three months ended July 2, 2010 and July 3, 2009, respectively and $3.8 million and $2.6 million for the six months ended July 2, 2010 and July 3, 2009, respectively.