Trimble Reports Third Quarter 2009 Revenue of $269.7 Million: Non-GAAP Earnings Per Share of $0.25

SUNNYVALE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Trimble (NASDAQ: TRMB) today announced revenue of $269.7 million for its third quarter ended Oct. 2, 2009, down approximately 18 percent from revenue of $328.1 million in the third quarter of 2008.

Operating income for the third quarter of 2009 was $20.2 million, down approximately 63 percent from the third quarter of 2008. Operating margin in the third quarter of 2009 was 7.5 percent, as compared to an operating margin of 16.5 percent in the third quarter of 2008.

Amortization of intangibles was $13.6 million in the third quarter of 2009, as compared to $11.1 million in the third quarter of 2008. The impact of stock-based compensation expense was $4.5 million, as compared to $3.8 million in the third quarter of 2008. There was also $1.1 million in restructuring expense, no acquisition-related inventory step-up charge, and $0.6 million in non-recurring acquisition costs in the third quarter of 2009. This compares to $0.5 million in restructuring expense, $0.4 million in acquisition-related inventory step-up, and no non-recurring acquisition costs in the third quarter of 2008. Excluding these items, non-GAAP operating income of $40.0 million was down 43 percent, as compared to the third quarter of 2008. Non-GAAP operating margin was 14.8 percent in the third quarter of 2009, as compared to 21.3 percent in the third quarter of 2008.

Third quarter 2009 net income was $15.6 million, down 60 percent, as compared to the third quarter of 2008. Diluted earnings per share for the third quarter of 2009 was $0.13, as compared to diluted earnings per share of $0.31 in the third quarter of 2008.

Adjusting for the items noted above, non-GAAP net income of $30.2 million for the third quarter of 2009 was down 40 percent, as compared to the third quarter of 2008. Non-GAAP earnings per share for the third quarter of 2009 was $0.25, as compared to non-GAAP earnings per share of $0.40 in the third quarter of 2008.

Cash flow from operations for the first nine months of 2009 was $139.1 million, as compared to $141.9 million in the first nine months of 2008.

"During the third quarter we saw early signs of recovery in some elements of the Engineering and Construction segment in the U.S. Additionally, we had a number of large contractual wins in the Mobile Solutions segment, where the pipeline generally remains strong," said Steven W. Berglund, Trimble's president and chief executive officer. "We did see a year to year fall in Field Solutions revenue, reflecting the change in market sentiment within the agriculture market," Berglund continued. "Although economic conditions remain volatile and uncertain, we now believe we have the capability to provide double digit revenue growth in 2010 with significantly higher earnings growth."

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, non-recurring acquisition costs, and the impact of stock-based compensation expense.

Engineering and Construction (E&C)

Third quarter 2009 E&C revenue was $149.4 million, down approximately 22 percent as compared to the third quarter of 2008, largely due to continued recessionary conditions in Europe and North America.

Operating income in E&C for the third quarter 2009 was $21.1 million, or 14.1 percent of revenue, as compared to $41.6 million, or 21.7 percent of revenue, in the third quarter of 2008.

In the third quarter of 2009, non-GAAP operating income in E&C was $22.7 million, or 15.2 percent of revenue, as compared to $42.7 million, or 22.3 percent of revenue, in the third quarter of 2008. The decline in non-GAAP operating margin was primarily due to lower revenue.

Field Solutions

Third quarter 2009 Field Solutions revenue was $55.7 million, down 14 percent as compared to the third quarter of 2008. The revenue decline was driven by lower agriculture product sales.

Operating income in Field Solutions for the third quarter 2009 was $16.3 million, or 29.3 percent of revenue, as compared to $22.1 million, or 34.3 percent of revenue, in the third quarter of 2008.

In the third quarter of 2009, non-GAAP operating income in Field Solutions was $16.6 million, or 29.8 percent of revenue, as compared to $22.3 million, or 34.6 percent of revenue, in the third quarter of 2008. The decrease in non-GAAP operating margin was due to lower revenue.

Mobile Solutions

Third quarter 2009 Mobile Solutions revenue was $39.6 million, down approximately 3 percent as compared to the third quarter of 2008. The decline in revenue was primarily attributable to lower sales of ready mix hardware.

Operating income in Mobile Solutions for the third quarter 2009 was $3.4 million, or 8.5 percent of revenue, as compared to $3.6 million, or 8.8 percent of revenue, in the third quarter of 2008.

In the third quarter of 2009, non-GAAP operating income in Mobile Solutions was $4.3 million, or 10.9 percent of revenue, down from 11.2 percent of revenue in the third quarter of 2008.

Advanced Devices

Third quarter 2009 Advanced Devices revenue was $25.1 million, down approximately 19 percent as compared to the third quarter of 2008. The decline in third quarter revenue was due to lower sales of embedded, timing and Applanix products.

Operating income in Advanced Devices for the third quarter 2009 was $4.5 million, or 17.9 percent of revenue, as compared to $6.8 million, or 22.0 percent of revenue, in the third quarter of 2008.

In the third quarter of 2009, non-GAAP operating income in Advanced Devices was $4.9 million, or 19.5 percent of revenue, as compared to 23.1 percent of revenue in the third quarter of 2008. The reduction in non-GAAP operating margin was due to product mix.

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 investor.trimble.com

Forward Looking Guidance

For the fourth quarter of 2009 Trimble expects revenue between $265 million and $270 million, with GAAP earnings per share of $0.08 to $0.10 and non-GAAP earnings per share of $0.19 to $0.21. Non-GAAP guidance for the fourth quarter of 2009 excludes the amortization of intangibles of $14.8 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $5.0 million. Both GAAP and non-GAAP earnings per share assume a 30 percent to 32 percent tax rate and 123 million shares outstanding.

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