NOTE 12: EMPLOYEE STOCK BENEFIT PLANS

The Company's stock benefit plans include the employee stock purchase plan and stock plans adopted in 2002, 1993, 1992, 1990, as well as one stock plan assumed through an acquisition. Other than the employee stock purchase plan and the 2002 and 1992 stock plans described below, the other plans have no shares available for future grant. At the end of fiscal 2011, for the stock plan assumed through an acquisition and 1993 and the 1990 stock option plans, options to purchase 178,451 shares, 5,000 shares, and 45,000 shares, respectively, were outstanding.

Plans

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan ("Purchase Plan") under which an aggregate of 15,550,000 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 Purchase Plan terminates on September 30, 2018. In fiscal 2011, 2010 and 2009, the shares issued under the Purchase Plan were 397,126, 450,774 and 763,597 shares, respectively. Compensation expense recognized during fiscal 2011, 2010 and 2009 related to shares granted under the Employee Stock Purchase Plan was $3.3 million, $2.9 million, and $3.4 million, respectively. At the end of fiscal 2011, the number of shares reserved for future purchases by eligible employees was 2,960,686.

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 restricted stock units for up to 20,000,000 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. Non-employee director stock options granted under the 2002 Plan generally have 84-120 month terms, and vest at a rate of 1/12th per month, with full vesting occurring one year from the date of 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. At the end of fiscal 2011, options to purchase 9,673,018 shares were outstanding, 1,123,730 restricted stock units were unvested, and 3,124,101 shares were available for future grant under the 2002 Plan.

1992 Employee Stock Bonus Plan

In 1992, Trimble's board of directors approved the 1992 Employee Stock Bonus Plan ("Bonus Plan"). At the end of fiscal 2011, there were no options outstanding to purchase shares and 3,643 shares were available for future grant under the 1992 Employee Stock Bonus Plan.

Stock Option and Restricted Stock Unit Activity

Options Outstanding and Exercisable

Exercise prices for options outstanding at the end of fiscal 2011, ranged from $3.35 to $48.18. 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 the end of fiscal 2011:


	Options Outstanding						Options Exercisable
Range	Number Outstanding		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in years)		Number Exercisable		Weighted- Average Exercise Price per Share
(in thousands, except for per share data)
$3.35 – $14.53		1,174	$	10.18		1.87		1,174	$	10.18
$14.91 – $19.96		1,615		18.81		3.84		1,204		18.43
$20.01– $21.68		1,419		20.93		4.79		680		20.82
$21.71– $28.00		1,348		25.20		2.48		1,209		24.91
$28.16– $35.94		1,020		31.39		5.30		317		31.78
$36.20– $41.22		1,350		37.79		4.86		390		40.26
$41.28		1,190		41.28		6.83		—		—
$42.36– $48.18		785		43.15		6.36		62		42.83

Total		9,901	$	27.48		4.41		5,036	$	21.22


	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		9,901	$	27.48		4.41	$	157,716
Options outstanding and expected to vest		9,532		27.14		4.35		155,028
Options exercisable		5,036		21.22		3.24		111,704

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 $43.40 at the end of fiscal 2011, which would have been received by the option holders had all option holders exercised their options as of that date.

At the end of fiscal 2011, the total unamortized stock option expense is $48.8 million with a weighted-average recognition period of 3.6 years.

Option Activity

Activity during fiscal 2011, under the combined plans was as follows:


	Options			Weighted average exercise price
(in thousands, except for per share data)

Outstanding at the beginning of year		10,314		$	22.25
Granted		2,038			41.94
Exercised		(2,238	)		16.37
Cancelled		(213	)		29.49

Outstanding at the end of year		9,901		$	27.48

Available for grant		3,128

The total intrinsic value of options exercised during fiscal 2011, 2010 and 2009 was $64.7 million, $47.5 million, and $7.8 million, respectively. Compensation expense recognized during fiscal 2011, 2010 and 2009 related to stock options was $15.8 million, $13.3 million, and $11.7 million, respectively.

Restricted Stock Unit Activity

Activity during fiscal 2011 was as follows:


	Restricted Stock Units			Weighted Average Grant-Date Fair Value
(in thousands, except for per share data)

Unvested at the beginning of year		1,202		$	25.73
Granted		109			41.32
Vested		(137	)		36.56
Cancelled		(50	)		23.85

Unvested at the end of year		1,124		$	26.01

Compensation expense recognized during fiscal 2011, 2010 and 2009 related to restricted stock units was $9.4 million, $6.9 million, and $3.5 million, respectively. At the end of fiscal 2011, there was $12.6 million of total unamortized restricted stock unit compensation expense related to unvested restricted stock units, with a weighted-average recognition period of 1.08 years.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense, net of tax, related to employee stock-based compensation (for all plans) included in the Consolidated Statements of Income.


Fiscal Years	2011			2010			2009
(in thousands)

Cost of sales	$	1,955		$	1,816		$	1,854


Research and development		4,624			3,991			3,476
Sales and marketing		6,672			5,611			4,446
General and administrative		15,200			11,707			8,883

Total operating expenses		26,496			21,309			16,805


Total stock-based compensation expense		28,451			23,125			18,659
Tax benefit (1)		(12,056	)		(4,959	)		(3,376	)


Total stock-based compensation expense, net of tax	$	16,395		$	18,166		$	15,283

(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 fiscal years 2011, 2010, and 2009.

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 2011, 2010 and 2009 was $10.81, $6.94 and $5.28, respectively. The fair value of rights granted during 2011, 2010 and 2009 was estimated at the date of grant using the following weighted-average assumptions:


Fiscal Years	2011			2010			2009
Expected dividend yield		—			—			—
Expected stock price volatility		34.0	%		35.5	%		53.1	%
Risk free interest rate		0.16	%		0.20	%		0.90	%
Expected life of purchase		0.5 years			0.5 years			0.5 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 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.

Fair value of Trimble Options

Stock option expense recognized in the Consolidated Statements of Income is based on the fair value of the portion of share-based payment awards that is expected to vest during the period and is net of estimated forfeitures. The Company's compensation expense for stock options is recognized using the straight-line single option method. The fair value for stock option is estimated on the date of grant using the binomial valuation 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 2011, 2010 and 2009 was $15.23, $11.85, and $7.92, respectively. For options granted during fiscal 2011, 2010 and 2009, the following weighted-average assumptions were used:


Fiscal Years	2011			2010			2009
Expected dividend yield		—			—			—
Expected stock price volatility		45	%		43	%		45	%
Risk free interest rate		1.13	%		1.39	%		2.01	%
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 for the contractual terms of the stock options, vesting schedules and expectations of future employee behavior.

Fair value of 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.