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 December 31, 1999
                                -----------------29, 2000

                                       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: 0-18645

                           TRIMBLE NAVIGATION LIMITED
             (Exact name of Registrant as specified in its charter)

            California                                  94-2802192
- --------------------------------           ----------------------------------------------------------------------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

 645 North Mary Avenue, Sunnyvale, CA                       94088
--------------------------------------        ----------------------- ---------------------------------------    ------------------------------------
(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: NONE

                 Securities registered pursuant to Section 12(g)
                                  of the Act:

                                  Common Stock
                         Preferred Share Purchase Rights
                                (Title of Class)

     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. Yes X No

     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. [X]

     The  aggregate  market  value  of the  registrant's  Common  Stock  held by
non-affiliates of the registrant was  approximately  $673,572,000$480,406,000 as of March 13,
2000,9,
2001,  based on the closing  sale price of the common  stock on the NasdaqNASDAQ Stock
Market for that date.

     There were 22,930,11324,247,608  shares of the  registrant's  Common Stock issued and
outstanding as of March 13, 2000.9, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Items 10, 11, 12 and 13 of Part III  incorporate  information  by reference
from  the   registrant's   Proxy  Statement  for  its  20002001  Annual  Meeting  of
Shareholders  to be held on May 11,  2000.10,  2001.  Except with  respect to  information
specifically  incorporated by reference into this Form 10-K, the Proxy Statement
is not deemed to be filed as a part hereof.




     This  report  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.  Actual  results  could  differ  materially  from  those
indicated in the forward-looking  statements as a result of the risk factors set
forth in, or  incorporated  by reference into, this report and other reports and
documents that the Company files with the  Securities  and Exchange  Commission.
The Company has attempted to identify forward-looking  statements in this report
by placing an asterisk (*) before paragraphs containing such material.

                                     PART I

Item 1.           Business

General

     Trimble  Navigation  Limited, a California  corporation  ("Trimble" or the
"Company""the
Company"),  develops,  markets,manufactures, and distributes innovative products and systems enabled
by  Global   Positioning   System   ("GPS"),   optical,   laser,   and  wireless
communications   technology.   We  provide  end-userend-users  and  original  equipment   manufacturer  (OEM)Original   Equipment
Manufacturers   (OEM's)  with  solutions  for  diverse  applications   including
Architecture/Engineering/Construction,  Asset Managementagriculture,  engineering and Tracking,
Agriculture,construction,  fleet and GPS  Component  Technologies.  Trimble  designsasset management, timing,
automobile  navigation,  and  markets
electronic  products that determine precise geographic  location.military.  Our principal  products,  which utilize
substantial amounts of proprietary software and firmware, are integrated systems
for  collecting,  analyzing and displayingutilizing  position data in forms  optimized for
specific end-user applications.

     In July 2000,  Trimble  completed the acquisition of Spectra  Precision,  a
wholly owned business (the "Spectra  Precision Group" or "SPG"),  formerly owned
by a  subsidiary  of Thermo  Electron  Corporation.  This  acquisition  provides
Trimble with optical and laser based  positioning  solutions  for two of our key
strategic   markets,   and  enhances  the  Company's   sales  and   distribution
capabilities.

Background

     Trimble   provides   positioning   solutions   through  three   fundamental
technologies:  GPS, optical, and laser. Precise  determination of locations both
on  and  above  the  earth's  surface  is  a  fundamental  requirement  in  many
applications.applications and industries.  For example,  position data is used for navigation
on land,  sea and air,  and to  conduct  surveys,  draw  maps,  and draw maps.guide  heavy
machinery.   Position   solutions   are  used  in  many   industries   including
construction,   engineering,   agriculture,   trucking,  maritime,   automotive,
aviation,  fleet and asset management,  consumer,  mobile appliances,  military,
in-vehicle  navigation,  timing, and recreation.  Previous position technologies have
limited users to the simultaneous determination of only two dimensions--latitude
and  longitude--while  altitude and time  required  separate  measurements  with
different  equipment.  GPS technology provides users
with all of these measurements, using a single instrument. GPS is a system of 27
orbiting Navstar satellites  established and funded by the U.S.  Government.  On
April 27, 1995,  GPS was  declared by the U.S.  Air Force Space  Command to have
achieved Full Operational  Capability.  GPSGlobal Positioning Systems can complement or replace many
other forms of electronic  navigation and positionpositioning  data systems.  GPS offers
major advantages over prior technologies in terms of ease of use, precision, and
accuracy, with worldwide coverage in three dimensions,  and does so in addition to providing
time and velocity measurement  capabilities.  GPS technology provides users with
latitude, longitude, altitude and time measurements using a single solution.

     GPS is a system of 27 orbiting Navstar satellites established and funded by
the U.S.  government,  which have been fully  operational  since March 1995. GPS
positioning  is based  on a  triangulationtrilateration  technique  that  precisely  measures
distances from three or more Navstar  satellites.  The  satellites  continuously
transmit precisely timed radio signals using extremely accurate atomic clocks. A
GPS receiver calculates distances from the satellites in view by determining the
travel time of a signal from the  satellite to the  receiver.  The receiver then
triangulatestrilaterates its position using its known distance from various satellites,  and
calculates  latitude,  longitude and  altitude.  Under normal  circumstances,  a
current  stand-alone GPS receiver is able to calculate its position at any point
on earth, in the earth's  atmosphere,  or in lower earth orbit, to within 100approximately
10 meters,  24 hours a day.  When a GPS  receiver  is coupled  with a  reference
receiver with known precise  position,  accuraciesaccuracy of less than ten centimeters areis
possible. In addition, GPS provides highly accurate time measurement.

     * The usefulness of GPS is dependent upon the locations of the receiver and
the GPS  satellites  that are above the horizon at any given  time.  The current
deployment  of 27 satellites  permits  three-dimensional  worldwide  coverage 24
hours a day. However, reception of GPS signals requires line-of-sight visibility
between  the  Navstar  satellites  and the  receiver,  which can be  blocked  by
buildings,  hills and dense  foliage.  For the  receiver to collect a sufficient
signal,  each satellite must be above the horizon,  and the receiver must have a line of sight to at least three  satellites in
order to determine its location in two  dimensions--latitude  and longitude--and
at least four  satellites  to  determine  its  location  in three  dimensions-latitude,dimensions  -
latitude,  longitude,  and altitude.  The accuracy of GPS may also be limited by
distortion of GPS signals from ionospheric and other atmospheric conditions, and
intentional or inadvertent signal  interference or Selective

                                       2
Availability (SA).  Selective.Selective Availability, which iswas the largest component of GPS
distortion,  is controlled by the U.S.  Department of Defense and is a  currently  activated,  intentional  system-wide
degradation of stand-alone  GPS accuracy from  approximately  twenty-five to one
hundred meters.on May 1, 2000
was  deactivated.  Selective  Availability may be implemented at any time by the
U.S.  Department of Defense in order to deny hostile forces the highly  accurate
position,  time and velocity  information  supplied by GPS. In certain  military
applications,  classified  devices are utilized to decode the SA  degradationcomponent  and
return
accuracies to their original levels.


                                       2
compute an undegraded solution.

     By using a technique  called  "differential  GPS" involving two or more GPS
receivers, position accuracies can currently be improved to approximately one to
three meters for navigation,  sub-meter for precision positioning, and less than
ten  centimeters  for survey and machine  guidance  applications,  even withif SA is
activated.  This  technique  compensates  for a number of potential  measurement
distortions,  including  distortions caused by ionospheric and other atmospheric
conditions,  as well as distortions  intentionally introduced into the satellite
data itself,  such as SA.  Differential  GPS involves  placing one receiver at a
known location and continuously comparing its calculated location with its known
location to measure  distortions  in the signal  transmission  and errors in the
satellite  data. At any one time,  suchmost  distortions  and errors are  reasonably
constant  over large  areas,  so that one or more remote GPS  receivers  can use
these  measurements  to correct  their own  position  calculations.  Measurement
corrections can be transmitted either in-real timein real-time over a suitable communication
link such as radio or telephone,  or integrated later with accumulated  data, as
is frequently the practice in surveysome highly precise scientific applications.

     * Each of  Trimble's  GPS  products is based on  proprietary  GPS  receiver
technology.  Trimble's GPS  receivers are capable of tracking all  satellites in
view and automatically selecting the optimum combination of satellites necessary
to provide the most accurate set of measurements  possible. CommunicationsGPS positioning data
is most useful when  presented,  communicated,  and computational modules, such as databases, database management systems, radiomanaged in an efficient  and
other communication equipment,functional  manner.  The  recent   technological   convergence  of  positioning,
wireless,  and variousinformation  technologies enables significant new capabilities in
positioning  systems.  GPS data  coupled  with  value-added  functionality  from
wireless   communications,    information   technology,    non-GPS   positioning
technologies  and customized  user  interfaces  are addedcan provide a complete  position
solution.   In  addition,   recent   developments  in  wireless  technology  and
deployments of wireless  networks have enabled more efficient and less expensive
wireless  communications.  Such  developments  allow for the rapid and efficient
transfer of GPS data to these
receiverslocations away from the GPS field device, improving data
usefulness  and  functionality  by making the data  accessible  to create fullyan  increased
number of users.  Accessing,  delivering and using position-centric  information
efficiently  can result in significant  productivity  increases to the end-user.
With  the  convergence  of  GPS  and  advanced   information  and  communication
technologies,  Trimble is focused on  creating  integrated  application-specific
solutions.systems that solve end-user  problems in targeted markets by optimizing  product
features and functionality and increasing end-user productivity,  thus providing
a complete value-added positioning solution.

     *  Navstar   satellites  and  their  ground  support  systems  are  complex
electronic  systems  subject to electronic and mechanical  failures and possible
sabotage. The satellites 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 27 satellites in place, some have already
been in place for 1112 years and they have an  average  age of 6 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  would impair the current utility of the GPS
system  and the  growth of  current  and  additional  market  opportunities.  In
addition,  there  can be no  assurance  that the  U.S.  government  will  remain
committed to the operation and maintenance of GPS satellites over a long period,
or that the policies of the U.S.  Government  for the use of GPS without  charge
will remain unchanged. However, a 1996 Presidential Decision Directive marks the
first time in the  evolution  of GPS that  access for  civilian  use has a solid
foundation in law. Because of  ever-increasing  commercial  applications of GPS,
other U.S.  Government agencies may become involved in the administration or the
regulation of the use of GPS signals.  Any of the foregoing factors could affect
the willingness of buyers of the Company's  products to select GPS-based systems
instead of products  based on competing  technologies.  Any resulting  change in
market demand for GPS products could have a material adverse effect on Trimble's
financial results. In 1995, certain European government  organizations expressed
concern  regarding  the  susceptibility  of  GPS  equipment  to  intentional  or
inadvertent  signal  interference.  Such concern  could  translate  into reduced
demand for GPS products in certain geographic regions in the future.

     Laser and optical products measure  distances very accurately by means of a
light beam.  Trimble generally uses laser diodes to create laser light beams for
its  applications.  The light  emitted by lasers is more  concentrated  around a
single  frequency  than  conventional  light  sources,  allowing a more accurate
distance measurement.

                                       3
Business Strategy

     Trimble seesTrimble's  strategy is to leverage our expertise in GPS as anand other  position
solutions,  coupled with information utility.  In orderand communication technologies to exploitprovide a
comprehensive product offering to our customers. Our primary objectives are:

     * Focus on growth  markets.  We target  markets  which  offer the  wide
range  of  applications  made  possible  by  this  information  utility,greatest
potential for growth,  profitability,  and a leadership position.  Currently, we
are
implementing the following strategies:

     * Targeted Markets.  Trimble targets a number of specific markets, basedfocus on end-user   applications.    The   markets   that   we   currently   target   are
Architecture/Engineering/four market segments: Engineering and Construction,  Agriculture, Fleet
and Asset  Management and Tracking,
AgricultureComponent  Technologies.  In addition,  we serve other
smaller  markets and GPS   Component   Technology.manage  these as the  Portfolio  Technologies  segment.  We
believe  these  market  segments  can be  characterized  by a need for  improved
productivity,  lower cost,  and better  information.  We intend to  continuously
evaluate and identify new market segments as well as numerous  specific vertical
markets  within  each of  these  segments  as  driven  by new  applications  and
development of our technology.

     * Continue to provide  innovative,  differentiated  product solutions.  Our
objective  is  to  continuously   provide  innovative   solutions  that  by  adding
application-specific  features and  functionalitydeliver
significant  value to our  core GPSend-users.  We intend to maintain our leading  market
position  through  research  and  development  spending  which  provides us with
products  differentiated  through software,  hardware,  and application specific
features.   Trimble  intends  to  pioneer  advances  in  positioning   component
technology,  continuing  to  improve  the state of the art in size,  power,  and
sensitivity.   In  addition,   we  can deliver  value-addedwill  target   solutions  aimed  at  specific
applications.  Also, we intend to leverage the intellectual  property  resulting
from these efforts through licensing to third parties.

     * Develop  products  that  integrate   communications   technologies.   In
developing  our  products  we  intend  to  integrate   within  our  markets  the
functionality  brought about by the  convergence of positioning,  wireless,  and
information  technologies.  We seek to  combine  these  technologies  to  create
products that provide end-users with comprehensive positioning solutions,  which
enable the real-time  management of  information  and enhance  productivity  inand
efficiency.

     * Leverage extensive  distribution network across vertical markets. We have
established  an  extensive  distribution  network  across  our  targeted  markets. Inmarket
segments  with strong  customer  relationships.  Our recent  acquisition  of the
Architecture/Engineering/ConstructionSpectra Precision Group served to extend our reach into new market Trimble focuses on
the centimeter positioning, data collection management,  wireless communication,segments both
domestically and machine  guidance and control.  In the Asset  Management and Tracking market
Trimble focuses on asset tracking, fleet management,  intelligent transportation
systems,  and public safety through integration of GPS,  information  technology
and  wireless  communication.  In the  Agriculture  market  we focus on  precise
machine guidance, yield monitoring,  and variable rate application of fertilizer
and  chemicals.internationally. We intend to continue tofurther leverage our GPS component  technology
directly to Original Equipment Manufacturers (OEMs) for integration into various
applications.

     Differentiated  Product  Solutions.  Trimble seeks to establishdistribution
channels  vertically and sustain
leadership in its targeted markets by offering products that are  differentiated
through software, firmware,  customized user interfaces, and quality service and
support.  Where feasible, we emphasize  application-specific  systems that solve
end-user problems in our targeted markets. We believe that a substantial portion
of the value of our products is derived  from the  firmware  that is embedded in
the product or software  provided to enable superior  performance.  In addition,
Trimble  incorporates

                                       3



other   technologies   into  many  of  its   products,   such  as  wireless
communications, information technologies and non-GPS positioning technologiesacross market segments in order to optimize product features for our end-users.

     Multichannel  Distribution  and Strategic  Alliances.  Trimble seeks direct
communication  with itsaccess  customers in
order to developdifferent business areas and modify its  product
designs as necessary to maximize  utility and payback to the user.geographic regions.

     * Continue pursuing strategic  alliances.  Strategic alliances have been an
essential  component of our success thus far. We have built
a  worldwide  sales  and  service  organization  made up of  Company  employees,
distributors  and  dealers.  In  addition,  we intend to continue to develop new
alliances and to strengthen existing alliances and OEM relationships to increase
our leverage of GPS component  technologies.  Trimble has pursuedestablished such alliances
with several  companies including  VDOCaterpillar,  Inc.; CNH Global N.V.; Honeywell,  Inc.;
Mannesmann   Telecommunications   (formerly   Phillips  Car   Communication  (a division of the
Mannesmann Group),  Pioneer Electronics  Corporation,  Seiko Epson, Blaupunkt (aSystem);   Siemens
Corporation;  Nortel  Networks  Limited;  Blaupunkt-Werke  GmbH,  a wholly owned
subsidiary of Robert Bosch GmbH), NortelNetworks,  British Telecom,
E-systems, Honeywell,GmbH (Bosch);  and Intel in the MobileBrience Inc.  These  relationships
have  enhanced  our  ability to enter new  markets,  develop  new  products  and
Timing Technology segment;strengthen our distribution  network.  As a result,  we have gained  substantial
market share and Caterpillar,  Inc.,  Topcon,penetration and CNH Global (formerly Case  Corporation) in the
Precision Positioning segment.secured our position within target markets.  As
our markets develop and new markets  emerge,  we believe it will be critical for
us to continue to forge and maintain strategic alliances. As our industry grows,
we may take advantage of acquisition opportunities, which complement our product
portfolio,  expand our technology,  enable us to enter new markets,  or solidify
our current market position.  Additionally,  we may use acquisitions to increase
our customer base and facilitate  our entry into new markets.  In each case, our
focus  will  be  to  leverage  existing  technologies,   distribution  networks,
marketing resources, and to identify and achieve synergies.

INDUSTRY SEGMENTS

     Trimble  operates in five primary  industry  segments that are increasingly
deploying a single industry segment as a leader in designingvariety of positioning-based  solutions,  including: (i) Engineering
and  developing  innovative  products enabled by GPS technology.  We provide end-userConstruction,  (ii)  Agriculture,  (iii) Fleet and Original  Equipment  Manufacture  solutions for diverse  applications in our
target markets. These applications include:

     o Architecture/Engineering/Construction  --  surveying,  mapping,  machine
       guidance/control;
     o Asset  Management,  and Tracking -- fixed asset mapping and fleet management
       using mobile positioning;
     o Agriculture -- mapping, yield monitoring,  variable rate applications and
       machine guidance/control; and
     o GPS(iv)
Component Technologies, -- automotive  navigation,  timing  systems,
       commercial avionics, and military systems.(v) Portfolio Technologies.

     We  design,   market,  and  distribute  electronic   products  that  determine  precise
geographic location combined with data communications and applications software.
We sell our  products  through a  direct-sales  force located in fifteen
countries,  as well as through a worldwide network  of  direct  salespeople,  independent
dealers,  distributors and authorized representatives.sales  representatives  supported by sales
offices throughout the world.

     Research and development  activities are conducted at Trimble's  facilities
in Sunnyvale,  California,  andCalifornia;  Dayton, Ohio; Atlanta, Georgia;  Corvallis,  Oregon;
Westminster,  Colorado; Danderyd, Sweden; Christchurch, New Zealand.Zealand

                                       4



and in Jena,  Munich and  Kaiserslautern in Germany.  Solectron  Corporation and
Solectron   Federal  Systems,   Inc.   (collectively,   "Solectron")   currently
manufactures most of Trimble's GPS products.  In addition,  weWe also have a manufacturing
facilityproduction facilities
in Austin,  Texas,  focused  primarily  on  FAA-certified  productsDanderyd, Sweden, Jena and Kaiserslautern in Germany and Dayton, Ohio for commercial aviationthe
manufacture of our optical and military systems.laser products.

     To achieve distribution,  marketing,  production, and technology advantages
for  our  targeted  markets,   we  manage  our  five  industry  segmentsegments  within
two Business
Units:  the  Precision  Positioning  Group  (PPG)  and  the  Mobile  and  Timing
Technologies  Group  (MTT).corresponding  divisions.  To focus on market needs, we manage our five industry
segments  through a  divisional  structure.  Each  Business  Unit is  managed  by a senior  vice
president whodivision is  responsible  for
strategy,  sales and marketing,  product development and financial  performance.
The  Precision   Positioning  Group  derives  its  revenue  from  precision
positioning  solutions for the architecture,  engineering,  construction,  asset
management,  and agriculture  markets.  These markets require  sub-centimeter to
meter  3D   positioning   accuracy   for   surveying,   mapping,   and   machine
guidance/control  applications. The Mobile and Timing Technologies Group derives
its revenues from automotive, timing, fleet management, commercial aviation, and
military  systems,  as well as from  development of software  licenses and other
rights for the use of our GPS technology to third parties.Each division is headed by a General Manager.

     Although we believe that these Business  Unitsdivisions have growth potential for sales of
GPSour products,  there can be no assurance  that such  Business Unitsdivisions  will continue to
develop,grow,  particularly  given that GPS-based systems are still in an early stage of
adoption in some of these markets.  Our future growth will depend on the timely  development  ofour ability
to develop  the  industry  markets  in which Trimblewe  currently  competes,compete,  and on our
ability to continue to identify and exploit new markets for our products.

Precision Positioning Group

     The  Precision  Positioning  Group focuses its effortsEngineering and Construction

     We continue to focus on the large market  opportunities  in markets where the distribution chain uses independent distributors orEngineering
and Construction  market segment.  In addressing this market segment,  we employ
all of our key technologies to develop and introduce  position-based  solutions,
including  GPS,  optical,   laser,  wireless  communication  and  software-based
information  technologies.  We currently  offer a direct sales forcerange of hardware and software
products that are used by survey and construction professionals in the field for
determining  position data  collection,  field computing,  data management,  and
automated  machine guidance and control.  These products  provide  solutions for
numerous construction applications,  including: surveying; general construction;
site preparation and excavation;  road and runway construction;  and underground
construction.

     Our  engineering  and  construction  products  reduce  the need for  manual
calculations  and operations in the field,  thereby  improving  productivity and
providing  significant potential cost savings that can be achieved by decreasing
project  completion  times and reducing the need for rework resulting from human
error.  Building on our leadership  position in the construction arena, our goal
is  to  sell
directlyprovide  comprehensive   "field-to-office"  solutions  that  enable  our
end-users to tightly integrate field  construction  operations with their office
information systems through the use of our positioning,  wireless  communication
and   software   technologies.   We  believe  that   considerable   productivity
improvements  and cost  savings  can be  achieved  by such  solutions  that will
effectively   streamline  the  use  of  information  in  the   engineering   and
construction  process,  from project concept to completion.  For example, if the
field and the office are tightly  integrated,  data collected and created in the
project  feasibility  phase can be used and modified in the design  phase.  Data
resulting  from  the  design  phase  can be used to  automate  processes  in the
construction  phase.  Finally,  data collected from the construction site can be
used not only for important  monitoring  purposes,  but also to effect  required
design  changes back at the office,  which can then be implemented in the field.
By  providing  complete  solutions  that  link the field to the  end-users.  Theoffice  through
positioning,  wireless and software technologies, we believe that we will enable
the end-users of our products are  typically  system  solutions in
high-end, value-added markets.


                                       4



     A key  business  strategy of PPG is  interoperability,  which  involves the
focus on,to achieve  significant cost savings from reducing
rework costs,  shortening  project  schedules and development  of systems that integrate  sensors  utilizing a wide
variety  of  technologies   and   communications   with  GPS.  We  believe  this
interoperability  developed by Trimble is an extremely  important advantage over
any of the competition. The emphasis is on providing solutions for applications,
which combine GPS and other technologies,  and results in a higher real value to
the  customer.  The  concept  of  interoperability  applies  to  electronic  and
mechanical  accommodations of other technologies,  together with GPS, to solve a
problem.  Probably the most  important area of  interoperability,  and often the
least recognizable until the integrated solution is put into use, is in the area
of data interchange.improving  project  monitoring
capabilities.

Products

The  following  is a  table  of some of the  Precision Positioning Groupkey  Engineering  and  Construction
products.

- ----------------------------------- --------------------------------------------
PRODUCT                             BRIEF DESCRIPTION--------------------------------------------------------------------------------
        Product                           Description
- ----------------------------------- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------- --------------------------------------------
4000 Series                         GPS   receiver  and   associated   antennas
                                    that  provide   position information for
                                    surveying.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
4600 LS(TM)                         Low-cost single-frequency survey system.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
4700/4800--------------------------------------------------------------------------------
 GPS Total Station Real time5700   Provides surveyors and civil engineers with innovative
                          features that bring a new level of confidence, speed
                          and efficiency to the construction cycle.  With the
                          intuitive, easy-to-use Trimble Survey Controller(TM)
                          field software and Trimble Geomatics Office Software,
                          survey and design tasks are unified in one powerful
                          system.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
  5600DR 200+             A powerful reflectorless optical surveying instrument.
                          Surveyors can survey previously unreachable objects of
                          over 200 meters away without a reflector.  The
                          instrument can, in its robotic version, be operated
                          remotely which enables one operator to execute all
                          applications without assistance.
 -------------------------------------------------------------------------------

                                       5


- --------------------------------------------------------------------------------
        Product                           Description
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 SiteVision(TM)           A grade control system for the construction market
                          that incorporatescombines a ruggedized on-board computer, a high
                          precision dual frequency receiver, two duel frequency
                          GPS antennas, three light bars and antenna
                                    with a radio modemthat
                          provides a complete solution to help bulldozer
                          operators increase productivity in a stakeless
                          environment.
 -------------------------------------------------------------------------------

Agriculture

     In today's competitive  agriculture market, where low cost producers have a
significant  advantage,  efficient  field  operation and antenna.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
4000 MSGR P/Y Survey System         Turnkey solutiondata  management can be
critical to success.  We provide high  accuracy,  real-time  positioning,  water
management,  machine  guidance  and field  management  solutions  to enhance the
productivity  of  agricultural  assets,  both land and  equipment.  Our products
provide key  advantages in a variety of agriculture  applications,  primarily in
the areas of precise land  leveling,  machine  guidance,  yield  monitoring  and
variable-rate applications of fertilizers and chemicals. By improving monitoring
capabilities  and  reducing  the  margin  for  military land survey
                                    applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
TTS(TM)300/500 Total Station        Optical extensionhuman  error,  our  products  can
significantly  improve  productivity and enhance crop yields.  For example,  our
GPS-based  machinery  guidance  systems  and  field  monitoring  systems  enable
machinery  operators to achieve  improved  accuracy  when planting row crops and
applying  fertilizers  and chemicals.  In addition,  machine  utilization can be
significantly improved.

     * We believe that there is considerable  growth opportunity in this market,
which is in the early  stages of adopting  position-based  solutions.  Given the
recent introduction of the GPS Total Station
                                    utilizing, reflectorless technology, for
                                    surveyingthe market is relatively unpenetrated. To
date,  machine  guidance  systems have  primarily been sold and installed in areas where GPS signalsthe
aftermarket. Original equipment manufacturers are obstructed.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Trimble   Geomatics   Office(TM)    Application   software  for  GPSincreasingly integrating these
capabilities  into new  machines.  We  believe  that we are well  positioned  to
address  the  opportunities  in the new  equipment  market as the  result of our
strategic alliance with CNH Global (formerly Case Corporation), a leading global
manufacturer and Survey Controller               postprocessing, survey project management,
                                    and field data collection.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
TRIMTALK(TM), TRIMMARK(TM),         Radio   modems  used  for
and   TRIMCOMM(TM) Radios           real-time  GPS  applications  that
                                    provide   broadcast   and  receive
                                    functions  for VHF,  UHF,  and 900
                                    MHz    spread     spectrum    data
                                    transmissions.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
MS750(TM)                           Real-time Kinematic GPS technology
                                    that provides precise  positioning
                                    to  hydrographic  survey,   marine
                                    construction,      and     machine
                                    guidance/control applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
4000RSi(TM)/ DSi                    Uses advanced GPS technology
                                    to      create      high-precision
                                    Differential GPS (DGPS) system for
                                    marine  survey,   navigation,  and
                                    positioning.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
DSM(TM)                             Sub-meter marine survey sensor.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Beacon Control System               A complete solution for   establishing  a
                                    networkdistributor of remote stations for the broadcast
                                    of  differential   GPS  correction data.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
GeoExplorer(R)3                     Rugged handheld GIS data collection and
                                    maintenance system.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Pathfinder Pro Family               GIS data collection and maintenance  systems
                                    that provide real-time sub-meter accuracy.
                                    The systems  are used in a wide  range off
                                    applications,  such as utility asset
                                    management,   environmental monitoring
                                    and scientific research, hazardous waste
                                    cleanup, and natural resource and land
                                    management.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Pathfinder Office   Microsoft       Windows-based application  provides fast,
                                    simple data  processing  and export  from
                                    data     collected,      including planning,
                                    data     dictionary creation,  batch
                                    processing,  and sophisticated  editing and
                                    output of collected data.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Pathfinder Card                     Easy-to-use  mobile GIS data collection and
                                    maintenance  system that works with a
                                    standard pen and notebook PCs.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Pathfinder Tools(TM) Software       Powerful software  development kit (SDK)
Development Kit                     designed   to   integrate Trimbleagricultural  equipment.  Since 1997, CNH Global
has utilized our GPS receivers with custom mapping and GIS
                                    applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
BenchGuide(TM)                      Provides mining machine  operators with
                                    precision  GPS-based guidance in  locating
                                    correct   bench  or terrain  elevations
                                    without using survey stakes.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
CAES                                Machine guidance system for mining
                                    applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
TrimFlight GPS(TM)                  An advanced  aerial guidance  and  mapping
                                    tool  that provides highly accurate guidance
                                    suitable for many precise airborne
                                    operations.
- ----------------------------------- --------------------------------------------


                                       5


- ----------------------------------- --------------------------------------------
AgGPS(R)132                         High-performance GPS receiver used
                                    to calculate  sub-meter  positions
                                    in real  time.  Used by farmers to
                                    tag soil type, insect infestation,
                                    or crop yield.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
AgGPS(R)170 Field Computer          Rugged  mobile  computing  platform  that
                                    adds data  logging and field mapping  to
                                    AgGPS  receivers  and enhanced  guidance to
                                    the  AgGPS Parallel  Swathing Option. The
                                    AgGPS 170 Field Computer is a tool for
                                    custom  applicators  who desire  top-of-the-
                                    line  field  guidance with data storage for
                                    environmental reporting, and customer
                                    billing.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
SiteVision(TM)GPS                   Earthmoving   grade  control system   that
                                    enables    machine operators to view the
                                    site planfarming  systems.  Our customers in
the cab.
- ----------------------------------- --------------------------------------------

Mobileagriculture market segment include family farmers,  commercial growers, crop
consultants, equipment manufacturers, farm centers and Timing Technologies

     The Mobile and Timing  Technologies  Group  focuses  its efforts in markets
where  the  majority  of its  products  are  sold  directly  to OEMs  or  system
integrators.   The  products  are  designed  to  support  system   solutions  in
high-volume applications.  In some instances the Business Unit's products are in
the form of software  and chipset  licenses  and other rights for the use of our
GPS technology by third parties.

     This  Business  Unit  focuses  on  product  lines  that  address  the fleet
management market, and leverage GPS component technologies for use in automotive
navigation,  timing for  telecommunications,  commercial  aviation  and military
systems.   The   product   lines  in  these   markets   involve   full-function,
high-performance  embedded  GPS  engines  that are  frequently  utilized in some
markets with integrated  communication systems such as cellular,  satellite, and
special  mobile radio systems.  The GPS equipment  provides  accurate  position,
velocity,  and timing  information  for use in such diverse  applications as car
navigation,  airborne  navigation,  munitions  guidance,  vehicle and high-value
cargo tracking.

     Trimble supplies GPS boards and chipsets,  and licenses  technology to some
of the leading automotive electronics suppliers,  including Pioneer Electronics,
Magneti Marelli, VDO Car Communication (a division of the Mannesmann Group), and
Blaupunkt (a wholly owned subsidiary of Robert Bosch GmbH). Trimble is also part
of the  reference  design  for  Intel's  initiative  to develop  in-car  Pentium
processor-based  computing,  and Microsoft's Auto PC platform.  Trimble airborne
navigation products are flown by more than 100 of the world's major airlines.

     Trimble supplies timing products to major telecommunications infrastructure
suppliers,  including  NortelNetworks,  AT&T Wireless,  Qualcomm,  and Glenayre.
These products include frequency synthesis hardware, which is timed by precision
GPS  receiver and is used to control  most of the time and  frequency  functions
within  wireless  base  stations.  Cellular  telephones,  paging  networks,  and
wireless  local loop  telephony  use these base  stations.  Precision  timing is
expected to become even more important as wireless  traffic  migrates from voice
centric to data centric applications.service providers.

Products

The following is a table of some of the Mobilekey Agriculture products.

 -------------------------------------------------------------------------------
        Product                           Description
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 AgGPS(R)132              Farmers use the AgGPS 132 to tag soil type, insect
                          infestation, or crop yield information with precise,
                          sub-meter location data. Mapping this data highlights
                          problem areas and Timing  Technologies  Grouphelps farmers target their use of
                          agricultural products, saving money and increasing
                          productivity.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 AgGPS(R)Parallel         Provides farm equipment operators with precision
 Swathing Option          guidance information for driving straight rows during
                          field preparation, planting, and agricultural product
                          applications.  The system works under any condition -
                          day or night, dust or fog, wind or rain - allowing
                          farmers to extend hours for chemical spraying, lime
                          and fertilizer application, tilling, and seedbed
                          preparation.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 AgGPS(R)Autopilot        A system that automatically steers tractors to within
                          inches for row-crop applications. The driver, with
                          hands-free operation, can now concentrate on working
                          the implements for listing, bed preparation, planting
                          and cultivating.  This technology breakthrough
                          translates into increased productivity for the farmer
                          through more efficient utilization of tractors and
                          extended working hours.
 -------------------------------------------------------------------------------

                                       6


 -------------------------------------------------------------------------------
        Product                           Description
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Laser-based Water        Laser-based water management allows the agricultural
 Management Systems       industry to make topographical maps of their fields,
                          design solutions for drainage or irrigation, and
                          control the machines that grade the land using a
                          rotating plane of laser light. Growers almost always
                          have either too much water or too little  water to
                          grow a crop.  Landleveling and farm tile drainage is a
                          high productivity long-term investment for a grower to
                          guarantee consistent crops at high yields.
 -------------------------------------------------------------------------------

Fleet and Asset Management

     Our Fleet and Asset Management  segment includes the mapping and GIS market
and the mobile  positioning and communications  market.  These markets have been
aggregated,  as the products have similar  technologies and address a converging
customer base.

     We integrate  our wireless,  GPS and  information  technologies  to provide
solutions for a variety of applications in fleet  management and asset tracking.
Our products enable end-users to efficiently monitor and manage their mobile and
fixed assets by communicating  location-relevant and time-sensitive  information
from the  field to the  office.  The key to these  applications  is not just the
ability to accurately locate assets, but also the ability to rapidly collect and
transfer  a wide  range of  asset-related  data from the field to the office for
monitoring  and  verification,  and  for use in  business  decisions  and  other
analysis.   Depending  on  the  application,   our  solutions  provide  numerous
advantages  to  the  end-user,   including  enhanced   productivity,   increased
efficiency,  reduced costs, and improved safety and security. We currently offer
a range of products  that address a number of sectors of this market:  long-haul
trucking; public safety vehicles;  municipal fleet management;  marine shipping;
and fixed asset data collection for a wide variety of  governmental  and private
entities.

     Our mobile  asset  management  products  offer a range of asset  management
solutions,  including  a turnkey  satellite-based  solution  for  vehicle  fleet
management  that  provides all the  functionality  necessary to actively  manage
vehicles  in the field,  including  position  and event  reporting  and  two-way
messaging  capabilities.  Using our mobile asset management products,  end-users
can effectively track the movement of their vehicles,  employees,  and goods and
services.  This enables them to make  real-time,  informed  decisions  regarding
asset  utilization,  which  can  enhance  productivity  and  profitability.  For
example,  positioning  data enables  end-users to route  vehicles in their fleet
more  efficiently,  reducing vehicle  downtime,  and potentially  increasing the
number of deliveries or trips per vehicle.  In addition,  these  improvements to
vehicle management can result in more efficient vehicle  maintenance and reduced
misuse of vehicles. Finally, end-users can be more responsive to their customers
by  more  effectively  managing  their  mobile  resources  and  providing  their
customers  with more  detailed  information  on the  location  of  products  and
services.

     With respect to fixed asset  tracking,  the combined forces of the Internet
and deregulation of  telecommunications  are providing asset-rich  organizations
such as utilities,  natural  resource-based  entities and local governments with
access to timely and accurate  data on their field  assets.  Our  customers  are
discovering  improvements to their customer  service and operating  efficiencies
resulting  from the provision of their spatial asset data,  both internal to the
organization  and via the  Internet.  One key to this market is the creation and
maintenance  of GIS  databases.  Our range of GPS based GIS data  collection and
maintenance  products enable these organizations to cost effectively capture and
maintain the features and attributes of their field assets.

     As with our other  targeted  market  segments,  we  believe  that  there is
considerable growth opportunity in this market,  which is in the early stages of
adopting  positioning-based  solutions.  Currently,  mobile  resources are often
tracked using inefficient and incomplete systems such as wireless telephones and
pagers.  We believe that  penetration of GPS-based  positioning  systems in this
market  segment  will  accelerate  as the  cost of such  systems  decreases  and
functionality increases.

                                       7


Products

The following is a table of some of the key Fleet and Asset Management products.

 - ----------------------------------- --------------------------------------------
PRODUCT                             BRIEF DESCRIPTION
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
ACE II   GPS(TM)   Module           Powerful miniature  8-channel-------------------------------------------------------------------------------
        Product                           Description
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Pathfinder Pro Family    The GPS board
                                    designed    for     applications requiring
                                    high  performance  at low cost.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Lassen(TM)-SKII                     Miniature 8-channel GPS receiver ideal for
                                    in-car  navigationPathfinder(R)Pro XR and telemetric systems.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
SveeEight  Plus GPS Module          8-channel GPS  technologyPro XRS Systems are
                          easy-to-use GIS data collection and maintenance
                          systems that provide real-time submeter accuracy.
                          These powerful systems are used in a convenient
                                    plug-and play-form factor.wide range of
                          applications, including utility asset management,
                          environmental monitoring, scientific research,
                          hazardous waste clean-up, municipal asset management,
                          and natural resource management.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 CrossCheck(R)Product     A cellular mobile unit - ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
CrossCheck(TM)the first device to combine
 Family                   Integrates GPS, wireless cellular, and computing technologies onto a
                          single module - provides a more efficient, cost-
                          effective asset and route management tool for fleet
                          management.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 GeoExplorer(R)3          A data collection and maintenance system that provides
                          the industry's most rugged and technologically
                          advanced handheld GPS solution available for creating
                          and maintaining GIS databases for management of
                          utility, urban, and natural resources.
 -------------------------------------------------------------------------------

Component Technologies

     As a leading provider of GPS components,  we currently market our component
products  through an  extensive  network of OEM  relationships.  These  products
include proprietary  chipsets,  modules and a variety of intellectual  property.
The  applications  into which  end-users  currently  incorporate  our  component
products include:  timing  applications for synchronizing  wireless and computer
systems;   in-vehicle  navigation  and  telematics  systems;  fleet  management;
security  systems;  data  collection  systems;  and wireless  handheld  consumer
products.  Our timing products are used in applications  such as wireless clocks
and   network   synchronization.   We   provide   timing   products   to   major
telecommunications infrastructure suppliers such as Nortel Networks and Glenayre
Technologies.

     * We believe that technological advances in component technology, including
reduced  size,  cost and power  consumption  and increased  functionality,  will
continue  to drive GPS into a  single
                                    low-cost mobile  positioningvariety  of new,  high  volume  applications.  In
particular,  as GPS-based timing and communicationslocation  information  becomes available at
reduced  cost, it will migrate from current  commercial  uses to the high volume
consumer markets.  The following is a selected list of some of the products that
we believe will incorporate GPS functionality: wireless handheld products (smart
phones,  pagers,  E911/SOS  phones,  child and  personal  locators);  automobile
products  (in-car  navigation  systems,  car security  systems,  auto  emergency
response  systems,   telematics  systems);   PC-based  products   (autoPC/in-car
computers,  portable PCs, PDAs and other wireless devices); and general consumer
and marine products  (recreational  and  entertainment  products,  wristwatches,
portable navigation systems, marine handheld systems, pet locators).

     * Our in-vehicle  navigation and telematics  technologies  are sold to OEMs
that sell  directly  to  automobile  manufacturers,  including  Pioneer,  Bosch,
Blaupunkt,  Siemens AT,  Mannesmann  Group  (formerly  Philips Car System),  and
Magneti  Marelli.  Automobile  manufacturers  that currently  purchase  products
incorporating  our  GPS  technology  include:  Alfa  Romeo,  BMW,  Fiat,  Honda,
Mercedes,  Opel, Porsche,  Renault,  Toyota, and VW/Audi. Japan is currently the
world's  largest GPS automobile  navigation  system  market,  with Eurpoe as the
second largest market. To date, GPS automobile  navigation system penetration in
the U.S.  market  has been  relatively  low due to high  prices  and the lack of
digital maps. In 1998,  however, a number of automobile OEMs in the U.S. started
making  navigation  and  emergency  response  systems  standard in some high-end
vehicles,  such as the GM OnStar  system for  commercial fleet management.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Placer(TM)FamilyCadillac.  We believe  that in-car
navigation  systems will eventually become commonplace as system prices continue
to decline.

     * The largest  domestic  consumer  market for GPS components is expected to
become the  wireless  handset  market.  The FCC has  mandated  that all cellular
phones  must  identify  their  location  to within 125 meters for 911  emergency
calls.  This  Enhanced  911 (E911)  mandate  takes effect in October 2001 and Mobile positioningis
creating the need for the wireless  carriers and communication system
Placer(TM)handset  manufacturers  to find
ways to meet the mandate's  requirements.  GPS 450/455               with various communications interfaces.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Galaxy Immarsat-C/GPS(TM)technology provides an attractive
solution to meet or exceed the  requirements  of the E911  mandate.  This market
will require very small, low-cost GPS components that consume very little power.
We believe that we are well positioned to

                                       8


address these requirements and other high volume consumer applications.  We were
the first GPS company that provided  components  used in a GPS-enabled  consumer
Personal  Digital  Assistant  (PDA)  product,  known  as the  Locatio,  which is
manufactured and marketed by Seiko Epson in Japan.

Products

The first commercial    product     which
                                    integrates    two-way   wireless satellite
                                    communications  withfollowing is a table of some of the key Component Technologies products.

 -------------------------------------------------------------------------------
        Product                           Description
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 FirstGPS(TM)             Specifically developed for power-sensitive mobile
                          information devices such as laptops, PDAs, digital
                          cameras, smart phones, pagers and automobile
                          navigation systems.  The architecture allows high-
                          volume manufacturers of consumer products to add GPS
                          location data for
                                    long-haul trucking and marine applications.
- ----------------------------------- --------------------------------------------


                                       6


- ----------------------------------- --------------------------------------------
Trimble GPS/AVL Subsystemwith minimal impact on the device's size or
                          battery life.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Thunderbolt(TM)          A system which combines radio communications
                                    and GPS technologies to enable public safety
                                    agencies to decrease emergency response call
                                    times  and  improve  operational efficiency.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
FleetVision(R)3.2                   Microsoft  Windows-based  application which
                                    provides fleet operators with cost-effective
                                    and easy-to-use solution for tracking mobile
                                    assets.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Palisade(TM) NTP                    High-performance, cost-effective reference
Synchronization Kit                 time source that uses GPS  technology  to
                                    synchronize computers, servers, and internet
                                    applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
ThunderBolt(TM) GPS Disciplined GPS clock designed specifically for Clock                               precision timing
 GPS-disciplined Clock    and synchronization of wireless networks. VariationsWireless
                          systems need precise timing to optimize use of this
                                    basic  design  are used by major
                                    telecommunication infrastructure providerstheir
                          assigned radio spectrums across wide geographic areas.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 GPSTM CDMA Clock         A GPS clock supplied to Nortel Networks for CDMA base
                          station synchronization.  Nortel Networks is expanding
                          the use of GPS clocks to other air interfaces besides
                          CDMA.
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Lassen(TM) LP GPS        A miniature, low-power GPS receiver module for
                          battery-powered applications.  It is ideal for
                          embedding GPS in portable devices such as NortelNetworks,  AT&T  Wireless,PDAs,
                          personal communication systems, data terminals,
                          recorders and Qualcomm.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
ACE UTC GPS                         A unitinstrumentation units.
 -------------------------------------------------------------------------------

Portfolio Technologies

     This segment is comprised  of several  markets that integrates GPS timing technology
                                    into the ACE   form   factor,   which  is
                                    slightly  bigger than a business card.
                                    Ideal for precision timing applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Bullet(TM) II/Bullet(TM)II HE       Rugged GPS antenna for timing systems
                                    installed outdoors.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Trimble 8100                        An IFR-certified C129-A1 aviation navigation
                                    system that provides GPSuse accurate  position,
velocity,  and course data,  plustiming  information.  The products in this segment are navigation
modules and embedded  sensors that are used in  avionics,  flight,  management
                                    informationand military
applications.  This segment is an  aggregation of various  operations  that each
equal less than ten percent of the  Company's  total  operating  revenue.  Also,
included  in  this  segment  are  the  operations  of our  Tripod  Data  Systems
subsidiary for the period November 14, 2000 through December 29, 2000.

     On March 6, 2001, the Company sold its Air Transport Systems (ATS) business
commercialto Honeywell. The ATS business was a part of our Portfolio Technologies segment.
The sale to Honeywell  consisted of the Trimble 8100,  the HT 9100 and air transport markets.two other
product lines, which were included in the ATS business.

Products

The following is a table of some of the key Portfolio Technologies products.

- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
HT9100(TM)--------------------------------------------------------------------------------
TA-12(TM)                 A product   created   from  the Trimble/
                                    Honeywell partnership combines Trimble's GPS
                                    technology   with    Honeywell's flight
                                    management  technology to create  a complete
                                    system  for Communications,  Navigation, and
                                    Surveillance/Air Traffic Management for  air
                                    transport operations.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Trimble  2101  Approach  Plus and   Is a Dzus  rail-mount,  GPS-based flight
I/O Approach Plus                   management  and  navigation system for
                                    corporate,  helicopter and regional commuter
                                    aviation.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
Force(TM) TM GPS Module  Series     A  GPS module  that has been  developed
                                    for  embedded  integration  into
                                    high-performance, land, sea, aircraft and
                                    missile applications.
- ----------------------------------- --------------------------------------------
- ----------------------------------- --------------------------------------------
TA-12                               High-performance, all-in-view, PPS GPS receiver for
                          military aircraft operating within the US National
                          Airspace System.  The TA-12 receiver is FAA TSO-C129A
                          certified and designed for integration with Flight
                          Management Systems (FMS)  that require Instrument Flight
                          Rules (IFR) -
                                    certified operations.
- ----------------------------------- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------- --------------------------------------------
Cargo Utility--------------------------------------------------------------------------------
Force 5 GRAM-S(TM)        An all-in-view, dual frequency PPS embedded GPS
                          Receiver (CUGR)   A  complete  GPS-basedreceiver card designed for integration with military
                          inertial navigation systemsystems for militaryuse on high
                          performance aircraft operations.and missiles.
- ----------------------------------- ----------------------------------------------------------------------------------------------------------------------------

Sales and Marketing

     Trimble  currently  has ninea number of  regional  sales  offices in the United
States and
six in Europe, as well as offices in Australia, Canada, China, Dubai, Japan,
Manila,  Mexico, New Zealand,  Russia,Singapore and Singapore.  We haveothers. The Company has substantial
variation  in the  needs of ourits  sales  and  distribution  channels  which are rapidly changing.across  its
markets.

                                       9


     Domestic. Trimble sells its products in the United States primarily through
dealers,   distributors,   and  authorized  representatives,   supplemented  and
supported  by our direct salesforce.sales force.  We have also  pursued  alliances  and OEM
relationships  with established  foreign and domestic  companies to assist us in
penetrating certainselected markets.

     International.  Trimble  markets  to  end-users  through a network  of more than
100many
dealers and  distributors in more than 85 countries.  Distributors  carry one or
more product lines and are generally limited to selling either in one country or
in a portion of a  country.  Trimble  occasionally  grants  exclusive  rights to
market certain products within specified countries.

     Sales  to   unaffiliated   customers  in  foreign   locations   represented
approximately 52%, 46%52%, and 46% of Trimble's total revenue in fiscal years 2000,
1999  1998  and  1997,1998,  respectively.   Sales  to  unaffiliated  customers  in  Europe
represented  25%28%,  25%,  and 22%25% of net  revenue in such  periods,  and sales to
unaffiliated  customers in the Far East  represented  14%12%, 13%14%, and 15%13% of total
revenue in such periods, respectively.

     7
Support.  Trimble's  general terms and conditions for salesTrimble generally provides a one year warranty on the sale of its
products
include  a  one-year  warranty.   Commercial  Aviation  products,  however,  are
generally  sold  with a basic  three-year  warranty  period  with an  additional
two-year  warranty sold with some units;  select  militaryproducts.  Certain  programs  may require  extended  warranty  periods.  General
warranty  terms for software  sold by our Tripod Data Systems  subsidiary  is 90
days. We support our GPS products on a board replacement level from locations in
the United Kingdom,  Singapore,Germany, Japan, and New Zealand, as well
as  Sunnyvale,  California.  Trimble's  dealersThe repair and
distributors  also  provide
factory-trained  third-party  maintenance,  includingcalibration  of our line of  Optical/Electronic  Surveying,  Laser  and  Machine
Control  equipment  is  available  from  company-owned  or  -funded  facilities.
Additionally over 200 service providers  globally perform warranty  and non warranty
repairs.servicing of
our products.  We reimburse dealers and distributors for all authorized warranty
repairs  they  perform.  Trimble  does not derive a  significant  portion of its
revenues from support activities.

Competition

     * In the segments  currently  being  addressed by Trimble,  competition  is
intense. Within each of itsour five market segments,  Trimble has encounteredwe encounter  direct  competition
from both foreignother GPS, optical and domestic  suppliers,laser suppliers.

     In the  Engineering  and  expects  that  competition  will
continue  to  intensify.  Indirect  competition  is also  beginning  to  emerge,
particularly from semiconductor and consumer  electronic  manufacturers that are
anticipatingConstruction  segment,  the emergence of high-volume, customer-oriented GPS applications.

     The PPG segment faces  competition from Leica AG, Spectra Precision (Thermo
Electron),  Topcon,  Sokkia,  Ashtech Precision Products (part of Magellan Corp.
via Orbital Sciences Corp.),  Novatel (Canadian Marconi),  Allen Osborne,  Javad
Positioning   Systems,    Communications   Systems   International,    Corvallis
Microtechnology, Inc., and Tripod Data Systems.

     The MTT segmentCompany faces ongoing
competition  primarily from other GPS and optical vendors,  such as Leica AG and
Topcon  Corporation.  Other competitors  include Magellan  Corporation;  NovAtel
Inc., Sokkia Company, Ltd.; and Nikon Geosystems.

     In the  Agriculture  segment  we face  competition  from  John  Deere,  CSI
Wireless, Starlink, AgSystems, and Topcon Corporation.

     In the  Component  Technologies  segment  high  volume  markets the primary
competitors are Motorola,  Inc.;Conexant,  and Japan Radio Corporation  Rockwell International Corporation,  Symmetricom,  Datum, Odetics,(JRC). In the
timing markets, the primary competitor is Symmetricom.

     In the Fleet and Asset  management  segment  we face  competition  from CSI
Wireless, AirIQ, Leica AG; Garmin Corporation; and Magellan Corporation.

     In the Portfolio  Technologies  segment,  we face ongoing  competition from
Rockwell Collins,  Universal Navigation  Corporation,  Canadian Marconi Company,
(a
subsidiary  of  the  General  Electric  Company  plc),   Northstar  Avionics  (a
subsidiary of Canadian  Marconi),  and UPS Aviation  TechnologiesIIMorrow, Inc. (a division of United Parcel Service of America, Inc.), The New Honeywell
Incorporated, (Merged
Allied Signal and Honeywell),  Smiths Industries, ARNAV, Interstate Electronics
(subsidiary of Figgie International),L3 Communications,  Raytheon, and Litton Industries
Orbital
Sciences Corp., and Wireless Link.

     A  number  of  Trimble's  markets  are also  served  primarily  by  non-GPS
technologies,  many of which are currently more accepted and less expensive than
GPS-based  systems.  The success of GPS-based  systems  against these  competing
technologies  depends  in part on  whether  GPS  systems  can offer  significant
improvements in  productivity,  accuracy,  and  reliability in a  cost-effective
manner, as well as continued market education about such products.Alliant TechSystems.

     The  principal  competitive  factors  in the markets that Trimble  addressesvary widely from  segment to segment.
Typical   competitive   factors  include  ease  of  use,  physical characteristics (including size,  weight,   power
consumption,  features,  performance,  reliability  and power
consumption),   product   features   (including   differential   GPS),   product
performance,   product  reliability,  price,  sizeprice. In the commercial
solution   applications,   ease  of  installed  base,  vendor
reputation,use  and  financial  resources.user  functionality   become  the
differentiating   factors.  We  believe  that  our  products  currently  competecompare
favorably  with otherrespect to these  factors.  We intend to maintain our leadership
position through:

     o Systems, products on most ofand services that have significantly differentiated
       features with improved benefits to end-users.
     o A strong commitment to new product development.  Trimble currently offers
       more than 100 products and continues to improve and expand the foregoing  factors,  though
we may be at a competitive  disadvantage  against other companies having greater
financial, marketing, and service and support resources.line.
     o Our technology leadership with approximately 490 patents issued.

                                       10


     o Extensive worldwide distribution.

     * Trimble  believesWe believe that itsour ability to compete successfully in the future against
existing  and  additional  competitors  will  depend  largely on itsour  ability to
provide systemsmore  complete  solutions,  as well as products  and services  that have
significantly  differentiated  features with improved cost/benefit ratios to our
end-users.  There can be no  assurances  that we will be able to implement  this
strategy successfully,  or that our competitors, many of whom have substantially
greater  resources,  than Trimble,
will not apply  those  resources  to  compete  successfully
against us on the basis
of system features and end-user cost/benefit ratios.us.

Research and Development

     Trimble'sOur leadership  position in itsour targeted marketsmarket segments is the result,  in
large part, of itsour strong  commitment to research and development.  Trimble
invests  heavilyWe invest in
developing positioning and information technologies and wireless communications,
including the design of proprietary  software,  andoptics,  laser systems,  control
systems,  integrated  circuits,  fornetwork  radios,  GPS receivers.  Moreover,receivers,  and real time
kinematic  (RTK)  technology.  Trimble  develops  substantial
systems expertisehas an  advanced  technology  laboratory
located in  Sunnyvale,  California  where we devote a portion  of our  corporate
research and user interfacesdevelopment expenditures to advancing core positioning technologies
and  integrating  them with  synergistic  technologies  such as  communications,
sensors, and information technologies.

     Significant  portions  of our  research  and  development  are  targeted at
developing  the  products  for a variety  of  applications  that  utilize  these
technologies. Recent examples include:

     o  3-D passive positioning through the use of rotating lasers for the
        construction  market o 5600DR 200+  reflectorless  robotic total station
        for the surveying and construction market
     o  Crosscheck GSM, integrating cellular and GPS technology for fleet
        management
     o  Introduction of an autosteer tractor utilizing GPS and control system
        technology for the agricultural  market.
     o  The GPS Total Station 5700  incorporating  Trimble's latest RTK
        technology for surveying and stake  out
     o  The  FirstGPS  technology,  offering  small,  low-power  GPS  for
        automotive and other embedded applications.

     Below is a table of Trimble's expenditures on research and development over
the last three fiscal years.

                                             8
Fiscal Years ended
                           ---------------------------------------------------------------------------------------------------------
                              December 29,        December 31,       January 1,
                                  January 2,2000               1999               1999               1998
- --------------------------------------------------------------------------------
(In thousands)

Research and development       $ 46,520             $ 36,493            $ 45,763             $ 38,242


     Often a new product is developed  initially for an individual  customer who
is willing to purchase  development-stage  products.  We have used feedback from
such  initial  customers as a primary  source of  information  in designing  and
refining our products and in defining, with greater precision, customer needs in
emerging market areas.  During 1996, Trimble  established an advanced technology
laboratory  where we devote a portion of our corporate  research and development
expenditures to advance core GPS technology and its integration into synergistic
technologies  such as  communications,  sensors,  and information  technologies.
These  technological   advances  are  sometimes  supported  financially  through
strategic alliances and partnerships.



     * Trimble  expects that a  significant  portion of future  revenues will be
derived  from  sales of newly  introduced  products.  Consequently,  our  future
success  depends in part on our ability to  continue to develop and  manufacture
new competitive products with timely market  introduction.introductions.  Advances in product
technology  will require  continued substantial  investment in research and  development  in
order to maintain and enhance our market position.

DevelopmentManufacturing

     In  August  of 1999,  Trimble  began  outsourcing  the  manufacture  of our
GPS-based  products,  reducing  our need to make costly  investments.  Solectron
Corporation   (Solectron)  currently   manufactures  our  GPS  products  and  is
responsible for nearly all material procurement,  assembly and testing.  Product
design through pilot production remains in the hands of Trimble. While Solectron
is responsible  for most facets of the  manufacturing  schedules for technologyprocess,  we are directly
involved in qualifying vendors and the key components used in our products.

     We manufacture our optical and laser-based  products are difficult to predict,at four  manufacturing
facilities  located in Dayton,  Ohio;  Danderyd,  Sweden; and there can be no
assurance that we will achieve  timely  initial  customer sales of new products.
The timely  availabilityKaiserslautern and
Jena, Germany.  Some of these products in volume,  and their  acceptance by
customers,subassemblies are important to Trimble's future success.also assembled on a
contract basis.

                                       11


     In addition, some of our
products 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  products sold in the European  Union.  An inability to obtain
such  certifications  in a timely  manner  could have an  adverse  effect on our
operating results.

Manufacturing

     Trimble  seeks to be a low-cost  provider and to serve the growth in demand
for GPS-based products and systems through the outsourcing of manufacturing, and
the design of products around a common core of receivers.

     On August  10,  1999,  Trimble  signed  an Asset  Purchase  Agreement  with
Solectron  Corporation  and  Solectron  Federal  Systems,  Inc.   (collectively,
"Solectron"). The closing of the transaction occurred on August 13, 1999. At the
closing  of the Asset  Purchase  Agreement,  Trimble  transferred  to  Solectron
substantially all of our tangible  manufacturing assets located at the Company's
Sunnyvale,  California,  campus.  These  assets  include  but are not limited to
equipment,  fixtures and work in progress, as well as certain contract and other
intangible  assets  and  rights,  together  with  certain  related  obligations,
including  but  not  limited  to  real  property  subleases  covering  Trimble's
manufacturing floor space, and outstanding purchase order commitments. The Asset
Purchase Agreement also provided for Solectron's  subsequent purchase, on August
30, 1999, of Trimble's entire component inventory on hand as of August 13, 1999.

     Concurrent  with the closing of the Asset Purchase  Agreement,  Trimble and
Solectron also entered into a Supply  Agreement.  The Supply Agreement  provides
for the exclusive  manufacture by Solectron of almost all Trimble products for a
period of three years. In addition,December 2000 Trimble maintains a manufacturing facility
in Austin,  Texas,  primarily  focused on FAA certified  products for commercial
aviation and military systems.  Solectron offered  employmentAs discussed in the industry segment section, as
of March 6,  2001,  we have  sold our Air  Transport  Systems  business  that is
located in Austin, and it is our intent to approximately  230 Trimbleclose our Austin operations in August
of 2001.  At that time,  we will  transfer the FAA  certified  military  systems
business  to  our  manufacturing  engineering  and  related  support  personnel,   and  Trimble  understands  that
substantially  all  such  employees  initially  accepted  such  employment  with
Solectron.

     * The  utilizationfacility  in  Sunnyvale,  California.  We  are
currently in the process of Electronic  Manufacturing  Services (EMS) provided by
Solectron  will  enable  the  management  of  Trimbletransferring our FAA certifications to focus on the true core
competencies  of Trimble's  business,  while still  deriving the benefits from a
world-classour Sunnyvale
manufacturing organization.  Benefits which Trimble hopes to receive
from this outsourcing of manufacturing include:

     o The purchasing power of a company with a multibillion-dollar  procurement
       budget.
     o Supply chain management and order fulfillment models developed to support
       the stringent demands of current customers.

                                       9



     o Flexibility and ability to respond to upside/market  opportunities due to
       the large scale of Solectron's manufacturing capacity.
     o Manufacturing,  service  and  distribution  capabilities  on a worldwide
       scale, enabling Trimble to provide more cost-effective supply solutions,
       closer to its customers.
     o Manufacturing  practices  yielding stable  processes and providing better
       quality output.
     o Availabilityfacility.

     While most of the  latestcomponents  used in our products are standard and most  cost-effectivecan be
obtained from multiple  qualified  manufactures,  some of our key components are
proprietary or sole sourced and require extended lead times. If we were required
to find new vendors for these sole or limited sourced components,  we would have
to qualify replacement  components and possibly  reconfigure our products.  This
qualification  or  reconfiguration  process  could  result in  product  assembly
       technologies.
     o Provision  of latest  design  services  to  participate  in the  product
       development   cycleshipment
delays.  Our supply management team works closely with  a  fresh   and   unbiased   focus  on  design
       for manufacturability, lower cost, higher quality and higher reliability.

     Trimblestrategically  important
suppliers who provide sole or limited sourced products.

     We will continue to provide  state-of-the art Computer Aided Design and
Computer  Integrated  Manufacturingcomputer aided design service
capabilities  to theour  development  community  relating to PCBprinted  circuit board
(PCB) layout,  assembly drawing and schematic  development.  We intend to remain
self-sufficient  in this field to ensure that the development  entities can have
the  maximum  benefit  from the  utilization  of  their  time,  while  including
automatic  test  capability  on the  board,  contributing  to  faster  and  more
effective product release cycles.

     Trimble  maintains quality control  procedures for its products,  including
testing during design, prototype, and pilot stages of production, and inspection
and testing of finished products using automated test equipment.

     Trimble takes a modular and upgradable  approach to its products,  building
around a common core of GPS  receivers  with  customized  software  and hardware
systems to analyze and present  position data. Our core receiver  technology has
evolved since the  development of our first GPS receiver  product in 1984, as we
have worked to reduce the size, weight,  power consumption and cost of the basic
GPS receiver. In this process, we have designed our own semi-custom, single-chip
GPS processor.

Backlog

     Trimble  believes that due to the volume of products  delivered  from shelf
inventories and the shortening of product delivery  schedules,  backlog is not a
meaningful  indicator of future business prospects.  Therefore,  we believe that
backlog information is not material to an understanding of our business.

Patents, Trademarks, and Licenses

     TrimbleOur success  depends to a significant  extent on technical  innovation.  We
pursue  an  active   program   of  filing   patent   applications   to   protect
technologically   sensitive   features  of  our  products.   We  currently  holdshold
approximately  280370 U.S.  GPS related  patents and  18approximately  20 foreign GPS
related
foreign  patents that expire at various dates no earlier than 2005. ItWe also has
more than 180 U.S. and foreign patent applications pending.have
approximately  100 laser or optical  related  patents  worldwide.  We  currently
license certain peripheral  aspects of our technology from Spectrum  Information
Technologies  and  GeoResearch.  Trimble  may enter  into  additional  licensing
arrangements in the future relating to its technologies.

     At  present  there  are  87  trademarks   registered  to  Trimble  and  its
subsidiaries.   Specifically,   "Trimble"   with  the  sextant  logo,   "Trimble
Navigation,"  "GeoExplorer,"  and "GPS Total Station," are trademarks of Trimble
Navigation  Limited,  registered  in the  United  States  and  other  countries.
"Trimble" with the globe and triangle logo and additional trademarks are pending
registration.  Trimble Navigation  Limited  acknowledges the trademarks of other
organizations  for their  respective  products  or  services  mentioned  in this
document.

     Although we believe that our patents and trademarks  have value,  there can
be no assurance that those patents and trademarks, or any additional patents and
trademarks  that  may  be  obtained  in  the  future,  will  provide  meaningful
protection from  competition.  We actively  develop and protect our intellectual
property through a program of patenting, enforcement, and licensing.

     We do not  believe  that  any of our  products  infringe  patent  or  other
proprietary  rights of third parties,  but we cannot be certain that they do not
do so. (See Note 1721 to  Consolidated  Financial  Statements.) If infringement is
alleged,  legal defense  costs could be material,  and there can be no assurance
that the necessary  licenses could be obtained on terms or conditions that would
not have a material adverse effect on our profitability.

InEmployees

     As of December 29, 2000, Trimble employed 2,306 people: 536 in research and
development,  926 in  sales  and  marketing,  619 in  manufacturing,  and 225 in
general  administration.  Of these, 596 were located in Europe (of which 75 were
in Germany and 236 were in Sweden),  207 in New Zealand,  53 in the second quarter of 1997,  Trimble expanded a prior license  agreement
with Pioneer Electronic  Corporation for certain ofAsia and the
technology  contained in
our TANS product for inclusion in in-vehicle  navigation products sold in Japan.
We received a one-time  $2.2  million  licensing  fee in  consideration  for the
expansion of this license.

     * Trimble  expects  that we will enter into  other  licensing  arrangements
relating to its technologies.

     "Trimble"  with the  sextant  logo,  "Trimble  Navigation,"  "GeoExplorer,"
"Flightmate,"  "GPS Total  Station,"  "Scout GPS,"Pacific region and "Aspen" are trademarks of
Trimble Navigation Limited, registered1,450 in the United States, Canada and other countries.
Additional  trademarks are pending.  Trimble Navigation Limited acknowledges the
trademarks  of other  organizations  for their  respective  products or services
mentioned in this document.


                                       10


Employees

     As of December 31, 1999, Trimble employed 978 persons:  317 in research and
product development,  400 in sales and marketing, 118 in manufacturing,  and 143
in administration  and finance.  Of these, 75 were located in Europe, 175 in New
Zealand,  16 in Japan,  6 in Singapore,  5 in  Australia,  and 701 in the United
States.Mexico. We also employ
temporary and contract personnel.  Use of such personnel,
has  decreased  over the last year and is not included in the above headcount numbers.

                                       12


     Trimble's  success  depends  in  part  on the  continued  contribution  and
long-term  effectiveness of our employees.  Competition in recruiting  personnel
is intense.  We believe thatcan be  significant  in some labor markets and our continued  ability to attract
and retain  highly  skilled  management,  marketing,
and  technical  personnelemployees  is  essential  to our future  growth and
success.  Our employees are not  represented by a labor unions,  except in certain
European  countries  where union  and wemembership  is almost  universal.  We have not
experienced work stoppages.

                                       Trimble's  success  depends  in  part  on the  continued  contribution  and
long-term  effectiveness  of our executive  officers and key  technical,  sales,
marketing, support, research and development,  manufacturing, and administrative
personnel, many of whom would be difficult to replace.

                                       1113


Executive Officers of the Company

     The names,  ages, and positions of the Company's  executive  officers as of
March 27, 200029, 2001 are as follows:

Name                       Age             Position
- --------------------------------------------------------------------------------
Steven W. Berglund........... 48Berglund........  49        President, Chief Executive Officer
Mary Ellen Genovese..........P. Genovese....  41        Chief Financial Officer
William C. Burgess........  54        Vice President, Human Resources
David M. Hall.............  52        Senior Vice President, Marketing
                                      and Business Development
John E. Huey..............  51        Treasurer
Ronald C. Hyatt...........  61        Senior Vice President and General
                                      Manager, Agriculture Division
Irwin L. Kwatek...........  62        Vice President and General Counsel
Bonnie L. Lemon...........  41        Corporate Controller
Michael W. Lesyna.........  40        Vice President Finance, Chief Financial
                                     Officer and Corporate Controller
CharlesGeneral Manager, Mobile
                                      Positioning and Communications Division
Bruce E. Armiger, Jr....... 45Peetz............  49        Vice President, Worldwide Sales
David M. Hall................ 51     Group Vice President, MobileAdvance Technology and
                                      Timing
                                     Technologies
Patrick J. Hehir............. 38Systems
Karl G. Ramstrom..........  57        Senior Vice President Chief Manufacturing
                                     Officer
John E. Huey................. 50     Treasurer
Ron C. Hyatt................. 60     Groupand General Manager,
                                      Engineering and Construction Division
Alan R. Townsend..........  52        Vice President Precision Positioning
Michael W. Lesyna............ 39and General Manager,
                                      Mapping and GIS Division
Dennis L. Workman.........  55        Vice President Strategic Marketing
Bruce E. Peetz............... 48     Vice President, Advanced Technology and SystemsGeneral Manager,
                                      Component Technologies Division

     All officers serve at the  discretion of the Board of Directors.  There are
no family  relationships  between any of the directors or executive  officers of
the Company.

     Steven W. Berglund joined Trimble as President and Chief Executive  Officer
in March  1999.  Mr.  Berglund  has a  diverse  background  with  experience  in
engineering,  manufacturing,  finance  and global  operations.  Most recently,Prior to joining
Trimble, Mr. Berglund was presidentPresident of Spectra Precision,  Inc.,  with which had global
salesrevenue of approximately  $200 million develops and manufacturesdeveloped and manufactured  surveying
instruments,  laser-basedlaser based construction alignment  instruments,  and construction
machine  control  systems.   Spectra   Precision,   Inc.  was  a  subsidiary  of
Spectra-Physics AB. During his fourteen years withwithin Spectra-Physics,  which was
an early  Silicon  Valley  pioneer  in the  development  of laser  systems,  Mr.
Berglund held a variety of management  positions  that included four years based
in Europe.  Prior to  Spectra
Precision,Spectra-Physics,  Mr.  Berglund spent a number of years in the early  1980s at
Varian  Associates  in  Palo  Alto  where  he  held a  number  of  planning  and
manufacturing  roles.  Varian is a technology company  specializing in microwave
communications,  semiconductor manufacturing equipment,  analytical instruments,
and medical  diagnostic  equipment.  Mr.  Berglund began his career as a process
engineer at Eastman  Kodak in Rochester,  New York.  HeMr.  Berglund  attended the
University  of Oslo and  University  of  Minnesota  where he  received a B.S. in
chemical  engineeringChemical  Engineering  in 1974. He1974  and  received  his MBA from  the  University  of
Rochester in 1977.

     Mary Ellen P.  Genovese  joined  Trimble  as  Controller  of  Manufacturing
Operations  in  December  1992 as  controller  of
manufacturing  operations.1992.  From 1994 to 1997 she served as  business  unit
controllerBusiness  Unit
Controller  for softwareSoftware and  component  technologies,Component  Technologies,  and for the tracking and
communications business unit.units. She was appointed corporate  controllerCorporate Controller in October1997October
1997 and vice presidentVice President of financeFinance and corporate  controllerCorporate Controller in February 1998. Currently,In
September  2000 she is Trimble's  interim chief financial  officer.was  appointed  Chief  Financial  Officer.  Prior to joining
Trimble, Mrs. Genovese was chief financial  officerChief Financial Officer and presidentPresident for Minton Co.,
a distributing  company to the commercial building market, from 1991 to 1992. In
her position as chief financial officer,Chief Financial  Officer she was responsible for the accounting,
management  reporting and bank and investor financing for the company.  In March
of 1992,  the board of  directors  asked her to assume the role of  president of MintonPresident to
reorganize  the  company,   including  the  divestiture  of  the   manufacturing
operations.  Prior  to  1991,  she  worked  for 10  years  with  General  Signal
Corporation. She was appointed European financial  controllerFinancial Controller in July 1990, andwhere
she was responsible for the company's three European operations, -- Germany, France
and the United Kingdom.  From 1988 to 1990 she served as unit
financial officer --Unit Financial Officer,
for General  Signal's  Semiconductor  Systems  Division.  She held several other
management  positions including  materials  manager,Materials Manager,  Controller of Manufacturing
Operation and controller of manufacturing  operation and international projects controllerInternational  Projects  Controller for General Signal's Ultratech
Stepper  Division  from  1984 to  1988.  Mrs.  Genovese  is a  Certified  Public
Accountant  and received her B.S. in  accounting  from  Fairfield  University in
Connecticut in 1981.

                                       Charles  E.  Armiger,  Jr.14


     William C. Burgess joined Trimble in January  1989 as Sales and
Marketing Manager for aviation products.  From January 1991 to December 1993, he
served as Director of U.S. Domestic Sales. Mr. Armiger held the post of Director
of Sales for North American West from January 1993 to November 1994. In December
1994 he  moved to  Trimble's  European  office  in  Hook,  England,  to serve as
Director of Sales for Europe,  the Middle East and Africa. In September 1996, he
was  appointed to serveAugust 2000 as Vice President for  Commercial  Systems  Sales.  In
Septemberof Human
Resources.  From August 1998 to July 2000,  Mr.  ArmigerBurgess was appointed Vice  President  of
Worldwide  Sales.
Prior to joining  Trimble,  he was  DirectorHuman  Resources and  Management  Information  Systems for Sonoma West Holdings,
Inc. Mr. Burgess also served as Vice President of SalesHuman  Resources from May 1995
through July 1998 for Optical Coating Laboratory, a large high-tech manufacturer
of fiber optic  products.  Mr.  Burgess'  experience  also  includes  Telenekron
Communications  Systems, a developer of  telecommunications  software;  and Marketing  for ARNAV
Systems,  Inc. HeAsea
Brown Boveri (ABB), a global technology  company.  Mr. Burgess received ahis B.S.  degree in Business
from  the  University  of  the
State of New York, Regents College,Nebraska  in  1996.


                                       12
1973  and  an  M.S.  in  organizational
development from Pepperdine University in 1978.

     David M. Hall joined  Trimble in February  1994 as Managing  Director,  OEM
products.  In November 1996 he was appointed Vice President and General  Manager
of  the  Software  and  Component   Technologies   business  unit,  focusing  on
application and operating  system  software,  component board level, and chipset
volume aspects of the GPS business. In November 1998 he was appointed Group Vice
President of the Mobile and Timing  Technologies  business unit, managing mobile
positioning and communications,  timing,  automotive,  military,  and commercial
aviation  businesses.  In  August  2000,  Mr.  Hall was  appointed  Senior  Vice
President  of  Marketing  and Business  Development.  Previously,  he worked for
Raychem  Corporation  for  twenty-one  years  in  a  variety  of  positions  and
divisions.  He served as  Director  of Sales and  Marketing  for the  Automotive
Division, National Distribution Manager for the Electronics Sector, and Director
of Marketing and Product  Management for the Interconnect  Systems Division,  as
well as District Sales Manager,  Area Sales Manager, and Operations Manager. Mr.
Hall received his B.S.  degree in  Industrial  Technology in 1971 and his MBA in
Marketing and Finance in1973in 1973 from the California  Polytechnic  State University
in San Luis Obispo, California.

     Patrick J. Hehir joined  Trimble in February 1999 as Senior Vice  President
and Chief Manufacturing Officer. Prior to Trimble, Mr. Hehir worked for Dovatron
International,  where he held several  positions  during his eight-year  tenure,
including quality/program manager, director of operations, executive director of
operations and vice president of worldwide business development.  Dovatron, a $1
billion  international  manufacturing  company with offices in Ireland,  Mexico,
Asia,  Eastern  Europe and the U.S.,  serves  clients  such as  Hewlett-Packard,
Hughes  Corporation,  I.B.M.,  and Lucent  Technologies.  Prior to Dovatron,  he
worked  for  Western  Digital in several  positions,  including  process/quality
engineer,  quality improvement process coordinator,  senior quality engineer and
quality manager. Mr. Hehir also held process engineering, production and quality
positions at Pulse  Engineering in Ireland.  He has a broad range of educational
qualifications  from  technical  colleges  and  universities  in Ireland and the
United  Kingdom.  He graduated  from Galway's  Institute of  Technology  with an
electronic  engineering  certificate  in 1981.  He received a  quality-assurance
post-graduate diploma from the Galway's University College in 1984. In 1987, Mr.
Hehir  received a production  and  operations  management  certificate  from the
United  Kingdom's  Institute  of  Industrial  Engineering,  and a  post-graduate
diploma in health,  safety and social welfare from Cork's University  College in
1993. Mr. Hehir also served on Ireland's technical committee for the development
of the environmental system standard,  ISO 14000, published by the International
Standards Organization.

     John E. Huey  joined  Trimble  in 1993 as  Director  Corporate  Credit  and
Collections.  HeCollections,  and was promoted to Assistant  Treasurer in 1995 and  Treasurer in
1996. As  Treasurer,  Mr. Huey has  responsibility  for the  Company's  banking
relationships including syndicated credit facilities, domestic and international
cash management, credit/collection/DSO management and worldwide risk management,
including  setting  and  execution  of the  Company's  hedging  policy and stock
administration.   Past  business experience includes two years with ENTEX Information  Services,  five
years  with  National  Refractories  &  Minerals  Corporation  (formerly  Kaiser
Refractories), and thirteen years with Kaiser Aluminum & Chemical Sales, Inc. He
has held positions in Credit  Management,  Market Research,  Inventory  Control,
Sales and as an  Assistant  Controller.  Mr. Huey  received  his B.A.  degree in
Business  Administration in 1971 from Thiel College in Greenville,  Pennsylvania
and an MBA in 1972 from West Virginia University in Morgantown, West Virginia.

     RonRonald  C.  Hyatt   joined   Trimble  in  August   1983  as   Director   of
Instrumentation Products. In 1985, he was appointed Vice President for Surveying
and  Mapping   Products,   managing  the  marketing  and  application   software
development  aspects of the business  until  February  1993.  In January 1997 he
returned to the Company as Senior Vice  President of Trimble  Labs,  focusing on
next-generation  ASIC developments.  In November 1998, Mr. Hyatt was promoted to
Group Vice President of Precision  Positioning  Group.Positioning.  He iswas responsible for managing
surveying,land survey, marine, marine survey, mapping/GIS, and machine  guidance/control  product lines.mining,  construction,  and
agricultural  applications.  In August 2000, Mr. Hyatt was appointed Senior Vice
President  and General  Manager of the  Agriculture  Division.  Prior to joining
Trimble,  Mr.  Hyatt  worked  for  Hewlett-Packard  from 1964 to 1983 in various
engineering and management  positions,  focusing on precision frequency and time
instrumentation.  Mr. Hyatt received his B.S.  degree in electrical  engineering
from Texas Tech University in 1962 and his M.S. degree in electrical engineering
from Stanford University in 1963.

     Irwin L. Kwatek joined  Trimble as Vice  President  and General  Counsel in
November 2000. Mr. Kwatek was Vice President and General Counsel of Tickets.com,
Inc., a ticketing  services  provider,  from May 1999 to November 2000. Prior to
that he was engaged in the private  practice of law for more than six years.  In
his career,  Mr.  Kwatek has served as Vice  President  and  General  Counsel to
several publicly-held high-tech companies, including Emulex Corporation, Western
Digital Corporation and General Automation,  Inc. Mr. Kwatek received his B.B.A.
from Adelphi College in Garden City, New York and an M.B.A.  from the University
of Michigan in Ann Arbor.  He received his J.D.  from Fordham  University in New
York City in 1968.

     Bonnie L.  Lemon  joined  Trimble in April of 1998 as  Assistant  Corporate
Controller where she was responsible for the financial  reporting and accounting
transaction  systems.  She was appointed Corporate  Controller in November 2000.
Prior to joining  Trimble,  Ms. Lemon worked for 5 years for Dexter  Corporation
where she held the position of Business  Controller in the  Aerospace  Materials
Division.  Ms. Lemon worked at Hexcel from 1989 to 1993, where she served as the
Group  Accounting  Manager  for  the  Advanced   Composites  Division  and  also
Accounting  Supervisor for the company's  Advanced Products  Division.  Prior to
joining  Hexcel,  she worked at  Motorola,  Inc. as a Financial  Analyst for the
Government  Electronics  Group and  Supervising  Senior Auditor at the company's
corporate  headquarters.  Ms. Lemon also served as the Corporate  Controller for
Quinton  Hazell,  Inc.  and as a Senior  Auditor  for Ernst & Young.  Ms.  Lemon
received her B.B.A.  in accounting  from the University of Michigan in 1981. She
is also a certified public accountant.

                                       15
Michael W. Lesyna joined Trimble as Vice  President of Strategic  Marketing
in September  1999.  In September  2000,  he was  appointed  Vice  President and
General  Manager of the Mobile  Positioning  and  Communications  Division.  Mr.
Lesyna brings broad experience in developing  business and marketing  strategies
for high-technologyhigh tech  companies.  Prior to Trimble,  Mr. Lesyna joins Trimble
fromworked for Booz Allen &
Hamilton,  where he spent six years, most recently serving as a principal in the
operations  management group. While at Booz Allen & Hamilton, he was responsible
for advising companies on a wide range of strategic issues.  Prior to Booz Allen
& Hamilton,  Mr. Lesyna held a variety of engineering positions at Allied Signal
Aerospace.  He  served  as a  project engineerProject  Engineer  for  Allied  Signal's  European
consortium  in Germany,  was a  developmentDevelopment  and test engineerTest  Engineer for the altitude
chamber,  and was a design  engineerDesign  Engineer for the company's  first jet fighter engine
afterburner.  Mr. Lesyna  received an MBA from  Stanford  University.University in 1994. He
also received an MSM.S. in mechanical engineering in 1983 and a B.S. in mechanical
engineering in 1982, both from Stanford.


                                       13
Stanford University.

     Bruce E.  Peetz  joined  Trimble in June 1988 as  Program  Manager  for GPS
Systems.  From January 1990 to January 19941993 he served as Development Manager for
commercial  dual-frequency  products,  and from January 1993 to December 1995 he
served as Engineering Manager for Surveying and Core Engineering. In 1996January1996
he was appointed  General  Manager of the Land Surveying unit, and from February
1998 started the Advanced Systems  division as General Manager.  In October 1998
he was named Vice President of Advanced  Technology  and Systems,  consolidating
Systems and Trimble Laboratories.  Prior to joining Trimble, Mr. Peetz served in
a variety of engineering and management positions during eleven years at Hewlett
Packard and four years at Hughes Aircraft  Company.Packard.  Mr.  Peetz  received  his B.S.
degree in Electrical EngineeringBSEE  from the  Massachusetts  Institute  of
Technology in 1973, and did graduate work in computer science at UCLA.

     Karl G. Ramstrom joined Trimble in August 2000 as Senior Vice President and
General Manager of the Engineering and Construction  Division.  Prior to joining
Trimble,  Mr. Ramstrom served as President of the Spectra Precision Group, which
was  acquired  by  Trimble in July 2000.  During his  31-year  tenure at Spectra
Precision  and its  predecessor  companies,  he  held a  variety  of  positions,
including marketing, sales management, general management, and finally executive
responsibilities.  Before his  appointment  as President,  Mr.  Ramstrom  headed
Spectra  Precision's  Survey business unit  headquartered  in Danderyd,  Sweden.
After  completing  his education in his native  Sweden,  Mr.  Ramstrom began his
career as a surveyor with the Swedish Road Administration before joining Spectra
Precision in 1969.

     Alan  R.  Townsend  joined  Trimble  in  1991  as the  Manager  of  Trimble
Navigation  New  Zealand  Ltd.,  a product  development  subsidiary  of  Trimble
Navigation Ltd. In 1995, he was appointed General Manager of the Mapping and GIS
systems  group.  In January 2001, he was promoted to Vice  President and General
Manager of the  Mapping and GIS  Division.  He is also  serving as the  Managing
Director of Trimble  Navigation New Zealand Ltd. Prior to Trimble,  Mr. Townsend
served in a variety  of roles  within  the  Datacom  group of  companies  in New
Zealand including  Managing Director of Datacom Software Research Ltd. from 1986
to 1991.  Trimble acquired Datacom Software  Research Ltd. in 1991. In addition,
Mr.  Townsend is a Director of IT Capital Ltd., a venture  capital company based
in Auckland,  New  Zealand;  and a Director of Pulse Data Ltd.,  an  electronics
company  that  produces  aids for the  visually  impaired in  Christchurch,  New
Zealand.  He is also a fellow of the New Zealand  Institute of Management  and a
past president of the New Zealand Software Exporters  Association.  Mr. Townsend
received a B.Sc. in economics from the University of Canterbury in 1970.

     Dennis L. Workman  joined  Trimble in 1995 as Director of Timing,  where he
led the  development  of GPS-based  precision  timing  products for the wireless
telecom market. In 1997, he was promoted to Director of Engineering for Software
and Component  Technologies.  In 1998, Mr. Workman was appointed Senior Director
and Chief Technical  Officer of the newly formed Mobile and Timing  Technologies
(MTT) business  group.  Mr. Workman also served as General  Manager of Trimble's
Automotive  and Timing group,  as well as Chief  Technology  Officer for MTT. In
September  1999, he was appointed to serve as Vice President and General Manager
of the  Component  Technologies  Division.  Prior to Trimble,  Mr.  Workman held
various senior-level  technical positions at Datum Inc. During his 9-year tenure
at Datum, he spearheaded  technology  development for GPS products.  Mr. Workman
also led the  development of board-level  products  unrelated to GPS for Datum's
Bancomm division.  In 1978, Mr. Workman co-founded  Bancomm,  which manufactures
board-level and  instrumentation  products for precision timing and data logging
applications.  In 1984, he was appointed President of Bancomm. Prior to Bancomm,
Mr. Workman  co-founded  Compression  Labs in 1977 and served as Chief Technical
Officer.  Mr.  Workman  began his career at Chicago  Aerial  Industries  as lead
engineer. He then joined Goodyear Aerospace,  now Loral, as program manager. Mr.
Workman  received a B.S. in  mathematics  from St. Marys  College in 1967 and an
M.S. in electrical engineering from the Massachusetts Institute of Technology in
1969.

                                       16


Item 2.           Properties

     Trimble  currently  leases an aggregate of 396,500309,480  square feet in fifteenfourteen
buildings in Sunnyvale,  California.  Trimble uses approximately  221,000200,480 square
feet;feet, with approximately 30,000 square feet used for final assembly and shipping
of GPS-based  products  and the balance is  subleased to others.  The leases and
subleases  on these  buildings  expire at various  dates  through  2004.2005.  We are
leasing two buildings in  Westminster,  Colorado  totaling 73,000 square feet of
which the 28,000  square  foot  facility  will be used by Trimble and the 45,000
square  foot  building  will be  subleased.  The leases and  sublease  expire at
various dates through  2006.  In addition,  we lease three  buildings in Austin,
Texas,  totaling  approximately  50,600 square feet.  Trimble uses approximately
25,00012,000 square feet to manufacture GPS-based aviation products.  Theproducts and the balance is
subleased;  thesubleased. The leases and subleases expire at various dates through 2004.  We also2004, with a
lease for two buildings totaling approximately 47,000 square feet (including the
12,000  square feet used by Trimble)  terminating  on August 31,  2001.  Trimble
leases  65,000 square feet in two buildings in  Christchurch,  New Zealand,  for
software development. TheseThe leases expire in 2005 and 2010. We also lease a 57,200
square foot building in Huber Heights,  Ohio (our Dayton,  Ohio facility)  where
22,300  square  feet are used in the  manufacturing  of optical  and laser based
products, and the balance is used for sales,  marketing and administration.  The
lease expires July 16, 2011. The Company owns an additional  150,000 square feet
in Huber  Heights,  Ohio of which  approximately  96,500 square feet is used for
manufacturing  and  warehousing  and the  remainder  is used for  administration
activities.  We also lease a 21,600  square foot  building  in Atlanta,  Georgia
where approximately 2,100 square feet is used in  manufacturing/warehouse  space
and 19,500 square feet is used for sales, marketing and administration.  Trimble
leases a 93,900  square foot  building in Danderyd,  Sweden and a 26,000  square
foot building in Kaiserslautern,  Germany. Both buildings are primarily used for
manufacturing.  Trimble's  two  largest  international  sales offices are thoseoffice is leased in the
United Kingdom (15,465 square feet) and Japan (5,640(9,542 square feet). In addition, our sales offices in Australia,
China, France, Germany, Hungary, Italy, Japan, Mexico, Spain, Singapore, Russia,
and in various  cities  throughout  the  United  States  are  leased.  Trimble currently does not own any real estate or buildings.  Trimble's
international office leases expire at various dates through 2005.2010. Certain of the
leases  have  renewal  options.  Trimble  owns a two story,  20,000  square foot
building in Corvallis,  Oregon, used by our Tripod Data Systems  subsidiary,  of
which a $1.9 million dollar loan is  encumbered.  We believe that our facilities
are adequate to support our current and anticipated near-term future operations.

Item 3.           Legal Proceedings

     The information with respect to legal proceedings  required by this item is
included in Part II, Item 8, Note 1721 to the Consolidated  Financial  Statements,
hereof under the caption "Pending Matters."hereof.

Item 4.           Submission of Matters to a Vote of Security Holders

     Not applicable.

                                       1417


                                     PART II

 Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

     Trimble's  Common  Stock is traded on the  Nasdaq  Stock  Market(R)Market  under the
symbol TRMB. The following  table sets forth,  for the quarters  indicated,  the
range of high and low closing  sales  prices for  Trimble's  Common Stock on the
Nasdaq Stock Market(R):Market:

                                     High              Low
           2000:
                    Fourth           28 3/16           18
                    Third            62 13/16          20 7/16
                    Second           50 3/4            18 7/16
                    First            30 1/4            19

           1999:
                    Fourth           23 1/8            10 1/2
                    Third            13 1/4            9
                    Second           13 3/4            9 3/8
                    First            10 1/2            7 1/4

     1998:

                        Fourth           10 1/4            7
                        Third            16 3/8            9 1/4
                        Second           19 13/16          13 7/8
                        First            24 3/8            17 1/4

     Trimble had 1,3571,146 registered shareholders of record as of March 13, 2000.9, 2001.

     Trimble's stock price is subject to significant volatility.  If revenues or
earnings fail to meet the expectations of the investment community,  there could
be an immediate  and  significant  impact on the trading  price forof the Company's
stock.  Due to stock  market  forces that are beyond our control and due also to
the nature of our business, such short falls can be sudden.

     TrimbleThe Company has never paid cash dividends on its Common Stock.  TrimbleThe Company
presently intends to retain its earnings to finance the development of itsthe Company's
business,  and does not  presently  intend to declare any cash  dividends in the
foreseeable future.  Under our  current  $50,000,000  revolving  line ofthe Company's  $200,000,000 senior credit agreement,  Trimblefacilities,
the Company is restricted from paying  dividends withoutand is limited as to the lender's
consent.amount
of its  common  stock  it can  repurchase.  Under  Trimble's Note Purchase Agreement,  pursuant to whichthe  provisions  of the  bank
agreement,  the Company issued $30,000,000is allowed to repurchase shares of its subordinated promissory notes in June 1994, Trimble is
also restricted  from paying  dividends.common stock only
up to 25% of net  income  for  the  previous  year.  See  Notes  72 and 910 to the
Consolidated Financial Statements contained in Item 8.

                                       1518


 Item 6.  Selected Financial Data

 HISTORICAL FINANCIAL REVIEW

 Summary Consolidated Statements of Operations Data

December 29, December 31, January 1, January 2, December 31, December 31, Fiscal Years ended 2000 (2) 1999 1999 1998 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except per share data) Revenue $ 369,798 $ 271,364 $ 268,323 $ 266,442 $ 226,784 $ 227,859 -------------------------------------------------------------------------------------------------------------------------------- Operating expenses Cost of sales 173,237 127,117 141,075 124,411 107,744 96,792 Research and development 46,520 36,493 45,763 38,242 27,833 30,518 Sales and marketing 79,901 53,543 61,874 57,661 61,112 60,321 General and administrative 30,514 33,750 33,245 27,424 35,136 23,395 Restructuring charges - - 10,280 - 2,134 Amortization of goodwill & other purchased intangibles 13,407 - -------------------------------------------------------------- - - ------------------------------------------------------------------- Total operating expenses 343,579 250,903 292,237 247,738 233,959 211,026 -------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) from continuing operations 26,219 20,461 (23,914) 18,704 (7,175) 16,833 Nonoperating income (expense), net (10,459) 274 (2,041) 1,172 706 773 -------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes from continuing operations 15,760 20,735 (25,955) 19,876 (6,469) 17,606 Income tax provision (benefit) 1,575 2,073 1,400 2,496 (300) 3,121 -------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------- Net income (loss) from continuing operations $ 14,185 $ 18,662 $ (27,355) $ 17,380 $ (6,169) $ 14,485 -------------------------------------------------------------------------------------------------------------------------------- Loss from discontinued operations (net of tax) - - (5,760) (8,101) (5,134) (3,224) Estimated gain (loss) on disposal of discontiueddiscontinued operations (net of tax) - 2,931 (20,279) - - - -------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 14,185 $ 21,593 $ (53,394) $ 9,279 $ (11,303) $ 11,261 ================================================================================================================================ Basic net income(loss) per share from continuing operations $ 0.60 $ 0.83 $ (1.22) $ 0.78 $ (0.28) $ 0.73 Basic net income(loss) per share from discontinued operations $ - $ 0.13 $ (1.16) $ (0.36) $ (0.23) $ (0.16) -------------------------------------------------------------------------------------------------------------------------------- Basic net income(loss) per share $ 0.60 $ 0.96 $ (2.38) $ 0.42 $ (0.51) $ 0.56 ================================================================================================================================ Shares used in calculating basic earnings per share 23,601 22,424 22,470 22,293 22,005 19,949 ================================================================================================================================ Diluted net income(loss) per share from continuing operations $ 0.55 $ 0.82 $ (1.22) $ 0.75 $ (0.28) $ 0.68 Diluted net income(loss) per share from discontinued operations $ - $ 0.13 $ (1.16) $ (0.35) $ (0.23) $ (0.15) -------------------------------------------------------------------------------------------------------------------------------- Diluted net income(loss) per share $ 0.55 $ 0.95 $ (2.38) $ 0.40 $ (0.51) $ 0.53 ================================================================================================================================ Shares used in calculating diluted earnings per share 25,976 22,852 22,470 22,947 22,005 21,318 ================================================================================================================================ Cash dividends per share $ - $ - $ - $ - $ - ================================================================================================================================ Other Operating Data: December 29, December 31, January 1, January 2, December 31, December 31, Fiscal Years ended 2000 (2) 1999 1999 1998 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands, except percentages) Gross margin percentage 53% 53% 47% 53% 52% 58% Operating income (loss) percentage 7% 8% (9%) 7% (3%) 7% EBITDA (1) $49,695 29,534 $ (11,404) $ 30,911 $ 2,965 $ 24,875 Depreciation and amortization 23,476 9,073 12,510 12,207 10,140 8,042 EBITDA percentage (1) 13% 11% (4%) 12% 1% 11% Selected Consolidated Balance Sheet: December 29, December 31, January 1, January 2, December 31, December 31, As of 2000 (2) 1999 1999 1998 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Working capital (deficit) $ (10,439) $ 111,808 $ 81,956 $ 133,434 $ 122,409 $ 135,097 Total assets 490,504 181,751 156,279 207,663 189,841 196,763 Noncurrent portion of long-term debt 143,553 33,821 31,640 30,697 30,938 31,316 Shareholders' equity $134,943 100,796 $ 74,691 $ 139,483 $ 124,045 $ 129,937- ---------------------------------------------------------------------------------------------------------------------------- (1) EBITDA consists of earnings from continuing operations before interest income, interest expense, other nonoperating income and expense, income taxes, depreciation and amortization.amortization and a $4.6 million inventory purchase accounting adjustment. EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as an alternative to net income as an indicator of a company's performance or to cash flows from operating activities as a measure of liquidity. (2) Includes financial informaiton of the Spectra Precision Group, which was acquired on July 14, 2000 and of Tripod Data Systems, which was acquired on November 14, 2000. (See Footnote 2 and 3 to the Consolidated Financial Statements included in Part II, Item 8.)
1619 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations RECENT BUSINESS DEVELOPMENTS Effective as of July 14, 2000, Trimble completed the acquisition of the Spectra Precision wholly owned businesses formerly owned by Thermo Electron Corporation ("Thermo Electron"), collectively known as the "Spectra Precision Group" for an aggregate purchase price of approximately $294 million, subject to a final adjustment in the purchase price as provided for in the acquisition agreements. The acquisition included 100% of the stock of Spectra Precision Inc., a Delaware corporation, Spectra Precision SRL, an Italian corporation, Spectra Physics Holdings GmbH, a German corporation, and Spectra Precision BV, a Netherlands corporation. The acquisition also consisted of certain assets and liabilities of Spectra Precision AB, a Swedish corporation, including 100% of the shares of Spectra Precision SA, a French corporation, Spectra Precision Scandinavia AB, a Swedish corporation, Spectra Precision of Canada Ltd., a Canadian corporation, and Spectra Precision Handelsges mbH, an Austrian corporation. The acquisition was accounted for as a purchase transaction. (See "Liquidity and Capital Resources" for a description of how this acquisition was financed.) The Spectra Precision Group develops instruments and systems that provide positioning solutions for two market segments, Engineering & Construction and Agriculture. Within those segments are four major customer applications: surveying, construction site positioning, construction and agricultural machine control, and software. Spectra Precision Group products generally measure distances very accurately by means of a light beam. In addition, they have capabilities that provide the capability to uniquely solve positioning problems such as the determination of angles with high accuracy. * The Company expects that the acquisition of the Spectra Precision Group will strengthen Trimble's position as a leading provider of positioning solutions worldwide. The acquisition also gives Trimble one of the most comprehensive product portfolios in the industry, strengthens its distribution network, and serves as a platform for future growth. The complementary product lines and technologies of Trimble and the Spectra Precision Group, should help the combined Company to become a leader in the Engineering and Construction, Agriculture, and Fleet and Asset Management market segments. In addition, the Spectra Precision Group's well-established and extensive distribution network should extend Trimble's reach into new segments of its target market segments both domestically and internationally. Although there was very little overlap between each of the companies' product offerings, two areas of overlap were identified and the Company has announced plans to discontinue Trimble's TTS Optical Survey Family and the Spectra Precision Group's Elta and Geotracer GPS receivers. * As part of the acquisition of the Spectra Precision Group, Trimble has identified approximately $20 million of annual cost synergies. We expect to realize $8 to $10 million of these benefits in fiscal 2001 and realize the full benefit in fiscal 2002 and beyond. However, the Company is still in the early stages of combining Trimble and the Spectra Precision Group and this involves certain inherent risks, including: the potential inability to successfully integrate acquired operations and businesses or to realize anticipated synergies, economies of scale or other value; diversion of management's attention; difficulties in coordinating the management of operations at new sites; and the possible loss of key employees of acquired operations. The Company's profitability may suffer if we are unable to successfully integrate and manage this acquisition, or if we do not generate sufficient revenue to offset the increased expenses associated with this acquisition. Trimble's current strategy for the on-going integration of the Spectra Precision Group is to focus on leveraging existing technologies, distribution, and marketing resources and identifying and taking advantage of synergies between the companies. The Company's initial priorities for the combined entities are centered on the following: o The reconciliation and alignment of distribution channels and the achievement of our market targets and cost synergies. The largest portion of the cost synergies result from the consolidation of redundant facilities. o Defining the basic corporate organization, reporting and structure. This included the announcement by Trimble in August 2000 of its new segment and management organization. As part of the August 2000 announcement, the Engineering and Construction division of Trimble is headquartered from our 20 Dayton, Ohio facility. Trimble's Agriculture and Component Technologies divisions continue to operate from our Sunnyvale, California facility. The Mobile Positioning and Communications market of the Fleet and Asset Management division is headquartered from our Sunnyvale, California facility. The GIS market of the Fleet and Asset Management division is headquartered in New Zealand. o Coordinating manufacturing facilities. The manufacturing facilities acquired, as a result of the acquisition of the Spectra Precision Group, support the Engineering and Construction divisions and report through that segment management. As part of integrating the two companies, Trimble reorganized management responsibilities in the third quarter of fiscal year 2000 by realigning its reportable market segments from the previous two segments: Precision Positioning Group (PPG) and Mobile Timing and Technologies Group (MTT) to five segments: (i) Engineering and Construction, (ii) Agriculture, (iii) Fleet and Asset Management, (iv) Component Technologies, and (v) Portfolio Technologies. The Engineering and Construction segment includes the Spectra Precision Group surveying and construction markets and the land survey, marine survey, mining and construction markets that had been under Trimble's PPG segment. The Agriculture segment includes the Spectra Precision Group agriculture market and the agriculture market that had been under Trimble's PPG segment. The Fleet and Asset Management segment includes the mapping and GIS market that had been under Trimble's PPG segment, as well as, the mobile positioning market that had been under Trimble's MTT segment. The Component Technologies segment includes the embedded, IVN and timing markets that had been under Trimble's MTT segment. The Portfolio Technologies segment includes air transport, military, commercial marine and advance technology markets that had been under Trimble's MTT segment. * In the Engineering and Construction segment, we focus on centimeter positioning, data collection management, wireless communication, and machine guidance and control. In the Agriculture segment we focus on precise machine guidance, yield monitoring, variable rate application of fertilizer and chemicals, and water management. In the Fleet and Asset Management segment we focus on asset tracking, fleet management, intelligent transportation systems, and public safety through integration of our technologies, information technology and wireless communication. In the Component Technologies segment we provide our GPS technology to various applications (automotive navigation, and timing systems) for OEMs. We intend to establish and sustain our leadership position in each of these market segments by offering products that are differentiated by unique product capabilities provided by our positioning technology, complemented by the additional value provided by our software and finally by the value provided by our distribution channels in providing high quality service and support. In many cases, we emphasize application-specific systems that solve end-user problems in its targeted market segments. Effective as of November 14, 2000, Trimble completed the acquisition of Tripod Data Systems, Inc., an Oregon corporation for an aggregate purchase price of approximately $15 million, which is subject to a final adjustment in the purchase price as provided for in the acquisition agreements. The purchase price was in the form of shares of the common stock of Trimble. The acquisition was accounted for as a purchase transaction. Tripod Data Systems operates as a wholly owned subsidiary of Trimble. Tripod Data Systems is a leading developer of data collection software for the land survey, construction and GIS markets. Tripod Data Systems has three core business components. The company develops software for data collection applications, manufactures rugged Windows CE-based handheld data collectors such as their TDS Ranger, and develops software for pen computer applications. * The Company expects that the acquisition of Tripod Data Systems will strengthen Trimble's ability to aggressively address a number of targeted markets including land survey, construction and GIS. On March 6, 2001, the Company sold its Air Transport Systems (ATS) business to Honeywell. The ATS business was a part of our Portfolio Technologies segment. The sale to Honeywell consisted of the Trimble 8100, the HT 9100 and two other product lines, which were included in the ATS business. 21 RESULTS EXCLUDING ONE-TIME, ACQUISITION, AND DISCONTINUED OPERATION ADJUSTMENTS The income from operations measurement utilized by management excludes certain one-time and acquisition related charges and discontinued operations adjustments that management believes are not reflective of on-going operations. The following table reflects results of operations adjusted to exclude the effects of such items as follows (in thousands):
Twelve Months Ended Dec. 29, Dec. 31, 2000 1999 -------------- ------------- Net income $ 14,185 (2) $ 21,593 One time and acquisition related charges 16,950 (1) - Estimated Loss on disposal of Discontinued Operations (net of tax) - (2,931) -------------- ------------- Adjusted net income from Continuing Operations $ 31,135 $ 18,662 ============== ============= Adjusted net income per share $ 1.20 $ 0.82 ============== ============= (1) Reflects after tax acquisition charges of $16.3 million or $0.62 per diluted share for amortization of goodwill and other purchased intangibles, as well as an inventory purchase accounting adjustment. Also includes an after tax debt extinguishment charge of $1.1 million or $0.04 per diluted share and a one time after tax charge of $0.8 million or $0.03 per diluted share for relocation costs related to opening a new office in Boulder, Colorado. In addition, there was a one time after tax gain on sale of a minority investment of $1.2 million or $0.04 per diluted share. (2) Net income for the twelve months ended December 29, 2000 includes income of the Spectra Precision Group for the period July 14, 2000 through December 29, 2000 and of Tripod Data Systems for the period November 14, 2000 through December 29, 2000.
RESULTS OF CONTINUING OPERATIONS In fiscal 1999, Trimble's2000, the Company's annual revenues from continuing operations increased to $271.4$369.8 million from $268.3$271.4 million in fiscal 1998.1999. In fiscal 1999, Trimble2000, the Company had net income from continuing operations of $14.2 million, or $0.55 diluted income per share, compared to a net income from continuing operations of $18.7 million, or $0.82 diluted earnings per share, in fiscal 1999. The total net income for fiscal 2000, including discontinued operations, was $ 14.2 million, or $0.55 diluted income per share, compared to a net loss from continuing operations of $27.4 million, or ($1.22) per share, diluted, in fiscal 1998. The total net income for fiscal 1999, including discontinued operations, wasof $21.6 million, or $0.95 diluted income per share, diluted, compared to a total net loss for fiscal 1998, including discontinued operations, of $53.4 million, or ($2.38) per share, diluted.share. 22 The following table sets forth, for the periods indicated, certain financial data as a percentage of total revenue:
December 29, December 31, January 1, January 2, Fiscal Years ended 2000 1999 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Revenue 100% 100% 100% ---------------- ----------------- ----------------- ------------- Operating expenses: Cost of sales 47% 47% 53% 47% Research and development 13% 13% 17% 14% Sales and marketing 22% 20% 23% 22% General and administrative 8% 12% 12% 10% Restructuring charges 0% 0% 4% Amortization of goodwill & other purchased intangibles 4% 0% ----------------0% ----------------- ----------------- ------------- Total operating expenses 93% 92% 109% 93% ---------------- ----------------- ----------------- ------------- Operating income (loss) from Continuing Operations 7% 8% (9%) 7% Nonoperating income (expense), net (3%) 0% (1%) 0% ---------------- ----------------- ----------------- ------------- Income (loss) before income taxes from Continuing Operations 4% 8% (10%) 7% Income tax provision 0% 1% 1% 1% ---------------- ----------------- ----------------- ------------- Net income (loss) from Continuing Operations 4% 7% (10%) 7% ---------------- ----------------- ----------------- ------------- Loss from Discontinued Operations (net of tax) 0% 0% (2%) (3%) Estimated gain (loss) on disposal of Discontiued Operations (net of tax) 0% 1% (8%) 0% ---------------- ----------------- ----------------- ------------- Net Income (loss) 4% 8% (20%) 3% ================ ================= ================= =============
Revenue. In fiscal 1999,2000, total revenue increased to $369.8 million from $271.4 million in fiscal 1999, which represents a percentage increase of 36.3%. Total revenue increased in fiscal 1999 to $271.4 million from $268.3 million in fiscal 1998, which represents a percentage increase of 1%. Total revenue increased in fiscal 1998 to $268.3 million from $266.4 million in fiscal 1997, which represents a percentage increase of less than 1%. The following table breaks out Trimble'sthe Company's revenues by industry segment:
----------------------------------------------------------------------------------------------------------------------------------------------------------------- December 29, % Total December 31, % Total January 1, % Total January 2, % Total2000 Revenue 1999 Revenue 1999 Revenue 1998 Revenue - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Precision Positioning GroupEngineering and Construction $ 161,294 59% $165,951 62%195,150 53% $ 142,449 53% Mobile108,536 40% $ 123,491 46% Agriculture $ 26,024 7% $ 12,837 5% $ - 0% Fleet and TimingAsset Management $ 65,099 18% $ 67,271 25% $ 64,515 24% Component Technologies 110,070 41% 102,372 38% 123,993 47% -------------- -------- -------------- -------$ 60,230 16% $ 58,660 21% $ 36,296 14% Portfolio Technologies $ 23,295 6% $ 24,060 9% $ 44,021 16% ---------------- ----------- ---------------- ----------- ------------- ------------------- Total revenue $ 369,798 100% $ 271,364 100% $268,323$ 268,323 100% $ 266,442 100% -------------- -------- -------------- ----------------------- ----------- ---------------- ----------- ------------- -------------------
Engineering and Construction Engineering and Construction revenues increased by 80% in fiscal 2000 over fiscal 1999. The increase in 2000 revenue compared to 1999 is due to the following: o Revenues generated since the purchase of the Spectra Precision Positioning Group The Precision Positioning Groupin July 2000, which accounted for approximately $87.0 million for the period July 14, 2000 through December 29, 2000. o Strong demand for GPS machine guidance equipment for construction applications. o These increases were partially offset due to continued delivery problems related to critical part shortages in our supply chain. 23 Engineering and Construction revenues decreased by 3%12% in fiscal 1999 overfrom fiscal 1998. The 1999 revenue decrease compared to 1998 is due to the following: o Sales were impacted from the change in commission structure for some of our products from commission dealers to buy/sell dealers in fiscal 1999. Under the buy/sell arrangement, the product is discounted to the dealer, as opposed to end-user pricing with commissions recorded under sales and marketing expense. o Sales to Original Equipment Manufacturers such as CNH Global and Caterpillar decreased as compared to 1998 sales due to an economic slowdown in the United States for mining and agriculture related products. 17 o In the fourth quarter of 1999, delivery problems due to critical part shortages in our supply chain, and transitional issues with outsourcing our manufacturing, had a negative impact on revenue for the fiscal year ended 1999. Precision Positioning GroupAgriculture Agriculture revenues had a growth rate of 16%increased by 103% in fiscal 19982000 over fiscal 1997.1999. The 19982000 increase in revenue compared to 1997 was primarily due to increases in revenues in the land surveying, marine surveying, mapping, and GIS systems, and mining, construction, and agriculture markets. The increase in land surveying was1999 is due to the following: o Revenues generated since the purchase of the Spectra Precision Group in July 2000, which accounted for approximately $6.9 million for the period July 14, 2000 through December 29, 2000. o Introduction of new products, including the AgGPS 170 Field Computer, the AgGPS 114, and the PSO Plus Parallel Swathing Option with Data Logging. o Strong growth in demand for GPS Agriculture products in general. o These increases were partially offset due to continued strong customer acceptancedelivery problems related to critical part shortages in our supply chain. Agriculture revenues were not broken out separately for fiscal year 1998 because it is impracticable to do so. Therefore there is no comparison of Trimble's GPS Total Station 4800 and 4700 products. Also, the increase in marine survey, mapping,revenue in the Agriculture segment from fiscal 1998 to fiscal 1999. The results of this division were included in the Engineering and GIS, as well as mining, constructionConstruction segment for fiscal 1998. Fleet and agriculture reflectsAsset Management Fleet and Asset Management revenues decreased by 3% in fiscal 2000 over fiscal 1999. The 2000 revenue change compared to 1999 is due to the following: o Asset management and tracking product revenues were down due to continued delivery problems related to critical part shortages in our supply chain. o These decreases were partially offset by increased demand in our Mapping products, especially our new GeoExplorer 3 used for these products. MobileGIS data collection and Timingdata maintenance. In addition, unit sales for our Crosscheck family of products increased by 30% over prior year. Fleet and Asset Management revenues increased by 4% in fiscal 1999 from fiscal 1998. The 1999 increase is due primarily to the growth of revenue in our pathfinder ProXR and Pathfinder ProXRS products, based on volume growth. Component Technologies Mobile and TimingComponent Technologies revenues increased 8%by 3% in fiscal 2000 over fiscal 1999. The 2000 revenue change compared to 1999 is due to the following: o Strong demand for GPS embedded applications such as vehicle tracking and safety and security. o The above increases were partially offset by continued delivery problems related to critical part shortages in our supply chain. Component Technologies revenues increased by 62% in fiscal 1999 overfrom fiscal 1998. The 1999 increase is attributabledue primarily to strong growth in our automotive and timing markets which was partially offsetmarkets. Portfolio Technologies Portfolio Technologies revenues decreased by decreases3% in fiscal 2000 over fiscal 1999. The 2000 revenue decrease compared to 1999 is due to the following: o Decreases in revenues for Military and air transport products. o Trimble's decision to exit the commercial marine commercial air transport,business in the fourth quarter of 1998 and military systems,the sale of the last of such products in the second quarter of 1999. 24 Portfolio Technologies revenues decreased by 45% in fiscal 1999 from fiscal 1998. The 1999 decrease is due to the following: o Trimble decided to exit the commercial marine business in the fourth quarter of 1998 and sold the last of such products in the second quarter of 1999. o Commercial air transport was down, due to decreases in market demand and the successful conclusion of shipments in fiscal 1998 to American Airlines and Continental Airlines through our Honeywell alliance, which were not repeated in fiscal 1999. o Military systems declined due to the completion of our CUGR contract in the first quarter of 1998 which sales were not repeated in 1999. The Mobile and Timing Technologies revenues decreased 17% in fiscal 1998 from fiscal 1997. The 1998 decrease was primarily in automotive, commercial air transport and military aerospace systems. The softness in the automotive market was due to the financial difficulties of a major customer and a delay in our new product introductions. The commercial air transport decrease was due to less-than-anticipated demand from Honeywell, and the military aerospace system decrease was due to the large dollar shipment on the CUGR contract in the fourth quarter of 1997, which was not repeated in 1998. In addition, Mobile and Timing Technologies revenues in 1997, included $1.8 million in revenues from a development agreement in connection with an irrevocable nonrefundable, nonrecurring engineering fee and a nonrecurring one-time $2.2 million technology license from Pioneer Electronic Corporation in connection with expansion of its prior license for in-car navigation. * Military sales are highly dependent on contracts that are subject to government approval and are, therefore, expected to continue to fluctuate from period to period. Trimble believes that opportunities in this market have been substantially reduced by cutbacks in U.S. and foreign military spending. Export Sales *Sales. Export sales from domestic operations, as a percentage of total revenue, were 34% in 2000, 38% in 1999, and 34% in 1998, and 28% in 1997.1998. Sales to unaffiliated customers in foreign locations, as a percentage of total revenue, were 52% in 2000, 52% in 1999, and 46% in both 1998 and 1997.1998. Trimble anticipates that export revenue and sales made by its subsidiaries in locations outside the U.S. will continue to account for a significant portion of its revenue. For this reason, Trimble is subject to the risks inherent in these sales, including unexpected changes in regulatory requirements, exchange rates, governmental approval, and tariffs or other barriers. Even though the U.S. Governmentgovernment announced on March 29, 1996, that it would support and maintain the GPS system, as well as eliminateand on May 1, 2000 eliminated the use of Selective Availability (SA)(S/A) -- a method of degrading GPS accuracy -- there may be a reluctance in certain foreign markets to purchase products based on GPS technology, given the control of GPS by the U.S. Government. Trimble's results of operations could be adversely affected if wethe Company were unable to continue to generate significant sales in locations outside the U.S. No single customer, including the U.S. Government and its agencies, accounted for 10% or more of Trimble'sthe Company's total revenues in fiscal2000, 1999 1998 or 1997.or1998. It is possible; however, that in future periods the failure of one or more large customers to purchase products in quantities anticipated by the Company may adversely affect the results of operations. * Gross Margin. Gross margin varies due to a number of factors, including product mix, domestic versus international sales, customer type, the effects of production volumes and fixed manufacturing costs on unit product 18 costs, and new product start-up costs. In fiscal 1999, theThe gross margin percentage on product sales, not including a $4.6 million charge for inventory purchase accounting adjustments for the acquisition of the Spectra Precision group, was 54% in 2000 and 53%, for 1999, compared with 47% in 1998fiscal 1998. The fiscal 2000 gross margin percentage increased over fiscal year 1999 due to the favorable product mix of Engineering and 53% in 1997.Construction and Agriculture products, which yield higher margins through the integration of software and wireless communications. In addition, it was favorably impacted by the cost benefits of outsourcing our manufacturing to Solectron. These increases were partially offset by higher costs to acquire components due to the worldwide component shortages. The increase in gross margin percentagespercentage in fiscal 1999 as compared to fiscal 1998 primarily reflect improved manufacturing cost controls achieved through the consolidation of the manufacturing organization, resulting in improved efficiencies and reduced inventory. In addition gross margins in the second half of fiscal 1999 were favorably impacted by the cost benefits of outsourcing our manufacturing to Solectron. The 1997 margins were enhanced by the positive impact of nonproduct revenues of $2.2 million recognized from Pioneer Electronic Corporation and from a development agreement in connection with an irrevocable, nonrefundable, nonrecurring engineering fee of $1.8 million; however, there can be no assurance that similar items will recur in the future. In addition, becauseBecause of 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, positive futurecurrent level gross margins cannot be assured. * Trimble expects that in the future a higher percentage of its business will be conducted through alliances with strategic partners. As a result of volume pricing and the assumption of certain operating costs by the partner, margins on this business are likely to be lower than sales directly to end-users. 25 Operating Expenses. The following table shows operating expenses for the periods indicated. It should be read in conjunction with the narrative descriptions of those operating expenses below: Fiscal Years Ended ---------------------------------------------------- December 31, January 1, January 2,
Fiscal Years Ended ------------------------------------------------------------- December 29, December 31, January 1, 2000 1999 1999 1998 - ------------------------------------------------------------------------------- (In thousands) Research and development $ 36,493 $ 45,763 $ 38,242 Sales and marketing 53,543 61,874 57,661 General and administrative 33,750 33,245 27,424 Restructuring charges - 10,280 - --------------------------------------------------------------------------------------------------------------------- (In thousands) Research and development $ 46,520 $ 36,493 $ 45,763 Sales and marketing 79,901 53,543 61,874 General and administrative 30,514 33,750 33,245 Restructuring charges - - 10,280 Amortization of goodwill & other purchased intangibles 13,407 - - -------------------- ---------------- --------------- Total $ 170,342 $ 123,786 $ 151,162 -------------------- ---------------- --------------- --------------- ------------- Total $ 123,786 $ 151,162 $ 123,327 --------------- --------------- -------------
Research and Development. Research and development spending decreasedincreased in absolute dollars during fiscal 1999,2000, representing 13% of revenues asrevenue, compared with 13% in 1999 and 17% in 1998 and 14%1998. The increase in 1997. The lowerabsolute dollars in research and development expenses in 19992000 are due primarily to the purchase of the Spectra Precision Group in July 2000, which accounted for approximately $9.9 million of the increase. The increase was also due to approximately $2.2 million less of cost reimbursement funds received for projects. There were also increases in our facilities costs of approximately $1 million. The increases are partially offset by decreases in our expense of approximately $3.4 million related to personnel, temporary help and consulting. The dollar decrease from 1998 to 1999 is due to Trimble's receiving approximately $4.2 million more funds from cost reimbursement projects in 1999 as compared to 1998. Also, there were decreases in our expenses of approximately $5.0 million related to electronicelectronics parts, depreciation, travel, personnel, and other supplies as part of the Company's restructuring plans which were implemented in the last half of fiscal 1998. The dollar increase from 1997 to 1998 is due primarily to Trimble's receiving approximately$3.5 million fewer funds from cost reimbursement projects in 1998 as compared with 1997. Trimble plans to continue its aggressive development of future products. * Sales and Marketing. Sales and marketing expenses decreasedincreased during fiscal 1999,2000, representing 20%22% of revenues, as compared with 20% in 1999 and 23% in 1998 and 22% in 1997.1998. The primary reason for the dollar and percentage decreaseincrease in expenses from 1999 to 2000 is the purchase of the Spectra Precision Group in July 2000, which had approximately $26.6 million in sales and marketing expenses recorded in the period subsequent to Trimble's acquisition. The primary reason for the dollar and percentage decline in expenses from 1998 to 1999 is decreases of approximately $7.7 million in personnel, consultants, travel, advertising, trade shows, expensed demo equipment, and other office supplies as part of the Company's restructuring plan, which was implemented in the last half of fiscal 1998. In addition, sales commissions were lower as a percentage of sales, due to the change in dealer structure for some of our product lines from commission dealers to buy/sell. The primary reason for the dollar and percentage increases in expenses from 1997 to 1998 was an increase of approximately $2.1 million in personnel and related expenses that accompany an increase in the number of employees. In addition, Trimble experienced increases in expenses of approximately $1.1 million related to trade shows, advertising, and demo equipment expenses.sell arrangements. * Trimble's future growth will depend in part on the timely development and continued viability of the markets in which we currently compete, and on our ability to continue to identify and exploit new markets for our products. In addition, we have encountered significant competition in selected markets, and we expect such competition to intensify as the market for GPS applications receives acceptance. Several of Trimble's competitors 19 are major corporations with substantially greater financial, technical, and marketing resources. Increased competition may result in reduced market share and is likely to result in price reductions of GPS-based products, which could adversely affect Trimble's revenues and profitability. General and Administrative. General and administrative expenses increased in absolute dollarsdecreased during fiscal 1999,2000, representing 12%8% of revenues, as compared with 12% in 1998both 1999 and 10%1998. The decrease in 1997.fiscal 2000 as compared to fiscal 1999 is due to an allowance for doubtful accounts charge in fiscal 1999 related to certain customers in South America which was not repeated in fiscal 2000. We also had decreases of approximately $6.1 million in expenses related for personnel, legal, facilities, equipment and other office supplies. The decreases were partially offset by approximately $3.0 million of the Spectra Precision Group's expenses included since its purchase in July 2000. The increase in fiscalabsolute dollars from 1998 to 1999 as compared to 1998 is due to an increase in the allowance for doubtful accounts related to certain customers in South America for 1999; and an increase in building rental costs due to the renewal of many of our building leases. This increase was partially offset by space consolidations as part of our restructuring efforts in the fourth quarter of 1998. 26 Restructuring Reserves. 2000 Acquisition Restructuring Reserves. As noted in Note 9 to the Consolidated Financial Statements, as a result of the acquisition of the Spectra Precision Group, the Company accrued approximately $9.0 million for costs to close certain duplicative office facilities and combine operations and relocate certain employees. These costs were accrued as part of the preliminary allocation of the purchase price. The increasefacility consolidation and employee relocations will result from 1997primarily combining certain office facilities and duplicative functions, including management functions, of the Spectra Precision Group. The Company has not yet finalized its plans to 1998 was due primarilyconsolidate facilities and to relocate employees, nor has it finalized a determination of the total costs to be incurred upon the termination of certain office facility leases or its ability to sublease vacated office space. Accordingly, unresolved issues could result in an increase of approximately $1.7 million in personnel and the related expenses that accompany an increaseor decrease in the numberliabilities for facility consolidation, the discontinuance of employeesoverlapping product lines, employee relocation, and consultants, as wellrelated tax and legal expenses. These adjustments, if any, will be reported as an increase or decrease in goodwill. Through December 29, 2000, the Company had charged $ 809,000 (which consisted of approximately $1.7 million in outside servicesinventory write-offs related to legal fees associated with certain litigation matters during 1998.the discontinuance of overlapping product lines) against the reserve, and the accrual for future costs to be incurred was $8.2 million at December 29, 2000. The Company anticipates on utilizing this reserve by the end of fiscal 2001. The elements of the reserve at fiscal year end 2000 on the balance sheet are as follows (in thousands): Employee Relocation Expense $ 390 Inventory Obsolescence 1,876 Legal and Tax Expense 1,175 Restructuring Expenses 4,750 --------------- Subtotal $ 8,191 =============== 1998 Restructuring Charges. As noted in Note 89 to the Consolidated Financial Statements during the year ended January 1, 1999, Trimblethe Company recorded a restructuring charge of $10.3 million classified inas operating expenses. These charges were a result of Trimble'sthe Company's reorganization to improve business processes and to decrease organizational redundancies, to improve management accountability and to improve ourthe Company's focus on profitable operations. As a result of the reorganization, Trimblethe Company downsized its operations, including reducing headcount and facilities space usage, and canceled its enterprisewideenterprise wide information system project and certain research and development projects. The impact of these decisions was that significant amounts of ourthe Company's fixed assets, prepaid expenses, and purchased technology had beenwere impaired and certain liabilities incurred. TrimbleThe Company wrote down the related assets to their net realizable values and made provisions for the estimated liabilities. The elements of the charges incurred in fiscal 1998 and the amounts remaining at December 31, 1999,29, 2000, on the balance sheet are as follows (in thousands):
Total charged to Amounts paid/ Amounts paid/ Amounts paid/ Remaining in expense in written off written off written off accrued liabilites fiscal 1998 in fiscal 1998 in fiscal 1999 in fiscal 2000 as of December 31, 199929, 2000 --------------- ----------------------------------------- -------------- ---------------- ----------------------- -------------------------- Employee termination benefits $ 2,864 $ (1,200) $ (371) $ 1,293(1,293) $ - Facility space reductions 1,061 - $ (1,053) 8$ (8) - ERP system abandonment 6,360 (4,895) $ (1,465) $ - ------------ ---------------------------- --------------- ----------------- -------------- ---------------- ----------------------- -------------------------- Subtotal $ 10,285 $ (6,095) $ (2,889) $ 1,301 ============ ============================(1,301) $ - =============== ================= ============== ================ ======================= ==========================
The cash expenditures associated withGoodwill and Other Purchased Intangibles. Amortization expense of goodwill and other intangibles increased for the remaining obligations will occur primarily in fiscal 2000.year ended December 29, 2000 by approximately $13.4 million related to the purchase of Spectra Precision Group. Nonoperating income (expense), net.Nonoperatingnet. Nonoperating income (expense), net, includes interest income and expense, as well as gains and losses on foreign currency transactions. 27 Foreign exchange gainslosses were $28,000$376,000 in fiscal 1999,2000, compared with gains of $28,000 in 1999 and gains of $234,000 in 1998 and 1997.1998. Trimble's policy is to hedge its exposure to foreign currency transactions in order to minimize the effect of changes in foreign currency exchange rates on consolidated results of operations. Gains and losses arising from foreign currency forward contracts offset gains and losses resulting from the underlying hedged transactions. Interest income increased in 2000 from 1999 as well as in 1999 from 1998 and decreased in 1998 from 1997.1998. The higher interest income in 2000 and 1999 is due primarily to the increased interest income received on cash and short-term investments because of higher average balance forbalances. Interest expense increased in fiscal 1999 over fiscal 1998. The decrease in 1998 from 1997 was because of lower interest income received on cash and short-term investments2000 due to lower average balancesfinancing obtained for the year, overacquisition of the prior year. Interest expense decreased slightly in 1999 due to lower fees in foreign locations.Spectra Precision Group. Interest expense includes interest on a $30.0$200.0 million credit facility and an $80.0 million subordinated sellers note both issued in August 1995, and fees on unused lines of credit.July 2000. (See Notes 7 and 9Note 11 to the Consolidated Financial Statements for details of long-term debt and lines of credit.debt.) Income Tax Provision. Trimble's effective income tax rates from continuing operations for fiscal years 2000, 1999 1998 and 19971998 are 10%, 10% and (6%), and 12%, respectively. The 19992000 and 19971999 income tax rates are less than the federal 20 statutory rate of 35%, due primarily to the realization of the benefits from prior net operating losses and previously reserved deferred tax assets. The 1998 income tax rate differs from the federal statutory rate, due primarily to foreign taxes and the inability to realize the benefit of net operating losses. Inflation. The effects of inflation on Trimble's financial results have not been significant to date. LITIGATION * Trimble is involved in a number of legal matters as discussed in Note 1721 to the Consolidated Financial Statements. While Trimble does not expect to suffer significant adverse effects from these litigation matters or from unasserted claims, the nature of litigation is unpredictable and there can be no assurance that it will not do so. LIQUIDITY AND CAPITAL RESOURCES * At December 31, 1999,29, 2000, Trimble had cash and cash equivalents of $49.3$40.9 million and $52.7 million inhad no short-term investments. Trimble's cash and cash equivalents and short-term investments increaseddecreased from the prior year, due to an increasethe purchase of the Spectra Precision Group in net income and the receipt of $26.9 million in cash as part of an agreement with Solectron for the outsourcing of Trimble's manufacturing operations located in Sunnyvale, California (See Note 4 to the consolidated financial statements).July 2000. Trimble's long-term debt consisted primarilyconsists of a $30.0$162 million note obligation due in 2001. We had no debt outstanding under our $50,000,000 unsecured line ofsenior secured credit but had issued certain letters of credit as of December 31, 1999, amounting to approximately $283,000.facilities, and a $80 million subordinated promissory note. In the past, Trimble has relied primarily on cash provided by operating and financing activities and net sales of short-term investments to fund capital expenditures, the repurchase of the Company's common stock, and other investing activities. Management believes that its cash, and cash equivalents and short-term investment balances, together with its existingnew credit line,facility, will be sufficient to meet its anticipated operating cash needs for at least the next twelve months. * In fiscal 1999,2000, the cash provided by operating activities was $23.6$21.9 million, as compared to cash provided of $7.0$23.6 million in the corresponding period in 1998.fiscal 1999. Cash provided by operating activities in 1999fiscal 2000 arose from the Company's net income, plus depreciation and amortization and decreasesincrease in inventoriesaccounts payable and offset partially by increases in inventories and increases in accounts receivable and decreases in accrued liabilities. Inventory from continuing operations as of December 31, 1999 decreased by $20.6 million from the 1998 year-end levels primarily, due to the transition of certain manufacturing operations to Solectron as well as a focused effort by Trimble to reduce inventory by supply chain synchronization, reducing lead and cycle times, simplifying product lines, and implementing tighter control over its material forecasting process (See Note 4 to the consolidated financial statements.)receivable. Trimble's ability to continue to generate cash from operations will depend in a large part on revenues, the rate of collections of accounts receivable, and the successful management of the Company's manufacturing relationship with Solectron manufacturing relationship.Corporation. Cash provided by sales of common stock in 1999fiscal year 2000 represents the proceeds from purchases made by employees pursuant to Trimble's stock option plan and employee stock purchase plan and totaled $4.5$12.0 million for the fiscal year ended December 13, 1999. *29, 2000. Effective as of July 14, 2000, Trimble completed the acquisition of the Spectra Precision Group for an aggregate purchase price of approximately $294 million. The acquisition was financed with $80 million in seller subordinated debt, $140 million of debt provided through a syndicate of banks, and $74 million of the Company's then available cash on hand. The Company also expects to incur up to $8 million of total costs and expenses in connection with the acquisition of which approximately $7 million has already been incurred to date. In August 1997,order to finance the acquisition of the Spectra Precision Group, fund the Company's on-going working capital requirements, and pay related fees and expenses of the acquisition, Trimble entered into(i) obtained a three-year, $50,000,000new senior secured 28 credit facility, (ii) issued an $80 million subordinated seller promissory note, (iii) terminated its existing $50 million unsecured revolving credit facility with four banks (the "Credit Agreement"). The Credit Agreement enables Trimble to borrow up to $50,000,000, provided that certain financial and other covenants are met. As of October 20, 1999, Trimble, the Agent, and the Lenders agreed to change and amend certain covenants for the life of the loan, which expires in August of 2000. The $50,000,000 revolving credit facility was modified to include Trimble's prior separate $5,000,000 line of credit and to simplify the entire arrangement. The Credit Agreement provides for payment of a commitment fee of 0.25% and borrowings to bear interest at 1% over LIBOR if the total funded debt to EBITDA is less than or equal to 1.00 times, 0.3% and borrowings to bear interest at 1.25% over LIBOR if the ratio is greater than 1.00 times and less than or equal to 2.00 times, or 0.4%, and borrowings to bear interest at 1.75% over LIBOR if the ratio is greater than 2.00 times. In addition to borrowing at the specified LIBOR rate, Trimble has the right to borrow with interest at the higher of (i) one of the bank's annual prime rate and (ii) the federal funds rate plus 0.5%. To date, Trimble has not made any borrowings under the $50,000,00 unsecured revolving credit facility, but has issued certain letters of credit as of December 31, 1999, amounting to approximately $283,000. In addition, Trimble is restricted from paying dividends under the terms of the Credit Agreement. In June 1994, Trimble issued $30.0(iv) prepaid its existing $30 million of subordinated promissory notes bearing interest at an annual rate of 10%, with principal due on June 15, 2001. Interest payments are due monthly in arrears. The notes are subordinated to the Company's senior debt, which is defined as all pre-existing indebtedness for borrowed money 21 and certain future indebtedness for borrowed money (including, subject to certain restrictions, secured bank borrowings and borrowed money for the acquisition of property and capital equipment) and trade debt incurred in the ordinary course of business. If Trimble prepays any portion of the principal, it is required to pay additional amounts if U.S. Treasury obligations of a similar maturity exceed a specified yield. Under the agreement, Trimble is also restricted from paying dividends. The issuance of the subordinated promissory notes also included the issuance of warrants entitling holders to purchase 400,000 shares of common stock at a price of $10.95 per share at any time through June 15, 2001. The net proceeds of the notes were $29,348,000. The notes are recorded as noncurrent liabilities, net of appraised fair value attributed to the warrants. The value of the warrants and the issuance costs are being amortized to interest expense, using the interest rate method over the term of theoutstanding subordinated promissory notes. The effective annual interest rate on(See Note 2 to the notes is 11.5%. Under the terms of the note,Condensed Consolidated Financial Statements under Acquisition Financing.) In 1996 and 1998, Trimble is required to meet a minimum consolidated net worth requirement. If Trimble falls below the minimum consolidated net worth requirement we could be in default of our loan covenants. Such events could have a material adverse effect on Trimble's operations and liquidity. Trimble announced in February 1996 that it had approved a discretionary program whereby up to 600,000a total of 2.2 million shares of its common stock could be repurchased on the open market by the Company to offset the potential dilutive effects to earnings (loss) per share from the issuance of additional stock options. In 1998, Trimble approved the repurchase of an additional 1.6 million shares under the discretionary program. During 1997 Trimble purchased 139,500 shares at a cost of $1.8 million. Duringand 1998, Trimble purchased 1.08a total of 1.22 million shares at a cost of $16.1$17.9 million. During fiscal 1999 and fiscal 2000, no shares were repurchased under the discretionary program. Trimble's current credit facility limits the amount of its common stock it can repurchase. The Company is allowed to repurchase shares of its common stock only up to 25% of net income in the previous fiscal year. * TrimbleThe Company presently expects fiscal 2001 capital expenditures in fiscal 2000 to be approximately $5.4$12.0 million, primarily for computer equipment, software, and leasehold improvements associated with business expansion. Trimble is continually evaluating potential external investments in technologies related to its business and, to date, has made relatively small strategic investments in a number of GPS related technology companies. There can be no assurance that any such outside investments made to date nor any potential future investments will be successful. * Trimble has evaluated the issues raised by the introduction of the Single European Currency (Euro) for initial implementation as of January 1, 1999, and during the transition period through January 1, 2002. Trimble does not currently believe that the introduction of the Euro will have a material effect on its foreign exchange and hedging activities. Trimble has also assessed the potential impact the Euro conversion will have in regard to its internal systems accommodating Euro-denominated transactions. Trimble will continue to evaluate the impact of the Euro introduction over time, based on currently available information. Trimble does not currently anticipate any adverse impact of the Euro conversion on the Company. YEAR 2000 IMPACT Year 2000 Issues ComputersCERTAIN OTHER RISK FACTORS Difficulties in Integrating New Acquisitions Could Adversely Affect Our Business. Critical to the success of our growth is the effective and software,timely integration of acquired businesses into our organization. If our integration efforts are unsuccessful, our businesses will suffer. We have recently acquired the Spectra Precision Group. The acquisition presents unique product, marketing, research and development, facilities, information systems, accounting, personnel and other integration challenges. This transition is still in its early stages and involves certain risks, including: the potential inability to successfully integrate acquired operations and businesses; the inability to realize anticipated synergies or cost reductions or other value; diversion of management's attention; difficulties in scaling up production at new sites and coordinating management of operations at new sites; and loss of key employees of acquired operations. Also, our information systems and those of the companies we acquire are often incompatible, requiring substantial upgrades to one or the other. Further, our current senior combined management is a combination of the prior senior management teams of Trimble and the Spectra Precision Group several of whom have not previously worked with other members of management. The benefits to us of the acquisition and our success, as well asa whole, depends upon our succeeding in each of these and other equipment that relied on only two digitsintegration challenges. Nevertheless, the integration of our business with another may result in unanticipated operations problems, expenses and liabilities and the diversion of management attention Our sales force is and will be in the future a combination of our sales force and the sales forces of the businesses we acquire, which must be effectively integrated for us to identify or represent a yearremain successful. Our acquisition of the Spectra Precision Group has resulted in sales forces differing in products sold, marketing channels used and sales cycles and models applied. Accordingly, we may experience disruption in sales and marketing in connection with our efforts to integrate our various sales and marketing forces, and we may be unable to accurately processefficiently or display certain information ateffectively correct any such disruptions or afterachieve our sales and marketing objectives if we fail in these efforts. Furthermore, it may be difficult to retain key sales personnel. As a result, we may fail to take full advantage of the Year 2000. This is commonly referred tocombined sales forces' efforts, and one company's sales approaches and distribution channels may be ineffective in promoting another entity's products, all of which may materially harm our business, financial condition or operating results. Risks Associated with Sole Suppliers and Limited Sources. With the selection of Solectron Corporation in August 1999 as the "Year 2000 issue."an exclusive manufacturing partner for many of our GPS products previously manufactured out of our Sunnyvale facilities, Trimble is substantially dependent upon a sole supplier for the manufacture of its products. Under the agreement with Solectron, Trimble provides to Solectron a twelve-month product forecast and places purchase orders with Solectron sixty calendar days in advance of the scheduled delivery of products to Trimble customers. Although Trimble purchase orders placed 29 with Solectron are cancelable, the terms of the agreement would require Trimble to purchase from Solectron all material inventory not awarereturnable or usable by other Solectron customers. Accordingly, if Trimble inaccurately forecasts demand for its products, Trimble may be unable to obtain adequate manufacturing capacity from Solectron to meet customers' delivery requirements or Trimble may accumulate excess inventories. In addition, we rely on sole suppliers for a number of our critical ASICS. We have experienced shortages of such supplies in the past. Our reliance on sole or a limited group of suppliers involves several risks, including a potential inability to obtain an adequate supply of required components and reduced control over pricing. The disruption or termination of any year 2000 issuesof these sources could have a material adverse effect on our business, operating results and financial condition. 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 have affected its business. In preparation fora material adverse effect on our business, operating results and financial condition. Fluctuations in Annual and Quarterly Performance. Our operating results have fluctuated and can be expected to continue to fluctuate in the year 2000, we incurred internal staff costs as well as consultingfuture on a quarterly and other expenses. The year 2000 expenses for external services totaled less than $1.0 million. During 1999, Trimble updated a significant portion of its computer software to be year 2000 compliant. * Trimble is also not aware of any material problems with customers or suppliers. Accordingly, Trimble does not anticipate incurring material expenses or experiencing any material operational disruptionannual basis as a result of a number of factors, many of which are beyond our control. Results in any year 2000 issues. CERTAIN OTHER RISK FACTORS Trimble'speriod could be affected by changes in market demand, competitive market conditions, market acceptance of new or existing products, fluctuations in foreign currency exchange rates, the cost and availability of components, our ability to manufacture and ship products, 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 economic conditions. Due to the foregoing factors, our operating results in one or more future periods are expected to be subject to significant fluctuations. In the event such fluctuations result in our financial performance being below the expectations of public market analysts and investors, the price of our common stock could decline substantially. Our revenues have historically tended to fluctuate on a quarterly basis due to the timing of shipments of products under contracts and the sale of licensing rights. A significant portion of Trimble's quarterly revenues occurs from orders received and immediately shipped to customers in the last few weeks and days of a quarter. If 22 orders are not received, or if shipments were to be delayed a few days at the end of a quarter, the operating results and reported earnings per share for that quarter could be significantly impacted. Future revenues are difficult to predict, and projections are based primarily on historical models, which are not necessarily accurate representations of the future. DueDespite the fluctuations in its quarterly sales patterns, the Company's operating expenses are incurred on an approximately ratable basis. As a result, if expected sales are deferred for any reason, the Company's business, operating results and financial condition could be materially adversely affected. Trimble's 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, since Engineering & Construction and Agriculture products generally have higher gross margins than Component Technologies products, absent other factors, a shift in sales toward Engineering & Construction and Agriculture products would lead to a gross margin improvement for Trimble. On the other hand, if market conditions in the highly competitive pressure,Engineering & Construction and Agriculture market segments forced us to lower unit prices, we would suffer a decline in gross margin unless we were able to timely offset the price reduction by a reduction in production costs or by sales of certainother products with higher gross margins. Either of these events could have a material effect on our business, operating results and financial condition. Risks of Managing Future Growth. Any significant growth in our sales or any significant expansion in the scope of our operations could strain our management, financial, manufacturing and other resources and may require us to implement and improve a variety of operating, financial and other systems, procedures and controls. While Trimble plans significant expansion of its sales, accounting, manufacturing, and other information systems to meet these challenges, there can be no assurance that these efforts will succeed, or that any existing or new systems, procedures or controls will be adequate to support our operations or that our systems, procedures and controls will be designed, implemented or improved in a cost effective and timely manner. Any failure to implement, improve and expand such systems, procedures and controls in a timely and efficient manner could have a material adverse effect on our business, operating results and financial condition. 30 Competition. Trimble's markets are highly competitive. Our overall competitive position depends on a number of factors including the price, quality and performance of our products, have declined substantially since their introduction,the level of customer service, the development of new technology and increasedour ability to participate in emerging markets. Within each of our markets, we encounter direct competition is likely tofrom other GPS, optical and laser suppliers and competition may intensify from various larger domestic and international competitors and new market entrants, some of which may be current Trimble customers. The competition in the future, may, in some cases, result in further price reduction andreductions, reduced margins or loss of market share, any of which could materially and adversely affect our net revenue. Withbusiness, operating results and financial condition. We believe that our ability to compete successfully in the selection of Solectron as an exclusive manufacturing partner, Trimble is substantially dependent upon a sole supplier for the manufacture of its precision positioningfuture against existing and mobileadditional competitors will depend largely on our ability to execute our strategy to provide systems and timing technologiesproducts with significantly differentiated features compared to currently available products. In addition, we rely on sole suppliers for a number of our critical ASICS. The dependence upon these sole suppliers subjects Trimble to risks associated with an interruption of supply if we are not able to find alternative sources on a timely basis. There can be no assurance that we will be able to implement this strategy successfully, or that any delay, disruptions,such products will be competitive with other technologies or quality problems resulting from the useproducts that may be developed by our competitors, many of a sole supplierwhom have significantly greater financial, technical, manufacturing, marketing, sales and other resources than we do. There can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressures faced by us will not have a material adverse effect on Trimble'sour business, operating results and financial condition. We expect that both direct and indirect competition will increase in the future. Additional competition could adversely affect our business, operating results and financial condition through price reductions or loss of market share. Risks Associated With International Operations and Sales. Our customers are located throughout the world. In addition, we have significant offshore operations, including manufacturing facilities, sales personnel and customer support operations. Our offshore operations include facilities in Australia, Canada, China, France, Germany, Great Britain, Japan, Mexico, New Zealand, Sweden, Russia, Singapore and others. Our international presence exposes us to risks not faced by wholly-domestic companies. Specifically, we face the following risks, among others, unexpected changes in regulatory requirements; tariffs and other trade barriers; political, legal and economic instability in foreign markets, particularly in those markets in which we maintain manufacturing and research facilities; difficulties in staffing and management; language and cultural barriers; seasonal reductions in business activities in the summer months in Europe and some other countries; integration of foreign operations; longer payment cycles; greater difficulty in accounts receivable collection; currency fluctuations; and potentially adverse tax consequences. Although we implemented a program to manage foreign exchange risks through hedging and other strategies, there can be no assurance that this program will be successful and that currency exchange rate fluctuations will not have a material adverse effect on our results of operations. Trimble'sIn addition, in certain foreign markets, there may be reluctance to purchase products based on GPS technology, given the control of GPS by the U.S. Government. Volatility of Stock Price. Our common stock has experienced and can be expected to experience substantial price is subjectvolatility in response to significant volatility. If revenues and/actual or anticipated quarterly variations in results of operations, announcements of technological innovations or new products by us or our competitors, developments related to patents or other intellectual property rights, developments in our relationship with customers, suppliers, or strategic partners and other events or factors. In addition, any short fall or changes in revenue, gross margins, earnings, fail to meetor other financial results from analysts' expectations could cause the expectations of the investment community, there could be an immediate and significant impact on the trading price of Trimble's stock.our common stock to fluctuate significantly. Additionally, certain macro-economic factors such as changes in interest rates as well as market climate for the high-technology sector could also have an impact on the trading price of our stock. Dependence on Proprietary Technology; Risk of Patent Infringement Claims. Trimble's future success and competitive position is dependent upon its proprietary technology, and we rely on patent, trade secret, trademark and copyright law to protect our intellectual property. There can be no assurance that the patents owned or licensed by us will not be invalidated, circumvented, challenged or licensed to others, that the rights granted thereunder will provide competitive advantages to us or that any of our pending or future patent applications will be issued within the scope of the claims sought by Trimble, stock.if at all. Furthermore, there can be no assurance that others will not develop technologies that are similar or superior to our technology, duplicate our technology or design around the patents owned by Trimble. In addition, effective copyright, patent and trade secret protection may be unavailable, limited or not applied for in certain foreign countries. There can be no assurance that the steps taken by Trimble to protect its technology will prevent the misappropriation of such technology. 31 The value of Trimble'sour products relies substantially on our technical innovation in fields in which there are many current patent filings. Trimble recognizes 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. Trimble doesWe do not believe any of itsour 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. Such events could have a material adverse effect on Trimble'sour revenues or profitability. (See also Note 1721 to the Condensed Consolidated Financial Statements.) Dependence on New Products. Trimble's 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. However, there can be no assurance that development stage products will be successfully completed or, if developed, will 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 there can be no assurance that we will achieve timely initial customer shipments of new products. The timely availability of these products in volume and their acceptance by customers are important to the future success of Trimble. In some of our markets -- for example, Land Survey and GISEngineering & Construction where we currently have a market leadership position, a delay in new product introductions could have a significant impact on our results of operations. No assurance can be given that we will not incur problems in the future in innovating and introducing new products. TrimbleIn addition, some of our products 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 Union. An inability to obtain such certifications in a timely manner could have an adverse effect on our operating results. Strategic Alliances and External Investments. We are continuously evaluating alliances and external investments in technologies related to itsour business, and has alreadyhave entered into certainmany strategic alliances and has madeincluding making relatively small strategic equity investments in a number of GPS related technology companies. Acquisitions of companies, divisions of companies, or products and alliances and strategic investments entail numerous risks, including (i) the potential inability to successfully integrate acquired operations and products or to realize anticipated synergies, economies of scale, or other value; (ii) diversion of management's attention; (iii) loss of key employees of acquired operations; and (iv) inability to recover strategic investments in development stage entities. Any such problems could have a material adverse effect on Trimble'sour business, financial condition, and results of operations. We also believe that in certain emerging markets our success will depend on our ability to form and maintain strategic alliances with established system providers and industry leaders. Our failure to form and maintain such alliances, or the preemption of such alliances by actions of other competitors or us will adversely affect our ability to penetrate emerging markets. No assurances can be given that we will not incur problems from current or future alliances, acquisitions, or investments. Furthermore, there can be no assurance that we will realize value from any such strategic alliances, acquisitions, or investments. TrimbleDependence on Key Customers. We currently enjoysenjoy strong relationships with a few key customers. An increasing amount of our revenue is generated from large OEMs such as Philips VDO, Nortel, Caterpillar, CNH Global (formerly Case Corporation), Bosch, and others. A reduction or loss of business with these customers could have a material adverse effect on our financial condition and results of operations. There can be no assurance that Trimblewe will be able to continue to realize value from these relationships in the future. Dependence on Key Markets and Successful Identification of New Markets. Trimble's current products serve many applications in Engineering & Construction, Agriculture, Fleet & Asset Management, Component Technologies, and Portfolio Technologies market segments. No assurances can be given that these market segments will continue to generate significant or consistent demand for our products. 32 Existing market segments could be significantly diminished by new technologies or products that replace or render obsolete our technologies and products. Trimble is dependent on successfully identifying new markets for its products. There can be no assurance that the Company will be able to successfully identify new high-growth markets in the future. Moreover, there can be no assurance that new markets will develop for Trimble or its customers' products, or that our technology or pricing will enable such markets to develop. Dependence on Retaining and Attracting Highly Skilled Development and Managerial Personnel. The ability of Trimble to maintain its competitive technological position will depend, in a large part, on its ability to attract, motivate, and retain highly qualified development and managerial personnel. Competition for qualified employees in our industry and location is intense, and there can be no assurance that we will be able to attract, motivate and retain enough qualified employees necessary for the future continued development of our business and products. Potential Adverse Impact of Governmental and Other Similar Certifications. Trimble has certain products that are subject to governmental and similar certifications before they can be sold. For example, FAA certification is required for all aviation products. Also, Trimble'sour products that use 23 integrated radio communication technology require an end-user to obtain licensing from the Federal Communications Commission (FCC) for frequency-band usage. During the fourth quarter of 1998, the FCC temporarily suspended the issuance of licenses for certain of our Real-time Kinematicreal-time kinematic products because of interference with certain other users of similar radio frequencies. An inability or delay in obtaining such certifications or FCC's delays of the FCC could have an adverse effect on our operating results. Dependence on Radio Frequency Spectrum. Trimble's GPS technology is dependent on the use of the Standard Positioning Service (SPS) provided by the U.S. Government's Global Positioning System (GPS). The GPS SPS operates in radio frequency spectrum. The assignmentbands that are globally allocated for radio navigation satellite services. International allocations of spectrum is controlledradio frequency are made by an international organization known as the International Telecommunications Union (ITU)., a specialized technical agency of the United Nations. These allocations are further governed by Radio Regulations which have treaty status and which may be subject to modification every two-three years by the World Radio communication Conference. Any ITU reallocation of radio frequency spectrum,bands, including frequency band segmentation or sharing of spectrum, may materially and adversely affect the utility and reliability of our products, which would, in turn, cause a material adverse effect on our operating results. In addition, unwanted emissions from mobile satellite serviceservices and other equipment operating in adjacent frequency bands or inband from licensed and unlicensed devices may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results. The Federal Communications Commission (FCC) continually receives proposals for novel technologies and services which may seek to operate in, or across, the radio frequency bands currently used by the GPS SPS and other public safety services. Adverse decisions by the FCC that result in harmful interference to the delivery of the GPS SPS may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results. Reliance on GPS Satellite Network. NAVSTAR satellites and their ground support systems are complex electronic systems subject to electronic and mechanical failures and possible sabotage. The satellites 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 27 satellites in place, some have already been in place for 12 years and have an average age of 6 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 would impair the current utility of the GPS system and the growth of current and additional market opportunities. In addition, there can be no assurance that the U.S. government will remain committed to the operation and maintenance of GPS satellites over a long period, or that the policies of the U.S. Government for the use of GPS without charge will remain unchanged. However, a 1996 Presidential Decision Directive marks the first time in the evolution of GPS that access for civilian use free of direct user fees is specifically recognized and supported by Presidential policy. In addition, Presidential policy has been complemented by corresponding legislation, signed into law. Because of ever-increasing commercial applications of GPS, other U.S. Government agencies may become involved in the administration or the regulation of the use of GPS signals. Any of the foregoing factors could affect the willingness of buyers of the Company's products to select 33 GPS-based systems instead of products based on competing technologies. Any resulting change in market demand for GPS products could have a material adverse effect on Trimble's financial results. For example, European governments have expressed interest in building an independent satellite navigation system, known as Galileo. Depending on the as yet undetermined design and operation of this system, there may be interference to the delivery of the GPS SPS and may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results. Reliance on a continuous power supply. * California is in the midst of an energy crisis that could disrupt our operations and increase our expenses. In the event of an acute power shortage, that is, when power reserves for the State of California fall below certain critical levels, California has on some occasions implemented, and may in the future continue to implement, rolling blackouts throughout California. We currently do not have backup generators or alternate sources of power in the event of a blackout, and our current insurance does not provide coverage for any damages we or our customers may suffer as a result of any interruption in our power supply. If blackouts interrupt our power supply or Solectron's power supply, we would be temporarily unable to continue operations at our California facilities. Any such interruption in our ability to continue operations at our facilities or Solectron to manufacture product at its facilities could damage our reputation, harm our ability to retain existing customers and to obtain new customers, and could result in lost revenue, any of which could substantially harm our business and results of operations. NEW ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, (SFAS 133) "Accounting for Derivative Instruments and Hedging Activities."Activities", as amended by SFAS No. 138. SFAS 133 will require Trimble to record all derivatives held on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. With respect to derivatives which are hedges, depending on the nature of the hedge, changes in the fair value of derivatives either will be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or will be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. In June of 1999 the Financial Accounting Standards Board delayed the effective date of implementation for one year; therefore, SFAS 133 is effective for fiscal years beginning after June 15, 2000. Trimble expects towill adopt SFAS 133 as of the beginning of its fiscal year 2001. The effect of adopting the SFAS 133 is currently beinghas been evaluated, but isand does not expected to have a material adverse effect on Trimble's financial position or results of operations. In December 1999, the Securities and Exchange Commission ("SEC") issued staffStaff Accounting Bulletin No.("SAB") 101, (SAB 101). SAB 101 summarizes certain areas of the staff's viewsRevenue Recognition in applying generally accepted accounting principlesFinancial Statements which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB 101 was effective the first fiscal quarter of fiscal years beginning after December 15, 1999 and requires companies to report any changes in financial statements. Trimble is currently assessingrevenue recognition as cumulative change in accounting principle at the impacttime of implementation in accordance with Accounting Principles Board Opinion No. 20, "Accounting Changes." In March 2000, the SEC issued SAB 101A "Amendment: Revenue Recognition in Financial Statements," which delayed implementation of SAB 101 but doesuntil the Company's first fiscal quarter of 2000. In June 2000, the SEC issued SAB 101B "Second Amendment: Revenue Recognition in Financial Statements," which delayed the implementation of SAB 101 until the Company's fourth fiscal quarter of 2000. SAB 101 was adopted by the Company in the fourth fiscal quarter of 2000 and it did not expect that it will have aany material adverse effect on Trimble'sthe Company's financial position or results of operations. Item 7A. Quantitative and Qualitative Disclosure about Market Risk The following is a discussion of Trimble's exposure to market risk related to changes in interest rates and foreign currency exchange rates. Trimble uses certain derivative financial instruments to manage these risks. Trimble does not use derivative financial instruments for speculative or trading purposes. All financial instruments are used in accordance with polices approved by Trimble's board of directors. Market Interest Rate Risk Short-term Investments Owned by the Company. As of December 29, 2000, Trimble had no short-term investments. 34 As of December 31, 1999, Trimble had short-term investments of $52.7 million. These short-term investments consisted of $50.2 million of highly liquid investments, with original maturities at the date of purchase between three and twelve months and a $2.5 million liquid investment with an original maturity at the date of purchase of 15 months, (See Note 24 to the Condensed Consolidated Financial Statements).Statements.) These investments arewere subject to interest rate risk and will decreasedecreased in value if market interest rates increase.increased. A hypothetical 10 percent increase in market interest rates from levels at December 31, 1999, would cause the fair value of these short-term investments to decline by an immaterial amount. Because Trimble hashad the ability to hold these investments until maturity, we would not expect the value of these investments to be affected to any significant degree by the effect of a sudden change in market interest rates. Declines in interest rates over time will, however, reduce our interest income. As of January 1, 1999, Trimble had short-term investments of $16.3 million. These short-term investments consisted of highly liquid investments, with original maturities at the date of purchase between three and twelve months. (See Note 2 to the Condensed Consolidated Financial Statements.) These investments are subject to interest rate risk and will decrease in value if market interest rates increase. A hypothetical 10 percent increase in market interest rates from levels at January 1, 1999, would cause the fair value of these short-term investments to decline by 24 an immaterial amount. Because Trimble has the ability to hold these investments until maturity, we woulddid not expect the value of these investments to be affected to any significant degree by the effect of a sudden change in market interest rates. Declines in interest rates over time will, however, reduce our interest income. Outstanding Debt of the Company. The Company is exposed to market risk due to the possibility of changing interest rates under the new senior secured credit facilities. The Company's new credit facilities are comprised of a 3-year US dollar-only revolver, a 3-year Multi-Currency revolver, and a 5-year term loan. (See Note 2 to the Consolidated Financial Statements under Acquisition Financing.) The entire credit facility has interest payments based on a floating rate of LIBOR plus 275 basis points for the first 6 months and thereafter tied to a formula based on the Company's leverage ratio. The US dollar and the Multi-Currency revolvers run through July 2003 and have outstanding principle balances at December 29, 2000 of $50,000,000 and $12,000,000, respectively. As of December 29, 2000 the Company has borrowed from the Multi-Currency revolver in US currency only. The term loan runs through July 2005 and has an outstanding principle balance of $100,000,000 at December 29, 2000. The 3-month LIBOR effective rate at December 29, 2000 was 6.438%. A 10% increase in 3-month LIBOR rates could result in approximately $1.0 million annual increase in interest expense on the existing principal balances. The Company also has $7.1 million of Euro-denominated debt. At December 29, 2000 $3.7 million was current. The interest rate on the current portion of this instrument is fixed at 6%. A hypothetical 10% decrease in interest rates would not have a material impact on the Company as related to this debt. In addition, the Company has a $1.9 million promissory note, of which $67,000 was current at December 29, 2000. The note is payable in monthly installments, bearing an 8.940% variable interest rate. A hypothetical 10% increase in interest rates would not have a material impact on the Company. As of December 31, 1999 and January 1, 1999, Trimble had outstanding long-term debt of approximately $30.0 million of subordinated promissory notes at a fixed interest rate of 10 percent.10%. The interest rate of this instrument iswas fixed. A hypothetical 10 percent10% decrease in the interest rates would not have a material impact on Trimble. Increases in interest rates could, however, increase interest expense associated with future borrowings of Trimble, if any. We do not currently hedge againstThe Company may consider utilizing interest rate increases.swap agreements to alter interest rate exposures. There were no interest rate swap agreements outstanding as of December 29, 2000 or December 30, 1999. Foreign Currency Exchange Rate Risk Trimble hedges risks associated with foreign currency transactions in order to minimize the impact of changes in foreign currency exchange rates on earnings. Trimble utilizes forward contracts to hedge trade and intercompany receivables and payables. 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 hedge contracts. All hedge instruments are marked to market through earnings every period. * Trimble does not anticipate any material adverse effect on its consolidated financial position utilizing our current hedging strategy. All contracts have a maturity of less than one year, and we do not defer any gains and losses, as they are all accounted for through earnings every period. 35 The following table provides information about the Company's foreign exchange forward contracts outstanding as of December 29, 2000:
Foreign Contract Value Fair Value Buy/ Currency Amount USD in USD Currency Sell (in thousands) (in thousands) (in thousands) - ----------------------- ----------- ------------------------ ------------------------ -------------------- YEN Sell 125,600 $ 1,136 $ 1,106 NZD Buy 4,619 $ 1,934 $ 2,045 NZD Sell 200 $ 80 $ 89 EURO Sell 4,109 $ 3,569 $ 3,863 Sterling Buy 1,665 $ 2,416 $ 2,489
The following table provides information about Trimble's foreign exchange forward contracts outstanding as of December 31, 1999:
Foreign Contract Value Fair Value Buy/ Currency Amount USD in USD Currency Sell (in thousands) (in thousands) (in thousands) - ----------------------- ----------- ------------------------ ------------------------ -------------------- YEN Buy 67,000 $ 657 $ 656 YEN Sell 261,000 $ 2,517 $ 2,568 NZD Buy 4,400 $ 2,257 $ 2,289 EURO Sell 2,955 $ 3,097 $ 3,014 Sterling Buy 1,230 $ 2,002 $ 1,996
The following table provides information about Trimble's foreign exchange forward contracts outstanding as of January 1, 1999:
Foreign Contract Value Fair Value Buy/ Currency Amount USD in USD Currency Sell (in thousands) (in thousands) (in thousands) - ----------------------- ----------- ------------------------ ------------------------ -------------------- YEN Buy 30,000 $ 251 $ 265 YEN Sell 415,900 $ 3,394 $ 3,707 NZD Buy 3,200 $ 1,705 $ 1,686 ECU Sell 1,565 $ 1,838 $ 1,833 Sterling Buy 650 $ 1,096 $ 1,078 DEM Sell 750 $ 444 $ 450
* 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 Trimble's 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. 2536 Item 8. Financial Statements and Supplementary Data CONSOLIDATED BALANCE SHEETS
December 29, December 31, January 1, 19992000 1999 - -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) ASSETS Current assets: Current assets: Cash and cash equivalents $ 49,26440,876 $ 40,86549,264 Short-term investments - 52,728 16,269 Accounts receivable, less allowance for doubtful accounts of $6,538 and $2,949, and $2,220, respectively 83,600 36,005 33,431 Inventories 60,846 16,435 37,166 Other current assets 8,017 4,510 4,173 ----------------------------------- ------------------ Total current assets of continuing operations193,339 158,942 131,904 Property and equipment, at cost less accumulated depreciation 34,059 12,333 15,104 Intangible assets, less accumulated amortization of $16,998 and $5,127, respectively 249,832 1,238 1,320 Deferred income taxes 531 387 405 Other assets 12,743 8,851 7,546 ----------------------------------- ------------------ Total long-term assets 297,165 22,809 ------------------ ------------------ Total assets of continuing operations 22,809 156,279 ----------------- ------------------ Total assets $181,751 $156,279 =================$ 490,504 $ 181,751 ================== ================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank & other short-term borrowings $ 62,000 $ - Current portion of long-term debt $ 1,388 $51,721 1,388 Accounts payable 26,448 11,710 13,000 Accrued compensation and benefits 16,771 7,011 4,696 Customer advances - 808 Accrued liabilities 31,626 14,091 15,474 Accrued liabilities related to disposal of General Aviation 867 2,212 6,743 Accrued warranty expense 7,749 5,786 5,681 Income taxes payable 5,005 2,983 2,158 Deferred gain on sale of assets 1,591 1,953 - ----------------------------------- ------------------ Total current liabilities 203,778 47,134 49,948 Noncurrent portion of long-term debt and other liabilities 137,341 30,566 31,640 Noncurrent portion of gain on sale of assetsDeferred tax liability 8,230 - Other noncurrent liabilities 6,212 3,255 - ---------------------------------- ------------------ Total liabilities 355,561 80,955 81,588 ---------------------------------- ------------------ Commitments and contingencies Shareholders' equity: Preferred stock, no par value; 3,000 shares authorized; none outstanding - - Common stock, no par value; 40,000 shares authorized; 22,74224,162 and 22,24722,742 shares outstanding, respectively 153,853 125,969 121,501 Common stock warrants 993 700993 Accumulated deficit (10,940) (25,125) (46,718) Accumulated other comprehensive loss (8,963) (1,041) (792) ---------------------------------- ------------------ Total shareholders' equity 134,943 100,796 74,691 ---------------------------------- ------------------ Total liabilities and shareholders' equity $181,751 $156,279 ================$ 490,504 $ 181,751 ================== ==================
See accompanying notes to consolidated financial statements. 2637 CONSOLIDATED STATEMENTS OF OPERATIONS
December 29, December 31, Janaury 1, January 2, Fiscal Years ended 2000 1999 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands, except per share data) Revenue $ 369,798 $ 271,364 $ 268,323 $ 266,442 --------------------- ----------------- ------------------ Operating expenses: Cost of sales 173,237 127,117 141,075 124,411 Research and development 46,520 36,493 45,763 38,242 Sales and marketing 79,901 53,543 61,874 57,661 General and administrative 30,514 33,750 33,245 27,424 Restructuring charges - - 10,280 Amortization of goodwill & other purchased intangibles 13,407 - - --------------------- ----------------- ------------------ Total operating expenses 343,579 250,903 292,237 247,738 --------------------- ----------------- ------------------ Operating income (loss) from continuing operations 26,219 20,461 (23,914) 18,704 Nonoperating income (expense): Interest and investment income 4,478 3,857 3,588 4,462 Interest and other expense (14,561) (3,611) (5,863) (3,524) Foreign exchange gain (loss) (376) 28 234 234 --------------------- ----------------- ------------------ Total nonoperating income (expense) (10,459) 274 (2,041) 1,172 --------------------- ----------------- ------------------ Income (loss) before income taxes from continuing operations 15,760 20,735 (25,955) 19,876 Income tax provision 1,575 2,073 1,400 2,496 --------------------- ----------------- ------------------ Net income (loss) from continuing operations $ 14,185 $ 18,662 $ (27,355) $ 17,380 --------------------- ----------------- ------------------ Discontinued Operations: Loss from discontinued operations (net of income tax benefit of $0 in 1999, $0 in 1998, and $176 in 1997)$0) $ - $ (5,760)- $ (8,101)(5,760) Estimated gain (loss) on disposal of discontinued operations (net of tax) $ - $ 2,931 $ (20,279) $ - --------------------- ----------------- ------------------ ------------------ LossGain (loss) on discontinued operations $ - $ 2,931 $ (26,039) $ (8,101) ---------------------- --------------------------------------- ----------------- ------------------ Net income (loss) $ 14,185 $ 21,593 $ (53,394) $ 9,279 ====================== ======================================= ================= ================== Basic net income (loss) per share from continuing operations $ 0.60 $ 0.83 $ (1.22) $ 0.78 Basic net income (loss) per share from discontinued operations $ - $ 0.13 $ (1.16) $ (0.36) ---------------------- --------------------------------------- ----------------- ------------------ Basic net income (loss) per share $ 0.60 $ 0.96 $ (2.38) $ 0.42 ====================== ======================================= ================= ================== Shares used in calculating basic net income (loss) per share 23,601 22,424 22,470 22,293 ====================== ======================================= ================= ================== Diluted net income (loss) per share from continuing operations $ 0.55 $ 0.82 $ (1.22) $ 0.75 Diluted net income (loss) per share from discontinued operations $ - $ 0.13 $ (1.16) $ (0.35) ---------------------- --------------------------------------- ----------------- ------------------ Diluted net income (loss) per share $ 0.55 $ 0.95 $ (2.38) $ 0.40 ====================== ======================================= ================= ================== Shares used in calculating diluted net income (loss) per share 25,976 22,852 22,470 22,947 ====================== ======================================= ================= ==================
See accompanying notes to consolidated financial statements. 2738 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Accumulative Common stock Accumulative and warrants Retained other Total ---------------------------and warrants earnings comprehensive shareholders' Shares Amount (deficit) income/(loss) equity - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Balance at December 31, 1996 22,063 $ 126,235 $ (2,603) $ 413 $ 124,045 Components of comprehensive income: Net income 9,279 9,279 Unrealized loss on short-term investments (12) (12) Currency translation adjustments (949) (949) --------------- Total comprehensive income 8,318 --------------- Subtotal 132,363 --------------- Issuances of stock under employee plans 890 8,954 - - 8,954 Repurchases of common stock (140) (1,834) - - (1,834) ---------------------------------------------------------------------------- Balance at January 2, 1998 22,813 $ 133,355 $ 6,676 $ (548) $ 139,483 Components of comprehensive income: Net loss (53,394) (53,394) Unrealized gain on short-term investments 11 11 Currency translation adjustments (255) (255) ------------------------------- Total comprehensive income (53,638) ------------------------------- Subtotal 85,845 ------------------------------- Issuances of stock under employee plans 514 4,977 - - 4,977 Repurchases of common stock (1,080) (16,131) - - (16,131) --------------------------------------------------------------------------------------------------------------------------------------------------------- Balance at January 1, 1999 22,247 122,201 (46,718) (792) 74,691 Components of comprehensive income: Net income 21,593 21,593 Unrealized loss on short-term investments (142) (142) Currency translation adjustments (107) (107) --------------------------------- Total comprehensive income 21,344 --------------------------------- Subtotal 96,035 --------------------------------- Issuances of stock under employee plans 495 4,468 - - 4,468 Issuance of warrants - 293 - - 293 --------------------------------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 22,742 126,962 (25,125) (1,041) 100,796 Components of comprehensive income: Net income 14,185 14,185 Unrealized gain on short-term investments 123 123 Currency translation adjustments (8,045) (8,045) ------------------ Total comprehensive income 6,263 ------------------ Subtotal 107,059 ------------------ Issuances of stock under employee plans and exercise of warrants 843 12,043 - - 12,043 Issuances of stock for acquisition 577 14,995 14,995 Issuance of warrants - 846 - - 846 ----------------------------------------------------------------------------- Balance at December 29, 2000 24,162 $ 126,962154,846 $ (25,125)(10,940) $ (1,041)(8,963) $ 100,796 ============================================================================134,943 =============================================================================
See accompanying notes to consolidated financial statements. 2839 CONSOLIDATED STATEMENTS OF CASH FLOWS
December 29, December 31, January 1, January 2, Fiscal Years ended 2000 1999 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Cash flow from operating activities of continuing operations: Net income (loss) from continuing operations $ 14,185 $ 18,662 $ (27,355) $ 17,380 Adjustments to reconcile net income (loss) from continuing operations to cash flows provided by operating activities of continuing operations: Depreciation and amortization expense 23,476 9,073 12,510 12,208 Writedown of fixed assets due to restructure - - 5,343 Amortization of deferred gain (2,555) (651) - Other (702)(3,621) (51) (835) (980) Decrease (increase) in assets: Accounts receivable, net (6,091) (2,574) 15,475 (15,042) Inventories (4,118) 6,653 5,219 (7,767) Other current and noncurrent assets (3,303) (354) 1,622 (1,535) Deferred income taxes (144) 18 (49) 27 Increase (decrease) in liabilities: Accounts payable 7,554 (1,290) (5,724) 4,961 Accrued compensation and benefits (6,362) 2,315 (1,134) (722) Customer advances - (808) (22) (2,170) Accrued liabilities 2,955 (8,193) 10,482 (967) Income taxes payable (2,141) 825 (506) 1,795 -------------------- ---------------- ----------------------------- --------------- --------------- Net cash provided by operating activities of continuing operations 19,835 23,625 15,026 7,188 Net cash used by operating activities of discontinued operations - - (8,058) (9,239) -------------------- ---------------- ----------------------------- --------------- --------------- Net cash provided (used) by operating activities 19,835 23,625 6,968 (2,051) -------------------- ---------------- ----------------------------- --------------- --------------- Cash flow from investing activities: Equity investments 35 (748) (1,548) (1,889) Acquisition of property and equipment (7,555) (6,411) (11,539) (10,393) Proceeds from sale of assets - 26,863 - Acquisitions, net of cash acquired (211,488) - - Costs of capitalized patents (900) (1,127) (992) (910) Purchase of short-term investments (6,458) (54,809) (53,854) (63,854) Maturities/Sales of short-term investments 59,186 18,350 90,756 70,538 -------------------- ---------------- ----------------------------- --------------- --------------- Net cash provided (used) by investing activities of continuing operations (167,180) (17,882) 22,823 (6,508) Net cash used by investing activities of discontinued operations - - (339) (598) -------------------- ---------------- ----------------------------- --------------- --------------- Net cash provided (used) by investing activities (167,180) (17,882) 22,484 (7,106) -------------------- ---------------- ----------------------------- --------------- --------------- Cash flow from financing activities: Issuance of common stock 12,043 4,468 4,977 8,954 Repurchase of common stock - - (16,131) (1,834) Payment(Payment)/collection of notes receivable 196 (540) (219) (504)Proceeds from long-term debt and revolving credit lines 162,000 - 2,835 (Payments)/proceeds on long-term debt and revolving credit facilitieslines (35,282) (1,272) 2,835 (179) -------------------- ---------------- ------------- ----------------- --------------- --------------- Net cash provided (used) by financing activities of continuing operations 138,957 2,656 (8,538) 6,437 Net cash provided by financing activities of discontinued operations - - - -------------------- ---------------- ----------------------------- --------------- --------------- Net cash provided (used) by financing activities 138,957 2,656 (8,538) 6,437 -------------------- ---------------- ----------------------------- --------------- --------------- Increase (decrease) in cash and cash equivalents (8,388) 8,399 20,914 (2,720) Cash and cash equivalents, beginning of period 49,264 40,865 19,951 22,671 -------------------- ---------------- ----------------------------- --------------- --------------- Cash and cash equivalents, end of period $ 40,876 $ 49,264 $ 40,865 $ 19,951 ==================== ================ ============================== =============== ===============
See accompanying notes to consolidated financial statements. 29statements 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of significant accounting policies: Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Due to the inherent nature of those estimates, actual results could differ from expectations. Basis of presentation. Trimble Navigation Limited ("Trimble" or the "Company") fiscal year is an annual period that varies from 52 to 53 weeks and always ends on the Friday nearest to December 31, which for fiscal 19992000 was December 31, 1999.29, 2000. Trimble's fiscal year will normally consist of four equal quarters of 13 weeks each, or 52 weeks; however, due to the fact that there are not exactly 52 weeks in a calendar year and that there is slightly more than one additional day per year (not including the effects of leap year) in each calendar year as compared to a 52-week fiscal year, Trimble will have a fiscal year comprising 53 weeks in certain fiscal years, as determined by when Friday falls closest to December 31 in consecutive calendar years. In those resulting fiscal years that have 53 weeks, Trimble will record an extra week of revenues, costs and related financial activity. Therefore, the financial results of those fiscal years, and the associated quarter, having the extra week, will not be exactly comparable to the prior and subsequent 52-week fiscal years, and the associated quarters having only 13 weeks. Thus, due to the inherent nature of adopting a 52-53 week fiscal year, Trimble, analysts, shareholders, investors and others will have to make appropriate adjustments to any analysis performed when comparing the Company's activities and results in fiscal years that contain 53 weeks, to those that contain the standard 52 weeks. Fiscal years 2000, 1999, 1998, and 19971998 were all comprised of 52 weeks. The consolidated financial statements of Trimble include the operating results of the Spectra Precision Group since the effective date of acquisition of July 14, 2000 and also include the operating results of Tripod Data Systems since the effective date of acquisition of November 14, 2000. Principles of consolidation. The consolidated financial statements include the accounts of Trimble Navigation Limited (the Company) and its wholly owned subsidiaries after elimination of all material intercompany balances and transactions. Foreign currency translation. Assets and liabilities of Trimble's foreign subsidiaries are translated into U.S. dollars at year-end exchange rates, and revenues and expenses are translated at average rates prevailing during the year. Local currencies are considered to be the functional currencies for the Company's non-U.S. subsidiaries. Translation adjustments are deferred in a separate component of shareholders' equity. Foreign currency transaction gains and losses are included in results of operations as incurred. Forward foreign currency exchange contracts. Trimble's policy is to hedge its known exposure to foreign currency transactions to minimize the effect of changes in foreign currency exchange rates on consolidated results of operations. Trimble entersTrimble's policy is to enter into simple forward foreign exchange contracts to either buy or sell currency if the net position exceeds $400,000. The forward foreign exchange contract obligates Trimble to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates, or to make an equivalent U.S. dollar payment equal to the value of such exchange. For contracts that are designated and effective as hedges, discounts, or premiums (the difference between the spot exchange rate and the forward exchange rate at inception of the contract) are accreted or amortized to other operating expenses over the contract lives, using the straight-line method, while realized and unrealized gains and losses resulting from changes in the spot exchange rate (including those from open, matured, and terminated contracts) are included in results of operations. The related amounts due to or from counterparties are included in other assets or other liabilities. Contract amounts are marked to market, with changes in market value recorded in earnings as foreign exchange gains or losses. To date, Trimble has entered into simple forward foreign currency exchange contracts to offset the effects of changes in exchange rates on foreign-denominated intercompany receivables. At December 31, 1999,29, 2000, Trimble had forward foreign currency exchange contracts to sell $2,517,000 of125,600,000 Japanese yen, and $3,097,000 of4,109,000 European Currency units, and to buy $2,257,000 of200,000 New Zealand dollars $2,002,000 ofand to buy 4,619,000 New Zealand dollars and 1,665,000 British poundpounds sterling and $657,000 of Japanese yen, at contracted rates that mature over the next six months. 41 Cash and cash equivalents. Cashequivalents.Cash and cash equivalents include all cash and highly liquid investments with original maturities of three months or less. The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of those instruments. 30 Short term/Marketable securities. Trimble has classified all its short-term/marketable investments as "available-for-sale" securities. Available-for-sale securities are carried at fair value, with the unrealized holding gains and losses, net of tax effects, reported as a separate component of shareholders' equity. Fair value is based on quoted market prices. The cost of debt securities in this classification is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as interest, dividends, and realized gains and losses, is included in interest and investment income. The cost of securities sold is based on the specific identification method. Trimble has classified all investments as short-term since it has the intent and ability to redeem them within the year.short-term. (See Note 24 to the Consolidated Financial Statements.) Concentration of credit risk. In entering into forward foreign exchange contracts, Trimble has assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The counterparties to these contracts are major multinational commercial banks, and Trimble does not expect any losses as a result of counterparty defaults. Trimble is also exposed to credit risk in its accounts receivable and performs ongoing credit evaluations of its customers and generally does not require collateral. The expenses recorded for doubtful accounts receivable were $1,198,000 in fiscal 2000, $1,875,000 in fiscal 1999, and $195,000 in 1998, and $315,000 in 1997.fiscal 1998. Inventories. Inventories are stated at the lower of standard cost or market. Standard costs approximate average actual costs. Revenue recognition. Trimble recognizes revenue from product sales when the products are shipped to the customer, title has transferred, and no significant obligations remain. Trimble also requires the following: (i) execution of a written customer order, (ii) delivery of the product, (iii) fee is fixed and determinable, and (iv) collectibility of the proceeds is probable. In circumstances where the customer has delayed their acceptance of our product, we defer recognition of revenue until acceptance. Revenues from purchased extended warranty and support agreements isare deferred and recognized ratably over the term of the warranty/support period. Substantially all technology licenses and research revenue have consisted of initial license fees and royalties, which were recognized when earned, when Trimble had no remaining obligations. Sales to distributors are recognized upon shipment providing that there is evidence of the arrangement through a distribution agreement or purchase order, and the Company has no remaining performance obligations, the price and terms of the sale are fixed and collection is probable. As a normal practice, distributors do not have a right of return. In fiscal 1999, Trimble adopted Statement of Position 97-2 (SOP 97-2) as set forth by FASB, "Software Revenue Recognition," which requires that revenue recognized from software arrangements be allocated to each element of the arrangement based on the relative fair values of the elements, such as software products, upgrades, enhancements, post-contract customer support, installation, or training. Revenue from post-contract customer support (PCS) is recognized ratably over the period of the PCS agreement. However, PCS revenue is recognized immediately upon the sale of the software when the PCS arrangement is for one year or less. The implementation of SOP 97-2 did not have a material impact on the recognized revenue of the Company. In December 1998, the AICPA issued SOP 98-9, Modifications of SOP 97-2, Software Revenue Recognition, with respect to Certain Transactions. SOP 98-9 amends SOP 97-2 Software Revenue Recognition to require recognition of revenue using the "residual method" when certain criteria are met. Trimble will be required to implement these provisions of SOP 98-9 for its fiscal year ending December 31, 2000. SOP 98-9 also amends SOP 98-4, an earlier amendment to SOP 97-2, which extended the deferral of the application of certain passages of SOP 97-2. Trimble does not believe the impact of SOP 98-9 will be material to its financial position, results of operations and cash flows. Trimble accounts for long-term development contracts on the percentage of completion method, and income is recognized as work on contracts progress, but estimated losses on contracts in progress are immediately charged to operations. In December 1999, the Securities and Exchange Commission issued staffStaff Accounting Bulletin No. 101 (SAB 101). SAB 101 summarizes certain areas of the staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. In the fourth quarter of the fiscal year ended December 29, 2000, Trimble is currently assessing the impact ofadopted SAB 101 but doesand reviewed the recognition of revenue for qualifying contracts. The result did not expect that it will have a material adverse effect on Trimble's financial position or results of operations. Product warranty. Trimble provides for estimated warranty costs at the time of sale. The warranty period is generally for one year from date of shipment, except for air transport products, for which the period is generally a basic three-year warranty period with an additional two-year warranty sold with some units. The Company's optic and laser products generally carry one to three year warranties. In addition, select military 42 programs may require extended warranty periods. 31 periods and certain products sold by our Tripod Data Systems subsidiary have a 90 day warranty period. Advertising costs. Trimble expenses the productionadvertising costs of advertising as incurred. Advertising expenses were $7,879,000, $4,229,000, $6,490,000, and $6,328,000$6,490,000 in fiscal 2000, 1999, 1998, and 1997,1998, respectively. Research and Development and Engineering Costs. Research, development and engineering costs are charged to expense when incurred. The CompanyTrimble has received third party funding of $7.1million$4.8 million, $7.1 million and $2.9 million in 2000, 1999, and $6.4 million in 1999, 1998, and 1997, respectively. The CompanyTrimble has offset research, development and engineering expenses by the third party funding, as the third party funding is based upon research and development expenditures and the Companyfunding. Trimble retains the rights to any technology that is developed. Stock compensation. In accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," Trimble applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretationsinterpretations in accounting for its stock option plans and stock purchase plan. Accordingly, it does not recognize compensation cost for stock options granted at or above market. Note 1315 to the Consolidated Financial Statements describes the plans operated by Trimble, and contains a summary of the pro forma effects to reported net income (loss) and earnings (loss) per share for fiscal 2000, 1999, 1998, and 19971998 as if Trimble had elected to recognize compensation cost based on the fair value of the options granted at grant date, as prescribed by SFAS No. 123. Depreciation. Depreciation of property and equipment owned or under capitalized leases 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 three to eight years for machinery and equipment and four to five years for furniture and fixtures. Intangible and Long-lived Assets. Intangible assets consist ofinclude goodwill and other intangible assets such as assembled workforce, patents, licenselicenses, technology and trademarks. Intangible assetstrademarks, which are capitalized at cost and amortized on athe straight-line basis over their estimated useful lives. Useful lives generally periodsrange from 3 to 10 years, with the exception of four years or less. Long-lived Assets. In accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 121, "Accounting forgoodwill, which is amortized over 20 years. If facts and circumstances indicate that the Impairment of Long-lived Assets and Long-lived Assets to be Disposed Of", the carrying value ofgoodwill, other intangible assets or property and other long-livedequipment may be impaired, an evaluation of continuing value would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with these assets would be compared to their carrying amount to determine if a write down to fair market value or discounted cash flow value is reviewed on a regular basis for the existence of facts or circumstances, both internal and external, that may suggest impairment.required. Interest. All interest costs incurred have been charged to interest expense. Earnings (loss) per share. Basic earnings per share represents the weighted average common shares outstanding during the period and excludes any dilutive effects of options, warrants, and convertible securities. The dilutive effects of options, warrants, and convertible securities are included in diluted earnings per share. New accounting standards. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, (SFAS 133), as amended by SFAS No. 138 "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 will require Trimble to record all derivatives held on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. With respect to derivatives which are hedges, depending on the nature of the hedge, changes in the fair value of derivatives either will be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or will be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. In June of 1999 the Financial Accounting Standards Board delayed the effective date of implementation for one year; therefore, SFAS 133 is effective for fiscal years beginning after June 15, 2000. Trimble expects towill adopt SFAS 133 as of the beginning of its fiscal year 2001. The effect of adopting the SFAS 133 is currently beinghas been evaluated, but isand will not expected to have a material adverse effect on Trimble's financial position or results of operations. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") 101, Revenue Recognition in Financial Statements which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB 101 was effective the first fiscal quarter of fiscal years beginning after December 15, 1999 and requires companies to report any changes in revenue recognition as cumulative change in accounting principle at the time of implementation in accordance with Accounting Principles 43 Board Opinion No. 20, "Accounting Changes." In March 2000, the SEC issued SAB 101A "Amendment: Revenue Recognition in Financial Statements," which delayed implementation of SAB 101 until the Company's first fiscal quarter of 2000. In June 2000, the SEC issued SAB 101B "Second Amendment: Revenue Recognition in Financial Statements," which delayed the implementation of SAB 101 until the Company's fourth fiscal quarter of 2000. SAB 101 was adopted by the Company in the fourth fiscal quarter of 2000 and it did not have any material effect on the Company's financial position or results of operations. Note 2 - Acquisitions: SPECTRA PRECISION GROUP ACQUISTION Effective as of July 14, 2000, Trimble completed the acquisition of the Spectra Precision wholly owned businesses formerly owned by Thermo Electron Corporation ("Thermo Electron"), collectively known as the "Spectra Precision Group" for an aggregate purchase price of approximately $294 million. This purchase price is subject to a final adjustment as provided for in the acquisition agreements. This final adjustment is not expected to be material. The acquisition included 100% of the stock of Spectra Precision Inc., a Delaware corporation, Spectra Precision SRL, an Italian corporation, Spectra Physics Holdings GmbH, a German corporation, and Spectra Precision BV, a Netherlands corporation. The acquisition also included certain assets and liabilities of Spectra Precision AB, a Swedish corporation, including 100% of the shares of Spectra Precision SA, a French corporation, Spectra Precision Scandinavia AB, a Swedish corporation, Spectra Precision of Canada Ltd., a Canadian corporation, and Spectra Precision Handelsges mbH, an Austrian corporation. The acquisition has been accounted for as a purchase for accounting purposes; accordingly, Trimble's consolidated results of operations include the operating results of the Spectra Precision Group since the effective date of the acquisition. The acquisition was financed with $80 million in seller subordinated debt, $140 million of debt provided through a syndicate of banks, and $74 million of the Company's available cash on hand. (See further discussions below under "Acquisition Financing".) The Company acquired approximately $133 million of identifiable intangible assets as part of the acquisition which the Company is amortizing over various time periods ranging from 5 to 10 years. The preliminary allocation of purchase price has also resulted in the recording of approximately $133 million of goodwill due to the acquisition, which will be amortized over 20 years. Acquisition costs relating to the purchase of the Spectra Precision Group approximated $7 million. In connection with the acquisition of the Spectra Precision Group, the Company accrued approximately $9.0 million for costs to close certain duplicative office facilities and combine operations and relocate certain employees. These costs were accrued for as part of the preliminary allocation of the purchase price. The facility consolidation and employee relocations will result from primarily combining certain office facilities and duplicative functions, including management functions, of the Spectra Precision Group. The Company has not yet finalized its plans to consolidate facilities and to relocate employees, nor has it finalized a determination of the total costs to be incurred upon the termination of certain office facility leases or its ability to sublease vacated office space. Accordingly, unresolved issues could result in an increase or decrease in the liabilities for facility consolidation, the discontinuance of overlapping product lines, employee relocation, and related tax and legal expenses. These adjustments, if any, will be reported as an increase or decrease in goodwill. Through December 29, 2000, the Company had charged $809,000 (which consisted of inventory write-offs related to the discontinuance of overlapping product lines) against the reserve, and the accrual for future costs to be incurred was $8.2 million at December 29, 2000. The elements of the reserve at fiscal year end 2000 on the balance sheet are as follows (in thousands): Employee Relocation Expense $ 390 Inventory Obsolescence 1,876 Legal and Tax Expense 1,175 Restructuring Expenses 4,750 --------------- Subtotal $ 8,191 =============== 44 Acquisition Financing: In order to finance the acquisition of the Spectra Precision Group, fund the Company's on-going working capital requirements, and pay related fees and expenses of the acquisition, Trimble (i) obtained a new senior secured credit facility, (ii) issued an $80 million subordinated seller promissory note, (iii) terminated its then existing $50 million unsecured revolving credit facility and (iv) prepaid its then existing $30 million outstanding subordinated promissory notes, as briefly summarized below. New Credit Facilities: In July 2000, ABN AMRO Bank, N.V. led a syndicate of banks which underwrote $200 million of new senior, secured credit facilities for the Company (the "New Credit Facilities") to support the acquisition of the Spectra Precision Group and the Company's ongoing working capital requirements and to refinance certain existing debt. (See Note 10 to the Consolidated Financial Statements for the specific terms of the New Credit Facilities.) New Seller Promissory Note: The Company issued an $80 million promissory note to the seller, which is subordinated to the New Credit Facilities. (See Note 11 to the Consolidated Financial Statements for the specific terms of the New Seller Promissory Note.) Prepayment of Existing $30 million Subordinated Notes: In June 1994, Trimble issued $30 million of subordinated promissory notes to John Hancock bearing interest at an annual rate of 10%, with principal and interest due on June 15, 2001. In order to effect the acquisition of the Spectra Precision Group and as part of obtaining the New Credit Facilities, Trimble prepaid all such outstanding long-term note obligations to John Hancock for a total of $31,069,108, which consisted of $30 million in principal, $183,333 in accrued interest and $885,775 as a prepayment penalty. Pursuant to the terms of such original notes, any prepayment of any portion of the outstanding principal required Trimble to pay additional amounts if U.S. Treasury obligations of a similar maturity exceed a specified yield. The prepayment penalty is included in interest expense. Termination of Existing $50 million Unsecured Revolving Credit Facility: In August 1997, Trimble entered into a three-year, $50,000,000 unsecured revolving credit facility with four banks (the "Credit Agreement"). This Credit Agreement enabled Trimble to borrow up to $50,000,000, provided that certain financial and other covenants were met. Trimble never made any borrowings under such $50,000,00 unsecured revolving portion of the Credit Agreement, but had issued certain letters of credit amounting to approximately $1.2 million as of June 30, 2000. In order to effect the acquisition of the Spectra Precision Group, in July 2000 Trimble completely terminated this Credit Agreement in favor of obtaining the New Credit Facilities described above. TRIPOD DATA SYSTEMS ACQUISITION Effective as of November 14, 2000, Trimble completed the acquisition of Tripod Data Systems, Inc., an Oregon corporation for an aggregate purchase price of less than $15 million. The purchase price was paid in the form of 576,726 shares of the common stock of Trimble. The acquisition has been accounted for as a purchase for accounting purposes; accordingly, Trimble's consolidated results of operations include the operating results of Tripod Data Systems since the effective date of the acquisition. The allocation of the purchase price has resulted in the recording of approximately $10.7 million of goodwill due to the acquisition, which will be amortized over 20 years. Acquisition costs relating to the purchase of Tripod Data Systems approximated $194,000. 45 Note 3 - Unaudited pro forma information: The accompanying consolidated statements of operations of Trimble include the accounts of the Spectra Precision Group for the period July 14, 2000 through December 29, 2000 and of Tripod Data Systems for the period November 14, 2000 through December 29, 2000. The following pro forma information for the twelve months ended December 29, 2000 and December 31, 1999 presents net sales, income (loss) before extraordinary items, and net loss for each of these periods as if the transaction with the Spectra Precision Group was consummated on January 2, 1999. This unaudited pro forma data does not purport to represent the Company's actual results of operations had the Spectra Precision Group acquisition occurred on January 2, 1999 and should not serve as a forecast of the Company's operating results for any future periods. (in thousands, except per share amounts)
------------------------------------------ Twelve Months Ended December 29, December 31, 2000 1999 ----------------------------------------- Net revenue $ 491,436 $ 488,728 Net loss from continuing operations (1,920) (17,661) Net loss (1,920) (14,730) Basic net loss per share from continuing operations $ (0.08) $ (0.79) Basic net income (loss) per share from discontinued operations - $ 0.13 ------------------- ------------------ Basic net loss per share $ (0.08) $ (0.66) Diluted net loss per share from continuing operations $ (0.08) $ (0.79) Diluted net income (loss) per share from discontinued operations - $ 0.13 ------------------- ------------------ Diluted net loss per share $ (0.08) $ (0.66)
Note 4 - Short term investments: All marketable securities are intended by management to be available for sale and are reported at fair value with net unrealized gains or losses reported within shareholders' equity. Realized gains and losses are recorded based on the specific identification method. At December 29, 2000, Trimble had no short-term investments. The table below shows the carrying amount of Trimble's investments is shown in the table below: 32 at December 31, 1999.
Fiscal Year ended December 31, 1999 --------------------------------------------------------------------------------------------------------------------------------------- Gross Gross Amortized Unamortized Unamortized Estimated Cost Gains Losses Fair Value - -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Investments: Investments: U.S. government obligations $ 32,631 $ - $ (99) $ 32,532 State and municipal - securities 7,658 - (1) 7,657 Certificates of deposit 2,500 - (2) 2,498 Corporate debt securities 7,462 - (20) 7,442 Other 2,600 - (1) 2,599 - -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total $ 52,851 $ - $ (123) $ 52,728 ====================================================================
Fiscal Year ended January 1, 1999 -------------------------------------------------------------------- Gross Gross Amortized Unamortized Unamortized Estimated Cost Gains Losses Fair Value - ------------------------------------------------------------------------------------------------------- (In thousands) Investments: U.S. government obligations $ - $ - $ - $ - State and municipal - securities 16,250 19 - 16,269 Certificates of deposit - - - - Corporate debt securities - - - - Other - - - - - ------------------------------------------------------------------------------------------------------- Total $ 16,250 $ 19 $ - $ 16,269 =======================================================================================================================================
At December 31, 1999, investments with scheduled maturities within one year were $50.2 million and for maturities between one to three years were $2.5 million. At January 1, 1999, investments with scheduled maturities within one year were $16.3 million and for maturities between one to three years was $0. 3346 Note 35 - Balance sheet components:
December 29, December 31, 2000 1999 - ------------------------------------------------------------------------------------------ (In thousands) Inventories Raw materials $ 27,878 $ 2,582 Work-in-process 6,940 2,232 Finished goods 26,028 11,621 ------------------ ------------------- $ 60,846 $ 16,435 ================== =================== Property and equipment Machinery and equipment $ 67,245 $ 50,831 Furniture and fixtures 6,994 5,930 Leasehold improvements 5,633 5,387 Buildings 7,948 - Land 1,905 - ------------------ ------------------- 89,725 62,148 Less accumulated depreciation (55,666) (49,815) ------------------ ------------------- $ 34,059 $ 12,333 ================== ===================
Increases in inventory from December 31, January 1, 1999 1999 - -------------------------------------------------------------------------------- (In thousands) Inventories Raw materials $ 2,582 $ 22,480 Work-in-process 2,232 4,033 Finished goods 11,621 10,653 ------------------ ---------------- $ 16,435 $ 37,166 ================== ================ Propertyare due to the purchases of the Spectra Precision Group in July 2000 and Tripod Data Systems in November 2000, which accounted for an aggregate of $30.3 million of the balance at December 29, 2000 and additional purchases to help mitigate the continued delivery problems related to critical part shortages in our supply chain Increases in property and equipment Machineryfrom December 31, 1999 are due to the purchases of the Spectra Precision Group in July 2000 and Tripod Data Systems in November 2000, which accounted for an aggregate of $18.3 million of net property, plant and equipment $ 50,831 $ 59,520 Furniture and fixtures 5,930 5,763 Leasehold improvements 5,387 6,700 ------------------ ---------------- 62,148 71,983 Less accumulated depreciation (49,815) (56,879) ------------------ ---------------- $ 12,333 $ 15,104 ================== ================at December 29, 2000. Note 46 - Disposition of assets: On August 10, 1999, Trimble signed an Asset Purchase Agreement with Solectron Corporation and Solectron Federal Systems, Inc. (collectively, "Solectron"). The closing of the transaction occurred on August 13, 1999. At the closing of the Asset Purchase Agreement, Trimble transferred to Solectron substantially all of Trimble's tangible manufacturing assets located at Trimble's Sunnyvale, California campus, including but not limited to equipment, fixtures and work in progress, and certain contract and other intangible assets and rights, together with certain related obligations, including but not limited to real property subleases covering Trimble's manufacturing floor space, and outstanding purchase order commitments. In addition, the Asset Purchase Agreement also provided for Solectron's subsequent purchase, on August 30, 1999, of Trimble's entire component inventory, on hand as of August 13, 1999. The final purchase price for these assets was $26.9 million. As part of this agreement Trimble incurred some employee and facility related liabilities, which have been accrued for and offset against the gain on the sale of these assets. The net gain on the transaction to Trimble of $5.9 million has been deferred and is being recognized over the three-year exclusive life of the Supply Agreement described below. In the fourth quarter of fiscal 2000, certain contingencies were finalized, and the deferred gain was reduced by $695,000. The remaining gain will be amortized over the remaining period of the supply agreement. Concurrently with the closing of the Asset Purchase Agreement, Trimble and Solectron also entered into a Supply Agreement. The Supply Agreement provides for the exclusive manufacture by Solectron of almost all Trimble products for a period of three years. Solectron will initially manufacture such Trimble products under the Supply Agreement in the same Trimble buildings in which such products were previously manufactured by Trimble, and Trimble has sublet such space to Solectron as part of this transaction. Solectron offered employment to approximately 230 Trimble manufacturing, engineering and related support personnel, and Trimble understands that substantially all such employees accepted such employment with Solectron. 47 Note 5 - The Company, industry segment, geographic, and customer information: Effective January 1, 1999, Trimble adopted Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Statement requires Trimble to report segment financial information consistent with the presentation made to the Company's management for decision-making purposes. Trimble operates in a single industry segment as a leader in designing and developing innovative products enabled by GPS technology. We provide end-user and Original Equipment Manufacture solutions for diverse applications in our target markets. These applications include: o Architecture/Engineering/Construction - surveying, mapping, machine guidance/control: 34 o Asset Management and Tracking - fixed asset mapping and fleet management using mobile positioning: o Agriculture - mapping, yield monitoring, variable rate applications, and machine guidance/control, and o GPS Component Technologies - automotive navigation, timing systems, commercial avionics, and military systems. We design, market, and distribute electronic products that determine precise geographic location combined with data communications and applications software. We sell our products through a direct-sales force located in fifteen countries, as well as through a worldwide network of dealers, distributors and authorized representatives. Research and development activities are conducted at Trimble's facilities in Sunnyvale, California, and Christchurch, New Zealand. Solectron currently manufactures most of Trimble's products. In addition we have a manufacturing facility in Austin, Texas primarily focused on FAA certified products for commercial aviation and military systems. To achieve distribution, marketing, production, and technology advantages for our targeted markets we manage our industry segment within two Business Units: the Precision Positioning Group (PPG) and the Mobile and Timing Technologies (MTT) Group. Each Business Unit is managed by a group senior vice president who is responsible for strategy, marketing, product development and financial performance. The Precision Positioning Group derives its revenue from precision positioning solutions for the architecture, engineering, construction, asset management, and agriculture markets. These markets require sub-centimeter to meter 3D positioning accuracy for surveying, mapping, and machine guidance/control applications. The Mobile and Timing Technologies Group derives its revenues from automotive, timing, fleet management, commercial aviation, military systems and from development of software licenses and other rights for the use of our GPS technology to third parties. Trimble evaluates these Business Units' performance and allocates resources based on profit and loss from operations before income taxes. The accounting policies applied by each of the markets are the same as those used by Trimble in general. The table on the following page presents revenues, operating income (loss), and identifiable assets by Trimble's Business Units. There is no recognition of inter-Business Unit sales or transfers. Operating income (loss) is net sales less operating expenses, excluding general corporate expenses, interest income (expense), and income taxes. The identifiable assets that Trimble's Chief Operating Decision Maker (CODM) views by industry market are accounts receivable and inventory. Trimble does not report depreciation and amortization or capital expenditures by industry markets to the CODM. 35
------------------------------------------------- December 31, 1999 ------------------------------------------------- PPG MTT Total ------------------------------------------------- External net revenue $ 161,294 $ 110,070 $ 271,364 Operating profit/(loss) before corporate allocations 52,900 13,864 66,764 Corporate allocations (1) (23,853) (11,209) (35,062) ------------------------------------------------- Operating profit from continuing operations $ 29,047 $ 2,655 $ 31,702 Assets: Accounts receivable (2) $ 29,205 $ 20,204 $ 49,409 Inventory $ 6,720 $ 9,715 $ 16,435 ------------------------------------------------- January 1 ,1999 ------------------------------------------------- PPG MTT Total ------------------------------------------------- External net revenue $ 165,951 $ 102,372 $ 268,323 Operating profit/(loss) before corporate allocations 23,905 1,137 25,042 Corporate allocations (1) (15,093) (7,751) (22,844) ------------------------------------------------- Operating profit/(loss) from continuing operations $ 8,812 $ (6,614) $ 2,198 Assets: Accounts receivable (2) $ 32,197 $ 14,837 $ 47,034 Inventory $ 10,042 $ 16,251 $ 26,293 ------------------------------------------------- January 2, 1998 ------------------------------------------------- PPG MTT Total ------------------------------------------------- External net revenue $ 142,449 $ 123,993 $ 266,442 Operating profit/(loss) before corporate allocations 11,644 18,608 30,252 Corporate allocations (1) (10,872) (6,869) (17,741) ------------------------------------------------- Operating profit from continuing operations $ 772 $ 11,739 $ 12,511 Assets: Accounts receivable (2) $ 31,301 $ 28,215 $ 59,516 Inventory $ 13,782 $ 17,499 $ 31,281 - ------------------------------------------------------------------------- (1) For the fiscal year ended December 31, 1999, the Company determined the amount of corporate allocations charged to each of its Business Units based on a percentage of the Business Units' monthly revenue, gross profit, and controllable spending (research and development, marketing, and general and administrative). For the fiscal years ended January 1, 1999 and January 2, 1998, the Company determined the amount of the corporate allocations charged to its Business Units, based on a percentage of the Business Units' monthly inventory balance and gross profit. Allocation percentages were determined at the beginning of each of the respective fiscal years. (2) As presented, the accounts receivable number excludes cash in advance and reserves, which are not allocated between Business Unit segments.
36 Following are reconciliations corresponding to totals in the accompanying consolidated financial statements (in thousands):
Fiscal Years ended --------------------------------------------------------------- December 31, January 1, January 2, Revenues: 1999 1999 1998 - --------------------------------------------------------------------------------------- ------------------ ---------------- Total for reportable markets $ 271,364 $ 268,323 $ 266,442 ==================== ================== ================ Operating income/(loss) from continuing operations: - ------------------------------------------------------------------ Total for reportable markets $ 31,702 $ 2,198 $ 12,511 Unallocated Corporate expenses (11,241) (26,112)(1) 6,193 (2) -------------------- ------------------ ---------------- Income/(loss) before income taxes from continuing operations $ 20,461 $ (23,914) $ 18,704 ==================== ================== ================ Assets: - ------------------------------------------------------------------ Accounts receivable total for reportable markets $ 49,409 $ 47,034 $ 59,516 Unallocated (3) (13,404) (13,603) (10,415) -------------------- ------------------ ---------------- Total $ 36,005 $ 33,431 $ 49,101 ==================== ================== ================ Inventory total for reportable markets $ 16,435 $ 26,293 $ 31,281 Common inventory (4) - 10,873 11,104 -------------------- ------------------ ---------------- Net inventory $ 16,435 $ 37,166 $ 42,385 ==================== ================== ================ - ------------------------------------------------------------------------------------------ (1) Includes approximately $10.3 million of restructuring charges. (2) For the fiscal years ended January 1, 1999 and January 2, 1998, the Company determined the amount of the corporate allocations charged to its Business Units based on a percentage of the Business Units' monthly inventory balance and gross profit which percentage was determined at the beginning of the respective fiscal year. However, due to the lower than expected actual level of corporate expenses and higher than expected inventory balances in the fiscal year ended January 2, 1998, the Company overallocated corporate expenses to the Business Units. This results in a negative unallocated corporate expense amount as shown in the reconciliation of operating profit (loss) from continuing operations for the reportable segments to the amounts reported in the Company's statement of operations. (3) Includes cash in advance and reserves that are not allocated by segment. (4) Consists of inventory that is common between the Business Unit segments. Parts can be used by either segment.
37 The geographic distribution of Trimble's revenues and identifiable assets by fiscal year-end are summarized in the table below in thousands.
Geographic Area ------------------------------------------------------------------------- Europe/ Other U.S. Middle East Asia Foreign Countries Eliminations Total ------------------------------------------------------------------------------------- 1999 Sales to unaffiliated customers (1) $ 131,395 $ 68,301 $ 37,707 $ 33,961 $ - $ 271,364 Intergeographic transfers 56,024 - 1,480 - (57,504) - ------------------------------------------------------------------------------------- Total revenue $ 187,419 $ 68,301 $ 39,187 $ 33,961 $ (57,504) $ 271,364 ------------------------------------------------------------------------------------- Identifiable assets $ 155,163 $ 16,119 $ 10,550 $ 92 $ (173) $ 181,751 1998 Sales to unaffiliated customers (1) $ 143,828 $ 66,446 $ 34,712 $ 23,337 $ - $ 268,323 Intergeographic transfers 79,416 - 1,153 - (80,569) - ------------------------------------------------------------------------------------- Total revenue $ 223,244 $ 66,446 $ 35,865 $ 23,337 $ (80,569) $ 268,323 ------------------------------------------------------------------------------------- Identifiable assets $ 134,170 $ 13,384 $ 9,460 $ 28 $ (763) $ 156,279 1997 Sales to unaffiliated customers (1) $ 144,817 $ 59,071 $ 39,810 $ 22,744 $ - $ 266,442 Intergeographic transfers 29,481 2,482 1,198 - (33,161) - ------------------------------------------------------------------------------------- Total revenue $ 174,298 $ 61,553 $ 41,008 $ 22,744 $ (33,161) $ 266,442 ------------------------------------------------------------------------------------- Identifiable assets $ 185,809 $ 11,897 $ 10,584 $ 39 $ (666) $ 207,663
- ------------------------------------------------------------------ (1) Sales attributed to countries based on the location of the customer. Transfers between U.S. and foreign geographic areas are made at prices based on total costs and contributions of the supplying geographic area. The Company's subsidiaries in the Pacific Rim and Asia have derived revenue from commissions from domestic operations in each of the periods presented. These commission revenues and expenses are excluded from total revenue and operating income (loss) in the preceding table. Sales to unaffiliated customers in Japan are made by the Company's Japanese subsidiary. No single customer accounted for 10% or more of Trimble's total revenues in fiscal 1999, 1998 or 1997. Note 67 - Discontinued operations: On October 2, 1998, Trimble adopted a plan to discontinue its General Aviation division. Accordingly, the General Aviation division is being reported as a discontinued operation for all periods presented in these financial statements. Net assets of the discontinued operation at October 2, 1998 were written off and consisted primarily of inventory, property, plant and equipment and intangible assets. The original estimated loss on the disposal of the discontinued operation in fiscal 1998 was $19.9 million, but was adjusted in March 1999 for certain product lines that were retained (see further discussion below).subsequently retained. The adjusted estimated loss on the disposal is $20.3 million. The original fiscal 1998 estimate included a write-off of net assets of $12.7 million and a provision of $7.2 million for costs of disposal, including severance costs, facility and certain other contractual costs, and anticipated operating losses through the estimated date of disposal. The adjusted fiscal 1999 estimate included the write-off of net assets of $12.7 million and a provision of $7.6 million for costs of disposal, including severance costs, facility and certain other contractual costs, and anticipated operating losses through the estimated date of disposal. 38 The net assets, which were written off in 1998, are summarized as follows: January 1, 1999 - ------------------------------------------------------------------- (in thousands) Inventory $ 7,283 Other current assets 451 Plant and equipment, net 3,241 Other noncurrent assets 1,754 Less write-offs (12,729) ------------------ Net assets of discontinued operations $ - ================== As of December 31, 1999, in connection withDuring the discontinued operations, Trimble had incurred cumulative net expenses of approximately $6.1 million, consisting of $6.6 million for operating losses for the discontinued operation through the estimated date of disposal, including severance costs and net of receipts of $543,000 related to the sale of particular inventory items and fixed assets. In the thirdfourth fiscal quarter of 1999, Trimblethe Company had revised its accrual for the remaining costs now expected to be incurred based on currentthe status of the related liabilities.liabilities associated with the disposal of the discontinued General Aviation division. This resulted in a reversal of approximately $2.9 million of prior amounts accrued related to the discontinued operations. As of December 29, 2000, Trimble has a remaining provision of $2.2 million,$870,000 associated with the disposal of the General Aviation Division, which includes $1.1 million$300,000 for the estimated remaining operating losses for service and warranty support includingand remaining severance costs, and $1.1 million$570,000 for facility and certain other contractual costs. On March 31, 1999,Note 8 - The Company, industry segment, geographic, and customer information: Trimble madeis a leading worldwide designer and distributor of innovative positioning products and applications enabled by GPS, optical, laser, and wireless communications technology. We design and market products, which deliver integrated information solutions, such as, collecting, analyzing, and displaying position data to our end-users. We offer an integrated product line for diverse applications in our targeted markets. Effective in the decisionthird quarter of fiscal year 2000, management changed the number of its reportable segments from two to retain certain product lines included withinfive segments. The five segments are now the General Aviation division which were partfollowing: (i) Engineering and Construction, (ii) Agriculture, (iii) Fleet and Asset management, (iv) Component Technologies, and (v) Portfolio Technologies. This change resulted primarily from a reorganization of overall management responsibility announced in August 2000 in connection with the completion of the previously planned discontinuedpurchase of the Spectra Precision Group. (See Note 2 of Notes to the Consolidated Financial Statements.) To achieve distribution, marketing, production, and technology advantages in our targeted markets, we manage ourselves within five segments: o Engineering and Construction - Consists of products currently used by construction professionals in the field for positioning data collection, field computing, data management, and automated machine guidance and control. These products provide solutions for numerous construction applications, including: surveying; general construction; site preparation and excavation; road and runway construction; and underground construction. o Agriculture - Consists of products that provide key advantages in a variety of agriculture applications, primarily in the areas of precise land leveling, machine guidance, yield monitoring and variable- rate applications of fertilizers and chemicals. o Fleet and Asset Management - Consists of products that enable end-users to efficiently monitor and manage their mobile and fixed assets by transmitting location-relevant and time-sensitive information from the field to the office. We currently offer a range of products that address the following: long-haul trucking; municipal fleet management; shipping; and fixed asset data collection for a wide variety of governmental and private entities. This segment is an aggregation of our Mapping and GIS operation and our Mobile Positioning and Communications operation. These operations have been aggregated based on the fact that the products mentioned above are complimentary in our asset management solutions and there is a strong similarity in the production process, the types of customers, and distribution methods. 48 o Component Technologies - Currently, we market our component products through an extensive network of OEM relationships. These products include proprietary chipsets, modules and a variety of intellectual property. The applications into which end-users currently incorporate our component products include: timing applications for synchronizing wireless and computer systems; in-vehicle navigation and telematics (tracking) systems; fleet management; security systems; data collection systems; and wireless handheld consumer products. o Portfolio Technologies - This segment is comprised of various markets that use accurate position, velocity, and timing information. The products in this segment are used in airborne navigation, flight management, commercial marine navigation, and military applications. Also, included in this segment are the operations of our Tripod Data Systems subsidiary. The various operations that comprise this segment were aggregated on the basis that no single operation accounted for more than 10% of the total revenue of the Company. Trimble evaluates each of these segment's performance and allocates resources based on profit and loss from operations before income taxes. The accounting policies applied by each of the segments are the same as those used by Trimble in general. The following table presents revenues, operating income (loss), and identifiable assets for Trimble's five segments. The information includes the operations of the Spectra Precision Group after July 14, 2000, Tripod Data Systems after November 14, 2000, and the information for 1999 and 1998 has been reclassified in order to conform to the new basis of presentation. There is no recognition of inter-segment sales or transfers. Operating income (loss) is net sales less operating expenses, excluding general corporate expenses, interest income (expense), and income taxes. The identifiable assets that Trimble's Chief Operating Decision Maker (CODM) views by segment are accounts receivable and inventory, except for the decision was that these products use common raw materialsaccounts receivable and laborinventory for Spectra Precision Group and Tripod Data Systems which are necessarynot currently allocated to business segments. Trimble does not report depreciation and amortization or capital expenditures by segment to the CODM. 49
------------------------------------------------------------------------------- Twelve Months Ended December 29, 2000 ------------------------------------------------------------------------------- (in thousands) ------------------------------------------------------------------------------- Fleet and Engineering & Asset Component Portfolio Construction Agriculture Management Technologies Technologies Total ------------------------------------------------------------------------------- External net revenue $ 195,150 $ 26,024 $ 65,099 $ 60,230 $ 23,295 $ 369,798 Operating profit (loss) before corporate allocations 43,937 4,254 15,211 14,850 (1,540) 76,712 Corporate allocations (1) (15,120) (2,724) (8,232) (4,788) (2,687) (33,551) ------------------------------------------------------------------------------ Operating profit (loss) $ 28,817 $ 1,530 $ 6,979 $ 10,062 $ (4,227) $ 43,161 Assets: Accounts recievable (2) $ 23,685 $ 4,649 $ 12,164 $ 11,892 $ 6,469 $ 58,859 Inventory (3) 10,046 1,774 5,775 2,360 6,774 26,729 ------------------------------------------------------------------------------- Twelve Months Ended December 31, 1999 ------------------------------------------------------------------------------- (in thousands) ------------------------------------------------------------------------------- Fleet and Engineering & Asset Component Portfolio Construction Agriculture Management Technologies Technologies Total ------------------------------------------------------------------------------- External net revenue $ 108,536 $ 12,837 $ 67,271 $ 58,660 $ 24,060 $ 271,364 Operating profit (loss) before corporate allocations 37,223 2,407 14,677 15,055 (2,598) 66,764 Corporate allocations (1) (16,067) (2,204) (8,108) (5,261) (3,422) (35,062) ------------------------------------------------------------------------------ Operating profit (loss) $ 21,156 $ 203 $ 6,569 $ 9,794 $ (6,020) $ 31,702 Assets: Accounts recievable (4) $ 22,304 $ 1,510 $ 11,009 $ 9,273 $ 5,313 $ 49,409 Inventory $ 6,653 $ 2 $ 2,180 $ 2,392 $ 5,208 16,435 ------------------------------------------------------------------------------- Twelve Months Ended January 1, 1999 ------------------------------------------------------------------------------- (in thousands) ------------------------------------------------------------------------------- Fleet and Engineering & Asset Component Portfolio Construction Agriculture Management Technologies Technologies Total ------------------------------------------------------------------------------- External net revenue $ 123,491 $ - $ 64,515 $ 36,296 $ 44,021 $ 268,323 Operating profit (loss) before corporate allocations 13,708 - 6,305 5,367 (5,920) 19,460 Corporate allocations (1) (11,437) - (4,982) (3,068) 88 (19,399) ------------------------------------------------------------------------------- Operating profit (loss) $ 2,271 $ - $ 1,323 $ 2,299 $ (5,832) $ 61 Assets: Accounts recievable (4) $ 20,957 $ - $ 10,790 $ 7,936 $ 7,392 $ 47,075 Inventory 8,396 - 5,820 4,379 7,729 26,324 - ------------------------------------------------------------------------------------------------------------------------------------ (1) For the fiscal years ended December 29, 2000 and December 31, 1999, the Company determined the amount of corporate allocations charged to each of its segments based on a percentage of the segments' monthly revenue, gross profit, and controllable spending (research and development, marketing, and general and adminstrative). For the Fiscal year ended January 1, 1999 the Company determined the amount of corporate allocations charged to each of its segments, based on a percentage of the segments monthly inventory balance and gross profit. Allocation percentages were determined at the beginning of each of the respective fiscal years. (2) As presented, the accounts receivable number excludes cash in advance and reserves, and the Spectra Precision Group's and Tripod Data System's accounts recievable as of December 29, 2000, which are not allocated between segments. (3) As presented, the inventory number excludes the Spectra Precision Group's and Tripod Data System's inventory as of December 29, 2000, which is not allocated between segments. (4) As presented, the accounts receivable number excludes cash in advance and reserves, which are not allocated between segments. (5) The company determined that it is impracticable to obtain all of the applicable information for the twelve months ended January 1, 1999 to report its Agriculture operating segment for that period in accordance with the new internal reporting structure. The Company does not believe the amounts are significant for fiscal 1998 and have included them in the Engineering and Construction division.
50 The following are reconciliations corresponding to totals in the accompanying consolidated financial statements (in thousands):
Fiscal Years Ended -------------------------------------------------------------- December 29, December 31, January 1, Revenues: 2000 1999 1999 - ------------------------------------------------- ------------------ ------------------- ------------------ Total for reportable divisions $ 369,798 $ 271,364 $ 268,323 ================= =================== ================== Operating profit: - -------------------------------------------------- Total for reportable divisions $ 43,161 $ 31,702 $ 61 Unallocated corporate expenses (16,942) (11,241) (23,975)(3) ----------------- ------------------- ------------------ Income before income taxes $ 26,219 $ 20,461 $ (23,914) ================= =================== ================== Assets: - -------------------------------------------------- Accounts receivable total for reportable divisions $ 58,859 $ 49,409 $ 47,075 Unallocated (1) 24,741 (13,404) (13,644) ----------------- ------------------- ------------------ Total $ 83,600 $ 36,005 $ 33,431 ================= =================== ================== Inventory total for reportable divisions $ 26,729 $ 16,435 $ 26,324 Common inventory (2) 34,117 - 10,842 ----------------- ------------------- ------------------ Net inventory $ 60,846 $ 16,435 $ 37,166 ================= =================== ================== - -------------------------------------------------------------------------------- (1) Includes cash in advance and reserves that are not allocated by segment. Also for December 29, 2000 accounts receivable includes the Spectra Precison Group and Tripod Data System as their accounts receivable are not allocated by segment. (2) Consists of inventory that is common between the segments. Parts can be used by either segment. Also for December 29, 2000 inventory consists of $29.1 million and $1.3 million of Spectra Precision Group and Tripod Data Systems, respectively as their inventory is not allocated by segment. (3) Includes approximately $10.3 million of restructuring charges.
The geographic distribution of Trimble's Air Transport products and, therefore, these particular product lines could be retained without adding additional overhead from the overhead currently required for the Air Transport products. The revenues and costs related to the products retained have been includedidentifiable assets by fiscal year-end is summarized in the resultstable below in thousands.
Geographic Area --------------------------------------------------------- Europe/ Other U.S. Middle East Asia Foreign Countries Eliminations Total --------------------------------------------------------------------------------------- 2000 Sales to unaffiliated customers (1) $ 175,993 $103,455 $ 43,922 $ 46,428 $ 369,798 Intergeographic transfers 65,117 12,108 8,320 (85,545) - -------------------------------------------------------------------------------------- Total revenue $ 241,110 $115,563 $ 52,242 $ 46,428 $(85,545) $ 369,798 -------------------------------------------------------------------------------------- Identifiable assets $ 146,821 $ 84,358 $ 12,016 $ 4,588 $(6,274) $ 241,509 1999 Sales to unaffiliated customers (1) $ 131,395 $ 68,301 $ 37,707 $ 33,961 $ - $ 271,364 Intergeographic transfers 56,024 - 1,480 - (57,504) - -------------------------------------------------------------------------------------- Total revenue $ 187,419 $ 68,301 $ 39,187 $ 33,961 $(57,504) $ 271,364 -------------------------------------------------------------------------------------- Identifiable assets $ 155,163 $ 16,119 $ 10,550 $ 92 $ (173) $ 181,751 1998 Sales to unaffiliated customers (1) $ 143,828 $ 66,446 $ 34,712 $ 23,337 $ - $ 268,323 Intergeographic transfers 79,416 - 1,153 - (80,569) - -------------------------------------------------------------------------------------- Total revenue $ 223,244 $ 66,446 $ 35,865 $ 23,337 $(80,569) $ 268,323 -------------------------------------------------------------------------------------- Identifiable assets $ 134,170 $ 13,384 $ 9,460 $ 28 $ (763) $ 156,279 - ------------------------------------------------------------------------------------------------------ (1) Sales attributed to countries based on the location of the customer.
51 Transfers between U.S. and foreign geographic areas are made at prices based on total costs and contributions of operations of continuingthe supplying geographic area. The Company's subsidiaries in the Pacific Rim and Asia have derived revenue from commissions from domestic operations in each of the periods presented. The netThese commission revenues of the discontinued operation -- revenues that have been restated to exclude the retained product lines --and expenses are not included in net revenues of continuing operationsexcluded from total revenue and operating income (loss) in the accompanying statementspreceding table. Sales to unaffiliated customers in Europe, Japan, Australia, and Mexico are made by the Company's subsidiaries in those countries. No single customer accounted for 10% or more of operations. The operating results for theTrimble's total revenues in fiscal years ended January 1,2000, 1999, and January 2, 1998, of the discontinued operation are summarized as follows: January 1, January 2, 1999 1998 - ----------------------------------------------------------------------------- (in thousands) Net revenues $ 6,807 $ 5,866 Income (loss) before tax provision (5,760) (8,277) Income tax provision (benefit) - (176) ------------------ ----------------- Net loss $ (5,760) $ (8,101) ================== ================= Basic net loss per share $ (0.26) $ (0.36) Diluted net income loss per share $ (0.26) $ (0.35)or 1998. Note 7 - Bank line of credit: In August 1997, Trimble entered into a three-year, $50,000,000 unsecured revolving credit facility with four banks (the "Credit Agreement"). The Credit Agreement enables Trimble to borrow up to $50,000,000, provided that certain financial and other covenants are met. As of October 20, 1999, the Company, the Agent and the Lenders agreed to change and amend certain covenants for the remaining life of the loan, which expires in August of 2000. The $50,000,000 revolving credit facility was modified to include the Company's prior separate $5,000,000 line of credit and to simplify the entire arrangement. The Credit Agreement provides for payment of a commitment fee of 0.25% and borrowings to bear interest at 1% over LIBOR if the total funded debt to EBITDA is less than or equal to 1.00 times, 0.3% and borrowings to bear interest at 1.25% over LIBOR if the ratio is greater than 1.00 times and less than or equal to 2.00 times, or 0.4% and borrowings to bear interest at 1.75% over LIBOR if the ratio is greater than 2.00 times. In addition to borrowing at the specified LIBOR rate, Trimble has the right to borrow with interest at the 39 higher of (i) one of the bank's annual prime rate and (ii) the federal funds rate plus 0.5%. To date, Trimble has made no borrowings under the $50,000,000 unsecured revolving credit facility, but has issued certain letters of credit as of December 31, 1999 amounting to approximately $283,000. In addition, Trimble is restricted from paying dividends under the terms of the Credit Agreement. Note 89 - Restructuring charges:reserves: 1998 Restructuring Charges: In fiscal 1998, Trimble recorded restructuring charges totaling $10.3 million in operating expenses. These charges were a result of Trimble's reorganization activities, through which the Company has downsized its operations, including reducing headcount and facilities space usage, and has canceled its enterprise-wide information system project and certain research and development projects. The impact of these decisions was that significant amounts of Trimble's fixed assets, prepaid expenses, and purchased technology havehad been impaired and certain liabilities incurred. Trimble wrote down the related assets to their net realizable values and made provisions for the estimated liabilities. The activity in fiscal 2000, 1999 and 1998 related to the restructuring charges and the amounts remaining at December 31, 1999,29, 2000 on the balance sheet are as follows (in thousands):
Total charged to Amounts paid/ Amounts paid/ Amounts paid/ Remaining in expense in written off written off written off accrued liabilites fiscal 1998 in fiscal 1998 in fiscal 1999 in fiscal 2000 as of December 31, 199929, 2000 --------------- -------------- --------------- -------------- ------------------------ ----------------------- -------------------------- Employee termination benefits $ 2,864 $ (1,200) $ (371) $ 1,293(1,293) $ - Facility space reductions 1,061 - $ (1,053) 8$ (8) - ERP system abandonment 6,360 (4,895) $ (1,465) $ - ------------ --------------------------- ----------------------- --------------------------$ - --------------- -------------- --------------- -------------- ------------------------ Subtotal $ 10,285 $ (6,095) $ (2,889) $ 1,301 ============ ============================ ======================= ==========================(1,301) $ - =============== ============== =============== ============== ========================
Also see Note 2 to the Consolidated Financial Statements for the restructuring reserve recorded as part of the acquisition of the Spectra Precision Group. Note 10 - Bank line of credit: In July 2000, ABN AMRO Bank, N.V. led a syndicate of banks which underwrote $200 million of new senior, secured credit facilities for the Company (the "New Credit Facilities") to support the acquisition of the Spectra Precision Group and the Company's ongoing working capital requirements and to refinance certain existing debt. The New Credit Facilities are comprised of a $50 million 3-year U.S. dollar only revolver; a $50 million 3-year multi-currency revolver; and a $100 million 5-year term loan. Pricing for any borrowings under the New Credit Facilities is fixed for the first 6 months at LIBOR plus 275 basis points and is thereafter tied to a formula, based on the Company's leverage ratio (which is defined as all outstanding debt (excluding the seller subordinated note) over EBITDA). Trimble immediately used approximately $170 million available under the New Credit Facilities to fund the acquisition of the Spectra Precision Group. $30 million was used to pay off the principal portion of Company's existing subordinated notes to John Hancock (as described in Note 2 to the Consolidated Financial Statements under "Acquisition Financing") and $140 million was paid in cash expenditures associatedto the seller. The New Credit Facilities are secured by all material tangible and intangible assets of the Company, subject to foreign tax considerations. If Trimble is able to achieve and maintain a leverage ratio (Debt/EBITDA) of 2.0x or less for four consecutive quarters, the security for the New Credit Facilities will be released. Financial covenants of the New Credit Facilities include leverage, fixed charge, and minimum net worth tests. The Company was in compliance with these covenants at December 29, 2000. The two $50 million revolvers are paid as the loans mature and the loan commitment fees are paid on a quarterly basis. The 5-year term loan is payable commencing March 31, 2001 in quarterly installments (excluding interest) of $4 million over the first year, $5 million over the second year, $6 million over the next year and a half and $7 million for the remaining obligations are expectedquarters until the debt is paid off. In addition, Trimble is restricted from paying dividends and is limited as to occur primarilythe amount of its common stock it can repurchase under the terms of the New Credit Facilities. 52 The Company is allowed to repurchase shares of its common stock only up to 25% of net income in the previous fiscal 2000.year. Note 911 - Long-term debt and other noncurrent liabilities:debt: Long-term debt consists of the following: December 31, January 1, 1999 1999 - ------------------------------------------------------------------------- (In thousands) Subordinated notes $ 29,819 $29,703 Installment loan obligations 1,388 2,776 Other 747 549 -----------------
December 29, December 31, 2000 1999 - -------------------------------------------------------------------------------------------------- (In thousands) New Credit Facilities $ 162,000 $ - Subordinated note 80,000 - Subordinated notes repaid in 2000 (See Note 2) - 29,819 Promissory note and Long-term commitment 9,037 - Installment loan obligations - 1,388 Other 25 747 ------------------ ---------------- 251,062 31,954 33,028 Less current portion 113,721 1,388 ------------------ ---------------- Noncurrent portion $ 137,341 $ 30,566 ================== ================
Trimble's long-term debt primarily consists of $162 million outstanding under the New Credit Facilities (See Note 10 to the Consolidated Financial Statements), and an $80 million subordinated promissory note (see below). The Company's current portion 1,388 1,388 ----------------- ---------------- Noncurrentof long-term debt consists of amounts payable within one year on the term loan portion $ 30,566 $31,640 ================= ================ In June 1994, Trimble issued $30.0of the New Credit Facilities, the revolver portion of the New Credit Facilities and $40 million of the subordinated note. The $80 million subordinated note to the seller carries a 10% coupon, payable in cash or additional seller paper at the Company's option. The subordinated seller note has a stated two year maturity ($40 million due in fiscal 2001 and $40 million due in fiscal 2002), but carries an automatic maturity deferral provision which effectively extends the maturity date to that date on which Trimble is allowed to repay the note without triggering a default under the New Credit Facilities. The New Credit Facilities allow Trimble to repay the seller note at any time (in part or in whole), provided that (a) Trimble's leverage ratio (Debt (excluding the seller note)/EBITDA) prior to such repayment is less than 1.0x and (b) after giving effect to such repayment Trimble would have (i) a leverage ratio (Debt (excluding any remaining portion of the seller note)/EBITDA) of less than 2.0x and (ii) cash and unused availability under the revolvers of the New Credit Facilities of at least $35 million. Although the subordinated seller note will carry certain limited covenants and defaults, the seller will be barred in the event of default from pursuing such rights and remedies for the stated maturity of the New Credit Facilities (i.e., a five-year standstill). The New Credit Facilities also prohibit cash payments of interest or principal on the subordinated seller note during a period of default. The promissory notes bearing interest at an annual ratenote and long-term commitment includes a $7.1 million obligation to former owners of 10%, with principal due on June 15, 2001. Interest payments are due monthlyZSP Geodetic Systems GmbH, a subsidiary of the Company which was purchased by the Spectra Precision Group in arrears. The notes are subordinated1999 (prior to the Company's senior debt, which is defined as all preexisting indebtedness for borrowed money and certain future indebtedness for borrowed money (including, subject to certain restrictions, secured bank borrowings and borrowed money for the acquisition of property and capital equipment) and trade debt incurred in the ordinary course of business. If Trimble prepays any portionpurchase of the principal, itSpectra Precision Group). Of this obligation, $3.7 million is required to pay additional amounts if U.S. Treasury obligationspayable equally on a quarterly basis through the end of September 2001, and bears interest at 6.0%. The remaining $3.4 million of the obligation has a stated maturity of September 2002. Outstanding promissory note and long-term commitment also include a $1.9 million promissory note from the purchase of a similar maturity exceedbuilding for our Corvallis, Oregon site. The note is payable in monthly installments through April 2015 bearing a specified yield. Under the agreement, Trimble is restricted from paying dividends. The issuance of the subordinated promissory notes also included the issuance of warrants entitling holders to purchase 400,000 shares of common stock at a price of $10.95 per share at any time through June 15, 2001. The net proceeds of the notes were $29.3 million. The notes are recorded as noncurrent liabilities, net of appraised fair value attributed to the warrants. The value of the warrants and the issuance costs are being amortized to interest expense, using thevariable interest rate method over the term of the subordinated promissory notes.(8.94% at December 29, 2000). The effective annual interest rate on the notes is 11.5%. Under the terms of the note, Trimble is required$1.4 million installment loan at December 31, 1999 related to meet a minimum 40 consolidated net worth requirement. If Trimble falls below the minimum consolidated net worth requirement we could be in default of our loan covenants. Such events could have a material adverse effect on Trimble's operations and liquidity. Other long-term debt represents deferred rent obligations, rental inducements on certain of Trimble's leased facilities, and installment loans for a fixed asset purchase. There are three installment loans for capitalized software whichand was repaid in total have two annual payments of $1.4 million. The first installment loan consists of two payments of $129,500. The first payment was made on May 30, 1999, and the second payment is due on May 30, 2000. The second installment loan consists of two payments of $942,800. The first payment was made on May 30, 1999, and the second payment is due on May 30, 2000. The third installment loan consists of two payments of $315,900. The first payment was made on May 1, 1999, and the second payment is due on May 1, 2000. The lease agreements provide for scheduled increases in lease payments over the terms of the leases.53 Note 1012 - Lease obligations and commitments: Trimble's principal facilities in the United States are leased under noncancelable operating leases that expire at various dates from 2000 through 2004.2011. Trimble has options to renew certain of these leases for an additional five years. The Company'sCompany also leases facilities under operating leases in the United Kingdom, subsidiary leases a facility under an operating leaseSweden and Germany that expiresexpire in 2005. Future minimum payments required under noncancelable operating leases are as follows: Operating Lease Payments - ---------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) 20002001 $ 8,889 2001 9,72413,793 2002 9,47212,327 2003 9,10410,700 2004 4,8315,777 2005 5,241 Thereafter 5,4502,627 --------------------------- Total $ 47,47050,466 =========================== Rent expense under operating leases was $10.6 million in 2000, $8.1 million in fiscal 1999, and $6.3 million in 1998, and $5.5 million in 1997.1998. Note 1113 - Fair value of financial instruments: Statement of Financial Accounting Standard No. 107, "Disclosures about Fair Value of Financial Instruments" requires disclosure of the following information about the fair value of certain financial instruments for which it is currently practicable to estimate such value. None of the Company's financial instruments are held or issued for trading purposes. The carrying amounts and fair values of Trimble's financial instruments are as follows:
Carrying Fair Amount Value --------------------------------- ----------------- December 31, 199929, 2000 - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Assets: Cash and cash equivalents (See Note 1) $ 49,26440,876 $ 49,264 Short-term investments (See Note 1 & 2) $ 52,728 $ 52,72840,876 Forward foreign exchange contracts (See Note 1) $ 58 $ 5850 50 Accounts Receivable 90,138 90,138 Liabilities: Subordinated notes (See Note 9)11) $ 29,81980,000 $ 29,19489,044 Bank Borrowing (See Note 11) 162,000 162,000 Promissory note and Long-term commitment 9,037 7,876 Accounts Payable 26,448 26,448
The fair value of the subordinated notes, hasbank borrowings, promissory note and the long-term commitment have been estimated using an estimate of the interest rate Trimble 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. 41 The fair value of forward foreign exchange contracts is estimated, based on quoted market prices of comparable contracts, and these contracts are restated to the fair value at the end of every month. 54 Note 1214 - Income taxes: Trimble's income tax provision consists of the following (in thousands): Fiscal Years Ended -------------------------------------------------------ended --------------------------------------------------------- --------------------------------------------------------- December 29, December 31, January 1, January, 22000 1999 1999 1998 Federal: Current $ 1,408 $ 1,089 $ 233 $ 1,344 Deferred - - - ---------------------------------------------------------------------------------------------------------------- 1,408 1,089 233 1,344 ---------------------------------------------------------------------------------------------------------------- State: Current 144 196 20 10 Deferred - - - ---------------------------------------------------------------------------------------------------------------- 144 196 20 10 ---------------------------------------------------------------------------------------------------------------- Foreign: Current 931 770 1,195 1,116 Deferred (908) 18 (48) 26 ---------------------------------------------------------------------------------------------------------------- 23 788 1,147 1,142 ---------------------------------------------------------------------------------------------------------------- Income tax provision $ 1,575 $ 2,073 $ 1,400 $ 2,496 -------------------------------------------------------========================================================= The domestic income (loss) from continuing operations before income taxes (including royalty income subject to foreign withholding taxes) was approximately $19.7 million,$14,380,000, $19,700,000, and ($26.2 million), and $18.8 million26,220,000) in fiscal years 2000, 1999 1998 and 1997, respectively. 42 1998. The income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The sources and tax effects of the differences are as follows (in thousands):
Fiscal Years ended ------------------------------------------------------------------------------------------------------------- December 29, December 31, January 1, January, 22000 1999 1999 1998 Expected tax from continuing operations at 35% in all years $ 5,516 $ 7,258 $(8,827) $ 7,356 Tax account valuation adjustments - - (4,100) Operating loss not utilized (utilized) (5,115) (6,176) 9,178 (1,410) Foreign withholding taxes 141 299 467 403 Foreign tax rate differential 307 109 329 (28) Other 726 583 253 275 --------------------------------------------------------------------------------------------------------------- Income tax provision $ 1,575 $ 2,073 $ 1,400 $ 2,496 -----------------------------------------------------========================================================== Effective tax rate 10% 10% (6%) 12% ===============================================================================================================
55 The components of deferred taxes consist of the following (in thousands): December, 31 January, 1 1999 1999 Deferred tax liabilities: Other individually immaterial items $ 246 $ 178 ------------------------ Total deferred tax liabilities 246 178 ------------------------ Deferred tax assets: Inventory valuation differences 9,437 10,423 Expenses not currently deductible 7,461 9,907 Federal credit carryforwards 6,108 7,252 Deferred revenue 3,243 968 State credit carryforwards 3,786 3,138 Warranty 2,352 2,090 Depreciation 1,770 3,689 Federal net operating loss (NOL) carryforward - 3,023 Other individually immaterial items 1,763 1,692 ------------------------ Total deferred tax assets 35,920 42,182 Valuation allowance (35,287) (41,599) ------------------------- Total deferred tax assets 633 583 ------------------------- Total net deferred tax assets $ 387 $ 405 -------------------------
December 29, December 31, 2000 1999 Deferred tax liabilities: Purchased intangibles $ 8,230 $ - Other individually immaterial items 288 246 --------------------------------------- Total deferred tax liabilities 8,518 246 --------------------------------------- Deferred tax assets: Inventory valuation differences 8,836 9,437 Expenses not currently deductible 5,656 7,461 Federal credit carryforwards 8,686 6,108 Deferred revenue 2,674 3,243 State credit carryforwards 4,725 3,786 Warranty 2,455 2,352 Depreciation 1,724 1,770 Federal net operating loss (NOL) carryforward 1,028 - Other individually immaterial items 2,751 1,763 --------------------------------------- Total deferred tax assets 38,535 35,920 Valuation allowance (37,861) (35,287) --------------------------------------- Total deferred tax assets 674 633 --------------------------------------- Total net deferred tax assets (liabilities) $(7,844) $ 387 =======================================
The NOL and credit carryforwards listed above expire in 20002001 through 2019.2020. The valuation allowance increased by $22$2.6 million in fiscal 1998.2000 and decreased by $6.0 million in 1999. Approximately $7.4$11.3 million of the valuation allowance at December 31, 1999,29, 2000 relates to the tax benefits of stock option deductions, which will be credited to equity when realized. 43 Note 1315 - Shareholder's Equity: 1993 Stock Option Plan. In 1992, Trimble's Board of Directors adopted the 1993 Stock Option Plan (1993 Plan)("1993 Plan"). The 1993 Plan, as amended to date and approved by shareholders, provides for the granting of incentive and nonstatutory stock options for up to 5,000,0005,925,000 shares of Common Stock to employees, consultants and directors of Trimble. At Trimble's 20002001 annual meeting of shareholders to be held on May 11, 2000,10, 2001, the shareholders are being asked to approve andan increase of 925,000450,000 shares under the 1993 Plan. 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. All employeeEmployee 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 exercise price of nonstatutory stock options issued under the 1993 Plan must be at least 85% of the fair market value of Common Stock on the date of grant. As of December 31, 1999,29, 2000, options to purchase 3,685,3213,961,581 shares were outstanding and 631,822610,454 shares were available for future grant under the 1993 Stock Option Plan. 1990 Director Stock Option Plan. In December 1990, Trimble adopted a Director Stock Option Plan under which an aggregate of 380,000 shares of Common Stock have been reserved for issuance to date to nonemployeenon-employee directors as approved by the shareholders.shareholders to date. At December 31, 1999,29, 2000, options to purchase 198,333173,333 shares were outstanding and 95,83385,416 shares were available for future grants under the Director Stock Option Plan. 56 1992 Management Discount Stock Option Plan. In 1992, Trimble's Board of Directors approved the 1992 Management Discount Stock Option Plan ("Discount Plan"). Under the Discount Plan, 300,000 nonstatutory stock options were reserved for grant to management employees at exercise prices that may be significantly discounted from the fair market value of Common Stock on the dates of grant. Options are generally exercisable six months from the date of grant. As of December 31, 1999,29, 2000, there were 4,974 shares available for future grants. For accounting purposes, compensation cost on these grants is measured by the excess over the discounted exercise prices of the fair market value of Common Stock on the dates of option grant. Noncash compensation cost related toThere were no discounted options exercisedgranted in the plan in fiscal 2000 1999, 1998, and 1997 amounted to $0, $0, and $275,000, respectively.1998. As of December 31, 1999,29, 2000, options to purchase 125,000 shares were outstanding.outstanding under the 1992 Management Discount Stock Option Plan. 1988 Employee Stock Purchase Plan. In 1988, Trimble established an employee stock purchase plan under which an aggregate of 2,950,0003,150,000 shares of Common Stock have been reserved for sale to eligible employees to date as approved by the shareholders. At Trimble's 2000 annual meeting of shareholders to be held on May 11, 2000, the shareholders are being asked to approve and increase of 200,000 shares under the employee stock purchase plan.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 six-month offering period. In fiscal 2000 and 1999, 131,657 shares and 317,210 shares, respectively, were issued under the plan for aggregate proceeds to the Company of $1.2 million and $2.5 million.million, respectively. At December 31, 1999,29, 2000, the number of shares reserved for future purchases by eligible employees was 685,632.831,216. As stated in Note 1 to the Consolidated Financial Statements, Trimble has elected to follow APB 25 and related Interpretationsinterpretations in accounting for its employee stock options and stock purchase plans. The alternative fair value accounting provided for under SFAS 123 requires use of option pricing models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of Trimble's employee stock options equals the market price of the underlying stock on date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share is required by SFAS 123 and has been determined as if Trimble had accounted for its employee stock options and purchases under the Employee Stock Purchase Planemployee stock purchase plan using the fair value method of that Statement.SFAS 123. The fair value for these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions for fiscal 2000, 1999, 1998, and 1997:1998:
December 29, December 31, January 1, January 2,2000 1999 1999 1998 ---------------------- --------------------------------------------- ---------------------- Expected dividend yield - - - Expected stock price volatility 66.41% 59.58% 55.65% 58.07% Risk-free interest rate 6.21% 6.34% 5.76% 6.36% Expected life of options after vesting 1.22 1.21 1.20 1.19
44 The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because Trimble's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period, and the estimated fair value of purchases under the Employee Stock Purchase Planemployee stock purchase plan is expensed in the year of purchase. The effects on pro forma disclosure of applying FASSFAS 123 are not likely to be representative of the effects on pro forma disclosure of future years. Trimble's pro forma information (in thousands except for per share data) is as follows: 57
December 29, December 31, January 1, January 2,2000 1999 1999 1998 ---------------------- --------------------------------------------- ---------------------- Net income (loss) - as reported $ 14,185 $ 21,593 $ (53,394) $ 9,279 Net income (loss) - pro forma $ 5,898 $ 16,377 $ (58,661) $ 2,899 Basic income (loss) per share - as reported $ 0.60 $ 0.96 $ (2.38) $ 0.42 Basic income (loss) per share - pro forma $ 0.25 $ 0.73 $ (2.61) $ 0.13 Diluted income (loss) per share - as reported $ 0.55 $ 0.95 $ (2.38) $ 0.40 Diluted income (loss) per share - pro forma $ 0.23 $ 0.72 $ (2.61) $ 0.13
Exercise prices for options outstanding as of December 31, 1999,29, 2000, ranged from $8.00 to $29.63.$51.69. The weighted average remaining contractual life of those options is 7.817.88 years. In view of the wide range of exercise prices, Trimble considers it appropriate to provide the following additional information in respect of options outstanding:
Total Currently exercisable Number Weighted-average Weighted-average Number Weighted-average Range (in thousands) exercise price remaining contractul life (in thousands) exercise price - ------------------------------------------------------------- -------------------------------------------------------------------------------------------- ------------- ------------------ ------------------------- -------------- ------------------- $8.0000 - $8.0000 430 $8.00 8.63 30 $8.00 $8.0625 - $8.6563 401 $8.43 7.75 60 $8.57 $8.8750$8.2500 451,532 $8.01 8.07 163,159 $8.02 $8.3125 - $9.9375 477 $9.83 7.53 198 $9.69637,445 $9.21 6.61 291,965 $9.21 $10.0000 - $11.5625 425 $10.80 6.77 204 $10.28 $11.6250 - $11.6250 150 $11.63 9.64 - $0.00306,145 $10.99 6.82 146,566 $10.69 $11.9375 - $11.9375 568474,591 $11.94 9.59 28.59 121,336 $11.94 $12.0000 - $13.9375 373 $12.76 7.03 185 $12.71 $15.3750 - $15.3750 562 $15.38 6.82 328 $15.38593,321 $14.27 6.12 400,464 $14.31 $16.8750 - $18.4375 424 $17.70 7.52 223 $17.69 $18.6250$19.2500 427,143 $17.90 6.92 244,364 $17.90 $19.3125 - $29.6250 199 $20.09 7.54 104 $20.36$23.0000 433,689 $20.24 9.11 54,337 $21.49 $23.2500 - ------------------------------------------------------------------------------------------------------------------------------------$34.1250 121,500 $31.95 9.29 6,388 $31.49 $41.1250 - $41.1250 772,250 $41.13 9.65 - $0.00 $51.6875 - $51.6875 42,500 $51.69 9.55 - $0.00 - ---------------------- ------------- ------------------ ------------------------- -------------- ------------------- $8.0000 - $29.6250 4,009 $12.36 7.81 1,334 $13.68$51.6875 4,260,116 $19.07 7.88 1,428,579 $12.94
45 Activity during fiscal 2000, 1999 1998 and 19971998 under the combined plans was as follows:
IN THOUSANDS, EXCEPT FOR PER SHARE DATA December 29, December 31, January 1, January 2,2000 1999 1999 1998 ------------------------------------------------------------------------------------------------------------------- -------------------------- ---------------------------- Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price ------------------------------------------------------------------------------------------------- ---------------- -------- ---------------- --------- ----------------- Outstanding at beginning of year 3,026 $13.64 2,696 $15.10 2,577 $13.06 Granted 1,813 10.22 1,117 11.40 962 16.45 Exercised (135) 11.64 (132) 11.41 (635) 8.78 Canceled (695) 14.03 (655) 16.30 (208) 15.40 -------- -------------- -------------- Outstanding at end of year 4,009 $12.36 3,026 $13.64 2,696 $15.10 Granted 1,379 34.39 1,813 10.22 1,117 11.40 Exercised (706) 13.08 (135) 11.64 (132) 11.41 Canceled (422) 15.51 (695) 14.03 (655) 16.30 ---------- -------- -------- Outstanding at end of year 4,260 $19.07 4,009 $12.36 3,026 $13.64 Exercisable at end of year 1,429 $12.94 1,334 $13.68 1,110 $13.91 700 $13.20 Weighted-average fair value of options granted during year $19.04 $5.51 $5.21 $8.30
401(k) Plan. Under Trimble's 401(k) Plan, U.S. employee participants may direct the investment of contributionsNon-statutory options. On May 25, 2000, Trimble entered into an agreement to their accounts among certain mutual funds and the Trimble Navigation Limited Common Stock Fund. The Fund purchased 47,066grant a non-statutory option to purchase up to 40,000 shares of Common Stock forcommon stock at an aggregateexercise price of $504,000 in 1999. Trimble, at its discretion, matches individual employee 401(k) Plan contributions up to $100$13.44 per month. Trimble's matching contributions to the 401(k) Plan were $1.0 million in fiscal 1999, $1.2 million in 1998, and $1.0 million in 1997. Profit-Sharing Plan. In 1995, Trimble introduced an employee profit-sharing plan inshare, which all employees, excluding executives and certain levels of management, participate. The plan distributes to employees approximately 5% of quarterly income before taxes. Payments under the plan during fiscal 1999, 1998, and 1997 were $1.2 million, $138,000, and $549,000, respectively. Warrants.expire no later than December 15, 2001. On May 3, 1999, Trimble grantedentered into an agreement to grant a non-statutory option to purchase up to 30,000 warrantsshares of common stock at an exercise price of $9.75 per share, which expire on March 29, 2004. As of December 31, 1999 no warrants29, 2000, none of these non-statutory options had been exercised. Common shares reserved for future issuances. As of December 31, 1999,29, 2000, Trimble had reserved 5,426,9155,791,974 common shares for issuance upon exercise of options outstanding and options available for grant under the 1993 Stock Option, 1990 Director Stock Option, and 1992 Management Discount Stock Option plans, and available for issuance under the 1988 Employee Stock Purchase plan. 4658 Note 1416 - EarningsBenefit plans: 401(k) Plans: Under Trimble's 401(k) Plan, U.S. employee participants may direct the investment of contributions to their accounts among certain mutual funds and the Trimble Navigation Limited Common Stock Fund. The Trimble Fund purchased 15,700 shares of Common Stock for an aggregate of $434,000 in 2000. Trimble, at its discretion, matches individual employee 401(k) Plan contributions up to $100 per share: In February 1997,month. Trimble's matching contributions to the Financial Accounting Standards Board issued Statement401(k) Plan were $798,000 in fiscal 2000, $1.0 million in fiscal 1999, and $1.2 million in 1998. Certain of Financial Accounting Standards No. 128, "Earnings Per Share." Trimble adopted this standard,the Company's subsidiaries acquired as required for its January 2, 1998, Financial Statements.part of the acquisition of the Spectra Precision Group participate in a 401(k) Plan where the Company matches fifty cents of every dollar the employee contributes to the plan up to 5 % of the employees annual contribution. For the period July 14, 2000 to December 29, 2000 the Company contributed $236,000 to the plan. The Company's Tripod Data Systems subsidiary matches one dollar for every three dollars the employee puts into the plan up to 8% of their annual salary. From November 14, 2000 to December 29, 2000 the Company contributed $11,000 to this plan. Profit-Sharing Plan: In 1995, Trimble introduced an employee profit-sharing plan in which all employees, excluding executives and certain levels of management, participate. The plan distributes to employees approximately 5% of quarterly income before taxes. Payments under the plan during fiscal 2000, 1999, and 1998 were $2.1 million, $1.2 million, and $138,000, respectively. Defined Contribution Pension Plans: Certain of the Company's subsidiaries acquired in the acquisition of the Spectra Precision Group participate in European state sponsored pension plans. Contributions are based on specified percentages of employee salaries. For these plans, the Company contributed and charged to expense $275,000 from July 14, 2000 through December 29, 2000. Defined Benefit Pension Plan The Company's Swedish subsidiary acquired in the acquisition of the Spectra Precision Group 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 presented, Trimble presents both basicas 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 diluted earnings (loss) per share.the liability will only increase for interest cost. Net periodic benefit costs for the period July 14, 2000 though December 29, 2000 was not material. 59 The Company's defined benefit plan activity was as follows: December 29, 2000 - -------------------------------------------------------------------------------- (In Thousands) Change in Benefit Obligation: Benefit obligation at acquisition date $ 3,927 Interest Cost 233 Actuarial (gain) loss 15 -------------------------- Benefit obligation at end of year 4,175 Unrecognized Prior Service Cost - Unrecognized Net Actuarial Gain - -------------------------- Accrued Pension Costs $ 4,175 ========================== Actuarial assumptions used to determine the net periodic pension costs for the year ended December 29, 2000 were as follows: Discount Rate 4% Rate of Compensation Increase 3% Note 17 - Earning Per Share: The following data show the amounts used in computing earnings (loss) per share and the effect on the weighted-average number of shares of dilutive potential Common Stock.
December 29, December 31, January 1, January 2,2000 1999 1999 1998 - -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands except per share amounts) Numerator: Income available to common shareholders: Used in basic and diluted income (loss) per share from continuing operations $ 14,185 $ 18,662 $ (27,355) $17,380 Used in basic and diluted income (loss) per share from discontinued operations - 2,931 (26,039) (8,101) ----------------- ------------------- -------------------------------------- Used in basic and diluted income (loss) per share $ 14,185 $ 21,593 $ (53,394) $ 9,279 ----------------- ------------------- ------------------================= =================== ==================== Denominator: Weighted-average number of common shares used in basic income (loss) per share 23,601 22,424 22,470 22,293 Effect of dilutive securities: Common stock options 2,098 382 - 530 Common stock warrants 277 46 - 124 ----------------- ------------------- -------------------------------------- Weighted-average number of common shares and dilutive potential common shares used in diluted income (loss) per share 25,976 22,852 22,470 22,947 ================= =================== ====================================== Basic income (loss) per share from continuing operations $ 0.60 $ 0.83 $ (1.22) $ 0.78 Basic loss per share from discontinued operations - 0.13 (1.16) (0.36) ----------------- ------------------- -------------------------------------- Basic income (loss) per share $ 0.60 $ 0.96 $ (2.38) $ 0.42 ================= =================== ====================================== Diluted income (loss) per share from continuing operations $ 0.55 $ 0.82 $ (1.22) $ 0.75 Diluted loss per share from discontinued operations - 0.13 (1.16) (0.35) ----------------- ------------------- -------------------------------------- Diluted income (loss) per share $ 0.55 $ 0.95 $ (2.38) $ 0.40 ================= =================== ======================================
60 If Trimble had reported net income in 1998, additional 387 common equivalent shares related to outstanding options and warrants would have been included in the calculation of diluted loss per share. Note 1518 - Comprehensive income (loss): AsThe components of January 3, 1998, Trimble adopted Statementother comprehensive income (loss), net of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 establishes new rules forrelated tax include:
December 29, December 31, Janaury 1, Fiscal Years ended 2000 1999 1999 - ------------------------------------------------------------------------------------------------------------ (In thousands) Cumulative foreign currency translation adjustments $ (8,045) $ (107) $ (255) Net unrealized gain (loss) on short-term investments 123 (142) 11 ---------------- ---------------- --------------- Other comprehensive income (loss) $ (7,922) $ (249) $ (244) ================ ================ ===============
Accumulated other comprehensive income (loss) on the reporting and displayingcondensed consolidated balance sheets consists of comprehensive income. SFAS 130 requires unrealized gains or losses on the Company's available-for-sale securitiesavailable for sale investments and cumulativeforeign currency translation adjustments to be included in comprehensive income.adjustments. The components of accumulated other comprehensive income (loss), net of related tax include:
December 29, December 31, Janaury 1, January 2, Fiscal Years ended 2000 1999 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Cumulative foreign currency translation adjustments $ (107)(8,963) $ (255) $ (949)(918) Net unrealized gain (loss) on short-term investments (142) 11 (12)- (123) ---------------- ---------------- --------------- Accumulated other comprehensive income (loss) $ (249)(8,963) $ (244) $ (961) ================(1,041) ================ ===============================
47 Note 1619 - Related-Party transactions: Related-Party Lease The Company currently leases office space in Ohio from an association of three individuals, two of whom are employees of one of the Company's U.S. operating units, under a noncancelable operating lease arrangement expiring in 2011 entered into in connection with the acquisition of the Spectra Precision Group. The annual rent is $345,000, and is subject to adjustment based on the terms of the lease. The condensed consolidated statements of operations include expenses from this operating lease of $172,702 for the year ended December 29, 2000. Note 20 - Statement of cash flow data:
December 29, December 31, January 1, January 2, Fiscal Years ended 2000 1999 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands) Supplemental disclosure of cash flow information: Interest paid $3,391 $3,377 $3,313 ------------- --------------$ 9,037 $ 3,391 $ 3,377 ------------------- ------------------- -------------- Income taxes paid $ 3,835 $ 866 $1,585 $ 167 ------------- --------------1,585 ------------------- ------------------- --------------
The purchase of Tripod Data Systems in 2000, a non-cash financing and investing activity, was made with shares of stock with a value of less than $15 million. The purchase of the Spectra Precision Group in 2000 included $80 million of a seller-financed note, which is a non-cash financing and investing activity. 61 Note 1721 - Litigation: Settled Matters. On December 6, 1995, two shareholders filed a class action lawsuit against the Company and certain directors and officers of the Company. Subsequent to that date, additional lawsuits were filed by other shareholders. The lawsuits were subsequently amended and consolidated into one complaint, which was filed on April 5, 1996. The amended consolidated complaint sought to bring an action as a class action consisting of all persons who purchased the Common Stock of the Company during the period April 18, 1995, through December 5, 1995 (the "Class Period"). The plaintiffs alleged that the defendants sought to induce the members of the Class to purchase the Company's Common Stock during the Class Period at artificially inflated prices. The plaintiffs sought recissory or compensatory damages with interest thereon, as well as reasonable attorneys' fees and extraordinary equitable and/or injunctive relief. The parties negotiated a definitive stipulation of settlement, which was formally approved, by the court on September 23, 1999. The final court-approved settlement was funded by insurance proceeds and payment by the Company of $1.8 million. The entire amount of the Company's obligation has been previously reserved, and the final settlement did not adversely effect the Company's financial position or results of operations. Pending Matters. On November 12, 1998, the Company brought suit in district court in San Jose, California, against Silicon RF Technology, Inc. (SiRF) for alleged patent infringement of three Trimble patents. Trimble and SiRF have a negotiated a settlement which includes cross licensing. Other Matters. Western Atlas, a Houston-based supplier to the oil exploration business, has accused the Company and other GPS manufacturers, suppliers, and users of infringing two U.S. Patents owned by it, namely U.S. Patent Nos. 5,014,066 and 5,619,212. Western Atlas contends that the foregoing patents cover certain aspects of GPS receiver design. Lawsuits for infringement of these two patents were filed in federal district court in Houston, Texas against Rockwell International Corp. and Garmin International Inc., and both have settled. Although Trimble has not been sued by Western Atlas on the foregoing patents, the Company has instructed its counsel thoroughly to investigate the infringement threat. At the present time, the Company does not expect this threat to have adverse consequences on the Company's business. OnIn January 31, 1997, counsel for one2001 Philip M. Clegg wrote tofiled suit in the Company asserting that a license under Mr. Clegg'sUnited States District Court for the District of Utah, Central Division, against Spectra-Physics Laserplane, Inc., Spectra Precision AB and Trimble Navigation Limited. The complaint alleges claims of infringement of U.S. Patent No. 4,807,131, which was issued February 21, 1989, wouldbreach of contract and unjust enrichment. The suit seeks damages and an accounting for moneys alleged to be required byowed under a license agreement, plus interest and attorney fees. The suit is in its very early stages. Management believes the Company becausecase to be without merit and intends to defend the lawsuit vigorously. In the opinion of a joint venture that the Company had previously entered into with Caterpillar Corporation concerning the use of Trimble GPS products in combination with earth-moving equipment. To date, no infringement action has been initiated on behalf of Mr. Clegg. The Company believes that there will be no adverse consequences to the Company as a resultmanagement, resolution of this inquiry. The Companylitigation is alsonot expected to have a party to other disputes incidental to its business.material adverse effect on the financial position of the Company. However, depending on the amount and timing, an unfavorable resolution of this matter could materially affect the Company's future operations or cash flows in a particular period. The Company believes that the ultimate liability of the Company as a result of suchall disputes, if any, would not be material to its overall financial position, results of operations, or liquidity. 48 Note 1822 - Selected quarterly financial data (unaudited):
First Second Third Fourth Quarter Quarter Quarter Quarter - ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (In thousands, except per share data) 2000 Total revenue $ 65,140 $ 71,264 $ 109,227 $ 124,167 Gross margin 37,045 41,885 55,932 61,699 Operating income 9,222 12,023 1,506 3,468 Net income from continuing operations 8,712 12,357 (4,268) (2,616) Net income from discontinued operations - - - - Net income 8,712 12,357 (4,268) (2,616) Basic net income per share from continuing operations 0.38 0.53 (0.18) (0.11) Basic net income per share from discontinued operations - - - - ------------- ------------- -------------- -------------- Basic net income $ 0.38 $ 0.53 $ (0.18) $ (0.11) ============= ============= ============== ============== Diluted net income per share from continuing operations 0.35 0.48 (0.18) (0.11) Diluted net income per share from discontinued operations - - - - ------------- ------------- -------------- -------------- Diluted net income $ 0.35 $ 0.48 $ (0.18) $ (0.11) ============= ============= ============== ============== 1999 Total revenue $ 68,770 $ 70,839 $ 69,636 $ 62,119 Gross margin 35,567 37,611 36,979 34,090 Operating income 3,733 5,565 5,812 5,351 Net income from continuing operations 3,014 4,656 5,124 5,868 Net income from discontinued operations - - 2,931 - Net income 3,014 4,656 8,055 5,868 Basic net income per share from continuing operations 0.14 0.21 0.23 0.26 Basic net income per share from discontinued operations - - 0.13 - ------------- ------------- -------------- -------------- ------------ ------------- Basic net income $ 0.14 $ 0.21 $ 0.36 $ 0.26 ============= ============= ============== ============== ============ ============= Diluted net income per share from continuing operations 0.14 0.20 0.22 0.25 Diluted net income per share from discontinued operations - - 0.13 - ------------- ------------- -------------- -------------- ------------ ------------- Diluted net income $ 0.14 $ 0.20 $ 0.35 $ 0.25 ============= ============= ============== ============== ============ ============= 1998 Total revenue $ 74,161 $ 73,536 $ 59,973 $ 60,653 Gross margin 38,326 36,259 25,528 27,135 Operating income (loss) 4,282 1,695 (13,741) (16,150) Net income (loss) from continuing operations 4,002 1,892 (15,536) (17,713) Net income (loss) from discontinued operations (2,087) (1,637) (21,898) (417) Net income (loss) 1,915 255 (37,434) (18,130) Basic net income (loss) per share from continuing operations 0.18 0.08 (0.70) (0.80) Basic net income (loss) per share from discontinued operations (0.09) (0.07) (0.98) (0.02) -------------- -------------- ------------ ------------- Basic net income (loss) $ 0.08 $ 0.01 $ (1.68) $ (0.82) ============== ============== ============ ============= Diluted net income (loss) per share from continuing operations 0.17 0.08 (0.70) (0.80) Diluted net income (loss) per share from discontinued operations (0.09) (0.07) (0.98) (0.02) --------------- -------------- -------------- ------------- Diluted net income (loss) $ 0.08 $ 0.01 $ (1.68) $ (0.82) =============== ============== ============== =============
Significant quarterly items include the following: (i) in the third quarter of 1998 Trimble recorded2000, net income includes an $8.8 million charge, or $0.38 per diluted share, for amortization of goodwill and other purchased intangibles, as well as an inventory purchase accounting adjustment; a $2.5$1.1 million restructuring charge, or $0.05 per diluted share relating to a debt extinguishment; a $0.7 million charge, or $0.03 per diluted share for relocation costs related to opening a new office 62 in Boulder, Colorado; and $1.0 million in income, or $0.04 per diluted share relating to a gain on the sale of a minority investment; (ii) in the fourth quarter of 19982000, net income includes a $9.2 million charge, or $0.36 per diluted share, for amortization of goodwill and other purchased intangibles, as well as an inventory purchase accounting adjustment; $0.3 million, or $0.01 per diluted share, of a gain on the sale of a minority investment; and a $0.2 million charge, or $0.01 per diluted share, of relocation costs related to opening a new office in boulder, Colorado. Note 23 - Subsequent Event: On March 6, 2001, the Company sold its Air Transport Systems business, which is primarily located in Austin, Texas, to Honeywell for approximately $4.5 million in cash, resulting in a loss to be recorded of approximately $2.5 million. As part of this sale the Company also intends to discontinue its manufacturing operations in Austin, Texas. The Austin facility, which employs fewer than 65 people, is scheduled to close in August of 2001. Under the agreement, Honeywell has purchased our Air Transport Systems' product lines which include the HT 1000, HT 9000, HT 9100 and Trimble's TNL 8100. As part of a strategic alliance that began in 1995, Trimble recorded a $7.8 million restructuring charge. 49and Honeywell jointly developed, manufactured, marketed, and sold the HT product line. These products are installed in many commercial aircraft and major airlines around the world for Global Positioning System (GPS)-based navigation. 63 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Shareholders, Trimble Navigation Limited We have audited the accompanying consolidated balance sheets of Trimble Navigation Limited as of December 31, 1999,29, 2000 and January 1,December 31, 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999.29, 2000. Our audits also included the financial statement schedule listed in the index at Item 14(a)(2). 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 auditing standards generally accepted in the 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 and schedule referred to above present fairly, in all material respects, the consolidated financial position of Trimble Navigation Limited at December 31, 1999,29, 2000 and January 1,December 31, 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999,29, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ ERNST & YOUNG LLP Palo Alto, California January 25, 2000 5026, 2001 64 Item 9. Changes in and Disagreements with Accountants on Accounting Financial Disclosure Not applicable. PART III Item 10. Directors and Executive Officers of the Registrant The section titled "Nominees" and the section titled "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement for its 20002001 annual meeting of shareholders to be held on May 11, 200010, 2001 ("Proxy Statement"), with respect to directors of the Company and compliance of the directors and executive officers of the Company with Section 16(a) of the Exchange Act required by this item are incorporated herein by reference. The information with respect to the executive officers of the Company required by this item is included in Part I hereof under the caption "Executive Officers of the Company." Item 11. Executive Compensation The following sections of the Proxy Statement are incorporated herein by reference: "Compensation of Executive Officers," "Compensation of Directors," "Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" and "Company Performance." Item 12. Security Ownership of Certain Beneficial Owners and Management The section titled "Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The section titled "Certain Relationships and Related Transactions" of the Proxy Statement is incorporated herein by reference. 5165 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on form 8-K (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 December 29, 2000 and December 31, 1999 and January 1, 1999 2637 Consolidated Statements of Operations for each of the three fiscal years in the period ended December 31, 1999 2729, 2000 38 Consolidated Statement of Shareholders' Equity for the three fiscal years in the period ended December 31, 1999 2829, 2000 39 Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended December 31, 1999 29, 2000 40 Notes to Consolidated Financial Statements 30-4941-63 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. 3. Exhibits Exhibit Number 3.1 Restated Articles of Incorporation of the Company filed June 25, 1986. (17) 3.2 Certificate of Amendment of Articles of Incorporation of the Company filed October 6, 1988. (17) 3.3 Certificate of Amendment of Articles of Incorporation of the Company filed July 18, 1990. (17) 3.4 Certificate of Determination of the Company filed February 19, 1999.(17) 3.8 Amended and Restated Bylaws of the Company. (21) 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. (16) 5266 10.410.4+ Form of Indemnification Agreement between the Company and its officers and directors. (1) 10.5 Loan Agreement dated December 21, 1984, between the Company and certain lenders. (1) 10.6 Note Purchase Agreement dated July 7, 1986, between the Company and certain purchasers. (1) 10.7 Form of Common Stock Purchase Agreement dated March 1989 between the Company and certain investors. (1) 10.8* Memorandum of Understanding dated March 11, 1988, and License Agreement dated September 5, 1988,5,1988, between the Company and AEG Aktiengesellschaft, with Amendments No. 1, No. 2, and No. 3 thereto, and Letter Agreement dated December 22, 1989, between Trimble and Telefunken Systemtechnik GmbH. (1) 10.9 Note Purchase Agreement dated December 6, 1988, between the Company and AEG Aktiengesellschaft. (1) 10.10 Master Equipment Lease Agreement dated April 26, 1990, between the Company and MATSCO Financial Corporation, and schedule of lease extensions. (1) 10.11* Agreement dated February 6, 1989, between the Company and Pioneer Electronic Corporation. (1) 10.15 International OEM Agreement dated May 30, 1989, between the Company and Geotronics AB. (1) 10.16 Patent License Agreement dated January 18, 1990, between the Company and the United States Navy. (1) 10.18 Asset Purchase Agreement dated April 19, 1990, between the Company; TR Navigation Corporation, a subsidiary of the Company; and Tracor Aerospace, Inc. (1) 10.19 Promissory Note dated April 20, 1990, for the principal amount of $400,000 issued by TR Navigation Corporation to DAC International, Inc. (1) 10.20 Guarantee dated April 20, 1990, between the Company and DAC International, Inc. (1) 10.21 Indemnification Agreement dated April 20, 1990, between the Company; TR Navigation Corporation, a subsidiary of the Company; DAC International, Inc.; and Banner Industries, Inc. (1) 10.22 Distributor Agreement dated April 20, 1990, between TR Navigation Corporation, a subsidiary of the Company, and DAC International, Inc. (1) 10.23 Distributor Agreement dated December 6, 1989, between the Company and DAC International, Inc. (1) 10.24 Lease Agreement dated April 26, 1990, between the Company and NCNB Texas National Bank, Trustee for the Company's offices located at 2105 Donley Drive, Austin, Texas. (1) 10.3210.32+ 1990 Director Stock Option Plan, as amended, and form of Outside Director Non-statutory Stock Option Agreement. (8) 10.35 Sublease Agreement dated January 2, 1991, between the Company, Aetna Insurance Company, and Poqet Computer Corporation for property located at 650 North Mary Avenue, Sunnyvale, California. (2) 10.36 Lease Agreement dated February 20, 1991, between the Company, John Arrillaga Separate Property Trust, and Richard T. Peery Separate Property Trust for property located at 880 West Maude, Sunnyvale, California. (2) 10.37 Share and Asset Purchase Agreement dated February 22, 1991, among the Company and Datacom Group Limited and Datacom Software Research Limited. (3) 10.38 License Agreement dated June 29, 1991, between the Company and Avion Systems, Inc. (3) 5367 10.40 Industrial Lease Agreement dated December 3, 1991, between the Company and Aetna Life Insurance Company for property located at 585 North Mary Avenue, Sunnyvale, California. (5) 10.41 Industrial Lease Agreement dated December 3, 1991, between the Company and Aetna Life Insurance Company for property located at 570 Maude Court, Sunnyvale, California. (5) 10.42 Industrial Lease Agreement dated December 3, 1991, between the Company and Aetna Life Insurance Company for property located at 580 Maude Court, Sunnyvale, California. (5) 10.43 Industrial Lease Agreement dated December 3, 1991, between the Company and Aetna Life Insurance Company for property located at 490 Potrero Avenue, Sunnyvale, California. (5) 10.44 Master Lease Agreement dated September 18, 1991, between the Company and United States Leasing Corporation. (5) 10.45 Equipment Financing Agreement dated May 15, 1991, between the Company and Corestates Bank, N.A. (5) 10.46+ 1992 Management Discount Stock Option and form of Nonstatutory Stock Option Agreement (5). 10.48 Equipment Financing Agreement dated April 27, 1992, with AT&T Systems Leasing Corporation. (7) 10.49** Memorandum of Understanding dated December 24, 1992, between the Company and Pioneer Electronics Corporation. (7) 10.51 Revolving Credit Agreement for $15,000,000 dated January 27, 1993, with Barclays Business Credit, Inc. (7) 10.52 $30,000,000 Note and Warrant Purchase Agreement dated June 13, 1994, with John Hancock Life Insurance Company. (9) 10.53 Revolving Credit Agreement for $20,000,000 and $10,000,000, dated August 4, 1995, with the First National Bank of Boston and Mellon Bank N.A., respectively. (1) 10.54 Revolving Credit Agreement - First Amendment. (12) 10.55 Revolving Credit Agreement - Second Amendment. (12) 10.56 Revolving Credit Agreement - Third Amendment. (13) 10.58 Revolving Credit Agreement for $50,000,000 dated August 27, 1997, with Fleet National Bank, Bank of Boston N.A., Sanwa Bank ofBankof California, and ABN Amro Bank N.V., respectively. (15) 10.5910.59+ 1993 Stock Option Plan, as amended. (18) 10.60amended May 11, 2000. (21) 10.60+ 1988 Employee Stock Purchase Plan, as amended. (18)amended May 11, 2000. (21) 10.61 Revolving Credit Agreement - Loan - Third Amendment. (17) 10.62+ Employment Agreement between the Company and Bradford W. Parkinson dated September 1, 1998. (17) 10.63+ Employment Agreement between the Company and Robert S. Cooper dated September 1, 1998. (17) 10.64+ Consulting Agreement between the Company and Bradford W. Parkinson dated September 1, 1998. (17) 10.65+ Standby Consulting Agreement between the Company and Bradford W. Parkinson dated September 1, 1998. (17) 54 10.66+ Consulting Agreement between the Company and Robert S. Cooper dated S eptemberSeptember 1, 1998. (17) 68 10.67+ Employment Agreement between the Company and Steven W. Berglund dated March 17, 1999. (17) 10.68+ Nonqualified deferred Compensation Plan of the Company effective February 10, 1994. (17) 10.69***Asset Purchase Agreement dated August 10, 1999 by and among Trimble Navigation Limited and Solectron Corporation and Solectron Federal Systems, Inc. (19) 10.70***Supply Agreement dated August 10, 1999 by and among Trimble Navigation Limited and Solectron Corporation and Solectron Federal Systems, Inc. (19) 10.71 Revolving Credit Agreement - Loan - Fourth Amendment. (20) 10.72 Stock and Asset Purchase Agreement, dated as of May 11, 2000, between Trimble Acquisition Corp., and Spectra Physics Holdings USA, INC., Spectra Precision AB, and Spectra Precision Europe Holdings, BV. (22) 10.73 Asset Purchase Agreement dated May 11, 2000 between Trimble Acquisition Corp. and Spectra Precision AB. (22) . 10.74 $200.0 million Credit Agreement dated July 14, 2000 between Trimble Navigation Limited and ABN AMRO Bank N.V., Fleet National Bank, and The Bank of Nova Scotia. (22) 10.75 Subordinated Seller Note dated July 14, 2000, for the principal amount of $80,000,000 issued by Trimble Navigation Limited to Spectra Precision Holdings, Inc. (22) 10.76+ Spectra Precision Supplement to the Trimble Navigation 1988 Employee Stock Purchase Plan. (23) 10.77+ Australian Addendum to the Trimble Navigation 1988 Employee Stock Purchase Plan. (24) 21.1 Subsidiaries of the Company. (21)(24) 23.1 Consent of Ernst & Young LLP, independent auditors (see page 79)78). 24.1 Power of Attorney (included on page 57). 27.1 Financial Data Schedule (21)72). * Confidential treatment has been previously granted for certain portions of this exhibit pursuant to an order dated July 11, 1990. ** Confidential treatment has been previously granted for certain portions of this exhibit pursuant to an order dated March 2, 1995. *** Confidential treatment has been granted for certain portions of this exhibit pursuant to an order dated effective October 5, 1999. + Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c) thereof. (1) Incorporated by reference to identically numbered exhibits filed in response to Item 16(a), "Exhibits," of the registrant's Registration Statement on Form S-1, as amended (File No. 33-35333), which became effective July 19, 1990. (2) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1990. (3) Incorporated by reference to identically numbered exhibits filed in response to Item 16, "Exhibits and Forms 8-K," of the registrant's Report on 10-Q for the quarter ended September 30, 1991, as amended on Form 8, filed February 11, 1992. 69 (4) Incorporated by reference to Exhibit No. 4.1 filed in response to Item 8, "Exhibits," of the registrant's Registration Statement on Form S-8 (File No. 33-45167), which became effective January 21, 1992. (5) Incorporated by reference to identically numbered exhibits filed in response to Item 16(a) "Exhibits," of the registrant's Registration Statement on Form S-1 (File No. 33-45990), which was filed February 18, 1992. (6) Incorporated by reference to Exhibits 4.1, 4.2 and 4.3 filed in response to Item 8, "Exhibits," of the registrant's Registration Statement on Form S-8 (File No. 33-57522), which was filed on January 28, 1993. (7) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992. (8) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. 55 (9) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended June 30, 1994. (10) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. (11) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. (12) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended June 30, 1996. (13) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended September 30, 1996. (14) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended June 30, 1997. (15) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended September 30, 1997. (16) Incorporated by reference to Exhibit No. 1 to the registrant's Registration Statement on Form 8-A, which was filed on February 18,1999.18, 1999. (17) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a), "Exhibits," of the registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1999. (18) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended July 2, 1999. (19) Incorporated by reference to identically numbered exhibits filed in response to Item 7(c), "Exhibits," of the registrant's Report on Form 8-K, which was filed on August 25, 1999. (20) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended October 1, 1999. (21) Incorporated by reference to identically numbered exhibits filed in response to Item 8, "Exhibits," of the registrant's registration statement on Form S-8 filed on June 1, 2000. (22) Incorporated by reference to identically numbered exhibits filed in response to Item 7(c), "Exhibits," of the registrant's Current Report on Form 8-K filed on July 28, 2000. (23) Incorporated by reference to identically numbered exhibits filed in response to Item 6A, "Exhibits," of the registrant's Annual Report on Form 10-Q for the quarter ended September 29, 2000. 70 (24) Filed herewith. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the registrant during the fourth quarter ended December 31, 1999. 5629, 2000. 71 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 March 27, 200028, 2001 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. 5772 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 Date - -------------------------------------------------------- ------------------------------ ----------------------------------- /s/ Steven W. Berglund President, Chief Executive March 27, 200028, 2001 - -------------------------------------------------------- Officer, Director Steven W. Berglund /s/ Mary Ellen Genovese Vice President Finance, and March 27, 2000 - ----------------------------- Chief Financial Officer and March 28, 2001 - --------------------------- Assistant Secretary (principal Mary Ellen Genovese (principal financial and principal accounting officer) /s/ Robert S. Cooper Director March 15, 200013, 2001 - -------------------------------------------------------- Robert S. Cooper /s/ John B. Goodrich Director March 15, 200019, 2001 - -------------------------------------------------------- John B. Goodrich /s/ William Hart Director March 15, 200012, 2001 - -------------------------------------------------------- William Hart /s/ Ulf J. Johansson Director March 20, 200016, 2001 - -------------------------------------------------------- Ulf J. Johansson /s/ Norman Y. Mineta Director March 15, 2000 - ----------------------------- Norman Y. Mineta /s/ Bradford W. Parkinson Director March 14, 200013, 2001 - -------------------------------------------------------- Bradford W. Parkinson 5873 SCHEDULE II TRIMBLE NAVIGATION LIMITED VALUATION AND QUALIFIYING ACCOUNTS (IN THOUSANDS OF DOLLARS)
Balance at Balance at beginning of (Reductions) end of Allowance for doubtful accounts: period Additions Write-offs ** period ------------------------------------- ----------------- ----------------- --------------------------------- ---------------- Year ended January 2, 1998 2,393 205 134 2,464 Year ended January 1, 1999 2,464 458 702 2,220 Year ended December 31, 1999 2,220 1,901 1,172 2,949 Year ended December 29, 2000 (1) 2,949 5,008 1,419 6,538 Balance at Balance at beginning of (Reductions) end of Inventory Reserves: period Additions Write-offs ** period ------------------------------------- ----------------- ----------------- --------------------------------- ---------------- Year ended January 2, 1998 9,882 2,389 2,862 9,409 Year ended January 1, 1999 9,409 7,057 2,347 14,119 Year ended December 31, 1999 14,119 1,607 1,617 14,109 Year ended December 31, 1999 14,119 1,607 1,61729, 2000 (2) 14,109 5,984 2,684 17,409
- --------------------------------------------------------------------------------------- ** Net of recoveries (1) Additions include $4,419,000 acquired at July 14, 2000 as part of the acquisition of the Spectra Precision Group and $26,000 acquired at November 14, 2000 as part of the acquisition of Tripod Data Systems. (2) Additions include $7,659,000 acquired at July 14, 2000 as part of the acquisition of the Spectra Precision Group and $13,000 acquired at November 14, 2000 as part of the acquisition of Tripod Data Systems. S-1 5974 INDEX TO EXHIBITS SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - -------------------------------------------------------------------------------- 3.8 Amended and Restated Bylaws of10.77 Australian Addendum to the Company 61-77Trimble Navigation 1988 Employee Stock Purchase Plan 76-78 21.1 Subsidiaries of the Company 7879-80 23.1 Consent of Ernst & Young LLP, Independent Auditors 79 27.1 Financial Data Schedule for the years ended December 31, 1999, and January 1, 1999 80 6081 75