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 January 2, 2009December 29, 2006

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: 0-18645001-14845

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

California94-2802192
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

935 Stewart Drive, Sunnyvale, CA94085
(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:
 
 Title of each className of each exchange on which stock registered
 Common StockNASDAQ Global Select Market
 
Common Stock
Preferred Share Purchase Rights
NASDAQ Global Select Market
 
Preferred Share Purchase Rights
NASDAQ Global Select Market
(Title of Class)		 

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes    ¨Nox

Yes       x
No       ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes       ¨
No       x

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. o¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large Accelerated Filerx
x
Accelerated Filer¨
¨
Non-accelerated Filer¨ (Do not check if a smaller reporting company)
Smaller Reporting Company    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes       ¨
No       x

As of June 30, 2006,27, 2008, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $2.5$4.4 billion based on the closing price as reported on the NASDAQ Global Select Market.

Indicate the number of share outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at February 21, 200727, 2009
Common stock, no par value59,099,854119,093,006 shares
 
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DOCUMENTS INCORPORATED BY REFERENCE

Certain parts of Trimble Navigation Limited's Proxy Statement relating to the annual meeting of stockholders to be held on May 17, 200719, 2009 (the "Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K.

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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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, which are subject to the "safe harbor" created by those sections. The forward-looking statements regarding future events and the future results of Trimble Navigation Limited (“Trimble” or “The“the Company” or “We”“we” or “Our”“our” or “Us”“us”) are based on current expectations, estimates, forecasts, and projections about the industries in which Trimble operates and the beliefs and assumptions of the management of Trimble.  Discussions containing such forward-looking statements may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations." In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "could," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions. These forward-looking statements involve certain risks and uncertainties that could cause actual results, levels of activity, performance, achievements and events to differ materially from those implied by such forward-looking statements, but are not limited to those discussed in this Report under the section entitled “Other“ Risk Factors” and elsewhere, and in other reports Trimble files with the Securities and Exchange Commission (“SEC”), specifically the most recent reports on Form 8-K and Form 10-Q, each as it may be amended from time to time. These forward-looking statements are made as of the date of this Annual Report on Form 10-K. We reserve the right to update these statements for any reason, including the occurrence of material events.  The risks and uncertainties under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risks"Risks and Uncertainties" contained herein, among other things, should be considered in evaluating our prospects and future financial performance. We have attempted to identify forward-looking statements in this report by placing an asterisk (*) before paragraphs containing such material.

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TRIMBLETRIMBLE NAVIGATION LIMITED

20062008 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

 PART I 
Item 1
Business
5
Item 1A
Risk Factors
1617
Item 1B
Unresolved Staff Comments
23
Item 2
Properties
23
Item 3
Legal Proceedings
23
Item 4
Submission of Matters to a Vote of Security Holders
24
   
 PART II 
Item 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities
24
Item 6
Selected Financial Data
2526
Item 7
Management's Discussion and Analysis of Financial Condition and Results of Operations
2627
Item 7A
Quantitative and Qualitative Disclosures about Market Risk
4044
Item 8
Financial Statements and Supplementary Data
4246
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
7687
Item 9A
Controls and Procedures
7687
Item 9B
Other Information
7687
   
 PART III 
Item 10
Directors, and Executive Officers, of the Registrantand Corporate Governance
7788
Item 11
Executive Compensation
7788
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
7788
Item 13
Certain Relationships, and Related Transactions, and Director Independence
7788
Item 14
Principal Accountant Fees and Services
7788
   
 PART IV 
Item 15
Exhibits and Financial Statement Schedules
78-8389

TRADEMARKS

TRADEMARKS

Trimble, the globe and triangle logo, EZ-Guide, EZ-Boom, EZ-Steer, Proliance, UtilityCenter, TrimWeb, TrimView, GeoManager, Taskforce, Juno, GeoExplorer, AgGPS,AgGPS, Spectra Precision, Autopilot, Fieldport, Copernicus, Recon, TrimTrac, EZ-Steer, PocketCitation, Trimble Outdoors, Force, BlueOx, EZ-Office, VX, Vision, VRS, VRSNow, FastMap, Geosite, Coastal Center, NetR8, FineLock, R-Track, Agriculture Manager, Thunderbolt and Force,Connected Site, among others are trademarks of Trimble Navigation Limited and its subsidiaries.  All other trademarks are the property of their respective owners.


PART I


PART IItem 1.   Business

Item 1
Business

Trimble Navigation Limited, a California corporation (“Trimble” or “the Company” or “we” or “our” or “us”), provides advanced positioning product solutions, typically to commercial and government users.  The principle applications servedprincipal application areas include surveying, agriculture, machine guidance, construction, alignment, asset management, mapping and fleet management, and telecommunications infrastructure.mobile resource management. Our products provide benefits that can include lower operational costs, higher productivity, and higher productivity. Examples of productsimproved quality. Product examples include systems that guide agricultural and construction equipment, guidance systems, surveying instruments, systems that track fleets of vehicles, and data collection systems that enable the management of large amounts of geo-referenced information. In addition, we also manufacture components for in-vehicle navigation and telematics systems, and timing modules used in the synchronization of wireless networks.

TrimbleOur products often combine knowledge of location or position together with a wireless link to provide a solution for a specific application.  Position is provided through a number of technologies including the Global Positioning System, (GPS)or GPS, and systems that use laser or optical technologies to establish position.  Wireless communication techniques include both public networks, such as cellular, and private networks, such as business band radio. OurSome of our products are augmented by our software; this includes embedded firmware that enables the positioning solution and applicationsapplication software that allows the customer to make use of the positioning information.

We design and market our own products. Our manufacturing strategy includes a combination of in-house assembly and third party subcontractors. Our global operations include major development, manufacturing or logistics operations in the United States, Sweden, Germany, New Zealand, France, Canada, the United Kingdom, the Netherlands, China, and India. Products are sold through dealers, representatives, joint ventures, and other channels throughout the world. These channels are supported by our sales offices located in more than 1517 countries.

We began operations in 1978 and incorporated in California in 1981. Our common stock has been publicly traded on NASDAQ since 1990 under the symbol TRMB.

On January 17, 2007, Trimble’s Boardour board of Directorsdirectors approved a 2-for-1 split of all outstanding shares of the Company’s Common Stock, payable February 22, 2007 to stockholders of record on February 8, 2007. All shares and per share information presented hashave been adjusted to reflect the stock split on a retroactive basis for all periods presented.

Technology Overview

A significant portion of our revenue is derived from applying Global Navigation Satellite System, (GNSS)or GNSS, technology to terrestrial applications.  The GNSS includes athe network of 24 orbiting US basedU.S. Global Positioning System, or GPS, radio navigation satellites and associated ground control that is funded and maintained by the U. S.U.S. Government and is available worldwide free of charge, a Russian satellite based system,direct user fees, and the Russian GLONASS radio navigation satellite system. Both the European Community and China have announced plans to establish future European Galileo system.operational radio navigation satellite systems. GNSS positioning is based on a technique that precisely measures distances from four or more satellites.  The satellites continuously transmit precisely timed radio signals using extremely accurate atomic clocks.  A GNSS receiver measures distances from the satellites in view by determining the travel time of a signal from the satellite to the receiver, and then uses those distances to compute its position. Under normal circumstances, a stand-alone GNSS receiver is able to calculate its position at any point on earth, in the earth's atmosphere, or in lower earth orbit, to approximately 10 meters, 24 hours a day. Much better accuracies are possible through a technique called “differential GNSS.” In addition to providing position, GNSS provides extremely accurate time measurement.

GNSS accuracy is dependent upon the locations of the receiver and the number of GNSS satellites that are above the horizon at any given time. Reception of GNSS signals requires line-of-sight visibility between the satellites and the receiver, which can be blocked by buildings, hills, and dense foliage. The receiver must have a line of sight to at least four satellites to determine its latitude, longitude, attitude (angular orientation), and time. The accuracy of GNSS may also be limited by distortion of GNSS signals from ionospheric and other atmospheric conditions.

Our GNSS products are based on proprietary receiver technology. Over time, the advances in positioning, wireless communication,communications, and information technologies have enabled us to add more capability to our products and thereby deliver more value to our users.  For example, the developments in wireless technology and deployments of next generation wireless networks have enabled less expensive wireless communications.  These developments allow forprovide the efficient transfer of position data to locations away from the positioning field device, allowing the data to be accessed by more users, and thereby increasing productivity.  This has allowedallows us to include a wireless link in manyintegrate visualization and design software into some of our products and connect remote field operations to a central location.systems, as well as offer positioning services, all of which make our customers more efficient at what they do.


Our laser and optical products either measure distances and angles to provide a position in three dimensional space or they provideare used as highly accurate laser references from which a position can be established.  The key elementelements of these products isare typically a laser, which is generally a commercially available laser diode, and a complex mechanical assembly.  These elements are augmented by software algorithms.algorithms to provide measurements and application-specific solutions.

Business Strategy
 
Our business strategy is developed around an analysis of several key elements:
 
 ·
Attractive markets - – We focus on underserved markets that offer potential for revenue growth, profitability, and market leadership.

 ·
Innovative solutions that provide significant benefits to our customers -– We seek to apply our technology to applications in which position data is important and where we can create unique value by enabling enhanced productivity in the field or field to back office.  We look for opportunities in which the rate of technological change is high and which have a requirement for the integration of multiple technologies into a solution.

 ·
Distribution channels to best access our markets -– We select distribution channels that best serve the needs of individual markets. These channels can include independent dealers, direct sales, joint ventures, OEM sales, and distribution alliances with key partners. We view international expansion as an important element of our strategy and seek to develop international channels.

Business Segments and Markets

We are organized into four reporting segments encompassing our various applications and product lines: Engineering and Construction, Field Solutions, Mobile Solutions and Advanced Devices. Our segments are distinguished by the markets they serve. Each segment consists of businesses which are responsible for product development, marketing, sales, strategy, and financial performance.

In the first quarter of 2006, Trimble combined the operating results of the former Components Technologies and Portfolio Technologies segments and included the combined operating results in the Advanced Devices segment. The change in presentation was made in recognition of the small size of each of the businesses relative to the total company. The presentation of prior period’s segment operating results has been conformed to the Company’s current segment presentation.

Engineering and Construction

Products in the Engineering and Construction segment improve productivity and accuracy throughout the entire construction process including the initial survey, planning, design, site preparation, and building phases.  Our products are intended to both improve the productivity of each phase, as well as facilitate the entire process by improving information flow from one stepphase to the next.

The product solutions typically include multiple technologies. The elements of these solutions may incorporate GPS, optical, laser, radio, or cellular communications.

An example of the customer benefits provided by our productproducts is our GPS and robotic optical surveying instruments which enable the surveyor to perform operations in the field faster, more reliably than conventional surveying instruments and with a smaller crew.  Similarly, our construction machine guidance products allow the operator to achieve the desired landform while eliminating stakeout and reducing rework. These steps in the construction process can be readily linked together with data collection modules to minimize the time and effort required to maintain data accuracy throughout the entire construction process.

We sell and distribute our products in this segment through a global network of independent dealers that are supported by Trimble personnel.  This channel is supplemented by relationships that create additional channel breadth including our joint ventures with Caterpillar and Nikon, andas well as private branding arrangements with other companies.


We also design and market handheld data collectors and data collection software for field use by surveyors, contractors, and other professionals. These products are sold directly through dealers and other survey manufacturers.

Competitors in this segment are typically companies that provide optical, laser, or GPS positioning products. Our principal competitors are Topcon Corporation, and Leica Geosystems.Geosystems, Inc.  Price points in this segment range from less than $1,000 for certain laser systems to approximately $125,000$100,000 for a high-precision, three-dimensional, machine control system.

Representative products sold in this segment include:

Trimble® S6Trimble S8 Total Station - The Trimble S6– Our S8 Total Station is a technologicallyour most advanced optical instrument designed to deliver unsurpassed performance for both typical surveying system. Its advanced servo motors makeand specialized engineering applications such as monitoring and tunneling. It features Trimble FineLock™ technology, a smart tracker sensor with a narrow field of view that enables the Trimble S6 fast, silent,S8 to detect a target without interference from surrounding prisms. Our S8 combined with our 4D Control software creates a powerful solution for real-time and precise, allowingpost-processed monitoring of permanent structures such as dams, short-term construction activities, and side slopes in mines.
Trimble I.S. Rover – Our I.S. Rover combines GNSS and optical data collection on a rover pole, enabling surveyors to measure pointsharness the unique strengths of both technologies. With it, surveyors can increase flexibility and collect data in the field efficientlysave time by seamlessly switching between technologies to adapt to local jobsite conditions as well as independently verify measurements for quality control.  Our I.S. Rover is a unique patented Trimble solution that offers land surveyors increased efficiency, flexibility and productively. The Trimble S6 offers unique new Trimble technologies that enable cable-free operation, longer battery life, and accuracy assurance, among many other features. Its detachable Trimble CU controller is utilized to effectively collect, display, and manage field data.versatility.

Trimble® VX™Trimble R8 GNSS System – Our R8 GNSS System is a multi-channel, multi-frequency, Global Navigation Satellite System (GNSS) receiver, antenna, and data-link radio combined in one compact unit. It features Trimble R-Track™ technology, powered by the most advanced RTK engine in the industry, supporting all GPS signals, including GPS Modernization (L2C signal and L5 signals) as well as GLONASS. Our R8 GNSS combines advanced receiver technology and a proven system design to provide maximum accuracy and productivity for a variety of surveying applications.
Trimble VX Spatial Station - – Our Trimble VX™ Spatial Station is an advanced positioningspatial imaging system that combines optical, 3D scanning, and video capabilities—Trimble VISION™ technology—to measure objects in 3D to produce 2D and 3D data sets for spatial imaging projects.  The Trimble VX Spatial StationIt enables users to blend extremely accurate ground-based information with airborne data to provide comprehensive datasets for use in the geospatial information industry. An entry-level model of our VX Spatial Station offers integrated imaging and surveying functionality only, with a scalable upgrade to 3D scanning.
SPS Site Positioning Solutions – The Trimble Site Positioning Solutions family increases the productivity of construction professionals and supervisors during site preparation, layout and grade checking by simplifying workflows, eliminating unnecessary steps, and providing intelligent data management between the field and the office, creating time savings by providing data updates to all members of the team.

GCS familyFamily of Grade Control Systems - – Grade control systems meet construction contractors' needs with productivity-enhancing solutions for earthmoving, site prep, and roadwork. The TrimbleOur GCS family provides upgrade options that deliver earthmoving contractors the flexibility to select a system that meets their daily needs today, and later add on to meet their changing needs. For example, a single control system such as the GCS300 can provide for low-cost point of entry into grade control, and over time can be upgraded to the GCS400 dual sensor system or to the full 3D GCS900 Grade Control System.

Spectra Precision® Laser portable tools - Our Spectra Precision Laser portfolioPortable Tools – Our Spectra Precision® Laser family includes a broad range of laser based tools for the interior, drywall and ceilings, HVAC, and mechanical contractor. Designed to replace traditional methods of measurement and leveling for a wide range of interior construction applications, our laser tools are easy to learn and use. Our Spectra Precision Laser product portfolio includes rotating lasers for horizontal leveling and vertical alignment, as well as laser pointers and a laser based distance measuring devices.device. They are available through independent and national construction supply houses both in the USU.S. and in Europe.

Proliance Software – Proliance® - Proliance® Software allows infrastructure-intensive organizations to optimize the Plan-Build-Operate project lifecycle for complex capital projects, construction and real estate programs, and extensive facility portfolios. Our Proliance Software was designed for large building owner/operators, real estate developers, and engineering-driven organizations managing $250M$250 million or more annually in new project construction or facility renovations.


GeoSpatial Solutions – Our GeoSpatial Solutions family enables mobile mapping companies to capture georeferenced data, extract features and attributes, and analyze conditions and change, thereby generating information to better manage assets and operations.  Aerial LIDAR / Imaging Systems and vehicle-based asset inventory systems, combined with powerful photogrammetry software, generate high accuracy as-built drawings for the transportation, and utilities and energy transmission and distribution industries.

Field Solutions

Our Field Solutions segment addresses the agriculture and geographic information system (GIS) markets.

Our agriculture products consist of manual and automated navigation guidance for tractors and other farm equipment used in spraying, planting, cultivation, and harvesting applications. The benefits to the farmer include faster machine operation, higher yields, and lower consumption of chemicals than conventional equipment. We also provide positioning solutions for leveling agricultural fields in irrigation applications and aligning drainage systems to better manage water flow in fields.

In 2006, Field Solutions entered the agricultural flow controls market with the introduction We also provide solutions to automate applications of the AgGPS® EZ-Boom™ 2010 automated application control system. The new system is designed to help growers cut input costspesticide and reduce operator fatigue by providing precise automatic control of field spraying applications. The AgGPS EZ-Boom 2010 system provides both application flow control and automatic boom section control that integrates with the Trimble AgGPS EZ-Guide® Plus and/or Field Manager™ display.  The combination of the AgGPS EZ-Boom 2010 system and EZ-Guide Plus Field Manager display allows the user to consolidate guidance, flow control, and precision agriculture functions into one integrated package controlling up to 10 boom sections automatically with GPS guidance. 

seeding.

We use multiple distribution channels to access the agricultural market, including independent dealers and partners such as CNH Global. Competitors in this market are either vertically integrated implement companies such as John Deere, or agricultural instrumentation suppliers such as Raven, CSI WirelessHemisphere GPS and Autofarm.Novariant.

Our Mapping and GIS product line is centered on handheld data collectors that gather information in the field to be incorporated into GIS databases. Typically this information includes features, attributes, and positions of fixed infrastructure and natural resource assets. An example would be that of a utility company performing a survey of its transmission poles including the age and condition of each telephone pole. Our handheld unit enables this data to be collected and automatically stored while confirming the location of the asset. The data can then be downloaded into a GIS database. This stored data could later be used to navigate back to any individual asset or item for maintenance or data update. Our mobile GIS initiative goes one step further by allowing this information to be communicated from the field worker to the back-office GIS database through the combination of wireless technologies, as well as giving the field worker the ability to download information from the database. This capability provides significant advantages to users including improved productivity, accuracy, and access to the information in the field.

Our Utilities Field Solutions product line is focused on integrated field and back office software solutions for managing utility mobile workers and their field work activities, including asset maintenance, GIS mapping, outage response, and automated vehicle locating (AVL).  Our software is typically installed on a server and on mobile computers that are used by utility field workers for conducting routine and emergency work, locating and mapping infrastructure, and performing utility asset maintenance, inspection, and field service.  Through the use of GIS and location-based technologies combined with mobile and wireless communications, our products connect utility field workers to the office.  Typically our products automate existing manual and paper based processes and are implemented to meet utility regulatory requirements, improve efficiency and reduce costs, and improve customer service and response.

Distribution for GIS products is primarily through a network of independent dealers and business partners, supported by Trimble personnel. Primary markets for our GIS products and solutions include both governmental and commercial users. Government usersUsers are most often municipal governments and natural resource agencies.  Commercial users include utility companies. Competitors in this market are typically survey instrument companies utilizing GPS technology. Two examples aretechnology such as Topcon and Thales.

Sales and distribution of both our Fieldport® and UtilityCenter® software solutions are direct to the customer.  Installation of both solutions generally involves a degree of integration and professional services.  Primary markets include government and commercial electric, gas, water and wastewater utilities.  Competitors are typically utility industry GIS software and service companies.

Approximate product price points in this segment range from $3,000$1,000 for a GIS handheld unit to $35,000 for a fully automated, farm equipment control system.


Representative products sold within this segment include:

AgGPS® EZ-Boom™AgGPS EZ-Guide 500 – Our AgGPS EZ-Guide 500 is a lightbar guidance system with a color LCD display, data logging functions and multiple accuracy options. Lightbar systems provide GPS-based guidance for vehicle operators to steer tractors, sprayers, fertilizer applicators, air seeders, and large tillage tools that require consistent pass-to-pass accuracy to help save fuel, increase efficiency, and reduce input costs for agricultural operations.
AgGPS EZ-Boom 2010 - The AgGPS– Our AgGPS® EZ-Boom® 2010 automated application control system is designed to help growers cut input costs and reduce operator fatigue by providing precise automatic control of field spraying applications.  It works with the Trimble AgGPSour AgGPS EZ-Guide® Plus lightbar guidance system, AgGPS EZ-Steer®AgGPS EZ-Steer® assisted steering system, or the AgGPSAgGPS Autopilot™ automated steering system.
 
AgGPS® Autopilot™AgGPS Autopilot System System - A– Our GPS-enabled, agricultural navigation system that connects to a tractor’s steering system and automatically steers the tractor along a precise path to within three centimeters or less.  This enables both higher machine productivity and more precise application of seed and chemicals, thereby reducing costs to the farmer.

AgGPS® EZ-Steer®AgGPS EZ-Steer System System - A– Our value added assisted steering system, that when combined with theour EZ-Guide Plus system, automatically steers agricultural vehicles along a path within 20 centimeters or less.  This system installs in less than thirty minutes and is designed to reduce gaps and overlaps in spraying, fertilizing, and other field applications, as well as reduce operator fatigue.

GeoExplorer®Juno Series – Our Juno family includes compact and cost-effective GPS handhelds designed to equip an entire workforce for data collection and fieldwork. The handhelds have a high-sensitivity GPS receiver, Bluetooth and Wireless LAN technology, a built-in 3 Megapixel digital camera, a MicroSD/SDHC storage slot and an optional 3.5G broadband cellular modem for wireless data communications.

2005GeoExplorer 2008 Series Series - Combines– Our GeoExplorer family combines a GPS receiver in a rugged handheld unit running industry standard Microsoft Windows Mobile version 5.0,6.0, making it easy to collect and maintain data about objects in the field. The GeoExplorer® series features three models ranging in accuracy from subfoota decimeter to 1-3 meters, —allowingthereby allowing the user to select the system most appropriate for their data collection and maintenance needs.

Spacient® Fieldport Software –® Our Fieldport Software - Focuses focuses on automating field service processes, operational efficiency and profitability for water and wastewater utility customers.  Sales

UtilityCenter Software – Our UtilityCenter Software is a GIS-based enterprise suite of modules oriented towards the electric and distribution of Fieldport software solutions are direct to the customer. A Fieldport software installation involves a degree of integrationgas utilities market. Modules include Outage Management (OMS), Mobile Asset Management, Data Collection, Staking, Network Tracing & Isolation and professional services.Field-based Editing.

Mobile Solutions
 
Our Mobile Solutions segment addresses solutions for vehicles and mobile workers by providingprovides both hardware and software applications for managing mobile work, mobile workers and mobile assets. The software is provided in both a client server model or web based.web-based.  Our software is provided through our hosted platform for a monthly subscription service fee;fee or as a perpetual license with annual maintenance and support fees. 


Our vehicle solutions typically include an onboard computerproprietary hardware device consisting of a GPS receiver, business logic, sensor interface, and a cellularwireless modem. Our solution usually includes the communication service from/to and from the vehicle to our data center and access over the Internetinternet to the application software.
 
Our mobile worker solutions include a rugged PChandset device and software.software designed to automate service technician work in the field at the point of customer contact.   The mobile worker handset solutions will also include communication gateway forsynchronize to a client server at the back office integration. for integration with other mission-critical business applications.

Our scheduling and dispatch solution is an enterprise software program to optimize scheduling and routing of field service technicians. For dynamic capacity management, our capacity planner, capacity controller, and intelligent appointer modules round out this innovative service delivery automation technology.
  
One element of our market strategy targets opportunities in specific vertical markets where we believe we can provide a unique value to the end-user by tailoring our solutions for a particular industry.  Sample markets include Ready Mix Concrete,Construction Supply, Direct Store Delivery and Public Safety.  OurFor example, our ready mix concrete solution combines a suite of sensors with our in-vehicle wireless platform providing fleets with updated vehicle status that requires no driver interaction -– referred to as “auto-status.”


We also sell our vehicle solutions using a horizontal market strategy that focuses on providing turnkey solutions to a broad range of service fleets that span a large number of market segments. Here, we leverage our capabilities without the same level of customization. These solutions are sold to the general service fleets as well as transportation and distribution fleets both on a direct basis and through dealer channels.
 
Our enterprise strategy focuses on sales to large, enterprise accounts with more than 1,000 vehicles or routes. Here, in addition to a Trimble-hosted solution, we can also integrate our service directly into the customer’s IT infrastructure, giving them improved control of their information. In this market we sell directly to end-users. Sales cycles tend to be long due to field trials followed by an extensive decision-making process.
 
Approximate prices for hardware fall in the range of $400 to $4,000,$3,000, while the monthly subscription service fees range from approximately $25 to approximately $55 per month per unit, depending on the customer service level.
 
We have also entered into new markets by acquisitions of @Road, Inc. (@Road) in 2007, and Eleven Technology, Inc., Advanced Public Safety, Inc. (APS) and Visual Statement, Inc. (VS). in 2006.  @Road is a global provider of solutions designed to automate the management of mobile resources and to optimize the service delivery process for customers across a variety of industries under the GeoManager™ and Taskforce® brand names.  Eleven Technology is a mobile application software company with market and technology position in the Consumer Packaged Goods (CPG) industry. APS provides mobile and handheld software products used by law enforcement, fire rescue and other public safety agencies. VS provides desktop software and enterprise solutions for collision and crime incident analysis, reporting and workflow management.

Representative products sold in this segment include:
 
Trimble Fleet Productivity -– Our fleet productivity solution offerings are comprised of the TrimViewTrimWeb™, GeoManager and TrimWebTrimView™ mobile platforms. The TrimWeb system providesand GeoManager systems provide different levels of service that run from snapshots of fleet activity to real-time fleet dispatch capability via access to the web basedweb-based platform through a secure internet connection. The TrimWeb system includesand GeoManager systems include truck communication service and computer backbone support of the service. TrimView is sold to fleets where system integration into back office applications areis required for more robust information flow.
 
Trimble Consumer Packaged Goods (CPG)- – This software solution operates in the Microsoft CE/Pocket or WinMobile PC environment and addresses the pre-sales, delivery, routesroute sales and full service vending functions performed by mobile workers.  Customers within the CPG market purchase a combination of both license software and handheld PCs.  The software handles all communications from/to the mobile computer as well as from/to the host and any other ERP or decision support systems. 

Field Service – Our handset-based mobile solution enables technicians to maintain and repair residential and commercial appliances, office equipment, medical equipment, refrigeration equipment, fountain, and manufacturing equipment, and manage a variety of service functions including wireless dispatching of service calls, real-time messaging, spare parts management, and work order and workflow management.  Trimble Field Service customers have benefited from increased service calls per day, an increase in first call resolution and reduction in administrative workload to name a few results.
Public Safety - – We provide a suite of solutions for the public safety sector including our Pocket Citation SystemPocketCitation™ system, which is an electronic ticketing system that enables law enforcement officers to issue traffic citations utilizing a mobile handheld device. This system scans the traffic offender’s driver’s license and automatically populates the appropriate information into the citation. We also provide a variation of this solution which enables law enforcement officers to complete electronic traffic citations in underwithin 30 seconds. Within this sector we also provide desktop software which enables accident investigators and other public safety professionals to reconstruct and simulate vehicle accidents.

Taskforce – The Taskforce software solution provides scheduling and dispatch solutions for field service technicians by synchronizing the right human and physical resources required to optimize a field service resource network.  The system manages significant numbers of dynamic scheduling resources in an unpredictable field service environment to increase productivity, field force utilization and control-to-field employee ratios.


Advanced Devices

In the first quarter of 2006, we began reporting a new segment called Advanced Devices that combines our previously reported Component Technologies and Portfolio segments. This was done in recognition of the small size of each of the businesses comprising the new segment, relative to the total company. Advanced Devices includes the product lines from our Component Technologies, Applanix, Trimble Outdoors, and Military and Advanced Systems (MAS) businesses. It is helpful to recognize that withWith the exception of Trimble Outdoors and Applanix these businesses share several common characteristics:  they are hardware centric, generally rely on OEM distribution,market to original equipment manufacturers (OEM), system integrators or service providers, and have products that can be utilized in a number of different end-user markets.markets and applications. The various operations that comprise this segment were aggregated on the basis that no single operation accounted for more than 10% of our total revenue, operating income or assets.


Within Component Technologies, we provide GPS-based componentssupply GPS modules, licensing and complementary technologies, and GPS-integrated sub-system solutions for applications that require embeddedrequiring precise position, time or time tofrequency.  Component Technologies serves a broad range of vertical markets such as theincluding telecommunications automotive electronics, and automotive industries where we supply modules, boards, custom integrated circuits, or single application IP licenses to the customer according to the needs of the application.commercial electronics.  Sales are made directly to original equipment manufacturers (OEMs)OEMs, system integrators, value-added resellers and system integratorsservice providers who incorporate our componentcomponents into a sub-system or a complete system-level product. solution.

Component Technologies has developed GPS technologies which it is making available for license. These technologies can run on certain digital signal processors (DSP) or microprocessors, removing the need for dedicated GPS baseband signal processor chips.  Advanced Devices has an agreement with u-Nav Microelectronics to license Trimble GPS technology for u-Nav GPS chipsets. We also have a cooperative licensing deal with Nokia for Trimble'sour Global Navigation Satellite System (GNSS) patents related to designated wireless products and services involving location technologies, such as GPS, assisted GPS or Galileo. The licensing agreement is exclusive to Nokia for the wireless consumer product and service domain and includes sublicensing rights. In return, Trimble receives a non-exclusive license to Nokia’s location-based patents for use in Trimble's commercial products and services.

Our Applanix business develops, manufactures, sells  We also have a licensing agreement with Marvell Semiconductors for our full GPS Digital Signal Processor software as well as tools for development support and supports high-value, precision products that combinetesting. Access to our GPS with inertial sensorstechnology complements Marvell's wireless and application processor initiatives for accurate measurement of the positionWiFi, Bluetooth, FM, multi-function radio, application processors and attitude. Sales are made directly by our sales force to the end users or to systems integrators. Competitors include IGI in the airborne survey market, and iXsea and TSS in the marine survey market.cellular processor devices.

Our MAS business supplies GPS receivers and embedded modules that use the military’s GPS advanced capabilities. The modules are principally used in aircraft navigation and timing applications. Military products are sold directly to either the USU.S. Government or defense contractors. Sales are also made to authorized foreign end users. Competitors in this market include Rockwell Collins, L3, and Raytheon.
 
TheOur Trimble Outdoors servicebusiness utilizes GPS-enabled cell phones to provide information for outdoor recreational activities. Some of the recreational activities include hiking, biking, backpacking, boating, and water sports. Consumers purchase the Trimble Outdoors product through our wireless operator partners which include Sprint-Nextel, SouthernLINC Wireless and Boost Mobile. In 2005, Trimble entered into an agreement

Our Applanix business is a leading provider of advanced products and enabling solutions that maximize productivity through mobile mapping and positioning to professional markets worldwide. Applanix develops, manufactures, sells and supports high-value, precision products that combine GPS with Rodale Inc., ownerinertial sensors for accurate measurement of Backpacker Magazine,position and attitude, flight management systems, and scalable mobile mapping solutions used in airborne, land and marine applications. Sales are made by our direct sales force to bring high quality trip content to consumer GPS cell phones.end users, systems integrators, and OEMs, and through regional agents. Competitors include Leica, IGI and Novatel.

Representative products sold by this segment include:

Copernicus™GPS Receiver Modules – The Lassen®, Copernicus® , Condor-Copernicus is Trimble’s first product built upon the uNav MicroelectonicsTM and PandaTM families of GPS chipset. It is amodules are full-function GPS receivermodules in a surface mount package the sizevariety of a postage stamp.form factors, some smaller than your fingertip. 

TrimTrac®TrimTrac Locator -– Our TrimTrac® product is a complete end user device that combines GPS functionality with global system for mobile communications (GSM) wireless communications. In 2006, we added to the TrimTrac locator full quad-band GSM and general packet radio service (GPRS) support along with several important application level features. The device is suitable for high volume personal vehicle and commercial asset management applications that demand a low-cost locator.

TM3000Asset Tracking Device – Our TM3000 product is a flexible, open platform that enables a broad range of applications such as: fleet management, mobile asset tracking and recovery and driver monitoring and assistance.  This device integrates wireless communications, a positioning function and an application engine in a package designed to improve the profits for service-focused businesses.


Thunderbolt GPS Disciplined Clock – Our Thunderbolt® clock is a fifth-generation product from our GPS Timing and Synchronization division, which outputs precision time and frequency.  It also serves as the architectural basis for GPS disciplined clocks sold to manufacturers of CDMA and WiMax infrastructure.

Applanix POS/AV™AV System - An– Our integrated GPS/inertial system for airborne surveying that measures aircraft position to an accuracy of a few centimeters and aircraft attitude (angular orientation) to an accuracy of 30 arc seconds or better. This system is typically interfaced to large format cameras and scanning lasers for producing geo-referenced topographic maps of the terrain.

Applanix DSS™ 322 Digital Sensor System - A medium-format,– Our digital aerialairborne imaging solution  produces high-resolution orthophoto map products.  Certified by the USGS, the system consists of a mapping grade digital camera that is tightly integrated with a GNSS/Inertial system, with direct georeferencing capability designedflight management system (FMS) and processing software for streamlined airborne digital image acquisition. Used for corridor surveys, photogrammetric mapping, GIS analysis and feature identification, andautomatic geo-referencing of each pixel. Our DSS can be used stand-alone or integrated with other airborne remote sensing applications requiring high-quality digital imagery.mapping sensors. Our DSS has been used by organizations worldwide in a variety of market segments that include ortho mapping, utility and transportation corridor mapping and rapid response applications.

Force™ 5 GS (GRAM-SAASM)Force 524D Module - A– This dual frequency, embedded GPS module that is used in a variety of military airborne applications.

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Table of ContentsTrimble Outdoors Service 

Trimble® Outdoors™ - Trip– Our trip planning and navigation software that works with GPS-enabled cell phones and conventional GPS receivers. This software enables consumers to research specific trips onlineon-line as part of trip pre-planning. In addition, users are able to share outdoor and off-road experiences onlineon-line with their friends and family.


Acquisitions and Joint Ventures

Our growth strategy is centered on developing and marketing innovative and complete value-added solutions to our existing customers, while also marketing them to new customers and geographic regions. In some cases, this has led to partnering with or acquiring companies that bring technologies, products or distribution capabilities that will allow us to establish a market beach head, penetrate a market more effectively, or develop solutions more quickly than if we had done so solely through internal development. Since 1999, this has led us to form twofour joint ventures and acquire twenty one companies.thirty seven companies through the end of fiscal 2008.  Most of these acquisitions have been small, both in dollar terms and in number of people added to the Trimble employee base.  No assurance can be given that our previous or future acquisitions will be successful or will not materially adversely affect our financial condition or operating results.  The following companies and joint ventures were acquired or formed during fiscal 2008 and are combined in the results of operations since the date of acquisition or formation:

@Road, Inc.Rawson Control Systems

On February 16, 2007,December 3, 2008, we acquired @Road, Inc.the assets of Fremont, California. @Road, Inc. is a global provider of solutions designed to automateprivately-held Rawson Control Systems based in Oelwein, Iowa. Rawson manufactures hydraulic and electronic controls for the management of mobile resourcesagriculture equipment industry, including variable rate planter drives and to optimize the service delivery process for customers across a variety of industries. @Road will be reported within our Mobile Solutions business segment. This acquisition was the largest in acquisition value in the company’s history. It significantly increases our presence in the mobile resource management, or MRM, market which Trimble believes is a largecontrollers, variable rate fertilizer controllers, mechanical remote electric control valves and fast growing market. 
* With the addition of @Road, Trimble’s TMS segment will be better able to service larger customers, with a broader and more robust solution set.

INPHO GmbH

On February 13, 2007, we acquired INPHO GmbH of Stuttgart, Germany. INPHO is a leader in photogrammetry and digital surface modeling for aerial surveying, mapping and remote sensing applications. INPHO will be reported within Trimble’s Engineering and Construction segment.

Spacient Technologies, Inc.

On November 21, 2006, we acquired privately-held Spacient Technologies, Inc. of Long Beach, California. Spacient is a leading provider of enterprise field service management and mobile mapping solutions for municipalities and utilities. Spacient’sspeed reducers.  Rawson Control Systems’ performance is reported under our Field Solutions business segment.segment.

Meridian Project Systems, Inc.FastMap and GeoSite

On November 7, 2006,28, 2008, we acquired the FastMap and GeoSite software assets from Korec, a privately-held Meridian ProjectTrimble distributor serving the United Kingdom and Ireland. FastMap and GeoSite performance is reported under our Engineering and Construction and Field Solutions business segments, respectively.

Callidus Precision Systems Inc.

On November 28, 2008, we acquired the assets of Folsom, California. Meridian provides enterprise project management and lifecycle softwareprivately-held Callidus Precision Systems GmbH of Halle, Germany. Callidus is a provider of 3D laser scanning solutions for optimizing the plan, build and operate lifecycle for real estate, construction and other physical infrastructure projects. Meridian���sindustrial market. Callidus performance is reported under our Engineering and Construction business segment.

XYZ Solutions, Inc.Toposys

On November 13, 2008, we acquired TopoSys GmbH of Biberach an der Riss, Germany. TopoSys is a leading provider of aerial data collection systems comprised of LiDAR and metric cameras. TopoSys’s performance is reported under our Engineering and Construction business segment.


TruCount

On October 27, 2006,30, 2008, we acquired the assets of privately-held TruCount, Inc., of Ames, Iowa. TruCount is a leading manufacturer of air and electric clutches that automate individual planter row shut-off. TruCount’s performance is reported under our Field Solutions business segment.

RolleiMetric

On October 20, 2008, we acquired the assets of RolleiMetric from Rollei GmbH of Braunschweig, Germany. RolleiMetric is a leading provider of metric camera systems for aerial imaging and terrestrial close range photogrammetry. RolleiMetric is reported within our Engineering and Construction business segment.

VirtualSite Solutions

On October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by Caterpillar and us began operations.  We contributed $7.8 million in exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35% ownership in VSS.  VSS develops software for fleet management and connected worksite solutions for both Caterpillar and us, and in turn, sells software subscription services to Caterpillar and us, which we both sell through our respective distribution channels.  For financial reporting purposes, VSS’s assets and liabilities are consolidated with ours, as are its results of operations, which are reported under our Engineering and Construction segment.  Caterpillar’s 35% interest is included in our Consolidated Financial Statements as minority interests in consolidated subsidiaries.

SECO

On July 29, 2008, we acquired privately-held XYZ Solutions, Inc.,SECO Manufacturing Company of Alpharetta, Georgia. XYZ Solutions provides real-time, interactive 3D intelligence software to manageRedding, California. SECO is a leading manufacturer of accessories for the spatial aspects of ageomatics, surveying, mapping, and construction project. XYZ Solutions’industries.  SECO’s performance is reported under our Engineering and Construction business segment.

Visual Statement, Inc.Géo-3D

On October 11, 2006,January 22, 2008, we acquired privately-held Visual Statement,Géo-3D Inc. of Kamloops, British Columbia,Montreal, Canada. Visual Statement provides desktop software tools for crime and collision incident investigation, analysis, and reconstitution as well as state-wide enterprise solutions for reporting and analysis used by public safety agencies. Visual Statement’s performance is reported under our Mobile Solutions business segment.


BitWyse Solutions, Inc.

On May 1, 2006, we acquired the assets of privately-held BitWyse Solutions, Inc. of Salem, Massachusetts. BitWyseGéo-3D is a provider of engineering and construction information management software. BitWyse’sleader in roadside infrastructure asset inventory solutions.  Géo-3D’s performance is reported under our Engineering and Construction business segment.

Eleven Technology, Inc.Crain Enterprises

On April 28, 2006,January 8, 2008, we acquired privately-held Eleven Technology,Crain Enterprises, Inc. of Cambridge, Massachusetts. ElevenMound City, Illinois. Crain is a mobile application software company with a leading position inmanufacturer of accessories for the Consumer Packaged Goods industry. Eleven’s performance is reported under our Mobile Solutions business segment.

Quantm International, Inc.

On April 5, 2006, we acquired privately-held Quantm International, Inc., a provider of transportation route optimization solutions used for planning highways, railways, pipelinesgeomatics, surveying, mapping, and canals. Quantm’s performanceconstruction industries.  Crain Enterprises is reported under our Engineering and Construction business segment.

XYZs of GPS, Inc.

On February 26, 2006, we acquired the assets of XYZs of GPS, Inc. of Dickerson, Maryland. XYZ develops real-time Global Navigation Satellite System or, GNSS, reference station, integrity monitoring and dynamic positioning software for meter, decimeter and centimeter applications. XYZs’ performance is reported under our Engineering and Construction business segment.


Patents, Licenses and Intellectual Property

We hold approximately 625 US720 U.S. issued and enforceable patents and approximately 85 non-US121 non-U.S. patents, the majority of which cover GPS technology and other applications such as optical and laser technology.

We prefer to own the intellectual property used in our products, either directly or thoughthrough subsidiaries. From time to time we license technology from third parties.

There are approximately 190236 trademarks registered to Trimble and its subsidiaries including "Trimble," the globe"AgGPS," “Spectra Precision,” and triangle logo, "AgGPS," "GeoExplorer," and "Recon," among others that are registered in the United States and other countries. Additional trademarks are pending registration.


Sales and Marketing

We tailor the distribution channel to the needs of our products and regional markets through a number of sales channel solutions around the world. We sell our products worldwide primarily through dealers, distributors, and authorized representatives, occasionally granting exclusive rights to market certain products within specific countries. This channel is supported and supplemented (where third party distribution is not available) by our regional sales offices throughout the world. We also utilize distribution alliances, OEM relationships, and joint ventures with other companies as a means to serve selected markets.


During fiscal 2008, sales to customers in the United States represented 49%, Europe represented 25%, Asia Pacific represented 14%, and other regions represented 12% of our total revenue. During fiscal 2007, sales to customers in the United States represented 50%, Europe represented 27%, Asia Pacific represented 12%, and other regions represented 11% of our total revenue. During fiscal 2006, sales to customers in the United States represented 54%, Europe represented 25%, Asia Pacific represented 12%, and other regions represented 9% of our total revenues. During fiscal 2005, sales to customers in the United States represented 54%, Europe represented 25%, Asia Pacific represented 11% and other regions represented 10% of our total revenues.revenue.

Warranty

The warranty periods for our products are generally between 90 days and three years. Selected military programs may require extended warranty periods up to 5.5 years and certain Nikon products have a five-year warranty period. We support our GPS products through a circuit board replacement program from locations in the United Kingdom, Germany, Japan, and the United States. The repair and calibration of our non-GPS products are available from company-owned or authorized facilities. We reimburse dealers and distributors for all authorized warranty repairs they perform.


While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, our warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ from the estimates, revisions to the estimated warranty accrual and related costs may be required.

Seasonality of Business

*   Our individual segment revenuesrevenue may be affected by seasonal buying patterns. Typically, the second fiscal quarter has been the strongest quarter for the Company driven by the construction buying season.

Backlog

In most of our markets, the time between order placement and shipment is short.  Orders are generally placed by customers on an as-needed basis.  In general, customers may cancel or reschedule orders without penalty.  For these reasons, we do not believe that orders are an accurate measure of backlog and, therefore, we believe that backlog is not a meaningful indicator of future revenuesrevenue or material to an understanding of our business.

Manufacturing

Manufacturing of substantially allmany of our GPS subsystemsproducts is subcontracted to Solectron Corporation. During fiscal 2006 we continued toFlextronics International Limited. We utilize Solectron's Suzhou facilities in ChinaFlextronics for all of our Component Technologies products. During 2006products, and 2004 we expanded our usefor some of Solectron in Mexico for our Construction and Survey, Field Solutions, products and handhelds, respectively.Mobile Solutions products. We continue toalso utilize Solectron CaliforniaFlextronics for our high-end GPS products and new product introduction services. SolectronFlextronics is responsible for substantially all material procurement, assembly, and testing. We continue to manage product design through pilot production for the subcontracted products, and we are directly involved in qualifying suppliers and key components used in all our products. Our current contract with SolectronFlextronics continues in effect until either party gives the other ninety days written notice.

We manufacture laser and optics-based products at our plants in Dayton, Ohio; Danderyd, Sweden; Jena and Kaiserslautern, Germany; and Toronto, Canada.Shanghai, China. Some of these products or portions of these products are also subcontracted to third parties for assembly.

Our design and manufacturing sites in Dayton, Ohio; Sunnyvale, California; Danderyd, Sweden; and Jena and Kaiserslautern, Germany are registered to ISO9001:2000, covering the design, production, distribution, and servicing of all our products.

Research and Development

We believe that our competitive position is maintained through the development and introduction of new products that incorporate improved features, better performance, smaller size and weight, lower cost, or some combination of these factors. We invest substantially in the development of new products. We also make significant investment in the positioning, communication, and information technologies that underlie our products and will likely provide competitive advantages.


Our research and development expenditures, net of reimbursed amounts were $148.3 million for fiscal 2008, $131.5 million for fiscal 2007, and $103.8 million for fiscal 2006, $84.3 million for fiscal 2005, and $77.6 million for fiscal 2004.2006.

* We expect to continue investing in research and development with the goal of maintaining or improving our competitive position, as well as the goal of entering new markets.

Employees

As of December 29, 2006,January 2, 2009, we employed 2,8423,940 employees, including 25%24% in manufacturing, 29% in engineering, 35% in sales and marketing, 36% in manufacturing, 28% in engineering, and 11%12% in general and administrative positions. Approximately 41%43% of employees are in locations outside the United States.

Our employees are not represented by unions except for those in Sweden and someSweden.  Some employees in Germany.Germany are represented by works councils. We also employ temporary and contract personnel that are not included in the above headcount numbers. We have not experienced work stoppages or similar labor actions.


Available Information

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on the Company’s web site through www.trimble.com/investors.htmlwww.trimble.com/investors.html, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Information contained on our web site is not part of this annual report on Form 10-K.

In addition, you may request a copy of these filings (excluding exhibits) at no cost by writing or telephoning us at our principal executive offices at the following address or telephone number:

Trimble Navigation Limited
935 Stewart Drive, Sunnyvale, CA 94085
Attention: Investor Relations   Telephone: 408-481-8000


Executive Officers

The names, ages, and positions of the Company's executive officers as of February 22, 200721, 2009 are as follows:

NameAgePosition
Steven W. Berglund5557President and Chief Executive Officer
Rajat Bahri4244Chief Financial Officer
Rick Beyer4951Vice President Mobile Solutions
Joseph F. Denniston, Jr.46Vice President, Operations
Bryn A. Fosburgh4446Vice President Engineering and Construction
Mark A. Harrington53Vice President
Jürgen Kliem51Vice President Strategy and Business Development
Debi HirshlagJames A. Kirkland41Vice President, Human Resources
John E. Huey57Treasurer
Irwin L. Kwatek6749Vice President and General Counsel
Michael W. Lesyna46Vice President, Business Transformation
Bruce E. Peetz55Vice President, Advanced Technology and Systems
Julie Shepard4951Vice President, Finance
Alan R. Townsend58Vice President, Field Solutions
Dennis L. Workman6264Vice President and Chief Technical Officer Advanced Devices

Steven W. Berglund - – Steven Berglund has served as president and chief executive officer of Trimble since March 1999. Prior to joining Trimble, Mr. Berglund was president of Spectra Precision, a group within Spectra Physics AB, and a pioneer in the development of laser systems. He spent 14 years at Spectra Physics in a variety of senior leadership positions.  In the early 1980s, Mr. Berglund spent a number of years at Varian Associates in Palo Alto, where he held a variety of planning and manufacturing roles.  Mr. Berglund began his career as a process engineer at Eastman Kodak in Rochester, New York. He attended the University of Oslo and the University of Minnesota where he received a B.S. in chemical engineering.  He later received his M.B.A. from the University of Rochester.  In December 2007, Mr. Berglund was elected to the board of directors of Verigy Ltd. a semiconductor test equipment manufacturer.


Rajat Bahri - – Rajat Bahri joined Trimble as Chief Financial Officerchief financial officer in January 2005.  Prior to joining Trimble, Mr. Bahri served for more than 15 years in various capacities within the financial organization of several subsidiaries of Kraft Foods, Inc. and General Foods Corporation.  Most recently, he served as the chief financial officer for Kraft Canada, Inc.  From June 2000 to June 2001, he served as chief financial officer of Kraft Pizza Company.  From 1997 to 2000, Mr. Bahri was Operations Controller for Kraft Jacobs Suchard Europe. Mr. Bahri holds a Bachelor of Commerce from the University of Delhi in 1985 and an M.B.A. from Duke University in 1987. In 2005, he was elected onto the board of Simple Technologies,STEC, Inc., a publicly traded company.memory storage manufacturer.

RickRichard A. Beyer - – Rick Beyer joined Trimble in March 2004 as president of Trimble Mobile Solutions (TMS) and in May 2006, Mr. Beyer was appointed a Vice Presidentvice president of Trimble.  In October 2007 his role was expanded to include responsibility for a number of Trimble’s mobile solutions business divisions. Prior to joining Trimble, Mr. Beyer held senior executive positions within the wireless mobile solutions industry since 1987. Part of the original senior executive team that launched Qualcomm's OmniTRAC's mobile satellite communication solution, Mr. Beyer also held the positions of general manager at Rockwell Collins, on-board computing division, from 1994 to 1995; executive vice president of Norcom Networks from 1995 to 1999; president of Husky Technologies, now part of Itronix, from 1999 to 2000; and CEO of TracerNet, nowwhich was acquired by Trimble, Mobile Solutions, from 2002 to 2004. Mr. Beyer holds a B.A. from Olivet College and was Chairman of the Board at the college from 2000 to 2003. He was elected Trustee Emeritus in 2007. Rick also served as a member of the Council of Board Chairs for the Association of Governing Boards for Colleges and Universities from 2002 to 2005.


Joseph F. Denniston, Jr. - Joseph Denniston joined Trimble as vice president of operations in April 2001, responsible for worldwide manufacturing, distribution and logistics. Prior to Trimble, Mr. Denniston worked for 3Com Corporation. During his 14-year tenure, he served as vice president of supply chain management for the Americas and held several positions in test engineering, manufacturing engineering and operations. Previously at Sentry Schlumberger for seven years, he held several positions including production engineering, production management and test engineering over six years. Mr. Denniston received a B.S. in electrical engineering technology from the Missouri Institute of Technology in 1981 and an M.S. in computer science engineering from Santa Clara University in 1990.College.

Bryn A. Fosburgh- – Bryn Fosburgh joined Trimble in 1994 as a technical service manager for surveying, mining, and construction. In 1997, Mr. Fosburgh was appointed director of development for the Company’s land survey business unit where he oversaw the development of field and office software that enabled the interoperability of Trimble survey products. From October 1999 to July 2002, he served as division vice president of survey and infrastructure. From 2002 to 2005, Mr. Fosburgh served as vice president and general manager of Trimble's Geomatics and Engineering (G&E) business area, with responsibility for all the division-level activities associated with survey, construction, and infrastructure solutions. In January 2005, he was appointed vice president and general manager of the Engineering and Construction Division.  In October 2007 his role was expanded to include a number of divisions, including construction and agriculture, as well as a responsibility for a number of corporate functions and geographical regions.  Prior to Trimble, he was a civil engineer with the Wisconsin Department of Transportation responsible for coordinating the planning, data acquisition, and data analysis for statewide GPS surveying projects in support of transportation improvement projects. He has also held various engineering, research and operational positions for the U.S. Army Corps of Engineers and Defense Mapping Agency. Mr. Fosburgh received a B.S. in geology from the University of Wisconsin in Green Bay in 1985 and an M.S. in civil engineering from Purdue University in 1989.

Mark A. Harrington - – Mark Harrington joined Trimble in January 2004 as a vice president, ofprimarily responsible for strategy and business development.  In October 2007 his responsibilities were expanded to include a number of divisions, including survey and mapping and geographical information systems, as well as the responsibility for a number of corporate functions and geographical regions.  Prior to joining Trimble, Mr. Harrington served as vice president of finance at Finisar Corporation and chief financial officer for Cielo Communications, Inc., a photonics components manufacturer, from February 1998 to September 2002, and Vixel Corporation, a photonics manufacturer, from April 2003 to December 2003. His experience also includes 11 years at Spectra-Physics where he served in a variety of roles including vice president of finance for Spectra-Physics Lasers, Inc. and vice president of finance for Spectra-Physics Analytical, Inc. Mr. Harrington began his career at Varian Associates, Inc. where he held a variety of management and individual positions in finance, operations and IT. Mr. Harrington received his B.S. in Business Administration from the University of Nebraska-Lincoln.

Debi HirshlagJürgen Kliem - Debi Hirshlag– Jürgen Kliem was appointed vice president of strategy and business development in October 2008. From 2002 to 2008, Mr. Kliem served as general manager of Trimble’s Survey Division.  Mr. Kliem joined Trimble in July 20052000 as vice presidentpart of human resources.the Spectra Precision acquisition. From 2000 to 2002, he was responsible for the Engineering and Construction segment’s European operations. Prior to Spectra Precision, Mr. Kliem held various leadership roles at Geotronics, a company acquired by Spectra Precision, directing the European sales and marketing activities. Before joining Trimble, Ms. Hirshlag served as vice president of human resources at Ariba Inc.,Geotronics, Mr. Kliem worked in a purchasing technology company from January 2003 to July 2004,privately-held surveying firm addressing cadastral, construction, plant and vice president of corporate services at Latitude Communications,engineering projects.  Mr. Kliem received a conferencing software provider from January 2001 to December 2002. In addition, she has held human resources positions at Seagate Technology, Inc., Pepsi-Cola and Amoco Corporation. Ms. Hirshlag received her B.S. in industrial management from Carnegie Mellon University and an M.A. in labor and industrial relationsDiplom Ingenieur degree from the University of Illinois.Essen, Germany in 1982.

John E. Huey James A. Kirkland-John Huey – James A. Kirkland joined Trimble in 1993 as director corporate credit and collections, and was promoted to assistant treasurer in 1995 and treasurer in 1996. Past experience includes two years with ENTEX Information Services, five years with National Refractories and Minerals Corporation (formerly Kaiser Refractories), and thirteen years with Kaiser Aluminum and 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.

Irwin L. Kwatek- Irwin Kwatek has served as vice president and general counsel of Trimble since November 2000.in July 2008. Prior to joining Trimble, Mr. Kwatek washe worked for SpinVox Ltd. from October 2007 to January 2008 as Senior Vice President, Corporate Development.  From October 2003 to September 2007, he served as general counsel and executive vice president, strategic development at Covad Communications. Mr. Kirkland also served as senior vice president of spectrum development and general counsel of Tickets.com, a ticketing service provider,at Clearwire Technologies, Inc. from May 1999March 2001 to November 2000. Prior to Tickets.com,October 2003. Mr. Kirkland began his career in 1984 as an associate at Mintz Levin and in 1992 he was engaged in the private practice of law for more than six years. During his career, he has served as vice president and general counselpromoted to several publicly held high-tech companies including Emulex Corporation, Western Digital Corporation and General Automation, Inc.partner. Mr. KwatekKirkland received his B.B.A.BA from Adelphi CollegeGeorgetown University in Garden City, New YorkWashington, D.C. in 1981 and an M.B.A. from the University of Michigan in Ann Arbor. He received his J.D. from Fordham UniversityHarvard Law School in New York City in 1968.1984.


Michael W. Lesyna-Michael Lesyna joined Trimble in September 1999 as vice president of strategic marketing. In September 2000, he was appointed vice president and general manager of the Mobile Solutions Division. In July 2004, Lesyna was appointed vice president of Business Transformation. In this cross-divisional role he focuses on driving operational improvements based on the marketing, sales and distribution channel strategies of Trimble's business segments. The scope of his work includes tailored business prioritization as well as lean manufacturing and lean overhead principles. Prior to Trimble, Mr. Lesyna spent six years at Booz Allen & Hamilton where he most recently served as a principal in the operations management group. Prior to Booz Allen & Hamilton, Mr. Lesyna held a variety of engineering positions at Allied Signal Aerospace. Mr. Lesyna received his M.B.A., as well as an M.S. and B.S. in mechanical engineering from Stanford University.

Bruce E. Peetz- Bruce Peetz has served as vice president of Advanced Technology and Systems since 1998 and has been with Trimble for 18 years. From 1996 to 1998, Mr. Peetz served as general manager of the Survey Business. Prior to joining Trimble, Mr. Peetz was a research and development manager at Hewlett-Packard for 10 years. Mr. Peetz received his B.S. in electrical engineering from Massachusetts Institute of Technology in Cambridge, Massachusetts in 1973.
Julie Shepard- – Julie Shepard joined Trimble in December of 2006 as vice president of finance.finance, and was appointed principal accounting officer in May 2007.  Ms. Shepard brings with her over 20 years of experience in a broad range of finance roles. She is responsible for Trimble's worldwide finance operations including financial planning, accounting, and external reporting, and compliance. Most recently,reporting.  Prior to joining Trimble, Ms. Shepard served as vice president of finance and corporate controller at Quantum Corporation, from 20042005 to 2006, and prior to that, from 2004 to 2005, as an independent consultant to Quantum Corporation.  She was vice president of finance at Nishan Systems from 2000 to 2003.  Ms. Shepard began her career at Price Waterhouse and is a Certified Public Accountant. She received a B.S from California State University where she majored in Accounting.
 
Alan R. Townsend- Alan Townsend has served as vice president and general manager of the Field Solutions business area since November 2001. From 1995 to 2001, Mr. Townsend was general manager of Mapping and GIS. Mr. Townsend joined Trimble in 1991 as the manager of Trimble Navigation New Zealand Ltd. Prior to Trimble, Mr. Townsend held a variety of technical and senior management roles within the Datacom Group of companies in New Zealand including managing director of Datacom Software Research Ltd. from 1986 to 1991. In addition, Mr. Townsend is a director of IT Capital Ltd., a venture capital company based in Auckland, 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.S.c in economics from the University of Canterbury in 1970.

Dennis L. Workman -– Dennis Workman has served as vice president and general manager of Trimble’svarious business divisions, currently including Component Technologies segmentand Applanix since September 1999.  He was appointed Trimble’s chief technical officer in March 2006.   From 1998 to 1999, Mr. Workman was senior director and chief technical officer of the newly formed Mobile and Timing Technologies (MTT) business group, also serving as general manager of Trimble's Automotive and Timing group.  In 1997, he was director of engineering for Software & Component Technologies. Mr. Workman joined Trimble in 1995 as director of the newly created Timing vertical market.  Prior to Trimble, Mr. Workman held various senior-level technical positions at Datum Inc. During his nine year tenure at Datum, he held the position of CTO.  Mr. Workman received a B.S. in mathematics and physics from St. Mary’s College in 1967 and an M.S. in electrical engineering from the Massachusetts Institute of Technology in 1969.1967.

Item 1A.
Item 1A.   Risk Factors.
Risk Factors.

RISKS AND UNCERTAINTIES

You should carefully consider the following risk factors, in addition to the other information contained in this Form 10-K and in any other documents to which we refer you in this Form 10-K, before purchasing our securities. The risks and uncertainties described below are not the only ones we face.

Current Economic Conditions and the Global Financial Crisis May Have an Impact on Our Business and Financial Condition in Ways that We Currently Cannot Predict.
The Company’s operations and performance depend on worldwide economic conditions and their impact on levels of business spending, which have deteriorated significantly in many countries and regions and may remain depressed for the foreseeable future. Uncertainties in the financial and credit markets have caused our customers to postpone purchases, and continued uncertainties may reduce future sales of our products and services.  Continued adverse economic conditions are likely to depress tax revenue of federal, state and local government entities, which are significant purchasers of the Company’s products. Protectionist trade measures that may be adopted in response to the economic downturn could reduce demand for our products and services overseas. With the exception of our Mobile Solutions and Advanced Devices segments, our products are generally sold through a dealer channel, and our dealers depend on the availability of credit to finance purchases of our products for their inventory.

Customer collections are our primary source of cash.  While we believe we have a strong customer base and have experienced strong collections in the past, if the current market conditions continue to deteriorate we may experience increased collection times or greater write-offs, which could have a material adverse effect on our cash flow.  In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products. Any write-off of goodwill could also negatively impact our financial results.  Finally, our ability to access the capital markets may be restricted at a time when we would like, or need, to do so, which could have an impact on our flexibility to pursue additional expansion opportunities and maintain our desired level of revenue growth in the future. These and other economic factors could have a material adverse effect on demand for the Company’s products and services and on the Company’s financial condition and operating results.

Our Inability to Accurately Predict Orders and Shipments May AffectSubject Our Revenue, Expenses and Earnings per Share.Results of Operations to Significant Fluctuations From Quarter to Quarter

We have not been able in the past to consistently predict when our customers will place orders and request shipments so that we cannot always accurately plan our manufacturing requirements. As a result, if orders and shipments differ from what we predict, we may incur additional expensesexpense and build excess inventory, which may require additional reserves and allowances. AnyAccordingly, we have limited visibility into future changes in demand and our results of operations may be subject to significant change in our customers’ purchasing patterns could have a material adverse effect on our operating results and reported earnings per share for a particularfluctuations from quarter to quarter.



Our Operating Results in Each Quarter May Be Affected by Special Conditions, Such Assuch as Seasonality, Late Quarter Purchases, Weather, and Other Potential Issues.Issues

Due in part to the buying patterns of our customers, a significant portion of our quarterly revenuesrevenue occurs from orders received and immediately shipped to customers in the last few weeks and days of each quarter, although our operating expenses tendexpense tends to remain fairly predictable. Engineering and construction purchases tend to occur in early spring, and governmental agencies tend to utilize funds available at the end of the government’s fiscal year for additional purchases at the end of our third fiscal quarter in September of each year. Concentrations of orders sometimes also occur at the end of our other two fiscal quarters. Additionally, a majority of our sales force earns commissions on a quarterly basis which may cause concentrations of orders at the end of any fiscal quarter. IfIt could harm our operating results if for any reason expected sales are deferred, orders are not received, or shipments are delayed a few days at the end of a quarter, our operating results and reported earnings per share for that quarter could be significantly impacted.quarter.

We Are Dependent on a Specific Manufacturer and Assembler for Many of Our Products and on Specific Suppliers of Critical Parts for Our Products.Products

We are substantially dependent upon Solectron Corporation in California, China and MexicoFlextronics International Limited as our preferred manufacturing partner for many of our GPS products previously manufactured out of our Sunnyvale facilities.products. Under the agreement, with Solectron, we provide to SolectronFlextronics a twelve-month product forecast and place purchase orders with SolectronFlextronics at least thirty calendar days in advance of the scheduled delivery of products to our customers depending on production lead time. Although purchase orders placed with SolectronFlextronics are cancelable, the terms of the agreement would require us to purchase from SolectronFlextronics all inventory not returnable or usable by other SolectronFlextronics customers. Accordingly, if we inaccurately forecast demand for our products, we may be unable to obtain adequate manufacturing capacity from SolectronFlextronics to meet customers’ delivery requirements or we may accumulate excess inventories, if such inventories are not usable by other SolectronFlextronics customers. Our current contract with SolectronFlextronics continues in effect until either party gives the other ninety days written notice..

In addition, we rely on specific suppliers for a number of our critical components. We have experienced shortages of components in the past. Our current reliance on specific 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.pricing, and economic conditions which may adversely impact the viability of our suppliers. 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 harm our reputation and brand and could have a material adverse effect onas well as our business.operating results.

Our Annual and Quarterly Performance May Fluctuate.Fluctuate Which Could Negatively Impact Our Operations and Our Stock Price

Our operating results have fluctuated and can be expected to continue to fluctuate in the future on a quarterly and annual basis as a result of a number of factors, many of which are beyond our control. Results in any period could be affected by:

·changes in market demand,
·competitive market conditions,
·market acceptance of existing or new 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,
·the timing of shipments of products under contracts and
·general global economic conditions.

In addition, demand for our products in any quarter or year may vary due to the seasonal buying patterns of our customers in the agricultural and engineering and construction industries. Due to the foregoing factors, our operating results in one or more future periods are expected to be subject to significant fluctuations. The price of our common stock could decline substantially in the event such fluctuations result in our financial performance being below the expectations of public market analysts and investors, which are based primarily on historical models that are not necessarily accurate representations of the future.



Our Gross Margin Is Subject to Fluctuation.Fluctuation

Our 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, sales of Nikon-branded products generally have lower gross marginsmargin as compared to our GPS survey products. Absent other factors, a shift in sales towards Nikon-branded products would lead to a reduction in our overall gross margins.margin. A decline in gross margin could potentially negatively impactharm our earnings per share.results of operations and financial condition.

Failure to Maintain Effective Internal Controls in Compliance With Section 404 of the Sarbanes-Oxley Act Could Have an Adverse Effect on our Business and Stock Price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include an internal control report of management in our Annual Report on Form 10-K. For fiscal 2004, 2005, and 2006 we satisfied the requirements of Section 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent auditors addressing these assessments.

A system of controls, however well designed and operated, cannot provide absolute assurance that the objectives of the system will be met. In addition, the design of a control system is based in part upon certain assumptions about the likelihood of future events. Because of the inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.

We Are Dependent on New Products.Products and if We are Unable to Successfully Introduce Them Into The Market Our Customer Base May Decline or Fail to Grow as Anticipated

Our 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. We may incur problems in the future in innovating and introducing new products. Our development stage products may not be successfully completed or, if developed, may not 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 we might not achieve timely initial customer shipments of new products. The timely availability of these products in volume and their acceptance by customers are important to our future success. A delay inIf we are unable to introduce new product introductionsproducts, if other companies develop similar technology products, or if we do not develop compelling new products, our number of customers may not grow as anticipated, or may decline, which could have a significant impact onharm our results of operations.operating results.

We Are Dependent on Proprietary Technology.Technology, which Could Result in Litigation that Could Divert Significant Valuable Resources

Our future success and competitive position is dependent upon our proprietary technology, and we rely on patent, trade secret, trademark, and copyright law to protect our intellectual property. The patents owned or licensed by us may be invalidated, circumvented, and challenged. The rights granted under these patents may not provide competitive advantages to us. Any of our pending or future patent applications may not be issued within the scope of the claims sought by us, if at all.

Others may develop technologies that are similar or superior to our technology, duplicate our technology or design around the patents owned by us. In addition, effective copyright, patent, and trade secret protection may be unavailable, limited or not applied for in certain countries. The steps taken by us to protect our technology might not prevent the misappropriation of such technology.

The value of our products relies substantially on our technical innovation in fields in which there are many current patent filings. We recognize 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. We do not believe any of our 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 eventsAny such litigation could require us to incur substantial costs and divert significant valuable resources, including the efforts of our technical and management personnel, which harm our results of operations and financial condition.

Investing in and Integrating New Acquisitions Could be Costly and May Place a Significant Strain on Our Management Systems and Resources Which Could Negatively Impact Our Operating Results

We have recently acquired a number of companies, and intend to continue to acquire other companies. Acquisitions of companies entail numerous risks, including:

·  potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated benefits from integration;
·  loss of key employees of acquired operations;
·  the difficulty of assimilating geographically dispersed operations and personnel of the acquired companies;
·  the potential disruption of our ongoing business;
·  unanticipated expense related to acquisitions; including significant transactions costs which under the new accounting rules, are required to be expensed rather than capitalized;
·  the correct assessment of the relative percentages of in-process research and development expense that can be immediately written off as compared to the amount which must be amortized over the appropriate life of the asset;
·  the impairment of relationships with employees and customers of either an acquired company or our own business; and
·  the potential unknown liabilities associated with acquired business.


As a result of such acquisitions, we have significant assets that include goodwill and other purchased intangibles. The testing of this goodwill and intangibles for impairment under established accounting guidelines requires significant use of judgment and assumptions. Changes in business conditions could require adjustments to the valuation of these assets. In addition, losses incurred by a company in which we have an investment may have a material adverse effectdirect impact on our revenuesfinancial statements or profitability.could result in our having to write-down the value of such investment. Any such problems in integration or adjustments to the value of the assets acquired could harm our growth strategy, and could be costly and place a significant strain on our management systems and resources.


Our Products May Contain Errors or Defects, which Could Result in Damage to Our Reputation, Lost Revenues,Revenue, Diverted Development Resources and Increased Service Costs, Warranty Claims, and Litigation.Litigation
 
Our devices are complex and must meet stringent requirements. We warrant that our products will be free of defect for various periods of time, depending on the product. In addition, certain of our contracts include epidemic failure clauses. If invoked, these clauses may entitle the customer to return or obtain credits for products and inventory, or to cancel outstanding purchase orders even if the products themselves are not defective.


We must develop our products quickly to keep pace with the rapidly changing market, and we have a history of frequently introducing new products. Products and services as sophisticated as ours could contain undetected errors or defects, especially when first introduced or when new models or versions are released. In general, our products may not be free from errors or defects after commercial shipments have begun, which could result in damage to our reputation, lost revenues,revenue, diverted development resources, increased customer service and support costs and warranty claims and litigation which could harm our business, results of operations and financial condition.litigation.

We Are Dependent on the Availability of Allocated Bands within the Radio Frequency Spectrum.Spectrum

Our GPSGNSS technology is dependent on the use of the Standard Positioning Service (“SPS”) provided by the US Government’s GPS. The GPS SPS operates in radio frequency bands that are globally allocated for radio navigation satellite services.signals from space and on terrestrial communication bands.  International allocations of radio frequency are made by the International Telecommunications Union (“ITU”)(ITU), a specialized technical agency of the United Nations. These allocations are further governed by radio regulations that have treaty status and which may be subject to modification every two to three years by the World Radio Communication Conference.  Each country also has regulatory authority on how each band is used.

Any ITU or local reallocation of radio frequency bands, including frequency band segmentation or sharing of spectrum, may materially and adversely affect the utility and reliability of our products. Many of our products use other radio frequency bands, together with the GPSGNSS signal, to provide enhanced GPSGNSS capabilities, such as real-time kinematickinematics precision. The continuing availability of these non-GPSnon-GNSS radio frequencies is essential to provide enhanced GPSGNSS products to our precision survey, agriculture and construction machine controls markets. Any regulatory changes in spectrum allocation or in allowable operating conditions may cause a material adverse effect on our operating results.

In addition, unwanted emissions from mobile satellite services and other equipment operating in adjacent frequency bands or in-band from licensed and unlicensed devices may materially and adversely affect the utility and reliability of our products. The Federal Communications Commission (FCC) continually receives proposals for novel technologies and services, such as ultra-wideband technologies, 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 and other radio frequency spectrum also used in our products may result incould have a material adverse effect on our business, results of operations, and financial condition.

We have certain products, such as GPS RTK systems, and surveying and mapping systems that use integrated radio communication technology requiring access to available radio frequencies allocated to local government.  Some bands are experiencing congestion. In the U.S., the FCC announced that it will require migration of radio technology from wideband to narrowband operations in these bands. The rules require migration of users to narrowband channels by 2011. In the meantime, congestion could cause FCC coordinators to restrict or refuse licenses. An inability to obtain access to these radio frequencies by end users could have a material adverse effect on our business, results of operations, and financial condition.

Many of Our Products Rely on GNSS technology, the GPS, and other Satellite Systems, Which May Become Inoperable and Result in Lost Revenue

GNSS technology, GPS satellites and their ground support systems are complex electronic systems subject to electronic and mechanical failures and possible sabotage.  TheMany of the GPS satellites currently in orbit 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 30 satellites in place, some have already been in operation for more than 12 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 may impair the current utility of the GPS system and the growth of current and additional market opportunities.


In 2004, a Presidential policy affirmed a 1996 Presidential Decision Directive that marked
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As the first timeonly complete GNSS currently in operation, we are dependent on continued operation of GPS.  GPS is operated by the evolution of GPS that access for civilian use was free of direct user fees. In addition, Presidential policy has been complemented by corresponding legislation, that was signed into law. However, there can be no assurance that the U.S.U. S. Government, will remainwhich is committed to maintenance and improvement of GPS; however if the operationpolicy were to change, and maintenanceGPS were no longer supported by the U. S. Government, or if user fees were imposed, it could have a material adverse effect on our business, results 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. 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 our products to select GPS-based systems instead of products based on competing technologies.operations, and financial condition.

Many of our products also use signals from systems that augment GPS, such as the Wide Area Augmentation System (WAAS) and National Differential GPS System (NDGPS). Many of these augmentation systems are operated by the federal government and rely on continued funding and maintenance of these systems. In addition, some of our products also use satellite signals from the Russian GlonassGLONASS System. Any curtailment of the operating capability of these systems could result in decreased user capability thereby impacting our markets.


The European governments havecommunity has begun development of an independent radio navigation satellite navigation system, known as Galileo. We have access to the preliminary signal design, which is subject to change.change and which requires a commercial license from Galileo authorities. Although an operational Galileo system is several years away, if we are unable to develop a timely commercial product, it may haveor obtain a materially adverse effect on our business and operating results.

We may be Materially Affected by New Regulatory Requirements.
We are subject to various federal, state and local environmental laws and regulations that govern our operations, including the handling and disposal of non-hazardous and hazardous wastes, and emissions and discharges into the environment. Failure to comply with such laws and regulationstimely commercial license, it could result in costs for corrective action, penalties, or the impositionlost revenue which could harm our results of other liabilities.operations and financial condition.

In particular, under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs of remediating hazardous substances or petroleum products on or from its property, without regard to whether the owner or operator knew of, or caused, the contamination, as well as incur liability to third parties impacted by such contamination. In addition, we face increasing complexity in our product design and procurement operations as we adjust to new and upcoming requirements relating to the materials composition of many of our products. The European Union (“EU”) adopted new directives to manage the use of hazardous materials and to facilitate the recycling of electrical and electronic equipment sold in the EU. One of these is the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”) directive. The RoHS directive restricts the use of lead, mercury and certain other substances in electrical and electronic products placed on the market in the European Union after July 1, 2006.

China adopted the Management Measures on Electronic Information Product Pollution Control to manage toxic and hazardous substances in electronic information products in 2006. Also known as “China RoHS,” the new regulations will require labeling of products containing toxic or hazardous substances placed on the Chinese market after March 1, 2007. Similar laws and regulations have been or may be enacted in other regions, including in the United States and Japan. Other environmental regulations may require us to reengineer our products to utilize components which are more environmentally compatible and such reengineering and component substitution may result in additional costs to us. Although we do not anticipate any material adverse effects based on the nature of our operations and the effect of such laws, there is no assurance that such existing laws or future laws will not have a material adverse effect on our business.
Our Business is Subject to Disruptions and Uncertainties Caused by War or Terrorism.Terrorism

Acts of war or acts of terrorism, especially any directed at the GPS signals, could have a material adverse impact on our business, operating results, and financial condition. The threat of terrorism and war and heightened security and military response to this threat, or any future acts of terrorism, may cause further disruption to our economy and create further uncertainties.invoke a redeployment of the satellites used in GPS or interruptions of the system. To the extent that such disruptions or uncertaintiesinterruptions result in delays or cancellations of orders, or the manufacture or shipment of our products, it could have a material adverse effect on our business, operating results of operations, and financial condition could be materially and adversely affected.condition.
 
We Are Exposed to Fluctuations in Currency Exchange Rates.Rates and Although We Hedge Against These Risks, Our Attempts to Hedge Could be Unsuccessful and Expose Us to Losses

A significant portion of our business is conducted outside the U.S., and as such, we face exposure to movements in non-U.S. currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results and cash flows. Fluctuation in currency impacts our operating results.

Currently, we hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. The hedging activities undertaken by us are intended to offset the impact of currency fluctuations on certain non-functional currency assets and liabilities. Our attempts to hedge against these risks may notcould be successful resulting in an adverse impact on our net income.unsuccessful and expose us to losses.

We Face Risks in Investing in and Integrating New Acquisitions.

We have recently acquired a number of companies, including @Road, and intend to continue to acquire other companies. Acquisitions of companies entail numerous risks, including:

·potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated benefits from integration;
·diversion of management’s attention from on-going business concerns;
·loss of key employees of acquired operations;
·the difficulty of assimilating geographically dispersed operations and personnel of the acquired companies;
·the potential disruption of our ongoing business;
·unanticipated expenses related to such integration;
·the correct assessment of the relative percentages of in-process research and development expense that can be immediately written off as compared to the amount which must be amortized over the appropriate life of the asset;
·the impairment of relationships with employees and customers of either an acquired company or our own business;
·the potential unknown liabilities associated with acquired business;
·inability to recover strategic investments in development stage entities; and
·insufficient revenues to offset increased expenses associated with acquisitions.
As a result of such acquisitions, we have significant assets that include goodwill and other purchased intangibles. The testing of these intangibles under established accounting guidelines for impairment requires significant use of judgment and assumptions. Changes in business conditions could require adjustments to the valuation of these assets. In addition, losses incurred by a company in which we have an investment may have a direct impact on our financial statements or could result in our having to write-down the value of such investment. Any such problems in integration or adjustments to the value of the assets acquired could harm our growth strategy and have a material adverse effect on our business, financial condition and compliance with debt covenants.

Our Debt Could Adversely Affect Our Cash Flow and Prevent Us from Fulfilling Our Obligations.Financial Obligations

Upon consummation of the @Road acquisition, on February 20, 2007, we borrowed $250 million underWe have an amendedexisting unsecured revolving credit agreement, and term loanunder which has increased ourwe have an ability to borrow an aggregate amount of up to $300 million.  As of January 2, 2009, $151.0 million was outstanding indebtedness and interest expense. Our debtunder this line of credit. Debt incurred under this agreement could have important consequences, such as:

·requiring us to dedicate a portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures, and other cash requirements;
·increasing our vulnerability to adverse economic and industry conditions;
·limiting our flexibility in planning for, or reacting to, changes and opportunities in, our industry, which may place us at a competitive disadvantage; and
·limiting our ability to incur additional debt on acceptable terms, if at all.

Additionally, if we were to default under our amended credit agreement and were unable to obtain a waiver for such a default, interest on the obligations would accrue at an increased rate and the lenders could accelerate our obligations under the amended credit agreement, however that acceleration will be automatic in the case of bankruptcy and insolvency events of default.  Additionally, our subsidiaries that have guaranteed the amended credit agreement could be required to pay the full amount of our obligations under the amended credit agreement.  Any such action on the part of the lenders against us could have a materially adverse impact onharm our business, financial condition, and resultscondition.



We May Not Be Able to Enter Into or Maintain Important Alliances.Alliances

We believe that in certain business opportunities our success will depend on our ability to form and maintain alliances with industry participants, such as Caterpillar, Nikon, and CNH Global. Our failure to form and maintain such alliances, or the pre-emption of such alliances by actions of competitors or us, will adversely affect our ability to penetrate emerging markets. No assurances can be given thatIf we will not experience problems from current or future alliances or thatit could harm our operating results and we willmay not be able to realize value from any such strategic alliances.

We Face Competition in Our Markets.Markets Which Could Decrease Our Revenue and Growth Rates or Impair Our Operating Results and Financial Condition

Our markets are highly competitive and we expect that both direct and indirect competition will increase in the future. Our overall competitive position depends on a number of factors including the price, quality and performance of our products, the level of customer service, the development of new technology and our ability to participate in emerging markets. Within each of our markets, we encounter direct competition from other GPS, optical and laser suppliers and competition may intensify from various larger U.S. and non-U.S. competitors and new market entrants, particularly from emerging markets such as China and India, some of which may be our current customers.India. The competition in the future may, in some cases, result in price reductions, reduced margins or loss of market share, any of which could materiallydecrease our revenue and adversely affectgrowth rates or impair our business, operating results and financial condition. We believe that our ability to compete successfully in the future against existing and additional competitors will depend largely on our ability to execute our strategy to provide systems and products with significantly differentiated features compared to currently available products. We may not be able to implement this strategy successfully, and our products may not be competitive with other technologies or products that may be developed by our competitors, many of whom have significantly greater financial, technical, manufacturing, marketing, sales and other resources than we do.


We Must Carefully Manage Our Future Growth.

Growth in our sales or continued expansion in the scope of our operations could strain our current 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. We have recently implemented a new enterprise resource planning software system and we may experience in our financial and order management processing as a result of new procedures. Problems associated with any improvement or expansion of these systems, procedures or controls may adversely affect our operations and these systems, procedures or controls may not 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 harm our growth strategy and adversely affect our financial condition and ability to achieve our business objectives.

We Are Subject to the Impact of Governmental and Other Similar Certifications.Certifications and Failure to Obtain the Requisite Certifications Could Harm Our Operating Results

We market certain products that 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.community. An inability to obtain such certifications in a timely manner could have an adverse effect on our operating results. Also, some of our products that use integrated radio communication technology require product type certification and some products require an end user to obtain licensing from the FCC for frequency-band usage. These are secondary licenses that are subject to certain restrictions. An inability or delay in obtaining such certifications or changes to the rules by the FCC could adversely affect our ability to bring our products to market which could harm our customer relationships and have a material adverse effect ontherefore, our business.

We Are Subject to the Adverse Impact of Radio Frequency Congestion.

We have certain products, such as GPS RTK systems, and surveying and mapping systems that use integrated radio communication technology requiring access to available radio frequencies allocated by the FCC (or the NTIA in the case of federal government users of this equipment) for which the end user is requiredoperating results. Any failure to obtain a license in order to operate their equipment. In addition, access to these frequencies by state agencies is under management by state radio communications coordinators. Some bands are experiencing congestion that excludes their availability for access by state agencies in some states. To reduce congestion, the FCC announced that it will require migration of radio technology from wideband to narrowband operations in these bands. The rules require migration of users to narrowband channels by 2011. In the meantime congestionrequisite certifications could cause FCC coordinators to restrict or refuse licenses. An inability to obtain access to these radio frequencies by end users could have an adverse effect onalso harm our operating results.

The Volatility of Our Stock Price Could Adversely Affect Your Investment in Our Common Stock.Stock

The market price of our common stock has been, and may continue to be, highly volatile. During fiscal 2006,2008, our stock price ranged from $17.51$14.43 to $26.18,$41.42, on a post-split basis.  We believe that a variety of factors could cause the price of our common stock to fluctuate, perhaps substantially, including:

·  announcements and rumors of developments related to our business or the industry in which we compete;
·  quarterly fluctuations in our actual or anticipated operating results and order levels;
·  general conditions in the worldwide economy, including fluctuations in interest rates;
·  announcements of technological innovations;economy;
· acquisition announcements; 
·  new products or product enhancements by us or our competitors;
·  developments in patents or other intellectual property rights and litigation;
·  developments in our relationships with our customers and suppliers; and
·  any significant acts of terrorism against the United States.terrorism.


In addition, in recent years the stock market in general and the markets for shares of "high-tech" companies in particular, have experienced extreme price fluctuations which have often been unrelated to the operating performance of affected companies. Any such fluctuations in the future could adversely affect the market price of our common stock, and the market price of our common stock may decline.

22

Changes in Our Charter Documents and Under California Law Could Prevent or Delay a Change of Control, which CouldEffective Tax Rate May Reduce the Market Price of Our Common Stock.Net Income in Future Periods

Certain provisionsA number of factors may increase our articlesfuture effective tax rates, including:

·  the jurisdictions in which profits are determined to be earned and taxed;
·  the resolution of issues arising from tax audits with various tax authorities;
·  changes in the valuation of our deferred tax assets and liabilities;
· increases in expense not deductible for tax purposes, including write-offs of acquired in-process
 R&D and impairments of goodwill in connection with acquisitions;
·  changes in available tax credits;
·  changes in share-based compensation;
·  changes in tax laws or the interpretation of such tax laws, and changes in generally accepted
 accounting principles;
·  the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes; and
·  challenges to the transfer pricing policies related to our global supply chain management structure. 

The Company is currently in various stages of incorporation, as amendedmultiple year examinations by federal, state, and restated,foreign taxing authorities, including an audit of its 2005 through 2007 tax years by the U.S. Internal Revenue Service (IRS).  If the IRS or the taxing authorities of any other jurisdiction were to successfully challenge a material tax position, we could become subject to higher taxes and our bylaws, as amended and restated, and the California General Corporation Lawearnings would be adversely affected. In addition, proposals for changes in U.S. tax laws that may be deemed to have an anti-takeover effect and could discourage a third party from acquiring,considered or make it more difficult for a third party to acquire, control of us without approval of our board of directors. These provisions could also limit the price that certain investors might be willing to payadopted in the future for shares of our common stock. Certaincould subject the Company to higher taxes or result in changes to tax law provisions allow the board of directors to authorize the issuance of preferred stock with rights superior to those of the common stock.that currently provide favorable tax treatment.

We have adopted a Preferred Shares Rights Agreement, commonly known as a "poison pill." The provisions described above, our poison pill and provisions of the California General Corporation Law may discourage, delay or prevent a third party from acquiring us.

Item 1B.   Unresolved Staff Comments.

Item 1B.
Unresolved Staff Comments.

None


Item 2.
ProperItem 2.   Properties.ties.

The following table sets forth the significant real property that we own or lease as of February 23, 2007:21, 2009:
 
Location Segment(s) served Size in Sq. Feet Commitment
 Sunnyvale, California All  160,000 
Leased, expiring in 2012
3 buildings
 Huber Heights (Dayton), Ohio 
Engineering & Construction
Field Solutions
DistributionMobile Solutions
 
150,000
57,200
35,60055,200
 
Owned, no encumbrances
Leased, expiring in 2011
Leased, month to monthexpiring in 2009
Westminster, Colorado Engineering & Construction, Field Solutions  76,00086,000 Leased, expiring in 2013
 Corvallis, Oregon Engineering & Construction 
 20,000
38,000
 
Owned, no encumbrances
Leased, expiring 2007in 2009
 Richmond Hill, Canada Advanced Devices  50,200 Leased, expiring 2007in 2010
 Danderyd, Sweden Engineering & Construction  93,900 Leased, expiring in 2010
Christchurch, New Zealand Engineering & Construction, Mobile Solutions, Field Solutions  65,000 
Leased, expiring in 2010
2 buildings
Fremont, California (@Road) Mobile Solutions 102,544 
Leased, expiring in 2010
2 buildings
Chennai, India
(@Road)
 Mobile Solutions 37,910 Leased, expiring 2009in 2012

In addition, we lease a number of smaller offices around the world primarily for sales and manufacturing functions. For financial information regarding obligations under leases, see Note 10 of the Notes to the Consolidated Financial Statements.

* We believe that our facilities are adequate to support current and near-term operations.

Item 3.
Item 3.   Legal Proceedings.
Legal Proceedings.

From time to time, the Company is involved in litigation arising out of the ordinary course of its business. There are no known claims or pending litigation expected to have a material adverse effect on our overall financial position,business, results of operations, or liquidity.and financial condition.



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

No matters were submitted to a vote of security holders during the fourth quarter of 2006.2008.


PART II

 
PART IIItem 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the NASDAQ National Market under the symbol "TRMB."  The table below sets forth, during the periods indicated, the high and low per share sale prices for our common stock as reported on the NASDAQ National Market.NASDAQ.
  2008  2007 
  Sales Price  Sales Price 
Quarter Ended High  Low  High  Low 
First quarter $30.97  $21.47  $57.41  $25.47 
Second quarter  41.42   26.09   32.65   26.83 
Third quarter  36.34   27.66   41.33   32.24 
Fourth quarter  28.04   14.43   43.15   30.40 

  
2006
Sales Price
 
2005
Sales Price
 
Quarter Ended High Low High Low 
First quarter $22.53 $17.51 $19.12 $15.02 
Second quarter  24.26  19.68  20.56  15.04 
Third quarter  25.55  21.29  22.28  15.58 
Fourth quarter  26.18  22.10  18.98  13.32 
Stock Repurchase Program

In January 2008, our board of directors authorized a stock repurchase program (“2008 Stock Repurchase Program”), authorizing us to repurchase up to $250 million of Trimble’s common stock under this program. We repurchased approximately 4,243,000 shares of common stock in open market purchases at an average price of $29.67 per share in 2008.  The total purchase price of $125.9 million was reflected as a decrease to common stock based on the average stated value per share with the remainder to retained earnings.  Common stock repurchases under the program were recorded based upon the trade date for accounting purposes.  All common shares repurchased under this program have been retired. As of January 2, 2009, the 2008 Stock Repurchase Program had remaining authorized funds of $124.1 million.  The timing and actual number of future shares repurchased will depend on a variety of factors including price, regulatory requirements, capital availability, and other market conditions.  The program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time without public notice.

The following table provides information relating to our purchases of equity securities for the fourth quarter of fiscal 2008:
  
Total Number of
Shares Purchased
  
Average
Price Paid
per Share
  
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
  
Maximum Dollar
Value of Shares that
May Yet Be
Purchased Under
the Program
 
             
September 27, 2008 – October 31, 2008  -   -   -  $134,149,431 
October 31, 2008 – November 28, 2008  357,617  $19.35   357,617   127,231,086 
November 29, 2008 – January 2, 2009  178,759   17.45   178,759   124,111,572 
Total Activities  536,376  $18.71   536,376     


2-for-1 Stock Split

On January 17, 2007, Trimble’s Board of Directors approved a 2-for-1 split of all outstanding shares of the Company’s Common Stock, payable February 22, 2007 to stockholders of record on February 8, 2007. All shares and per share information presented has been adjusted to reflect the stock split on a retroactive basis for all periods presented.

As of December 29, 2006,February 27, 2009, there were approximately 1,009961 holders of record of our common stock.


Dividend Policy

We have not declared or paid any cash dividends on our common stock during any period for which financial information is provided in this Annual Report on Form 10-K. At this time, we intend to retain future earnings, if any, to fund the development and growth of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Under the existing terms of our credit facility, we are allowed to pay dividends and repurchase shares of our common stock without limitation so long as no default or unmatured default then existed, the leverage ratio for the two most recently completed periods was less than 2.00:1.00 and after giving pro forma effect to such dividend or share repurchase, the leverage ratio will be less than 2.00:1.00. Should the leverage ratio be equal to or greater than 2.00:1.00 without exceeding a leverage ratio of 3.00:1.00, we can pay dividends and repurchase shares of our common stock in any twelve (12) month period, in an aggregate amount equal to fifty percent (50%) of net income (plus, to the extent deducted in determining net income for such period, non-cash expenses in respect of stock options) for the previous twelve month period.  Also, we are allowed to spendtwelve-month period, plus an additional $50 million over the term of the credit facility subject to pay dividends and repurchase shares if we are inpro forma compliance with our fixed charge coverage ratio.ratio covenant. Otherwise, dividends and share repurchases are restricted by our Credit Agreement.



Item 6.Item 6.   Selected Financial Data
Selected Financial Data

The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this annual report. Historical results are not necessarily indicative of future results. In particular, because the results of operations and financial condition related to our acquisitions are included in our Consolidated Statements of Income and Consolidated Balance Sheets data commencing on those respective acquisition dates, comparisons of our results of operations and financial condition for periods prior to and subsequent to those acquisitions are not indicative of future results.  In February 2007 we acquired @Road, Inc. Please refer to Note 4 to the Consolidated Financial Statements for more information.

 January 2,  December 28,  December 29,  December 30,  December 31, 
As of And For the Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
January 2,
2004
 
January 3,
2003
  2009  2007  2006  2005  2004 
(Dollar in thousands, except per share data)
                          
                          
Revenue $940,150 $774,913 $668,808 $540,903 $466,602  $1,329,234  $1,222,270  $940,150  $774,913  $668,808 
Gross margin $461,081 $389,805 $324,810 $268,030 $234,432  $649,136  $612,905  $461,081  $389,805  $324,810 
Gross margin percentage  49% 50% 49% 50% 50%  48.8%  50.1%  49.0%  50.3%  48.6%
Income from continuing operations $103,658 $84,855 $67,680 $38,485 $10,324  $141,472  $117,374  $103,658  $84,855  $67,680 
Net income $103,658 $84,855 $67,680 $38,485 $10,324  $141,472  $117,374  $103,658  $84,855  $67,680 
Per common share (1):                                
Net income (1)                                
- Basic $0.94 $0.80 $0.66 $0.41 $0.12  $1.17  $0.98  $0.94  $0.80  $0.66 
- Diluted $0.89 $0.75 $0.62 $0.38 $0.12  $1.14  $0.94  $0.89  $0.75  $0.62 
Shares used in calculating basic earnings per share (1)  110,044 106,432 102,326 95,010 85,720   120,714   119,280   110,044   106,432   102,326 
Shares used in calculating diluted earnings per share (1)  116,072 113,638 109,896 100,024 87,156   124,235   124,410   116,072   113,638   109,896 
Cash dividends per share $- $- $- $- $-  $-  $-  $-  $-  $- 
                                
Total assets $978,431 $743,088 $653,978 $552,602 $447,704  $1,635,016  $1,539,359  $983,477  $749,265  $657,975 
Non-current portion of long term debt and other non-current liabilities $28,000 $19,474 $38,226 $85,880 $114,051  $213,017  $116,692  $28,000  $19,474  $38,226 

 (1)2-for-1 Stock Split - On January 17, 2007, Trimble’s Boardboard of Directorsdirectors approved a 2-for-1 split of all outstanding shares of the Company’s Common Stock, payable February 22, 2007 to stockholders of record on February 8, 2007. All shares and per share information presented has been adjusted to reflect the stock split on a retroactive basis for all periods presented.


Item 7.Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and the related notes. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under "Risks Factors." We have attempted to identify forward-looking statements in this report by placing an asterisk (*) before paragraphs containing such material.

EXECUTIVE LEVEL OVERVIEW

Trimble’s focus is on combining positioning technology with wireless communication and application capabilities to create system-level solutions that enhance productivity and accuracy for our customers. The majority of our markets are end-user markets, including engineering and construction firms, governmental organizations, public safety workers, farmers and companies who must manage fleets of mobile workers and assets. In our Advanced Devices segment, we also provide components to original equipment manufacturers to incorporate into their products.  In the end user markets, we provide a system that includes a hardware platform that may contain software and customer support. Some examples of our solutions include products that automate and simplify the process of surveying land, products that automate the utilization of equipment such as tractors and bulldozers, products that enable a company to manage its mobile workforce and assets, and products that allow municipalities to manage their fixed assets. In addition, we also provide software applications on a stand-alone basis. For example, we provide software for project management on construction sites.

Solutions targeted at the end-user make up a significant majority of our revenue. To create compelling products, we must attain an understanding of the end users’ needs and work flow, and how location-based technology can enable that end user to work faster, more efficiently, and more accurately. We use this knowledge to create highly innovative products that change the way work is done by the end-user. With the exception of our TMS segment,Mobile Solutions and Advanced Devices segments, our products are generally sold through a dealer channel, and it is crucial that we maintain a proficient global, third-party distribution channel.

During 2006 weWe continued to execute our strategy with a series of actions that can be summarized in four categories.

Reinforcing our position in existing markets

Generally, we* We believe that ourthese markets provide us with additional, substantial potential for substituting our technology for traditional methods. In 2006 we continuedWe are continuing to develop new products and to strengthen our distribution channels in order to realize these opportunities. A numberexpand our market opportunity. In our Field Solutions Segment, we introduced the AgGPS EZ-Guide 250 Lightbar Guidance System, GPS Pathfinder ProXRT Receiver, Trimble GeoExplorer 2008 Series and the new Juno™ Series.   We announced that the City of Joliet, Illinois Public Utilities Department and the Baton Rouge Water Company in Louisiana selected Trimble’s Fieldport software to enhance utility field operations. In our Engineering and Construction segment, we introduced the Trimble MEP layout solution, Trimble Coastal Center™ Software, and Trimble NetR8™ GNSS Reference Receiver. We also introduced further enhancements to our complete surveying portfolio as part of its Connected Site™ solutions: new products such asmodels of the Trimble S6, Trimble SPS700 Robotic ConstructionS8 Total Station with options for monitoring and the enhancedtunneling applications; a new version of Trimble GCS900 Grade Control SystemBusiness Center; a scalable Trimble VX Spatial Station; and improved field to office solutions for German surveyors. In our Mobile Solutions segment, we announced that Carrier Corporation is rolling out Trimble's Mobile Resource Management (MRM) solution within its fleet. All of these products strengthened our competitive position and created new value for the user.

ExtendExtending our position in existing markets through new product categories

* We are utilizing the strength of the Trimble brand in our markets to expand our revenuesrevenue by bringing new products to existing users. A 2006 example wasIn our Field Solutions segment, we introduced Agriculture Manager™ Asset Management System AgGPS EZ-Office™ Software. In our Engineering and Construction segment, we introduced new products, such as a new sensor for the introductionTrimble CCS900 Compaction Control System that provides real-time material density information to earthworks operators. We were also chosen to supply Trimble VRS™  technology to establish a nationwide GNSS infrastructure network for Turkey called CORS-TR (Continuous Operating Reference Station-Turkey or TUSAGA AKTIF) and the Republic of Croatia called the AgGPS EZ-Boom 2010 product. In orderCROatian POsitioning System (CROPOS).  We launched Trimble VRS Now™ Service in Madrid, Spain and in the state of Florida to createprovide surveyors, civil engineers and geospatial professionals in the area with instant access to real-time kinematic (RTK) GNSS corrections without the need for a base station.  These are all examples of bringing new categoriesproducts to existing markets.

BringBringing existing technology to new markets

* We continue to reinforce our position in existing markets and positionedposition ourselves in newer markets that will serve as important sources of future growth. Our efforts in Africa, China, India, Russia, Koreathe Middle-East and Eastern Europe allRussia reflected improving financial results,results.  We announced a GPS software technology licensing agreement with the promise of moreMarvell, a leader in the future.development of storage, communications and consumer silicon. The licensing agreement will enable Marvell to provide customers with comprehensive GPS solutions based on innovative architectures that are tailored for high performance and low overall system power consumption.

Entered completelyEntering new marketsmarket segments

In fiscal 2006* During 2008 we acquired Visual Statement,companies, technologies or introduced new product categories that have allowed us to enter new market segments. In our Engineering and Construction segment, we acquired two accessory companies, Crain and SECO, whose products complement our existing construction product offerings.  Additionally, we acquired three companies, Géo-3D, RolleiMetric and Toposys, which provides desktopthrough new product offerings, expand the emerging Geospatial markets.  In our Field Solutions segment, we acquired TruCount and Rawson Control Systems, which through new products, expand our agricultural market segment. We also acquired the FastMap and GeoSite software tools for crime and collision incident investigation, analysis, and reconstitution as well as state-wide enterprise solutions for reporting and analysis used by public safety agencies, and Eleven Technology, Inc.,assets from Korec, which is a mobile application software company with a leading position in the Consumer Packaged Goods industry. In addition, we increasedexpand our reach with existing products in new markets, particularly emerging markets such as China and India.GIS solutions.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are more fully described in Note 2 of the Notes to the Consolidated Financial Statements. The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements. We consider the accounting polices described below to be our critical accounting polices. These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

Our revenues are recorded in accordance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” and in accordance with Statement of Position (SOP) No. 97-2, “Software Revenue Recognition” and Statement of Position (SOP) No. 98-9, “Modification of SOP 97-2”. The Company recognizesWe recognize product revenue when persuasive evidence of an arrangement exists, deliveryshipment has occurred, the fee is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

Contracts andand/or customer purchase orders are typically used to determine the existence of an arrangement. Shipping documents and customer acceptance, when applicable, are used to verify delivery. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history.

Revenue for orders is not recognized until the product is shipped and title has transferred to the buyer. We bear all costs and risks of loss or damage to the goods up to that point. Our shipment terms for USU.S. orders and international orders fulfilled from itsour European distribution center are typically FCA (Free Carrier) shipping point, except certain sales to US government agencies which are shipped FOB destination. FCA shipping point meansprovide that we fulfill the obligation and title has passedpasses to the buyer upon delivery of the goods to the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, we may choose within the place or range stipulated where the carrier will take the goods into carrier’s charge. FOB destination means revenue for orders are not recognized until the product is delivered andOther shipment terms may provide that title has transferredpasses to the buyer. We bear all costs and risksbuyer upon delivery of loss or damagethe goods to the goods up to that point.buyer.  Shipping and handling costs are included in the cost of goods sold.

Revenue to distributors and resellers is recognized upon delivery,shipment, assuming all other criteria for revenue recognition have been met. Distributors and resellers do not have a right of return.


Revenue from purchased extended warranty and support agreements areis deferred and recognized ratably over the term of the warranty/support period.

We present revenue net of sales taxes and any similar assessments.

We apply Statement of Position (SOP) No. 97-2, “Software Revenue Recognition”Recognition,” to products where the embedded software is more than incidental to the functionality of the hardware. This determination requires significant judgment including a consideration of factors such as marketing, research and development efforts and any postcustomerpost-customer contract support (PCS) relating to the embedded software.

Our software arrangements generally consist of a perpetual license fee and PCS. We have established vendor-specific objective evidence (VSOE) of fair value for our PCS contracts based on renewal rates. The remaining value of the software arrangement is allocated to the license fee using the residual method.  License revenue is primarily recognized when the software has been delivered and there are no remaining obligations. Revenue from PCS is recognized ratably over the term of the PCS agreement.

We apply EITF Issue 00-3, "Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use Software Stored on Another Entity's Hardware," for hosted arrangements which the customer does not have the contractual right to take possession of the software at any time during the hosting period without incurring a significant penalty and it is not feasible for the customer to run the software either on its own hardware or on a third-party’s hardware. Subscription revenue related to our hosted arrangements is recognized ratably over the contract period. Upfront fees for our hosted solution primarily consist of amounts for the in-vehicle enabling hardware device and peripherals, if any. For upfront fees relating to proprietary hardware where the firmware is more than incidental to the functionality of the hardware in accordance with SOP No. 97-2, “Software Revenue Recognition,” we defer the upfront fees at installation and recognize them ratably over the minimum service contract period, generally one to five years. Product costs are also deferred and amortized over such period.

In accordance with Emerging Issues Task Force (EITF)EITF Issue 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables,” when a non-software sale involves multiple elements the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when revenue recognition criteria for each element areis met.

Our software arrangements generally consist of a perpetual license fee and post contract customer support (PCS). We have established vendor-specific objective evidence (VSOE) of fair value for our PCS contracts based on the renewal rate. The remaining value of the software arrangement is allocated to the license fee using the residual method, which revenue is primarily recognized when the software has been delivered and there are no remaining obligations. Revenue from PCS is recognized ratably over the term of the PCS agreement.

Allowance for Doubtful Accounts and Sales Returns

Our accounts receivable balance, net of allowance for doubtful accounts and sales returns reserve, was $172.0$204.3 million as of January 2, 2009, as compared with $239.9 million as of December 29, 2006, compared with $145.128, 2007. The allowance for doubtful accounts was $6.0 million and $5.2 million as of January 2, 2009 and December 30, 2005.28, 2007, respectively.  We evaluate theongoing collectibility of our trade accounts receivable based on a number of factors such as age of the accounts receivable balances, credit quality, historical experience, and current economic conditions that may affect a customer’s ability to pay. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, a specific allowance for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding.


A reserve for sales returns is established based on historical trends in product return rates experienced in the ordinary course of business. The reserve for sales returns as of December 29, 2006January 2, 2009 and December 30, 2005 were $900,00028, 2007 was $1.8 million and $1.5$1.7 million, respectively, for estimated future returns that were recorded as a reduction of our accounts receivable and revenue. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.

Inventory Valuation

Our inventories, net balance was $112.6$160.9 million as of January 2, 2009 as compared with $143.0 million as of December 29, 2006 compared with $107.9 million as of December 30, 2005.28, 2007. Our inventory allowances as of December 29, 2006January 2, 2009 were $28.6$29.8 million, as compared with $23.2$29.6 million as of December 30, 2005.28, 2007. Our inventories are stated at the lower of standard cost or market, with costs primarily computed(which approximates actual cost on a standard cost basis.first-in, first-out basis) or market.  Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence, or impaired inventory.balances.  Factors influencing these adjustments include decline in demand, technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues. If actual factors are less favorable than those projected by us, additional inventory write-downs may be required.


Income Taxes
 
Income taxes are accounted for under the liability method whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not such assets will not be realized.

The company’sOur valuation allowance is attributable to, primarily, the California Research Creditacquisition related net operating loss and acquisition Net Operating Lossresearch and development credit carryforwards.  Valuation allowance amounts are offsets to related deferred tax assets.  Management believes that it is more likely than not that the Companywe will not realize these deferred tax assets, and, accordingly, a valuation allowance has been establishedprovided for such amounts.  When the tax credits are utilized and theSFAS 141(R), “Business Combinations”, becomes effective, any valuation allowance is released,adjustment associated with an acquisition that closed prior to January 3, 2009 (and after the benefit of the release of the valuation allowancemeasurement period) will be accounted for as a credit to shareholder’s equity rather than as a reduction of therecorded through income tax provision.
Annual Goodwill Impairment Testexpense whereas the current accounting treatment (under SFAS 141) would require any adjustment to be recognized through the purchase price.

Goodwill asand Purchased Intangible Assets
Goodwill represents the excess of December 29, 2006 was $374.5 million, comparedthe purchase price over the fair value of the net tangible, identifiable intangible assets, and in-process research and development acquired in a business combination. Intangible assets acquired individually, with $286.1 million asa group of December 30, 2005. The processother assets, or in a business combination are recorded at fair value. Identifiable intangible assets are comprised of evaluatingdistribution channels and distribution rights, patents, licenses, technology, acquired backlog and trademarks.  Identifiable intangible assets are being amortized over the potential impairmentperiod of goodwill is subjective and requires significant assumptions. If an evaluation is required,estimated benefit using the estimated future undiscounted cash flowsstraight-line method, reflecting the pattern of economic benefits associated with these assets, would be comparedand have estimated useful lives ranging from one to their carrying amounttwelve years with a weighted average useful life of 6.5 years. Goodwill is not subject to determine ifamortization, but is subject to at least an annual assessment for impairment, applying a write-down to fair market value or discounted cash flow value is required.fair-value based test.
Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets

We performed an annual impairment test ofevaluate goodwill, at the end of the third fiscal quarter of 2006 and 2005 and found there was no impairment of goodwill. We will continue to evaluate our goodwill for impairmenta minimum, on an annual basis at the end of each fiscal third quarter and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The determinationannual goodwill impairment testing is performed in the fourth fiscal quarter of each year.  Goodwill is reviewed for impairment utilizing a two-step process.  First, impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the netreporting unit.   The fair values of the reporting units are estimated using a discounted cash flow approach.  If the carrying amount of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment loss, if any. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit’s goodwill, and the extent to which, if any, theredifference is recognized as an impairment are dependent on material estimates and judgments on our part, including the useful life over which the intangible assets are to be amortized, and the estimates of the value of future net cash flows, which are based upon further estimates of future revenues, expenses and operating income.

Accounting for Long-Lived Assets Including Intangibles Subject to Amortizationloss.

Depreciation and amortization of ourthe intangible assets and other long-lived assets is provided using the straight-line methodsmethod over their estimated useful lives.lives, reflecting the pattern of economic benefits associated with these assets. Changes in circumstances such as technological advances, changes to our business model, or changes in the capital strategy could result in the actual useful lives of intangible assets or other long-lived assets differing from initial estimates. In those cases where we determine that the useful life of a long-livedan asset should be revised, we will depreciate the net book value in excess of the estimated residual value will be expensed and the residual value is depreciated over its revised remaining useful life. Factors such as changes in the planned use of equipment, customer attrition, contractual amendments, or mandated regulatory requirements could result in shortened useful lives.


Long-livedThese assets and asset groups are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.recoverable based on their future cash flows. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows. Long-livedThe assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made.value.

Warranty Costs

The liability for product warranties was $8.6$13.3 million as of January 2, 2009, as compared with $10.8 million as of December 29, 2006, compared with $7.5 million as of December 30, 2005.28, 2007. We accrue for warranty costs as part of cost of sales based on associated material product costs, technical support labor costs, and costs incurred by third parties performing work on our behalf. Our expected future cost is primarily estimated based upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the equipment.  The products sold are generally covered by a warranty for periods ranging from 90 days to three years, and in some instances up to 5.5 years.


While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ from our estimates, revisions to the estimated warranty accrual and related costs may be required.

StockStock-Based Compensation

We apply StandardBeginning in fiscal 2006, we adopted Statement of Financial Accounting  Standards (“SFAS”)(SFAS) No. 123(R), “Share-Based Payment” (“SFAS(SFAS 123(R)”), which requires the measurement and related interpretationsrecognition of compensation expense for all share-based payment awards made to our employees and directors, based on estimated fair values. Stock-based compensation expense recognized in accounting for our stock option plans and stock purchase planConsolidated Statements of Income for fiscal 2006. As a result, the Company’s financial statements2008, 2007 and 2006 includes compensation expense for fiscal 2006 include stock-based compensation expenses that are not comparable to financial statements prior to fiscal 2006. Prior to fiscal 2006, we applied Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related interpretations in accounting for our stock option plans and stock purchase plan. Accordingly, we did not recognize compensation cost for stock options granted at a price equal to fair market value prior to fiscal 2006.

For optionsawards granted prior to, October 1,but not yet vested as of December 30, 2005 based on the grant date fair value estimated using the Black-Scholes options-pricing model in accordance with the provisions of SFAS 123 and compensation expense for these optionsawards granted subsequent to December 30, 2005 based on the grant date fair value estimated using a binomial valuation model in accordance with the provisions of SFAS 123(R). The fair value of rights to purchase shares under stock participation plans was estimated at the date of grant using the Black-Scholes option-pricing model. For stock options granted on or after October 1, 2005, the

The determination of fair value of each award is estimatedshare-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a binomial valuation model. Similar tonumber of highly complex and subjective variables.  These variables include our expected stock price volatility over the Black-Scholes model,term of the binomial model takes into account variables such as volatility, dividend yield rate,awards, actual and risk freeprojected employee stock option exercise behaviors, risk-free interest rate.rates, and expected dividends.  In addition, the binomial model incorporates actual option-pricing behavior. For these reasons, we believebehavior and changes in volatility over the option’s contractual term.

Beginning in fiscal 2006, our expected stock price volatility for stock purchase rights has been based on implied volatilities of traded options on our stock and our expected stock price volatility for stock options is based on a combination of our historical stock price volatility for the period commensurate with the expected life of the stock option and the implied volatility of traded options.  The use of implied volatilities was based upon the availability of actively traded options on our stock with terms similar to our awards and also upon our assessment that the binomial model provides a fair value thatimplied volatility is more representative of actual experience and future stock price trends than historical volatility.  However, because the expected experiencelife of our stock options is greater than the value calculated usingterms of our traded options, we used a combination of our historical stock price volatility commensurate with the expected life of our stock options and implied volatility of traded options.

We estimated the expected life of the awards based on an analysis of our historical experience of employee exercise and post-vesting termination behavior considered in relation to the contractual life of the options and purchase rights.  The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the awards.

We do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.  Accordingly, our expected dividend yield is zero.

Because stock-based compensation expense recognized in the Consolidated Statement of Operations for fiscal 2008, 2007 and 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.  SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  Forfeitures were estimated based on historical experience.

If factors change and we employ different assumptions in the application of SFAS 123(R) in future periods, the compensation expense that we record under SFAS 123(R) may differ significantly from what we have recorded in the current period.  In addition, valuation models, including the Black-Scholes model.

Note 14and binomial models, may not provide reliable measures of the Notesfair values of our stock-based compensation.  Consequently, there is a risk that our estimates of the fair values of our stock-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, expiration, early termination, or forfeiture of those stock-based payments in the future.  Certain stock-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements.  Alternatively, value may be realized from these instruments that are significantly higher than the fair values originally estimated on the grant date and reported in our financial statements.

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See Note 2 and Note 14 to the Consolidated Financial Statements describesfor additional information.

RECENT BUSINESS DEVELOPMENTS

The following companies and joint ventures were acquired or formed during fiscal 2008 and are combined in our results of operations since the plans we operate, and Note 2date of the Notes to the Consolidated Financial Statements contains a summary of the effects to reported net income and earnings per share for fiscal 2006, and pro forma net income and earnings per share for fiscal 2005 and 2004 as if we had elected to recognize compensation cost based on the fair value of the options granted at grant date.acquisition or formation:

Rawson Control Systems

RECENT BUSINESS DEVELOPMENTS

@Road, Inc.

On February 16, 2007,December 3, 2008, we acquired @Road, Inc.the assets of Fremont, California. @Road, Inc. is a global provider of solutions designed to automateprivately-held Rawson Control Systems based in Oelwein, Iowa. Rawson manufactures hydraulic and electronic controls for the management of mobile resourcesagriculture equipment industry, including variable rate planter drives and to optimize the service delivery process for customers across a variety of industries. @Road will be reported within our Mobile Solutions business segment. This acquisition was the largest in acquisition value in the company’s history. It significantly increases our presence in the mobile resource management, or MRM, market which Trimble believes is a largecontrollers, variable rate fertilizer controllers, mechanical remote electric control valves and fast growing market.


* With the addition of @Road, Trimble’s TMS segment will be better able to service larger customers, with a broader and more robust solution set.

INPHO GmbH

On February 13, 2007, we acquired INPHO GmbH of Stuttgart, Germany. INPHO is a leader in photogrammetry and digital surface modeling for aerial surveying, mapping and remote sensing applications. INPHO will be reported within Trimble’s Engineering and Construction segment.

Spacient Technologies, Inc.

On November 21, 2006, we acquired privately-held Spacient Technologies, Inc. of Long Beach, California. Spacient is a leading provider of enterprise field service management and mobile mapping solutions for municipalities and utilities. Spacient’sspeed reducers.  Rawson Control Systems’ performance is reported under our Field Solutions business segment.segment.

Meridian Project Systems, Inc.FastMap and GeoSite

On November 7, 2006,28, 2008, we acquired the FastMap and GeoSite software assets from Korec, a privately-held Meridian ProjectTrimble distributor serving the United Kingdom and Ireland. FastMap and GeoSite performance is reported under our Engineering and Construction and Field Solutions business segments, respectively.

Callidus Precision Systems Inc.

On November 28, 2008, we acquired the assets of Folsom, California. Meridian provides enterprise project managementprivately-held Callidus Precision Systems GmbH of Halle, Germany. Callidus is a provider of 3D laser scanning solutions for the industrial market. Callidus performance is reported under our Engineering and lifecycle software for optimizing the plan, buildConstruction segment.

Toposys

On November 13, 2008, we acquired TopoSys GmbH of Biberach an der Riss, Germany. TopoSys is a leading provider of aerial data collection systems comprised of LiDAR and operate lifecycle for real estate, construction and other physical infrastructure projects. Meridian’smetric cameras. TopoSys’s performance is reported under our Engineering and Construction business segment.

XYZ Solutions, Inc.TruCount

On October 27, 2006,30, 2008, we acquired the assets of privately-held TruCount, Inc., of Ames, Iowa. TruCount is a leading manufacturer of air and electric clutches that automate individual planter row shut-off. TruCount’s performance is reported under our Field Solutions business segment.

RolleiMetric

On October 20, 2008, we acquired the assets of RolleiMetric from Rollei GmbH of Braunschweig, Germany. RolleiMetric is a leading provider of metric camera systems for aerial imaging and terrestrial close range photogrammetry. RolleiMetric is reported within our Engineering and Construction business segment.

VirtualSite Solutions

On October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by Caterpillar and us began operations.  We contributed $7.8 million in exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35% ownership in VSS.  VSS develops software for fleet management and connected worksite solutions for both Caterpillar and us, and in turn, sells software subscription services to Caterpillar and us, which we both sell through our respective distribution channels.  For financial reporting purposes, VSS’s assets and liabilities are consolidated with ours, as are its results of operations, which are reported under our Engineering and Construction segment.  Caterpillar’s 35% interest is included in our Consolidated Financial Statements as minority interests in consolidated subsidiaries.

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SECO

On July 29, 2008, we acquired privately-held XYZ Solutions, Inc.,SECO Manufacturing Company of Alpharetta, Georgia. XYZ Solutions provides real-time, interactive 3D intelligence software to manageRedding, California. SECO is a leading manufacturer of accessories for the spatial aspects of ageomatics, surveying, mapping, and construction project. XYZ Solutions’industries.  SECO’s performance is reported under our Engineering and Construction business segment.

Visual Statement, Inc.Géo-3D

On October 11, 2006,January 22, 2008, we acquired privately-held Visual Statement,Géo-3D Inc. of Kamloops, British Columbia,Montreal, Canada. Visual Statement provides desktop software tools for crime and collision incident investigation, analysis, and reconstitution as well as state-wide enterprise solutions for reporting and analysis used by public safety agencies. Visual Statement’s performance is reported under our Mobile Solutions business segment.

BitWyse Solutions, Inc.

On May 1, 2006, we acquired the assets of privately-held BitWyse Solutions, Inc. of Salem, Massachusetts. BitWyseGéo-3D is a provider of engineering and construction information management software. BitWyse’sleader in roadside infrastructure asset inventory solutions.  Géo-3D’s performance is reported under our Engineering and Construction business segment.

Eleven Technology, Inc.Crain Enterprises

On April 28, 2006,January 8, 2008, we acquired privately-held Eleven Technology,Crain Enterprises, Inc. of Cambridge, Massachusetts. ElevenMound City, Illinois. Crain is a mobile application software company with a leading position inmanufacturer of accessories for the Consumer Packaged Goods industry. Eleven’s performance is reported under our Mobile Solutions business segment.

Quantm International, Inc.

On April 5, 2006, we acquired privately-held Quantm International, Inc., a provider of transportation route optimization solutions used for planning highways, railways, pipelinesgeomatics, surveying, mapping, and canals. Quantm’s performanceconstruction industries.  Crain Enterprises is reported under our Engineering and Construction business segment.

XYZs of GPS, Inc.RESULTS OF OPERATIONS

On February 26, 2006, we acquired the assets of XYZs of GPS, Inc. of Dickerson, Maryland. XYZ develops real-time Global Navigation Satellite System or, GNSS, reference station, integrity monitoring and dynamic positioning software for meter, decimeter and centimeter applications. XYZs’ performance is reported under our Engineering and Construction business segment.


RESULTS OF OPERATIONS

Overview

The following table is a summary of revenue, gross margin and operating income for the periods indicated and should be read in conjunction with the narrative descriptions below.

 January 2,  December 28,  December 29, 
Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
  2009  2007  2006 
(Dollars in thousands)
                
                
Total consolidated revenue $940,150 $774,913 $668,808  $1,329,234  $1,222,270  $940,150 
Gross Margin $461,081 $389,805 $324,810 
Gross Margin %  49% (1)  50% 49%
Gross margin $649,136  $612,905  $461,081 
Gross margin %  48.8%  50.1%  49.0%
Total consolidated operating income $135,365 $124,944 $85,625  $185,460  $178,267  $135,366 
Operating Income %  14% (1)  16% 13%
Operating income %  14.0%  14.6%  14.4%

Basis of Presentation

We have a 52-53 week fiscal year, ending on the Friday nearest to December 31, which for fiscal 2008 was January 2, 2009.  Fiscal 2008 was a 53-week year. Fiscal 2007 and 2006 was December 29, 2006. Fiscal 2006, 2005, and 2004 were both 52-week years.

Revenue

In fiscal 2006,2008, total revenue increased by $165.3$107.0 million, or 21%9%, to $940.2 million$1.33 billion from $774.9 million$1.22 billion in fiscal 2005.2007. The increase in fiscal 20062008 was due to stronger performances in the Field Solutions and Mobile Solutions segments. Engineering and Construction revenue decreased $1.6 million, or 0.2%; Field Solutions increased $100.1 million, or 50%; Mobile Solutions increased $9.4 million, or 6%; and Advanced Devices decreased $0.9 million, or 1%, as compared to fiscal 2007.  In fiscal 2008, revenue growth was primarily driven by new products, a strong agricultural environment, as well as the impact of acquisitions partially offset by softness in European and U.S. markets in Engineering and Construction.

* Although revenue increased by 17% on a year over year basis for the first nine months of the year, our revenue in the fourth quarter declined by 14% over the corresponding quarter in the prior year.  Although we have limited visibility into fiscal 2009, due to the current economic crisis, we expect that there will be continued softness in our revenue in the first quarter of 2009 as compared to the corresponding period in the prior year, particularly in our Engineering and Construction segment.

In fiscal 2007, total revenue increased by $282.1 million, or 30%, to $1.22 billion from $940.2 million in fiscal 2006. The increase in fiscal 2007 was due to stronger performances across all our operating segments. The Engineering and Construction revenue increased $106.2 million, or 17%; Field Solutions increased $61.4 million, or 44%; Mobile Solutions increased $96.8 million, or 159%; and Advanced Devices segments increased 21%$17.7 million, or 17%, 9%, 93%, and 13% respectively,as compared to fiscal 2005.2006.  Revenue growth within these segments was primarily driven by new product introductions, increased penetration of existing markets, and geographical expansion. Mobile Solutionsproducts, a robust agricultural environment, strong international growth, in particular benefited from the prior year acquisitions. Overall, 2006 acquisitions impacted total company revenue growth by approximately 2%.

In fiscal 2005, total revenue increased by $106.1 million or 16% to $774.9 million from $668.8 million in fiscal 2004. The increase in fiscal 2005 was primarily due to stronger performances across all our operating segments with the exception of Component Technologies. The Engineering and Construction, Field Solutions and Mobile Solutions segments increased 19%, 21% and 34%, respectively, compared to fiscal 2004. Revenue growth within these segments was driven by new product introductions and increased penetration of existing markets. Both the Engineering and Construction and Mobile Solutions operating segments also benefited fromas well as the impact of acquisitions, partially offset by regional pockets of softness in the Pacific Crest, Apache and MobileTech acquisitions.U.S. markets.

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* During fiscal 2008, sales to customers in the 2006United States represented 49%, Europe represented 25%, Asia Pacific represented 14%, and other regions represented 12% of our total revenue. During the 2007 fiscal year, sales to customers in the United States represented 50%, Europe represented 27%, Asia Pacific represented 12%, and other regions represented 11% of our total revenue. During fiscal 2006, sales to customers in the United States represented 54%, Europe represented 25%, Asia Pacific represented 12%, and other regions represented 9% of our total revenues. During the 2005 fiscal year, sales to customers in the United States represented 54%, Europe represented 25%, Asia Pacific represented 11% and other regions represented 10% of our total revenues.revenue. We anticipate that sales to international customers will continue to account for a major portion of our revenues.revenue.

* No single customer accounted for 10% or more of our total revenuesrevenue in fiscal 2006, 2005,2008, 2007, and 2004.2006. It is possible, however, that in future periods the failure of one or more large customers to purchase products in quantities anticipated by us may adversely affect the results of operations.

Gross Margin

Our gross margin varies due to a number of factors including product mix, pricing, distribution channel used, effects of production volumes, new product start-up costs, and foreign currency translations.

In fiscal 2006,2008, our gross margin increased by $71.3$36.2 million as compared to fiscal 20052007 primarily due to higher revenue and the success of higher margin products, including survey and machine control products and higher subscription revenues. The increase was partially offset by decreases due to the impact of the reclassification of the CTCT transactions of $18.1 million previously recorded in non-operating expenses, amortization of software-related purchased intangibles of $5.2 million and stock-based compensation expense of $1.2 million that were not included in gross margin during the same period in fiscal 2005.revenue. Gross margin as a percentage of total revenuesrevenue was 49%48.8% in fiscal 20062008 and 50%50.1% in fiscal 2005.2007. The 1% decrease in the gross margin percentage was driven primarily by a decrease of 3% due to the CTCT impact,increased amortization of purchased intangibles, and stock-based compensation, offset by an increase of 2% due to higher margin products and subscription revenues.

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product mix.

In fiscal 2005,2007, our gross margin increased by $65.0$151.8 million dueas compared to fiscal 2006 due to higher revenue, and success of our market segmentation strategy, higher service revenues, cost reductions, and introduction of higher margin products.products, including software and subscription revenue, and improved manufacturing utilization, partially offset by an increase in amortization of purchased intangibles primarily due to the acquisition of @Road.  Gross margin as a percentage of total revenuesrevenue was 50 %50.1% in fiscal 20052007 and 49%49.0% in fiscal 2004.2006. The increase in the gross margin percentage was due to higher margin products.

* Because of potential 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, current level gross marginsmargin cannot be assured.


Operating Income

Operating income increased by $10.4$7.2 million for fiscal 20062008 as compared to fiscal 2005 due to higher revenues and the success of higher margin products, offset by decreases due to the impact of the reclassification of the CTCT transactions previously recorded in non-operating expenses and stock-based compensation expense that was not included in operating income during the same period in fiscal 2005.
2007.  Operating income as a percentage of total revenue was 14% for fiscal 20062008 was 14.0% as compared to 16%14.6% for fiscal 2007. The increase in fiscal 2005.operating income was primarily driven by higher revenue and associated gross margin. The 2% decrease in operating income percentage was primarily due to a 4% CTCT transaction reclassification impact,by increased amortization of purchased intangibles, product mix and foreign exchange.

* Although our operating income increased acquisitionon a year over year basis for the first nine months of the year, our operating income in the fourth quarter declined as compared to the corresponding quarter in the prior year.  Although we are reducing expenses, and stock-based compensation impact, partially offset by 2% increase driven by gross margin expansion.due to the current economic crisis, we may experience operating income decline in the first quarter of fiscal 2009 as compared to the corresponding period in the prior year.

Operating income increased by $39.3$42.9 million for fiscal 20052007 as compared to fiscal 2004.2006.  Operating income as a percentage of total revenue for fiscal 2007 was 16%14.6% as compared to 13%14.4% for fiscal 2006. The increase in fiscal 2004. The increaseoperating income was due to improvement in revenues along withhigher revenue and associated gross marginsmargin and greater leveragesoftware and subscription revenue, partially offset by additional amortization of operating expenses. Operating expenses represented 34% of total revenue in fiscal 2005 as compared to 36% in fiscal 2004.purchased intangibles.


Results by Segment

To achieve distribution, marketing, production, and technology advantages in our targeted markets, we manage our operations in the following four segments: Engineering and Construction, Field Solutions, Mobile Solutions, and Advanced Devices. Operating income (loss) equals net revenue less cost of sales and operating expenses,expense, excluding general corporate expenses,expense, amortization of purchased intangibles,intangible assets, in-process research and development expenses,expense, restructuring charges, non-operating income (expense), net, and income taxes.tax provision.

In the first fiscal quarter of 2006, we combined the operating results of the former Component Technologies and Portfolio Technologies segments and included the combined operating results in the Advanced Devices segment. The change in presentation was made in recognition of the small size of each of the businesses relative to the total company. The presentation of prior period’s segment operating results has been changed to conform to our current segment presentation.

The following table is a breakdown of revenue and operating income by segment for the periods indicated and should be read in conjunction with the narrative descriptions below.

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(Dollars in thousands)
       
        
Engineering and Construction
       
Revenue $637,118 $524,461 $440,478 
Segment revenue as a percent of total revenue  68% 68% 66%
Operating income $136,157 $117,993 $79,505 
Operating income as a percent of segment revenue  21% 22% 18%
Field Solutions
          
Revenue $139,230 $127,843 $105,591 
Segment revenue as a percent of total revenue  15% 16% 16%
Operating income $37,377 $32,527 $25,151 
Operating income as a percent of segment revenue  27% 25% 24%
Mobile Solutions
          
Revenue $60,854 $31,481 $23,531 
Revenue as a percent of total consolidated revenue  6% 4% 4%
Operating income (loss) $2,550 $(3,072)$(5,997)
Operating income (loss) as a percent of segment revenue  4% (10%) (25%)
Advanced Devices
          
Revenue $102,948 $91,128 $99,208 
Segment revenue as a percent of total revenue  11% 12% 15%
Operating income $10,084 $13,212 $18,746 
Operating income as a percent of segment revenue  10% 14% 19%
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(Dollars in thousands)         
          
Engineering and Construction         
Revenue $741,668  $743,291  $637,118 
Segment revenue as a percent of total revenue  56%  61%  68%
Operating income $126,014  $174,177  $136,157 
Operating income as a percent of segment revenue  17%  23%  21%
Field Solutions            
Revenue $300,708  $200,614  $139,230 
Segment revenue as a percent of total revenue  22%  16%  15%
Operating income $109,489  $60,933  $37,377 
Operating income as a percent of segment revenue  36%  30%  27%
Mobile Solutions            
Revenue $167,113  $157,673  $60,854 
Revenue as a percent of total consolidated revenue  13%  13%  6%
Operating income $11,328  $12,517  $2,550 
Operating income as a percent of segment revenue  7%  8%  4%
Advanced Devices            
Revenue $119,745  $120,692  $102,948 
Segment revenue as a percent of total revenue  9%  10%  11%
Operating income $24,445  $17,276  $10,084 
Operating income as a percent of segment revenue  20%  14%  10%

A reconciliation of our consolidated segment operating income to consolidated income before income taxes follows:

 
Fiscal Years Ended
 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
       
        
Consolidated segment operating income $186,168 $160,660 $117,405 
Unallocated corporate expense  (35,799) (27,483) (22,901)
Restructuring charges     (278) (552)
Amortization of purchased intangible assets  (13,074) (6,855) (8,327)
In-process research and development  (1,930) (1,100) - 
Non-operating income (expense), net  12,727  (156) (10,701)
Consolidated income before income taxes $148,092 $124,788 $74,924 

  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Consolidated segment operating income $271,276  $264,903  $186,168 
Unallocated corporate expense  (36,284)  (42,914)  (35,798)
Restructuring charges  (4,641)  (3,025)  - 
Amortization of purchased intangible assets  (44,891)  (38,582)  (13,074)
In-process research and development expense  -   (2,112)  (1,930)
Consolidated operating income  185,460   178,267   135,366 
Non-operating income, net  6,502   5,489   12,726 
Consolidated income before taxes $191,962  $183,756  $148,092 
Engineering and Construction

Engineering and Construction revenues

Engineering and Construction revenue decreased by $1.6 million, or 0.2%, while segment operating income decreased by $48.0 million, or 28%, for fiscal 2008 as compared to fiscal 2007. The revenue decrease was primarily due to recessionary conditions in the U.S. and European markets partially offset by strength in the rest of world markets. Operating income decreased as a result of the slight decline in revenue, product mix and operating expense associated with acquisitions in the last twelve months.

Engineering and Construction revenue increased by $112.7$106.2 million, or 21%17%, while segment operating income increased by $18.2$38.0 million, or 15%28%, for fiscal 20062007 as compared to fiscal 2005.2006. The revenue growth was driven by all business units within the continued strength in survey products as well as increased sales of machine control products, aggressive marketing programssegment, strong international markets, acquisitions made during fiscal 2007 and geographic expansion.foreign exchange gains.  Segment operating income increased as a result of higher revenuesrevenue and increased sales of higher margin products partially offset by $5.7 million in expenses related to CTCT transactions, $4.0 million in stock-based compensationincluding software revenue and operating expense that were not present in the corresponding periodcontrol.

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Field Solutions

Engineering and Construction revenues
Field Solutions revenue increased by $84.0approximately $100.1 million, or 19%50%, while segment operating income increased by $38.5$48.6 million, or 48%80%, for fiscal 2005year 2008 as compared to fiscal 2004.2007. The increase in revenue growth was driven primarily by the introduction of products such as the Trimble S6 and machine control products, and growth of existing products such as the Trimble R8 GPS System. Revenue growth was also attributed to the acquisitions for fiscal 2005. Segment operating income increased as a result of higher revenues and increasedstrong sales of higher margin products.

Field Solutions

Field Solutions revenues increased by approximately $11.4 million or 9% while segment operating income increased by $4.9 million or 15% for fiscal year 2006 as compared to fiscal 2005. Revenue increased primarily due growth in our GIS business. In GIS, growth was due to newagriculture products, and a continuing shift to a higher value, differentiated distribution channel. The agricultural business remained stable as compared to the prior year due to a steady agricultural market. Operating income increased primarily due to strong operating leverage and increased revenue, partially offset by the inclusion of stock-based compensation that was not presentboth in the corresponding periods of fiscal 2005.


Field Solutions revenues increased by approximately $22.3 million or 21% while segment operating income increased by $7.4 million or 29% for fiscal year 2005 as compared to fiscal 2004. Revenue increased primarily due to successful new products such as the AgGPS EZ-Guide systemU.S. and AgGPS EZ-Steer system in our agriculture product line and as a result of higher demand for both automated and manual guidance products into the agricultural market.internationally.  Operating income increased primarily due to increased revenue, and associated gross margins.

as well as improvement in product costs.
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Table of Contents

MobileField Solutions

Mobile Solutions revenues revenue increased by $29.4approximately $61.4 million, or 93%44%, while segment operating income increased by $5.6$23.6 million, or 183%63%, for fiscal 2006year 2007 as compared to fiscal 2005.2006. The increase in revenue was driven primarily by the introduction of new agricultural products and a robust agricultural market, both in the U.S. and internationally.  Operating income increased primarily due to higher revenue and operating expense control.

Mobile Solutions

Mobile Solutions revenue increased by $9.4 million, or 6%, while segment operating income decreased by $1.2 million, or 9%, for fiscal 2008 as compared to fiscal 2007. Revenue increasedgrew due to increased subscriber growth, an increasesubscription revenue and a full first quarter of @Road revenue as compared to a partial first quarter of @Road revenue in recurringfiscal 2007.  Operating income decreased primarily due to increased research and development and sales expense for our new Field Service software, partially offset by a reduction in marketing and general and administrative expenses.
Mobile Solutions revenue increased by $96.8 million, or 159%, while segment operating income increased by $10.0 million, or 391%, for fiscal 2007 as compared to fiscal 2006.  Revenue grew due to increased subscription revenues,revenue due primarily to the benefit of acquisitions, especially MobileTech, and entry into new vertical markets.@Road acquisition.  Operating income increased primarily due to higher subscription revenue and associated gross margins, partially offsetmargin.

Advanced Devices

Advanced Devices revenue decreased by the inclusion of stock-based compensation that was not present in fiscal 2005.

Mobile Solutions revenues increased by $8.0$0.9 million, or 34% in fiscal 2005 over fiscal 2004 due to increased subscriber growth, an increase in sales into the ready-mix suppliers,1%, and increased sales from our dealer channel as we continue to develop and extend this channel. Operating loss decreased by $2.9 million or 49% in fiscal 2005 compared to fiscal 2004 primarily attributable to an increase in revenues and increase in gross margins due higher recurring service revenue.


Advanced Devices

Advanced Devices revenues increased by $11.8 million or 13% while segment operating income decreasedincreased by $3.1$7.2 million, or 24%42%, for fiscal 20062008 as compared to fiscal 2005.2007. The decrease in revenue was primarily driven by slower sales of Component Technologies products.  Operating income increased due to product mix, royalty and licensing revenue.

Advanced Devices revenue increased by $17.7 million, or 17%, and segment operating income increased by $7.2 million, or 71%, for fiscal 2007 as compared to fiscal 2006. The increase in revenue was primarily due todriven by stronger performance in our Component Technologies timing and embedded product revenue.  Operating income increased due to strong timing and airborne products as well asembedded product revenue, licensing revenuesrevenue associated with a Nokia intellectual property agreement signed in the third quarter of fiscal 2006. Operating income decreased for fiscal 2006, due to sales of lower gross margin products, a reduction in revenue in our Military and Advanced Systems product line, increased costs related to the TrimTrac product line and inclusion of stock-based compensation that were not present in the corresponding periods of fiscal 2005, partially offset by stronger embedded and airborne product revenue and intellectual property licensing revenue.strong operating expense control.

Advanced Devices revenues decreased by $8.1 million or 8% while segment operating income decreased by $5.5 million or 30% for fiscal 2005 as compared to fiscal 2004. The decrease in revenue and operating income were primarily due to the decline in demand for our in-vehicle navigation products as a result of changes in buying strategies among certain automotive manufacturers, and softness in the timing business, which was offset by a stronger performance in our Applanix airborne business.


Research and Development, Sales and Marketing, and General and Administrative Expenses

The following table shows research and development (“R&D”), sales and marketing, and general and administrative (“G&A”) expenses in absolute dollars and as a percentage of total revenuesrevenue for the fiscal years ended2008, 2007 and 2006 2005 and 2004 and should be read in conjunction with the narrative descriptions of those operating expensesexpense below.

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
             
Research and development $103,840  11%$84,276  11%$77,558  11%
Sales and marketing  143,623  15% 120,215  15% 108,054  16%
General and administrative  68,416  7% 52,137  7% 44,694  7%
   315,879  34%$256,628  33%$230,306  34%
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(Dollars in thousands)         
          
Research and development $148,265  $131,468  $103,840 
Percentage of revenue  11%  11%  11%
Sales and marketing  196,290   186,495   143,623 
Percentage of revenue  15%  15%  15%
General and administrative  94,023   92,572   68,416 
Percentage of revenue  7%  8%  7%
Total $438,578  $410,535  $315,879 
Percentage of revenue  33%  34%  33%

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Overall, R&D, sales and marketing, and G&A expenses increased by approximately $59.3$28.0 million in fiscal 20062008 compared to fiscal 2005.2007.

Research and development expensesexpense increased by $19.6$16.8 million in fiscal 20062008, as compared to fiscal 20052007, primarily due to the inclusionimpact of expensesnew R&D expense as a result of $4.6 million from acquisitions, not applicable in the prior year, $4.9 millionan increase in compensation related expenses, $2.6 million in stock-based compensation expense, not present in fiscal 2005 and $2.3 millionan increase in R&D materials primarilyand an increase due to compliance with the European lead free initiative.foreign currency exchange rates. All of our R&D costs have been expensed as incurred. Cost of software developed for external sale subsequent to reaching technical feasibility were not considered material and were expensed as incurred.

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Research and development expenses increased by $6.7 million in fiscal 2005 compared to fiscal 2004 primarily due to the inclusion of expenses from acquisitions not applicable in the prior year in the amount of $2.8 million and increase in compensation of $2.8 million.

* Overall research and development spending remained relatively constant at approximately 11% of revenues.revenue.

Research and development expense increased by $27.6 million in fiscal 2007 compared to fiscal 2006 primarily due to the impact of new R&D expense as a result of acquisitions, an increase in compensation related expense, and an increase due to foreign currency exchange rates, partially offset by decreased consulting fees. All of our R&D costs have been expensed as incurred. Overall research and development spending remained relatively constant at approximately 11% of revenue.

* We believe that the development and introduction of new products are critical to our future success and we expect to continue to devote resources to theactive development of new products and the enhancement of existing products. We believe that research and development is critical to our strategic product development objectives and that to leverage our leading technology and meet the changing requirements of our customers, we will need to fund investments in several development projects in parallel.

Sales and marketing expensesexpense increased by $23.4$9.8 million in fiscal 20062008 as compared to fiscal 2005.2007. The increase was primarily due the inclusionto new sales and marketing expenses as a result of expenses from acquisitions, not applicable in the prior period in the amount of $7.5 million, $8.0 millionan increase in compensation related expenses, $2.8 millionexpense and an increase in stock-based compensation expense not present in the third quarter of fiscal 2005,trade shows and $1.9 million in customer trade show expenses due to increased size and attendance at the shows.marketing literature expense. Spending overall remained relatively constant at approximately 15% of revenues.revenue.

Sales and marketing expensesexpense increased by $12.2$42.9 million in fiscal 20052007 as compared to fiscal 2004, but decreased as a percent of total revenues.2006.  The increase was primarily due to advertisingnew sales and promotion costs associated with the launchmarketing expenses as a result of new products of $5.4 million, the inclusion of expenses from acquisitions, not applicable in the prior year of $1.5 million,an increase in travel expenses of $1.4 million,compensation-related expense, an increase due to foreign currency exchange rates and an increase in compensationmarketing expense. Spending overall remained relatively constant at approximately 15% of $1.7 million.revenue.

* We intend to continue to focus and expand our sales and marketing efforts across all the geographies and markets we serve in order to increase market awareness of our products and to better support our existing customers worldwide. Our future growth will depend in part on the timely development and continued viability of the markets in which we currently compete as well as our ability to continue to identify and exploitdevelop new markets for our products.

General and administrative expensesexpense increased by $16.3$1.5 million in fiscal 20062008 compared to fiscal 20052007 primarily due to the inclusionnew G&A expenses as a result of expenses from acquisitions, not applicable in the prior year of $4.3 million, $3.9 million increase in compensation-related expenses,partially offset by decreased compensation related expense and $6.0 million in stock-basedreduced deferred compensation expense not present in fiscal 2005.liabilities. Spending overall remained relatively constantwas at approximately 7% of revenues.revenue in fiscal 2008 compared to 8% in fiscal 2007.

General and administrative expensesexpense increased by $7.4$24.2 million in fiscal 20052007 compared to fiscal 20042006 primarily due to new G&A expenses as a result of acquisitions, an increase in compensationcompensation-related expense, and an increase in tax and legal fees. Spending overall was at approximately 8% of revenue in fiscal 2007 compared to 7% in fiscal 2006.

Other Operating Expenses

Restructuring Charges

Restructuring expense for the three years ended January 2, 2009 was as follows:
  2008  2007  2006 
(in thousands)         
          
Severance and benefits $4,641  $3,025  $- 
During fiscal 2008, restructuring expense of $5.9$4.6 million increase in rent expense of $1.0 million as we were making duplicate payments during our move to our new headquarters, the inclusion of expenses from acquisitions not applicable in the prior year of $1.8 million, and increase of $0.8 million in patent expense. This was partially offset by a decrease in bad debt expense of $1.7 million. 


Other Operating Expenses

Restructuring Charges

There were no restructuring charges recorded in fiscal 2006. Restructuring charges of $0.3 million, and $0.6 million were recorded in fiscal years 2005 and 2004 respectively. The charges in fiscal 2005 were primarily related to office closure costs duedecisions to integration effortsstreamline processes and reduce the cost structure of the Mensi acquisition. The charges in fiscal 2004 were primarilyCompany, with approximately 100 employees affected worldwide. Of the total restructuring expense, $2.7 million is shown as a separate line within Operating expense on our Consolidated Statements of Income, and $1.9 million is included within Cost of sales.  Additionally, $4.1 million is related to severance costs duethe Engineering and Construction segment and $0.5 million is related to the realignment of Trimble Mobile Solutions Inc.segment. As a result of the realignment,above decisions, we expect restructuring activities in the headcount decreased by 36Engineering and Construction segment to result in additional restructuring expense totaling approximately $1.8 million through the first quarter of 2010. Additional restructuring activities have been announced in the first fiscal 2004. Asquarter of December 29, 2006, an accrual balance2009.

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During fiscal, 2007, restructuring expense of $3.0 million was for charges associated with the Company’s acquisition of @Road. The restructuring expense was related to the acceleration of vesting of employee stock options for certain terminated @Road employees, of which $1.4 million was settled in cash and $1.6 million was recorded as shareholders’ equity.

Restructuring costs associated with a business combination:
In addition to the restructuring expense in fiscal 2005 office closure,2008, costs associated with exiting activities of companies we acquired in fiscal 2008 was $0.4 million, consisting of severance and benefits costs. These costs were recognized as a liability assumed in the business combinations and were included in the allocation of the cost to acquisitions and accordingly, resulted in an increase to goodwill rather than an expense in fiscal 2008. The Company also had $0.9 million in restructuring activity reversals related to costs associated with exiting activities of pre-merger @Road.  The reversals were primarily due to severance and benefits costs for employees whose positions were retained in a variety of functions. The reversals were recognized in the first quarter of fiscal 2008 as a reduction of the liability assumed in the purchase business combination that had been included in the allocation of the cost to acquire @Road and, accordingly, resulted in a decrease to goodwill rather than an expense reduction in fiscal 2008.

In addition to the restructuring expense in fiscal 2007, costs associated with exiting activities of pre-merger @Road of $3.6 million, consisted of severance and benefits costs.  These costs were recognized as a liability assumed in the purchase business combination and were included in the allocation of the cost to acquire @Road and accordingly, resulted in an increase to goodwill rather than an expense in fiscal 2007.

Restructuring liability:
The following table summarizes the restructuring activity for 2007 and 2008 (in thousands):

Balance as of December 30, 2006 $744 
Acquisition related              3,547 
Charges              3,025 
Payments            (6,004) 
Adjustment                   14 
Balance as of December 28, 2007 $1,326 
Acquisition related                 355 
Charges              4,641 
Payments            (3,351) 
Adjustment            (1,054) 
Balance as of January 2, 2009 $1,917 


As of January 2, 2009, the $1.9 million restructuring accrual consists of severance and benefits.  Of the $1.9 million restructuring accrual, $0.7 million is included in Other current liabilities and is expected to be paid oversettled by the next several years.first half of fiscal 2009.  The remaining balance of $1.2 million is included in Other non-current liabilities and is expected to be settled by the first quarter of fiscal 2010.

In-Process Research and Development
 
We recorded in-process research and development (IPR&D) expense of $1.9$2.1 million and $1.1$1.9 million related to acquisitions made in fiscal 2007 and 2006, and 2005 respectively.  We did not record anyNo IPR&D expense was recorded in fiscal 2004.2008. At the date of each acquisition, the projects associated with the IPR&D efforts had not yet reached technological feasibility and the research and development in process had no alternative future uses. The value of the IPR&D was determined using a discounted cash flow model similar to the income approach, focusing on the income producing capabilities of the in-process technologies. Accordingly, the value assigned to these IPR&D amounts were charged to expense on the respective acquisition date of each of the acquired companies.

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Amortization of Purchased and Other Intangible Assets

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
Amortization of purchased intangibles included in cost of sales $5,168 $- $- 
Amortization of purchased intangibles included in operating expenses  7,906 $6,855 $8,327 
Amortization of other intangible assets  185  165  183 
Total amortization of purchased and other intangible assets $13,259 $7,020 $8,510 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Cost of sales $22,690  $19,778  $5,353 
Operating expenses  22,376   18,966   7,906 
Total $45,066  $38,744  $13,259 


Total amortization expense of purchased and other intangible assets was $13.3$45.1 million in fiscal 2006,2008, of which $5.4$22.7 million was recorded in cost of sales and $7.9$22.4 million was recorded in operating expenses.expense. Total amortization expense of purchased and other intangibles represented 1.4%3.4% of revenue in fiscal 2006,2008, an increase of $6.2$6.3 million from fiscal 20052007 when it represented 0.9%3.2% of revenue. The increase was primarily due to the acquisition of certain technology and patent intangibles as a result of acquisitions made in fiscal 20062008, as well as fiscal 20052007 acquisition intangibles that included a full year impact of amortization expense in fiscal 2006, but only partial year2008.

Total amortization expense of purchased and other intangible assets was $38.7 million in fiscal 2005 due to the timing2007, of the acquisitions.

Amortizationwhich $19.8 million was recorded in cost of sales and $19.0 million was recorded in operating expense.  Total amortization expense of purchased and other intangibles represented 0.9%3.2% of revenue in fiscal 2005, a decrease2007, an increase of $1.5$25.5 million from fiscal 20042006 when it represented 1.3%1.4% of revenue. Although there were acquisitions in fiscal 2005, amortization expense decreasedThe increase was primarily due to the fact our Spectra Precision Groupacquisition of certain technology and patent intangibles were fully amortizedas a result of acquisitions made in the second quarterfiscal 2007, primarily @Road, and to a lesser extent, fiscal 2006 acquisition intangibles that included a full year impact of amortization expense in fiscal 2005.2007.

Non-operating Expense,Income (Expense), Net

The following table shows non-operating expense,income (expense), net for the periods indicated and should be read in conjunction with the narrative descriptions of those expenses below:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
        
Interest income $3,799 $836 $436 
Interest expense  (558) (2,331) (3,888)
Foreign exchange gain (loss)  1,719  1,022  (859)
Income (expenses) for affiliated operations, net  6,989  (291) (7,590)
Other income  777  608  1,200 
Total non-operating income (expense), net $12,726 $(156)$(10,701)
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
Interest income $2,044  $3,502  $3,799 
Interest expense  (2,760)  (6,602)  (558)
Foreign currency transaction gain (loss), net  1,509   (1,351)  1,719 
Income from joint ventures  7,981   8,377   6,989 
Minority interests in consolidated subsidiaries  540   -   - 
Other income (expense), net  (2,812)  1,563   777 
Total non-operating income (expense), net $6,502  $5,489  $12,726 

Non-operatingTotal non-operating income (expense), net increased by $12.9$1.0 million during fiscal 20062008 compared with fiscal 2005. Of this2007.  The increase $4.7Mwas due to lower interest expense due to lower average outstanding debt balances and interest rates, fluctuations in foreign currencies, largely offset by a decrease in interest income and losses on assets in our deferred compensation plan.

Total non-operating income (expense), net decreased by $7.2 million during fiscal 2007 compared with fiscal 2006.  The decrease was due to higher interest income and lower interest expense as a result of interest income earned on higher cash balances and debt repaid in fiscal 2005 and also a $0.7 milliondue to an increase in debt associated with the @Road acquisition, fluctuations in foreign currency transaction gains. In addition, expenses for affiliated operations, net increased by $7.3 million due a $5.2 million increase in income from affiliated operations and the absence of $11.6 million of net transfer pricing expense with CTCT that was included in fiscal 2005, but is now included in operating income,currencies, partially offset by the recognition of a one-time deferred gain on the CTCT joint venture of $9.3 million in fiscal 2005.

Non-operating expense, net decreased by $10.5 million during fiscal 2005 as compared with fiscal 2004 primarily due to a decrease in net interest expense of $2.0 million as a result of the repayment of debt and interest earned on higher cash balances offset by a $0.9 million write-off of debt issuance costs relating to the 2003 Credit Facility, an increase of $1.9 million in foreign currency transaction gain and a $7.3 million decrease in expenses for affiliated operations as a result of increased profits from our joint ventures and recognition of the remaining deferred gain from the CaterpillarCTCT joint venture. This was partially offset by a decrease in other income primarily due to the absence of a non-recurring gain in investments of approximately $1.0 million in fiscal year 2004.

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Income Tax Provision

Our effective income tax rate for fiscal years 2008, 2007 and 2006 2005was 26%, 36% and 200430% respectively.  The 2008 rate was 30%, 32%less than the U.S. federal statutory rate of 35% primarily due to the implementation of a global supply chain management structure.  In 2006 and 10% respectively.2007, we licensed our US intellectual property to a foreign affiliated legal entity and implemented a global supply chain management structure which streamlined our worldwide operations.  We believe that the licensing of intellectual property was effected for consideration that was equivalent to arms-length negotiated pricing.  This resulted, beginning in 2008, in a tax savings due to a lower foreign tax rate.  For financial statement purposes and the Company’s policy with respect to its undistributed foreign subsidiaries’ earnings some of those earnings are to be indefinitely reinvested and, accordingly, no related provision for U.S. federal and state income taxes has been provided.  The 2007 rate was greater than the U.S. federal statutory rate of 35% due to impacts resulting from SFAS 123(R). The 2006 rate was less thatthan the US federal statutory rate of 35% primarily due to operations in foreign jurisdictions subject to an effective tax rate lower than the USU.S. and the Extraterritorial Income Exclusion (ETI) deduction.

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The 2005 income tax rate was less that the US federal statutory rate, primarily due to the benefit from the repatriation of undistributed foreign subsidiary earnings provided by the American Jobs CreationEmergency Economic Stabilization Act of 2004.2008, Energy Improvement and Extension Act of 2008 and Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (HR1424) was signed into law on October 3, 2008. This legislation includes a provision that retroactively extends the research tax credit from January 1, 2008 to December 31, 2009. The 2004 income tax rate was less thanCompany has included the federal statutory rate primarily due to$2.4 million benefit of the realization of benefits from net operating losses and other previously reserved deferred tax assets.current year research credits in the quarter ended January 2, 2009.


Litigation Matters

* From time to time, we are involved in litigation arising out of the ordinary course of our business. There are no known claims or pending litigation that are expected to have a material effect on our overall financial position, results of operations, or liquidity.


OFF-BALANCE SHEET ARRANGEMENTS
 
Other than lease commitments incurred in the normal course of business (see Contractual ObligationObligations table below), we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries that are not included in the consolidated financial statements. Additionally, we do not have any interest in, or relationship with, any special purpose entities.

In the normal course of business to facilitate sales of its products, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors, and our bylaws contain similar indemnification obligations to our agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements were not material and no liabilities have been recorded for these obligations on the Consolidated Balance Sheets as of January 2, 2009 and December 28, 2007.

LIQUIDITY AND CAPITAL RESOURCES

 
As of and for the Fiscal Year Ended
 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(dollars in thousands)
       
        
Cash and cash equivalents $129,621 $73,853 $71,872 
As a percentage of total assets  13.2% 9.9% 11.0%
Accounts receivable days sales outstanding (DSO)  55  66  63 
Inventory turns per year  4  4  4 
Total debt $481 $649 $38,996 
           
Cash provided by operating activities $138,087 $92,880 $74,576 
Cash used in investing activities $(116,432)$(74,918)$(25,133)
Cash provided (used) by financing activities $34,162 $(13,402)$(24,159)
Net increase in cash and cash equivalents $55,768 $1,981 $26,456 
  January 2,  December 28,  December 29, 
As of and for the Fiscal Year Ended 2009  2007  2006 
(in thousands)         
          
Cash and cash equivalents $147,531  $103,202  $129,621 
As a percentage of total assets  9.0%  6.7%  13.2%
Total debt $151,588  $60,690  $481 
             
Cash provided by operating activities $176,074  $186,985  $135,843 
Cash used in investing activities $(121,696) $(311,392) $(114,188)
Cash provided by (used in) financing activities $(6,441) $103,816  $34,162 
Effect of exchange rate changes on cash and cash equivalents $(3,608) $(5,828) $(49)
Net increase (decrease) in cash and cash equivalents $44,329  $(26,419) $55,768 

Cash and Cash Equivalents

Our financial condition further strengthened asAs of January 2, 2009, cash and cash equivalents totaled $129.6$147.5 million compared to $103.2 million at December 29, 2006,28, 2007.  We had debt of $151.6 million at January 2, 2009 compared to $73.9$60.7 million at December 30, 2005. We essentially had no debt at December 29, 2006 and December 20, 2005.28, 2007.

In fiscal 2006, cash provided by operating activities was $138.1 million, compared to $92.9 million in cash provided by operating activities in fiscal 2005. This increase of $45.2 million was primarily driven by a $22.8 million increase in net income before stock-based compensation expense and associated excess tax benefits, with the remainder due to working capital improvements in inventories and account receivables.

Our accounts receivable days of sales outstanding improved to 55 days at the end of fiscal 2006, from 66 days at the end of fiscal 2005. The decrease is primarily due to increased collection efforts and improvement in monitoring of outstanding receivables. In addition, in the first quarter of 2006, the Company established a dealer floor plan financing program in the U.S. and Canada through a non-recourse financing facility. Our accounts receivable days of sales outstanding is based upon the latest month revenues plus any uncollected accounts receivable from prior months’ revenues calculated into days. Our inventory turns were at 4.1 for fiscal 2006 as compared to 3.9 for fiscal 2005. Our inventory turnover is based on the total cost of sales for the fiscal period over the average inventory for the corresponding fiscal period.

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In fiscal 2005, cash provided by operating activities was $92.9 million, as compared to $74.6 million in fiscal 2004. The increase of $18.3 million was primarily driven by the $17.2 million increase in net income during fiscal 2005 compared to fiscal 2004.* Our ability to continue to generate cash from operations will depend in large part on profitability, the rate of collections of accounts receivable, our inventory turns, and our ability to manage other areas of working capital. Our accounts receivable days for sales outstanding increased from 63 days at the end of fiscal 2004 to 66 days at the end of fiscal 2005. The increase is due to acquisitions, delayed payments from some government contracts, and past due accounts from a couple of key customers. Our inventory turns was unchanged at 4.0 at the end of fiscal 2005 and 2004.

Cash used in investing activities was $116.4 million in fiscal 2006, compared to $74.9 million in fiscal 2005. The $41.5 million increase in spending was due to an increase of $48.5 million in cash used for acquisitions, partially offset by a decrease of $6.9 million in capital equipment spending.

Cash used in investing activities was $74.9 million in fiscal 2005 as compared to $25.1 million in fiscal 2004. The $49.8 million increase was primarily due to an increase of $40.0 million in cash used for acquisitions and an increase of $10.6 million in investment in capital equipment of which $6.6 million was related to the relocation of our Sunnyvale headquarters.

Cash provided from financing activities was $34.2 million for fiscal 2006 compared to cash used of $13.4 million in fiscal 2005. The $47.6 million improvement was primarily due to a $38.3 million decrease in repayment of net debt, $8.8 million in excess tax benefits relating to stock-based compensation upon the exercise of stock options which were not present in fiscal 2005 and a $2.1 million increase in proceeds received from issuance of common stock.

Cash used in financing activities was $13.4 million in fiscal 2005 as compared to $24.2 million in fiscal 2004. The $10.8 million decrease was primarily due to a $12.9 million decrease in repayment of net debt as we repaid our entire debt balance in the second fiscal quarter of 2005. This was partially offset by a $2.3 million decrease in proceeds received from issuance of common stock and warrants.

* We believe that our cash and cash equivalents, together with our revolving credit facilities ($200 million as of December 29, 2006), will be sufficient to meet our anticipated operating cash needs and stock purchases under the stock repurchase program for at least the next twelve months.

* We anticipate that planned capital expenditures primarily for computer equipment, software, manufacturing tools and test equipment, and leasehold improvements associated with business expansion, will constitute a partial use of our cash resources.  Decisions related to how much cash is used for investing are influenced by the expected amount of cash to be provided by operations.

* Additionally, on February 16,Operating Activities

Cash provided by operating activities was $176.1 million for fiscal 2008, as compared to $187.0 million for fiscal 2007. This decrease of $10.9 million was due to a decrease in accounts payable, deferred revenue, income taxes payable, and accrued compensation and benefits, partially offset by an increase in net income before non-cash depreciation and amortization and a decrease in accounts receivable.

Cash provided by operating activities was $187.0 million for fiscal 2007, we acquiredas compared to $135.8 million for fiscal 2006. This increase of $51.1 million was primarily driven by an increase in net income before non-cash depreciation and amortization and increases in deferred revenue and income taxes payable.  This was partially offset by an increase in accounts receivable due to increased revenue.

Investing Activities

Cash used in investing activities was $121.7 million for fiscal 2008, as compared to $311.4 million for fiscal 2007. The decrease was due to cash used for acquisitions, attributable primarily to @Road which was funded through cashacquired in the first quarter of Trimble and a new debt financing arrangement.  Post acquisition expenditures will be funded through anticipated positive cash flow from operations.  The positive cash flow from operations is a result of our belief that we will be able to manage our assets efficiently and achieve our overall financial projections.fiscal 2007.

Cash used in investing activities was $311.4 million for fiscal 2007, as compared to $114.2 million for fiscal 2006.  The increase was primarily attributable to cash used for the @Road acquisition.

Financing Activities

Cash used in financing activities was $6.4 million for fiscal 2008, as compared to cash provided of $103.8 million during fiscal 2007, primarily due to stock repurchase activities, partially offset by net cash borrowed from the company’s credit facilities.

Cash provided by financing activities was $103.8 million for fiscal 2007, as compared to $34.2 million for fiscal 2006, primarily related to outstanding debt that was incurred for the @Road acquisition.

Accounts Receivable and Inventory Metrics


  January 2,  December 28, 
As of 2009  2007 
       
Accounts receivable days sales outstanding  69   70 
Inventory turns per year  4.2   4.3 


Accounts receivable days sales outstanding were relatively flat at 69 days as of January 2, 2009, as compared to 70 days as of December 28, 2007. Our accounts receivable days sales outstanding are calculated based on ending accounts receivable, net, divided by revenue for the fourth fiscal quarter, times a quarterly average of 91 days. The actual fiscal quarter contained 98 days; however the Company was shut down an additional week during the quarter. Our inventory turns were at 4.2 for fiscal 2008 as compared to 4.3 for fiscal 2007. Our inventory turnover is based on the total cost of sales for the fiscal period over the average inventory for the corresponding fiscal period.

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Debt

At the end of fiscal 2006,2008, our total debt was comprised primarily of our revolving credit line in the amount of $151.0 million. At the end of fiscal 2007, out total debt was primarily comprised of a term loan in the amount of $60.0 million, which was repaid during fiscal 2008.  As of January 2, 2009 and December 28, 2007, there were also notes payable totaling approximately $588,000 and $690,000, respectively, consisting of government loans to foreign subsidiaries in amount of approximately $481,000 as compared with approximately $649,000 at the end of fiscal 2005.subsidiaries.

On July 28, 2005, we entered into a $200 million unsecured revolving credit agreement (“(the 2005 Credit Facility”)Facility) with a syndicate of 10 banks with The Bank of Nova Scotia as the administrative agent.  The 2005 Credit Facility replaces our $175 million secured 2003 Credit Facility. The funds available under the new 2005 Credit Facility may be used for our general corporate purposes and up to $25 million of the 2005 Credit Facility may be used for letters of credit. We incur a commitment fee if the 2005 Credit Facility is not used. The commitment fee is not material to our results during all periods presented. At December 29, 2006 and as of the date of this report, the Company has a zero balance outstanding and was in compliance with all financial debt covenants. For additional discussion of our debt, see Note 9 of Notes to the Consolidated Financial Statements.
38
On February 16, 2007, the Companywe amended and restated itsour existing $200 million unsecured revolving credit agreement with a syndicate of 11 banks with The Bank of Nova Scotia as the administrative agent (the “20072007 Credit Facility”)Facility). Under the 2007 Credit Facility, the Companywe exercised the accordion option in the existing credit agreement to increase the availability under the revolving credit line by $100,000,000,$100 million, for an aggregate availability of up to $300,000,000,$300 million, and extended the maturity date of the revolving credit line by 18 months, from July 2010 to February 2012.  Up to $25 million of the availability under the revolving credit line may be used to issue letters of credit, and up to $20 million may be used for swing linepaying off other debts or loans.  The maximum leverage ratio under the 2007 Credit Facility is 3.00:1.00.   The funds available under the new 2007 Credit Facility may be used by us for acquisitions, stock repurchases, and general corporate purposes. As of August 20, 2008, we amended the 2007 Credit Facility to allow us to redeem, retire or purchase Trimble common stock. In addition, the Companydefinition of the fixed charge was amended to exclude the impact of redemptions, retirements, or purchases of Trimble common stock from the fixed charges coverage ratio. For additional discussion of our debt, see Note 9 of Notes to the Consolidated Financial Statements.

In addition, during the first quarter of fiscal 2007 we incurred a five-year term loan under the 2007 Credit Facility in an aggregate principal amount of $100,000,000,$100 million, which will mature concurrently with the revolving credit line.  The term loan will bewas repaid in quarterly installments, with principal being amortizedfull during fiscal 2008. 

We may borrow funds under the 2007 Credit Facility in U.S. Dollars or in certain other currencies, and borrowings will bear interest, at our option, at either: (i) a base rate, based on the following annual rates: year 1 at 10%administrative agent's prime rate, plus a margin of between 0% and 0.125%, year 2 at 15%, year 3 at 15%, year 4 at 20%, year 5 at 20%, and the last quarterly payment to be made at maturity, together with a final payment of 20%.  Under the existing facility, the Company was required to maintain a maximumdepending on our leverage ratio as of 2:75:1. our most recently ended fiscal quarter, or (ii) a reserve-adjusted rate based on the London Interbank Offered Rate (LIBOR), Euro Interbank Offered Rate (EURIBOR), Stockholm Interbank Offered Rate (STIBOR), or other agreed-upon rate, depending on the currency borrowed, plus a margin of between 0.625% and 1.125%, depending on our leverage ratio as of the most recently ended fiscal quarter. Our obligations under the 2007 Credit Facility are guaranteed by certain of our domestic subsidiaries.

The 2007 Credit Facility increasedcontains customary affirmative, negative and financial covenants including, among other requirements, negative covenants that restrict our ability to dispose of assets, create liens, incur indebtedness, repurchase stock, pay dividends, make acquisitions, make investments, enter into mergers and consolidations and make capital expenditures, within certain limitations, and financial covenants that require the maximummaintenance of leverage ratio to 3.00:1.and fixed charge coverage ratios. The funds available under the new 2007 Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments, and events constituting a change of control. Upon the occurrence and during the continuance of an event of default, interest on the obligations will accrue at an increased rate and the lenders may accelerate our obligations under the 2007 Credit Facility, however that acceleration will be used byautomatic in the Company for acquisitionscase of bankruptcy and general corporate purposes.
insolvency events of default.  As of February 20, 2007, the Company had $150 million drawn on the revolving credit line and $100 millionJanuary 2, 2009 we were in term loan outstanding. compliance with all financial debt covenants.


42


CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations at December 29, 2006:January 2, 2009:

 Payments Due By Period 
 Payments Due By Period     Less than  1-3  3-5  More than 
 Total 
Less than
1 year
 
2-3
Years
 
4-5
years
 
More than
5 years
  Total  1 year  years  years  5 years 
(in thousands)
                          
                          
Total debt including interest (1) $481 $- $481 $- $-  $177,258  $5,258  $15,866  $156,134  $- 
Operating leases  41,857 10,852 17,505 9,944 3,556   44,179   17,598   19,750   6,675   156 
Other purchase obligations and commitments  32,129 32,129 - - -   68,722   58,026   10,692   -   4 
Total $74,467 $42,981 $17,986 $9,944 $3,556  $290,159  $80,882  $46,308  $162,809  $160 

(1) ExcludesWe may borrow funds under the impact2007 Credit Facility in U.S. Dollars or in certain other currencies, and will bear interest as described under Note 9 of debt resulting from the @Road acquisition. See Note 18 of the Notes to the Consolidated Financial Statements for further financial information.Statements. Our obligations under the 2007 Credit Facility are guaranteed by certain of our domestic subsidiaries. We estimate the interest to be 3.4% per annum, based upon a historical average.

Total debt consists of a revolving credit line of $151.0 million under our credit facilities and government loans of $0.6 million to foreign subsidiaries. (See Note 9 of the Notes to the Consolidated Financial Statements for further financial information regarding long-term debt)

Other purchase obligations and commitments represent open non-cancelable purchase orders for material purchases with our vendors and a forecasted commitment with a supplier for outsourced services as described in Note 10 of the Notes to the Consolidated Financial Statements.vendors. Purchase obligations exclude agreements that are cancelable without penalty. Our pension obligation, which is not included in the table above, and is included in “Accrued compensation and benefits”“Other current liabilities” and “Other non-current liabilities” on our Consolidated Balance Sheets, is disclosedSheets.  Additionally, as of January 2, 2009, we had acquisition earn-outs of $6.3 million and holdbacks of $20.8 million recorded in “Other current liabilities” and “Other non-current liabilities.”  The maximum remaining payments, including the $6.3 million and $20.8 million recorded, will not exceed $71.7 million.  The remaining earn-outs and holdbacks are payable through 2012.

We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (FIN 48), on December 30, 2006.  A total of $37.3 million, including interest and penalties, represents the FIN 48 liability at Note 15January 2, 2009.  At this time, we cannot make a reasonably reliable estimate of the Notes to the Consolidated Financial Statements.period of cash settlement with tax authorities regarding this liability.


EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

The impact of recent accounting pronouncements is disclosed in Note 2 of the Notes to Consolidated Financial Statements.

3943


Item 7A.Item 7A.   Quantitative and Qualitative Disclosure about Market Risk
Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. We use certain derivative financial instruments to manage these risks. We do not use derivative financial instruments for speculative purposes. All financial instruments are used in accordance with policies approved by our board of directors.

Market Interest Rate Risk

Our cash equivalents and short-term investments consisted primarily of money market funds, treasury bills, commercial paper (FDIC insured), interest and certificate ofnon-interest bearing bank deposits as well as bank time deposits for fiscal 20062008 and 2005.2007. The main objective of these investmentsinstruments was safety of principal and liquidity while maximizing return, without significantly increasing risk.

* Due to the short-term nature of our cash equivalents, and short-term investments, we do not anticipate any material effect on our portfolio due to fluctuations in interest rates.
.
We may beare exposed to market risk indue to the event wepossibility of changing interest rates under our senior secured credit facilities. Our credit facility is comprised of an unsecured revolving credit agreement with a maturity date of February 2012. We may borrow against our 2005 Credit Facility. Borrowingsfunds under the 2005 Credit Facility haverevolving credit agreement in U.S. Dollars or in certain other currencies and borrowings will bear interest payments based on a floating rateas described under Note 9 of LIBOR plus a number of basis points tiedNotes to a formula based on our Leverage Ratio. The 2005 Credit Facility had outstanding principal balances of zero as of December 29, 2006.the Consolidated Financial Statements.

As of January 2, 2009, we had an outstanding balance on the revolving credit line of $151.0 million and during fiscal 2008, we repaid the remaining outstanding principal balance on our term loan. A hypothetical 10% increase in the three-month LIBOR rates could result in approximately $0.2 million annual increase in interest expense on the existing principal balances.

* 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 our 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.

Foreign Currency Exchange Rate Risk

We enter into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations on certain trade and inter-company receivables and payables, primarily denominated in Australian, Canadian, Japanese, New Zealand, South African and Swedish currencies, the Euro, and the British pound. 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 forward contracts. These instruments are marked to market through earnings every period and generally range from one to three months in original maturity. We do not enter into foreign exchange forward contractcontracts for trading purposes.

Foreign exchange forward contracts outstanding as of December 29, 2006January 2, 2009 and December 30, 200528, 2007 are summarized as follows (in thousands):

 December 29, 2006 December 30, 2005 January 2, 2009 December 28, 2007 
 Nominal Amount Fair Value Nominal Amount Fair Value Nominal Amount Fair Value Nominal Amount Fair Value 
Forward contracts:                     
Purchased $(21,442)$201 $(14,426)$249  $(22,012) $512  $(34,865) $374 
Sold $38,579 $(358)$27,726 $328  $24,960  $(1,660) $34,946  $(552)

* We do not anticipate any material adverse effect on our consolidated financial position utilizing our current hedging strategy.

4044


TRIMBLE NAVIGATION LIMITED
INDEX TO FINANCIAL STATEMENTS

 
Consolidated Balance Sheets at December 29, 2006January 2, 2009 and December 30, 200528, 20074246
  
Consolidated Statements of Income for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4347
  
Consolidated StatementStatements of Shareholders' Equity for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4448
  
Consolidated Statements of Cash Flows for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4549
  
Notes to Consolidated Financial Statements4650
  
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm7485

45

Item 8.   Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

  January 2, December 28,
  2009 2007
(In thousands)    
     
ASSETS    
Current assets:
    
Cash and cash equivalents $147,531 $103,202
Accounts receivable, less allowance for doubtful accounts of $5,999 and $5,221, and sales return reserve of $1,819and $1,683 at January 2, 2009 and December 28, 2007, respectively  204,269  239,884
Other receivables  17,540  10,201
Inventories, net  160,893  143,018
Deferred income taxes  41,810  44,333
Other current assets  16,404  15,661
Total current assets  588,447  556,299
Property and equipment, net  50,175  51,444
Goodwill  715,571  675,850
Other purchased intangible assets, net  228,901  197,777
Other non-current assets  51,922  57,989
Total assets $1,635,016 $1,539,359
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
Current portion of long-term debt $124 $126
Accounts payable  49,611  67,589
Accrued compensation and benefits  41,291  55,133
Deferred revenue  55,241  49,416
Accrued warranty expense  13,332  10,806
Income taxes payable                    -  14,802
Other current liabilities  63,719  51,980
Total current liabilities  223,318  249,852
Non-current portion of long-term debt          151,464  60,564
Non-current deferred revenue  12,418  15,872
Deferred income taxes  42,207  47,917
Other non-current liabilities  61,553  56,128
Total liabilities  490,960  430,333
       
Minority interests in consolidated subsidiaries  3,655                   -
       
Commitments and contingencies      
       
Shareholders' equity:      
Preferred stock no par value; 3,000 shares authorized; none outstanding Common stock, no par value; 180,000 shares authorized; 119,051 and 121,596 shares issued and outstanding at January 2, 2009 and December 28, 2007, respectively  684,831  660,749
Retained earnings  427,921  388,557
Accumulated other comprehensive income  27,649  59,720
Total shareholders' equity  1,140,401  1,109,026
Total liabilities and shareholders' equity $1,635,016 $1,539,359
See accompanying Notes to the Consolidated Financial Statements.
4146

Item 8.
Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS
As at 
December 29,
 2006
 
December 30,
 2005
 
(in thousands)
      
       
ASSETS      
Current assets:
      
Cash and cash equivalents $129,621 $73,853 
Accounts receivable, less allowance for doubtful accounts of $4,063 and $5,230, and sales return reserve of $859 and $1,500, respectively  172,008  145,100 
Other receivables  6,014  6,489 
Inventories, net  112,552  107,851 
Deferred income taxes  25,905  18,504 
Other current assets  13,026  8,580 
Total current assets  459,126  360,377 
Property and equipment, net  47,998  42,664 
Goodwill  374,510  286,146 
Other purchased intangible assets, net  67,172  27,310 
Deferred income taxes  399  3,580 
Other assets  29,226  23,011 
Total non-current assets  519,305  382,711 
Total assets $978,431 $743,088 
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Current liabilities:       
Current portion of long-term debt $-- $216 
Accounts payable  44,148  45,206 
Accrued compensation and benefits  47,006  36,083 
Accrued liabilities  24,973  16,189 
Deferred revenues  28,060  12,588 
Accrued warranty expense  8,607  7,466 
Deferred income taxes  4,525  4,087 
Income taxes payable  23,814  24,922 
Total current liabilities  181,133  146,757 
Non-current portion of long-term debt  481  433 
Deferred income tax  21,633  5,602 
Other non-current liabilities  27,519  19,041 
Total liabilities  230,766  171,833 
Commitments and contingencies       
Shareholders' equity:       
Preferred stock no par value; 3,000 shares authorized; none outstanding  --  -- 
Common stock, no par value; 180,000 shares authorized; 111,718 and 107,820 shares issued and outstanding at December 29, 2006 and December 30, 2005, respectively  435,371  384,196 
Retained earnings  271,183  167,525 
Accumulated other comprehensive income  41,111  19,534 
Total shareholders' equity  747,665  571,255 
Total liabilities and shareholders' equity $978,431 $743,088 
 
42

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands, except per share amounts)
          
           
Revenue (1) $940,150 $774,913 $668,808 
Cost of sales (1)  479,069  385,108  343,998 
Gross margin  461,081  389,805  324,810 
           
Operating expenses          
Research and development  103,840  84,276  77,558 
Sales and marketing  143,623  120,215  108,054 
General and administrative  68,416  52,137  44,694 
Restructuring charges  --  278  552 
Amortization of purchased intangible assets  7,906  6,855  8,327 
In-process research and development  1,930  1,100  - 
Total operating expenses  325,715  264,861  239,185 
Operating income  135,366  124,944  85,625 
Non-operating income (expense), net          
Interest income  3,799  836  436 
Interest expense  (558) (2,331) (3,888)
Foreign currency transaction gain (loss), net  1,719  1,022  (859)
Income (expenses) for affiliated operations, net  6,989  (291) (7,590)
Other income  777  608  1,200 
Total non-operating income (expense), net  12,726  (156) (10,701)
Income before taxes  148,092  124,788  74,924 
Income tax provision  44,434  39,933  7,244 
Net income $103,658 $84,855 $67,680 
           
Basic earnings per share $0.94 $0.80 $0.66 
Shares used in calculating basic earnings per share  110,044  106,432  102,326 
           
Diluted earnings per share $0.89 $0.75 $0.62 
Shares used in calculating diluted earnings per share  116,072  113,638  109,896 
  January 2, December 28, December 29,
  2009 2007 2006
(In thousands, except per share data)      
       
Revenue (1) $1,329,234 $1,222,270 $940,150
Cost of sales (1)  680,098  609,365  479,069
Gross margin  649,136  612,905  461,081
          
Operating expense         
Research and development  148,265  131,468  103,840
Sales and marketing  196,290  186,495  143,623
General and administrative  94,023  92,572  68,416
Restructuring charges  2,722  3,025           -
Amortization of purchased intangible assets  22,376  18,966  7,906
In-process research and development              -  2,112  1,930
Total operating expense  463,676  434,638  325,715
Operating income  185,460  178,267  135,366
Non-operating income (expense), net         
Interest income  2,044  3,502  3,799
Interest expense  (2,760)  (6,602)  (558)
Foreign currency transaction gain (loss), net  1,509  (1,351)  1,719
Income from joint ventures  7,981  8,377  6,989
Minority interests in consolidated subsidiaries  540              -           -
Other income (expense), net       (2,812)        1,563        777
Total non-operating income (expense), net  6,502  5,489  12,726
Income before taxes  191,962  183,756  148,092
Income tax provision  50,490  66,382  44,434
Net income $141,472 $117,374 $103,658
          
Basic earnings per share $1.17 $0.98 $0.94
Shares used in calculating basic earnings per share  120,714  119,280  110,044
          
Diluted earnings per share $1.14 $0.94 $0.89
Shares used in calculating diluted earnings per share  124,235  124,410  116,072


(1) Sales to related partiesCaterpillar Trimble Control Technologies Joint Venture (CTCT) and Nikon-Trimble Joint Venture (Nikon-Trimble) were $22.3$27.0 million, $9.1$24.1 million and $7.6$22.3 million in fiscal 2008, 2007 and 2006, 2005 and 2004, respectively, whilewith associated cost of sales to those related parties wereof $21.5 million, $17.0 million and $13.9 million $4.0for fiscal 2008, 2007 and 2006, respectively.  In addition, cost of sales associated with CTCT net inventory purchases was $21.4 million, $25.1 million and $3.8$19.5 million in fiscal 2006, 20052008, 2007 and 2004,2006, respectively.  See Note 5 to these Consolidated Financial Statements regarding joint ventures for a discussion of related parties.further discussion.


See accompanying Notes to the Consolidated Financial Statements.

47

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

43
           Accumulative    
        Other  Total 
  Common stock  
Retained
  Comprehensive  Shareholders' 
  Shares  Amount  Earnings  Income/(Loss)  Equity 
(In thousands)               
                
Balance at December 30, 2005 $107,820  $384,196  $167,525  $19,534  $571,255 
Components of comprehensive income:                    
Net income          103,658       103,658 
Unrealized loss on investments              4   4 
Foreign currency translation adjustments, net of tax              21,709   21,709 
Total comprehensive income                  125,371 
Adjustment to initially apply FASB Statement No. 158, net of tax              (136)  (136)
Issuance of common stock in  connection with acquisitions and joint venture, net  52               - 
Issuance of common stock under employee plans and exercise of warrants  3,846   26,781           26,781 
Stock based compensation      12,705           12,705 
Tax benefit from stock option exercises      11,689           11,689 
Balance at December 29, 2006  111,718  $435,371  $271,183  $41,111  $747,665 
Components of comprehensive income:                    
Net income          117,374       117,374 
Unrealized loss on investments              (33)  (33)
Foreign currency translation adjustments, net of tax              18,655   18,655 
Unrecognized actuarial loss              (13)  (13)
Total comprehensive income                  135,983 
Issuance of common stock in  connection with acquisitions and joint venture, net
  5,876   163,678           163,678 
Issuance of common stock under employee plans and exercise of warrants  4,002   31,913           31,913 
Stock based compensation      15,099           15,099 
Tax benefit from stock option exercises      14,637           14,637 
Minority interest      51           51 
Balance at December 28, 2007 $121,596  $660,749  $388,557  $59,720  $1,109,026 
Components of comprehensive income:                    
Net income          141,472       141,472 
Unrealized loss on investments              (392)  (392)
Foreign currency translation adjustments, net of tax              (31,722)  (31,722)
Unrecognized actuarial gain              43   43 
Total comprehensive income                  109,401 
Issuance of common stock under employee plans and exercise of warrants  1,698   22,804           22,804 
Stock repurchase  (4,243)  (23,780)  (102,108)      (125,888)
Stock based compensation      16,293           16,293 
Tax benefit from stock option exercises      8,765           8,765 
Balance at January 2, 2009  119,051  $684,831  $427,921  $27,649  $1,140,401 

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
        Accumulative   
      Other Total 
  Common stock Retained Comprehensive Shareholders' 
  Shares Amount Earnings Income/(Loss) Equity 
(in thousands)
           
            
Balance at January 2, 2004  99,976 $303,015 $14,990 $30,239 $348,244 
Components of comprehensive income:                
Net income        67,680     67,680 
Gain on interest rate swap           106  106 
Unrealized loss on investments           (6) (6)
Foreign currency translation adjustments, net of tax           14,025  14,025 
Total comprehensive income              81,805 
Issuance of common stock in connection with acquisitions and joint venture, net  589  899        899 
Issuance of common stock under employee plans and exercise of warrants  3,861  26,805        26,805 
Tax benefit from stock option exercises     14,408        14,408 
Balance at December 31, 2004  104,426  345,127  82,670  44,364  472,161 
Components of comprehensive income:                
Net income        84,855     84,855 
Loss on interest rate swap           (106) (106)
Unrealized loss on investments           (34) (34)
Foreign currency translation adjustments, net of tax           (24,690) (24,690)
Total comprehensive income              60,025 
Issuance of common stock in connection with acquisitions, net  20           - 
Issuance of common stock under employee plans and exercise of warrants  3,374  24,582        24,582 
Tax benefit from stock option exercises     14,487        14,487 
Balance at December 30, 2005  107,820  384,196  167,525  19,534  571,255 
Components of comprehensive income:                
Net income        103,658     103,658 
Unrealized gain on investments           3  3 
Foreign currency translation adjustments, net of tax           21,709  21,709 
Adjustment to initially apply FASB Statement No. 158, net of tax           (136) (136)
Total comprehensive income              125,234 
Issuance of common stock in connection with acquisitions, net  52             
Issuance of common stock under employee plans and exercise of warrants  3,846  26,781        26,781 
Stock based compensation     12,705        12,706 
Tax benefit from stock option exercises       11,689            11,689 
Balance at December 29, 2006  111,718 $435,371 $271,183 $41,110 $747,665 
See accompanying Notes to the Consolidated Financial Statements.



CONSOLIDATED STATEMENTS OF CASH FLOWS
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(In thousands)         
          
Cash flows from operating activities:         
Net income $141,472  $117,374  $103,658 
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation  19,047   17,212   13,523 
Amortization  45,066   38,744   13,259 
Provision for doubtful accounts  2,709   1,410   163 
Amortization of debt issuance cost  169   218   180 
Deferred income taxes  (17,356)  6,368   10,368 
Non-cash restructuring expense  -   1,725   - 
Stock-based compensation  16,166   15,016   12,571 
In-process research and development  -   2,112   1,930 
Equity gain from joint ventures  (7,981)  (8,377)  (6,989)
Excess tax benefit for stock-based compensation  (5,970)  (12,409)  (8,761)
Provision for excess and obsolete inventories  4,426   4,352   7,376 
Other  (348)  651   720 
Add decrease (increase) in assets:            
Accounts receivable  33,414   (35,696)  (12,185)
Other receivables  (7,422)  4,825   (51)
Inventories  (16,461)  (18,678)  (7,588)
Other current and non-current assets  779   7,650   (18,936)
Add increase (decrease) in liabilities:            
Accounts payable  (20,898)  (3,521)  (4,487)
Accrued compensation and benefits  (12,487)  1,691   7,807 
Accrued liabilities  3,183   (4,635)  9,790 
Deferred revenue  (1,320)  32,400   3,263 
Income taxes payable  (114)  18,553   10,232 
Net cash provided by operating activities  176,074   186,985   135,843 
             
Cash flows from investing activities:            
Acquisitions of businesses, net of cash acquired  (115,137)  (295,848)  (99,887)
Acquisition of property and equipment  (16,196)  (13,187)  (16,529)
Purchase of debt and equity securities  -   (5,576)  - 
Proceeds from dividends  10,648   2,888   2,244 
Capital infusion from minority investor  4,200   -   - 
Other  (5,211)  331   (16)
Net cash used in investing activities  (121,696)  (311,392)  (114,188)
             
Cash flows from financing activities:            
Issuance of common stock and warrants  22,802   31,864   26,566 
Excess tax benefit for stock-based compensation  5,970   12,409   8,761 
Repurchase and retirement of common stock  (125,888)  -   - 
Proceeds from long-term debt and revolving credit lines  151,000   250,000   - 
Payments on long-term debt and revolving credit lines  (60,314)  (190,457)  - 
Other  (11)  -   (1,165)
Net cash provided by (used in) financing activities  (6,441)  103,816   34,162 
             
Effect of exchange rate changes on cash and cash equivalents  (3,608)  (5,828)  (49)
             
Net increase (decrease) in cash and cash equivalents  44,329   (26,419)  55,768 
Cash and cash equivalents, beginning of fiscal year  103,202   129,621   73,853 
Cash and cash equivalents, end of fiscal year $147,531  $103,202  $129,621 

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
         
          
Cash flows from operating activities:         
Net income $103,658 $84,855 $67,680 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation  13,523  10,671  8,874 
Amortization  13,259  7,020  8,510 
Provision for doubtful accounts  163  (502) 1,210 
Amortization of debt issuance cost  180  1,270  487 
Deferred income taxes  10,368  14,242  (1,482)
Stock-based compensation  12,571  -  - 
In-process research and development  1,930  1,100  - 
Equity (gain) loss from joint ventures  (6,989) 290  (1,212)
Excess tax benefit for stock-based compensation  (8,761) -  - 
Other  720  (756) 1,191 
Add decrease (increase) in assets:          
Accounts receivable, net  (12,185) (19,018) (17,245)
Other receivables  1,949  (2,108) 2,231 
Inventories, net  (374) (17,888) (15,529)
Other current and non-current assets  (18,692) (2,294) (69)
Add increase (decrease) in liabilities:          
Accounts payable  (4,487) 1,078  14,668 
Accrued compensation and benefits  7,807  3,408  4,847 
Accrued liabilities  9,952  6,232  (1,757)
Deferred gain on joint venture  -  (9,180) (665)
Deferred revenues  3,263  2,406  1,619 
Income taxes payable  10,232  12,054  1,218 
Net cash provided by operating activities  138,087  92,880  74,576 
           
Cash flows from investing activities:          
Acquisition of property and equipment  (16,529) (23,436) (12,750)
Acquisitions, net of cash acquired  (99,887) (51,379) (11,388)
Other  (16) (103) (995)
Net cash used in investing activities  (116,432) (74,918) (25,133)
           
Cash flows from financing activities:          
Issuance of common stock and warrants  26,566  24,463  26,805 
Excess tax benefit for stock-based compensation  8,761  -  - 
Proceeds from long-term debt and revolving credit lines  -  6,000  14,000 
Payments on long-term debt and revolving credit lines  -  (44,250) (65,235)
Other  (1,165) 385  271 
Net cash provided by (used in) financing activities  34,162  (13,402) (24,159)
           
Effect of exchange rate changes on cash and cash equivalents  (49) (2,579) 1,172 
           
Net increase in cash and cash equivalents  55,768  1,981  26,456 
Cash and cash equivalents, beginning of fiscal year  73,853  71,872  45,416 
Cash and cash equivalents, end of fiscal year $129,621 $73,853 $71,872 

See accompanying Notes to the Consolidated Financial Statements.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS

Trimble Navigation Limited (Trimble or the Company) began operations in 1978 and incorporated in California in 1981. TrimbleThe Company provides positioning product solutions, most typically to commercial and government users. The principal applications served include surveying, construction, agriculture, urban and resource management, military, transportation and telecommunications. The Company’s products typically provide its customers benefits that can include lower operational costs, higher productivity, and higher productivity.improved quality. Examples of products include systems that guide agricultural and construction equipment, surveying instruments, systems that track fleets of vehicles, and data collection systems that enable the management of large amounts of geo referencedgeo-referenced information. In addition, the Company also manufactures components for in vehiclein-vehicle navigation and telematics systems, and timing modules used in the synchronization of wireless networks.

NOTE 2: ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in accordance with accounting principlesU.S. generally accepted in the U.S.accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for allowances for doubtful accounts, sales returns reserve, allowances for inventory valuation, warranty costs, investments, goodwill impairments, stock-based compensation, and income taxes among others. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the company in the future, actual results may differ materially from management’s estimates.

Basis of Presentation

TrimbleThe Company has a 52-53 week fiscal year, ending on the Friday nearest to December 31.  Fiscal 2008 was a 53-week year and ended on January 2, 2009. Fiscal 2007 and fiscal 2006 awere both 52-week year,years, and ended on December 29, 2006, fiscal 2005, a 52-week year, and fiscal 2004, a 52-week year, ended on December 30, 200528, 2007 and December 31, 2004,29, 2006, respectively.  Unless otherwise stated, all dates refer to itsthe Company’s fiscal year.

These Consolidated Financial Statements include the results of Trimblethe Company and its majority-owned subsidiaries. Inter-company accounts and transactions have been eliminated. Certain segment disclosures from prior years have been reclassified to conform toMinority interests in consolidated subsidiaries represent the current year presentation.minority shareholders’ proportionate share of the net assets and results of operations of the Company’s majority-owned subsidiaries.

On January 17, 2007, Trimble’s Boardthe Company’s board of Directorsdirectors approved a 2-for-1 split of all outstanding shares of the Company’s Common Stock, payable February 22, 2007 to stockholders of record on February 8, 2007. All shares and per share information presented has been adjusted to reflect the stock split on a retroactive basis for all periods presented.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in local currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive income. Income and expense accounts are translated at average exchange rates during the year. Where the U.S. dollar is the functional currency, translation adjustments are recorded in foreign currency transaction adjustments,income, net of tax in accumulated other comprehensive income within the shareholders’ equity section of the consolidated balance sheets.Consolidated Balance Sheets. Income and expense accounts are translated at average exchange rates during the year.

Cash and Cash Equivalents

Cash and cash equivalents include all cash and highly liquid investments with insignificant interest rate risk and maturities of three months or less at the date of purchase. The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of those instruments.



Fair Value of Financial Instruments

The fair value of certain of the Company’s financial instruments, including cash and cash equivalents, and other accrued liabilities approximate cost because of their short maturities. The fair value of investments is determined using quoted market prices for those securities or similar financial instruments.

Concentration of Risk

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal credit risk.

The Company is also exposed to credit risk in the Company’s trade receivables, which are derived from sales to end user customers in diversified industries as well as various resellers. TrimbleThe Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally does not require collateral.

With the selection of SolectronFlextronics Corporation in August 1999 as an exclusive manufacturing partner for many of its GPS products, Trimblethe Company became substantially dependent upon a sole supplier for the manufacture of many of its products.  In addition, the Company relies on sole suppliers for a number of its critical components.

Allowance for Doubtful Accounts

TrimbleThe Company maintains allowancesan allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.

TrimbleThe Company evaluates the ongoing collectibility of its trade accounts receivable based on a number of factors such as age of the accounts receivable balances, credit quality, historical experience, and current economic conditions that may affect a customer’s ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company, a specific allowance for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount Trimblethat the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding.

Inventories

Trimble’s inventoriesInventories are stated at the lower of standard cost or market, with costs primarily computed(which approximates actual cost on a standard cost basis.first-in, first-out basis) or market. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence or impaired balances. Factors influencing these adjustments include declinedeclines in demand, technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. If actual factors are less favorable than those projected by us, additional inventory write-downs may be requiredrequired.

Internal-Use Software Development Costs

The Company capitalizes material software development costs for internal use pursuant to Statement of Position No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.”

Goodwill and Purchased Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible, identifiable intangible assets, and Long-Lived Assets

in-process research and development acquired in a business combination. Intangible assets include goodwill,acquired individually, with a group of other assets, or in a business combination are recorded at fair value. Identifiable intangible assets are comprised of distribution channels and distribution rights, patents, licenses, technology, acquired backlog and trademarks whichtrademarks.  Identifiable intangible assets are capitalized at acquisition cost. Intangible assets with definite lives arebeing amortized onover the period of estimated benefit using the straight-line basis. Usefulmethod, reflecting the pattern of economic benefits associated with these assets, and have estimated useful lives generally rangeranging from threeone to seventwelve years with a weighted average useful life of 5.36.5 years.

If facts and circumstances indicate that intangible assets or property and equipment may be impaired, Goodwill is not subject to amortization, but is subject to at least an evaluation of continuing value would be performed. The process of evaluating the potentialannual assessment for impairment, of goodwill is subjective and requires significant assumptions If an evaluation is required, the estimated future undiscounted cash flows associated with these assets would be compared to their carrying amount to determine ifapplying a write-down to fair market value or discounted cash flow value is required.fair-value based test.


Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets

Trimble performed an annual impairment test ofThe Company evaluates goodwill, at the end of the third fiscal quarter of 2006, 2005, and 2004, respectively, and concluded there was no impairment of goodwill. Trimble will continue to evaluate its goodwill for impairmenta minimum, on an annual basis at the end of each fiscal third quarter and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company performs its annual goodwill impairment testing in the fourth fiscal quarter of each year.  Goodwill is reviewed for impairment utilizing a two-step process.  First, impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit.   The fair values of the reporting units are estimated using a discounted cash flow approach.  If the carrying amount of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment loss, if any. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit’s goodwill, the difference is recognized as an impairment loss.

Revenue RecognitionDepreciation and amortization of the Company’s intangible assets and other long-lived assets is provided using the straight-line method over their estimated useful lives, reflecting the pattern of economic benefits associated with these assets. Changes in circumstances such as technological advances, changes to the Company’s business model, or changes in the capital strategy could result in the actual useful lives differing from initial estimates. In those cases where the Company determines that the useful life of an asset should be revised, the Company will depreciate the net book value in excess of the estimated residual value over its revised remaining useful life. These assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows. The assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value.

Trimble’s revenues are recorded in accordance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition.” Revenue Recognition

The Company recognizes product revenue when persuasive evidence of an arrangement exists, deliveryshipment has occurred, the fee is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

Contracts andand/or customer purchase orders are typically used to determine the existence of an arrangement. Shipping documents and customer acceptance, when applicable, are used to verify delivery. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis,analyses, as well as the customer’s payment history.

Trimble’sRevenue for orders is not recognized until the product is shipped and title has transferred to the buyer. The Company bears all costs and risks of loss or damage to the goods up to that point. The Company’s shipment terms for USU.S. orders and international orders fulfilled from itsthe Company’s European distribution center are typically FCA (Free Carrier) shipping point, except certain sales to US government agencies which are shipped FOB destination. FCA shipping point meansprovide that we fulfill the obligation and title has passedpasses to the buyer upon delivery of the goods to the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, Trimblethe Company may choose within the place or range stipulated where the carrier will take the goods into carrier’s charge. FOB destination means revenue for orders are not recognized until the product is delivered andOther shipment terms may provide that title has transferredpasses to the buyer. We bear all costs and risksbuyer upon delivery of loss or damagethe goods to the goods up to that point.buyer.  Shipping and handling costs are included in the cost of goods sold.

Revenue to distributors and resellers is recognized upon delivery,shipment, assuming all other criteria for revenue recognition have been met. Distributors and resellers do not have a right of return.

RevenuesRevenue from purchased extended warranty and support agreements areis deferred and recognized ratably over the term of the warranty/support period.

The Company presents revenue net of sales taxes and any similar assessments.

The Company applies Statement of Position (SOP) No. 97-2, “Software Revenue Recognition”Recognition,” to products where the embedded software is more than incidental to the functionality of the hardware. This determination requires significant judgment including a consideration of factors such as the marketing, research and development efforts and any postcustomerpost contract support (PCS) relating to the embedded software.


The Company’s software arrangements generally consist of a perpetual license fee and PCS. The Company has established vendor-specific objective evidence (VSOE) of fair value for the Company’s PCS contracts based on the renewal rate. The remaining value of the software arrangement is allocated to the license fee using the residual method.  License revenue is primarily recognized when the software has been delivered and there are no remaining obligations. Revenue from PCS is recognized ratably over the term of the PCS agreement.

The Company applies Emerging Issues Task Force (EITF) Issue 00-3, “Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use Software Stored on Another Entity’s Hardware.” for hosted arrangements which the customer does not have the contractual right to take possession of the software at any time during the hosting period without incurring a significant penalty and it is not feasible for the customer to run the software either on its own hardware or on a third-party’s hardware. Subscription revenue related to the Company’s hosted arrangements is recognized ratably over the contract period. Upfront fees for the Company’s hosted solution primarily consist of amounts for the in-vehicle enabling hardware device and peripherals, if any. For upfront fees relating to proprietary hardware where the firmware is more than incidental to the functionality of the hardware in accordance with SOP No. 97-2, the Company defers the upfront fees at installation and recognizes them ratably over the minimum service contract period, generally one to five years. Product costs are also deferred and amortized over such period.

In accordance with Emerging Issues Task Force (EITF)EITF Issue 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables,” when a non-software sale involves multiple elements the entire fee from the arrangement is allocated to each respective element based on its relative fair value and recognized when revenue recognition criteria for each element areis met.

Software revenue is recognized in accordance with Statement of Position (SOP) No. 97-2, “Software Revenue Recognition” and Statement of Position (SOP) No. 98-9, “Modification of SOP 97-2.” Trimble’s software arrangements generally consist of a perpetual license fee and post contract customer support (PCS). Trimble has established vendor-specific objective evidence (VSOE) of fair value for its PCS contracts based on the renewal rate. The remaining value of the software arrangement is allocated to the license fee using the residual method, which revenue is primarily recognized when the software has been delivered and there are no remaining obligations. Revenue from PCS is recognized ratably over the term of the PCS agreement.

A reserve for sales returns is established based on historical trends in product return rates experienced in the ordinary course of business. The reserve for estimated future returns is recorded as a reduction of our accounts receivable and revenue. If the actual returns were to deviate from the historical data on which the sales reserve had been established, the Company’s revenue could be adversely affected.


Warranty

The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, technical support labor costs, and costs incurred by third parties performing work on the Company’s behalf. Trimble’sThe Company’s expected future cost is primarily estimated based upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the equipment.  The products sold are generally covered by a warranty for periods ranging from 90 days to three years, and in some instances up to 5.5 years.

While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, its warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ from the estimates, revisions to the estimated warranty accrual and related costs may be required.

Changes in the Company’s product warranty liability during the 12 monthsfiscal years ended December 29, 2006January 2, 2009 and December 30, 2005,28, 2007, are as follows:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
(In thousands)
     
      
Beginning balance $7,466 $6,425 
Warranties accrued  8,446  7,960 
Warranty claims  (7,305) (6,919)
Ending Balance $8,607 $7,466 
  January 2,  December 28, 
Fiscal Years Ended 2009  2007 
(in thousands)      
       
Beginning balance $10,806  $8,607 
Acquired warranties  930   67 
Accruals for warranties issued  22,214   15,883 
Changes in estimates  -   - 
Warranty settlements (in cash or in kind)  (20,618)  (13,751)
Ending Balance $13,332  $10,806 


Guarantees, Including Indirect Guarantees of Indebtedness of Others

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents.


It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements were not material and no liabilities have been recorded for these obligations on the Consolidated Balance Sheets as of December 29, 2006January 2, 2009 and December 30, 2005.28, 2007.

Advertising Costs

The Company expenses all advertising costs as incurred. Advertising expenses wereexpense was approximately $16.1$22.6 million, $14.8$21.2 million, and $9.5$16.1 million, in fiscal 2006, 2005,2008, 2007, and 2004,2006, respectively.

Research and Development Costs

Research and development costs are charged to expense as incurred. Cost of software developed for external sale subsequent to reaching technical feasibility were not considered materialsignificant and were expensed as incurred. The Company received third party funding of approximately $7.8$9.2 million, $9.0$8.5 million, and $7.7$7.8 million in fiscal 2006, 2005,2008, 2007, and 20042006, respectively. The Company offsets research and development expensesexpense with any third party funding received. The Company retains the rights to any technology developed under such arrangements.

Stock-Based Compensation

In December 2004,fiscal 2006 the Financial Accounting Standards Board (“FASB”) issued StandardCompany adopted, and currently accounts for stock-based compensation under Statement of Financial Accounting Standards (“SFAS”) No.(SFAS) No 123(R), “Share-Based“Share Based Payment” (“SFAS(SFAS 123(R)”).  SFAS 123(R) requires employee stock options and rights to purchase shares under stock participation plans to be accounted for under the fair value method, and eliminates the ability to account for these instruments under the intrinsic value method prescribed by Accounting Principals Board (“APB”) Opinion No. 25, and allowed under the original provisions of SFAS 123.


Trimble has adopted SFAS 123(R) using the modified prospective method. As a result, the Company’s financial statements for fiscal periods after December 30, 2005 include stock-based compensation expenses that are not comparable to financial statements of fiscal periods prior to December 30, 2005. SFAS 123(R) requires stock-based compensation to be estimated using the fair value on the date of grant using an option-pricing model. The value of the portion of the award that is expected to vest is recognized as expense over the related employees’ requisite service periods in the Company’s Consolidated Statements of Income. Prior to the adoption of SFAS 123(R), the Company accounted for stock-based compensation to employees and directors using the intrinsic value method in accordance with APB Opinion No. 25 as allowed under SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under the intrinsic value method, no stock-based compensation expense had been recognized in the Company’s Consolidated Statement of Income because the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the date of grant. Note 14 of the Consolidated Financial Statements describe the plans operated by Trimble.

The following table summarizes stock-based compensation expense, net of tax, related to employee stock-based compensation included in the Consolidated Statements of Income in accordance with SFAS 123(R) for the year ended December 29, 2006..
 

Year Ended   
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
         
          
Cost of sales    $1,173 $- $- 
              
Research & development     2,554  -  - 
Sales & marketing     2,814  -  - 
General & administrative     6,029  -  - 
Stock-based compensation expense included in operating expenses     11,397  -  - 
              
Total stock-based compensation     12,570  -  - 
Tax benefit  (1)  (1,185) -  - 
Total stock-based compensation, net of tax    $11,385 $- $- 
Effect of FAS 123(R) on basic earnings per share    $0.10 $- $- 
Effect of FAS 123(R) on diluted earnings per share    $0.10 $- $- 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Cost of sales $1,920  $1,733  $1,173 
             
Research and development  3,489   3,573   2,554 
Sales and marketing  3,993   3,891   2,815 
General and administrative  6,764   5,819   6,029 
Total operating expenses  14,246   13,283   11,398 
             
Total stock-based compensation expense  16,166   15,016   12,571 
Tax benefit (1)  (2,636)  (1,857)  (1,185)
Total stock-based compensation expense, net of tax $13,530  $13,159  $11,386 

(1) Tax benefit related to USU.S. incentive and non-qualified stock options, only as allowed by the applicable tax requirements using theemployee stock purchase plan (ESPP) and restricted stock units, applying a Federal statutory and State (Federal effected) tax rate for the year ended January 2, 2009 and December 29, 2006.28, 2007.

The table below provides pro forma information for the year ended December 30, 2005 and December 31, 2004, respectively, as if Trimble had accounted for its employee stock options and purchases under the employee stock purchase plan in accordance with SFAS 123.

Fiscal Years Ended   
 December 30,
2005
 
December 31,
2004
 
(in thousands, except per share amounts)
        
         
Net income - as reported    $84,855 $67,680 
Stock-based compensation expense, net of tax  (1)  11,149  9,986 
Net income - pro forma    $73,706 $57,694 
           
Basic earnings per share - as reported    $0.80 $0.66 
Basic earnings per share - pro forma    $0.69 $0.56 
           
Diluted earnings per share - as reported    $0.75 $0.62 
Diluted earnings per share - pro forma    $0.65 $0.52 


(1) Includes compensation expense for employee stock purchase plan for the year ended December 30, 2005 and December 31, 2004, respectively, and reduction of tax benefits for stock-based compensation other than non-qualified stock options which were not included in the pro forma disclosure of Trimble’s fiscal 2005 and 2004 Form 10-K. Tax benefit relates to non-qualified options only as allowed by the applicable tax requirements using the statutory tax rate as of December 30, 2005 and December 31, 2004, respectively.


Options

Stock option expense recognized duringin the periodConsolidated Statements of Income is based on the value of the portion of share-based payment awards that is expected to vest during the period. Stockperiod and is net of estimated forfeitures. For fiscal 2008, 2007 and 2006 the stock option expense recognized in the Company’s Consolidated of Income for the year ended December 29, 2006 includedincludes compensation expense for stock options granted prior to, but not yet vested as of December 30, 2005 based on the grant date fair value estimated in accordance with the provisions of SFAS 123 and compensation expense for the stock options granted subsequent to December 30, 2005 based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). In conjunction with the adoption of SFAS 123(R), the Company changed its method of attributing the value of stock optionoptions to expense from the accelerated multiple-option approach to the straight-line single option method. Compensation expense for all stock options granted on or prior to December 30, 2005 will continue to be recognized using the accelerated multiple-option approach while compensation expense for all stock options granted subsequent to December 30, 2005 will beis recognized using the straight-line single-option method. SFAS 123(R) requires forfeitures to be estimated at the time



For options granted prior to October 1, 2005, the fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model. For stock options granted on or after October 1, 2005, the fair value of each award is estimated on the date of grant using a binomial valuation model. Similar to the Black-Scholes model, the binomial model takes into account variables such as volatility, dividend yield rate, and risk free interest rate. In addition, the binomial model incorporates actual option-pricing behavior and changes in volatility over the option’s contractual term. For these reasons, the Company believes that the binomial model provides a fair value that is more representative of actual experience and future expected experience than the value calculated using the Black-Scholes model.

Under the binomial and Black-Scholes models,model, the estimatedweighted average grant-date fair valuesvalue of each employee stock optionoptions granted during fiscal years 2008, 2007 and 2006 2005,were $8.80, $12.37 and 2004 were $8.04, $7.27 and $6.93, respectively. The value of each option grant is estimated on the date of grant using the binomial model forFor options granted during and afterfor the fourth quarter of fiscal 2005, and the Black-Scholes option pricing model for options granted during and prior to the third quarter of fiscal 2005, withthree years ending January 2, 2009, the following assumptions:

 
December 29,
2006
December 30,
2005
December 31,
2004
Expected dividend yield---
Expected stock price volatility42%47%56%
Risk free interest rate4.8%4.3%3.5%
Expected life of options after vesting1.3 years1.7 years1.6 years
weighted-average assumptions were used:
 
51
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
Expected dividend yield  -   -   - 
Expected stock price volatility  45%  37%  42%
Risk free interest rate  2.50%  4.20%  4.80%
Expected life of options after vesting 1.3 years  1.3 years  1.3 years 


Expected Dividend Yield - – The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Expected Stock Price Volatility - – The Company’s computation of expected volatility is based on a combination of implied volatilities from traded options on the Company’s stock and historical volatility. The Company used implied and historical volatility as the combination was more representative of future stock price trends than historical volatility alone.

Expected Risk Free Interest Rate - – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option.

Expected Life Of Option - – The Company’s expected term represents the period that the Company’s stock options are expected to be outstanding and was determined based on historical experience of similar stock options with consideration to the contractual terms of the stock options, vesting schedules and expectations of future employee behavior.

Restricted Stock Units

Restricted stock units are converted into shares of Trimble common stock upon vesting on a one-for-one basis.  Vesting of restricted stock units is subject to the employee’s continuing service to the Company.  The compensation expense related to these awards was determined using the fair value of Trimble’s common stock on the date of grant, and the expense is recognized on a straight-line basis over the vesting period.  Restricted stock units typically vest at the end of three years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, rights to purchase shares are generally granted during the second and fourth quarter of each year. The fair value of rights granted under the Employee Stock Purchase Plan was estimated at the date of grant using the Black-Scholes option-pricing model. The estimated weighted average value of rights granted under the Employee Stock Purchase Plan during fiscal years 2008, 2007 and 2006 2005,were $8.30, $7.54 and 2004 were $5.16, $4.94 and $3.66, respectively. The fair value of rights granted during 2006, 2005,2008, 2007 and 20042006 was estimated at the date of grant using the following weighted-average assumptions:

Fiscal years ended
December 29,
2006
December 30,
2005
December 31,
2004
Expected dividend yield---
Expected stock price volatility35.5%47%46%
Risk free interest rate4.8%3.5%1.7%
Expected life of purchase0.6 years0.5 years0.5 years

  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
Expected dividend yield  -   -   - 
Expected stock price volatility  44.0%  36.5%  35.5%
Risk free interest rate  2.70%  4.90%  4.80%
Expected life of purchase 0.5 years  0.5 years  0.6years 
Expected Dividend Yield - – The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Expected Stock Price Volatility - – The Company’s computation of expected volatility is based on implied volatilities from traded options on the Company’s stock. The Company used implied volatility because it is representative of future stock price trends during the purchase period.

Expected Risk Free Interest Rate - – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the purchase period.

Expected Life Of Purchase - – The Company’s expected life of the purchase is based on the term of the offering period of the purchase plan.

55
DepreciationTable of Contents

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation. Depreciation of property and equipment owned 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 two to six years for machinery and equipment, five years for furniture and fixtures, two to five years for computer equipment and software, and the life of the lease for leasehold improvements. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Depreciation expense was $19.0 million in fiscal 2008, $17.2 million in fiscal 2007 and $13.5 million in fiscal 2006, $10.7 million in fiscal 2005, and $8.9 million in fiscal 2004.2006.

Derivative Financial Instruments

The Company enters into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations on certain trade and inter-company receivables and payables, primarily denominated in Australian, Canadian, Japanese, New Zealand, South African and Swedish currencies, the Euro, and the British pound. 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 forward contracts. These instruments are marked to market through earnings every period and generally range from one to three months in original maturity. We do not enter into foreign exchange forward contracts for trading purposes.

Income Taxes

Income taxes are accounted for under the liability method whereby deferred tax assetassets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.  The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), on December 30, 2006.  See Note 12 to the Consolidated Financial Statements for additional information.


Computation of Earnings Per Share

NumberThe number of shares used in the calculation of basic earnings per share represents the weighted average common shares outstanding during the period and excludes any dilutive effects of options, non-vested restricted stock units and restricted stock awards, warrants, and convertible securities. The dilutive effects of options, non-vested restricted stock units and restricted stock awards, warrants, and convertible securities are included in diluted earnings per share.


NewRecent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)."  SFAS 158 requires companies to recognize the overfundedover-funded or underfundedunder-funded status of a defined benefit post-retirement plan as an asset or liability in its balance sheet, recognize as a component of accumulated other comprehensive income, net of tax, amounts accumulated at the date of adoption due to delayed recognition of actuarial gains and losses, prior service costs and credits, and transition assets and obligations, and provide additional disclosures,disclosures. SFAS 158 is effective for fiscal years ending after December 15, 2006. On December 29,28, 2006, Trimblethe Company adopted the recognition and disclosure provisions of SFAS 158.  The effect of adopting these provisions of SFAS 158 on the Company’s financial condition at December 29, 2006, December 28, 2007 and January 2, 2009 has been included in the accompanying consolidated financial statements.  These provisions of SFAS 158 did not have an effect on the Company’s consolidated financial condition at December 30, 2005 or December 31, 2004. See Note 15 to the Notes to Consolidated Financial Statements for additional information. 

SFAS 158 also requires companies to measure the funded status of the plan as of the date of its fiscal year-end, with limited exceptions, effective for fiscal years ending after December 15, 2008. For Trimble, thisThis provision of SFAS 158 will bewas effective for the fiscal year ended 2008. The Company is currently evaluating this provisionadoption of SFAS No. 158 and its possible impactsdid not have a material impact on the Company’s financial statements.position, results of operations or cash flows.  See Note 15 to the Notes to Consolidated Financial Statements for additional information. 


In JulySeptember 2006, the FASB issued InterpretationSFAS No. 48, “Accounting157, “Fair Value Measurements,” which clarifies the definition of fair value, establishes a framework for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 appliesmeasuring fair value within GAAP and expands the disclosures regarding fair value measurements.  In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 deferring the effective date of SFAS No. 157 to all tax positions related to income taxes subject to SFAS 109, “Accountingfiscal years beginning after November 15, 2008, and interim periods within those fiscal years for Income Taxes.”  Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the income tax benefits from the tax positionsnonfinancial assets and nonfinancial liabilities that are recognized provides guidance as to the timing of the derecognition of previously recognized tax benefits and describes the methods for classifying and disclosing the liabilities withinor disclosed at fair value in the financial statements on a nonrecurring basis.  The Company adopted SFAS No. 157 in its first quarter of fiscal 2008, except for those items specifically deferred under FSP No. FAS 157-2.  The adoption of SFAS No. 157 did not have a material impact, nor does the Company expect that the full adoption in fiscal 2009 will have a material impact, on the Company’s financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.”  SFAS No. 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities under an instrument-by-instrument election. Subsequent measurements for the financial assets and liabilities an entity elects to fair value will be recognized in earnings. SFAS No. 159 also establishes additional disclosure requirements. SFAS No. 159 became effective for the Company at the beginning of its first quarter of fiscal 2008.  The Company did not elect the fair value option for any unrecognized tax benefits.    FIN 48 also addresses when a company should record interest and penalties relatedof its financial assets or liabilities.  However, the Company may decide to tax positions and howelect the interest and penalties may be classified within the income statement and presentedfair value option on new items in the balance sheet.  FIN 48future. The adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree and recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.  SFAS No. 141(R) also sets forth the disclosures required to be made in the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, the Company will adopt this standard in fiscal 2009.  The Company continues to evaluate the impact of the adoption of SFAS No. 141(R) on its financial position, results of operations and cash flows, which will be largely dependent on the size and nature of the business combinations subject to this statement.  When SFAS 141(R) becomes effective, any tax related adjustments associated with acquisition that closed prior to January 3, 2009 (and after the measurement period) will be recorded through income tax expense, whereas the current accounting treatment (under SFAS 141) would require any adjustment to be recognized through the purchase price.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as non-controlling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders.  SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively.  SFAS 160 is effective for fiscal years beginning after December 15, 2006.  For Trimble, FIN 482008 and, as such, the Company will be effective foradopt this standard in fiscal 2009.  The Company continues to evaluate the first quarterimpact of fiscal 2007.  Differences between the amounts recognized in the statements of operations prior to and after the adoption of FIN 48 wouldSFAS No. 160 on its financial position, results of operations and cash flows, which will be largely dependent on the size and nature of the non-controlling interests subject to this statement.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133”, which requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for as a cumulative effect adjustment to theunder SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning balance of retained earnings.after November 15, 2008, with early application encouraged.  The Company is currently evaluating FIN 48 and its possible impactsdoes not expect the adoption of SFAS No. 161 will have a material impact on the Company’s financial statements.   Upon adoption, there is a possibility that the cumulative effect would result in a chargeposition, results of operations or benefit to the beginning balance of retained earnings.cash flows.

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”.  This Statement identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).  This Statement shall be effective November 16, 2008.   The adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.


NOTE 3: EARNINGS PER SHARE

The following data showshows the amounts used in computing earnings per share and the effect on the weighted-average number of shares of potentially dilutive common stock.

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands, except per share data)
          
           
Numerator:          
Income available to common shareholders:          
Used in basic and diluted earnings per share $103,658 $84,855 $67,680 
           
Denominator:          
Weighted average number of common shares used in basic earnings per share  110,044  106,432  102,326 
Effect of dilutive securities (using treasury stock method):          
Common stock options  5,134  5,900  5,894 
Common stock warrants  894  1,306  1,676 
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share  116,072  113,638  109,896 
                 
Basic earnings per share $0.94 $0.80 $0.66 
Diluted earnings per share $0.89 $0.75 $0.62 

  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands, except per share amounts)         
          
Numerator:         
Income available to common shareholders: $141,472  $117,374  $103,658 
             
Denominator:            
             
Weighted average number of common shares used in basic earnings per share  120,714   119,280   110,044 
Effect of dilutive securities (using treasury stock method):            
Common stock options and restricted stock units  3,516   4,907   5,134 
Common stock warrants  5   223   894 
Weighted average number of common shares and dilutive potential common  shares used in diluted earnings per share  124,235   124,410   116,072 
             
Basic earnings per share $1.17  $0.98  $0.94 
Diluted earnings per share $1.14  $0.94  $0.89 
For fiscal 2008, 2007, and 2006 the Company excluded 2.2 million shares, 514,311 shares and 323,035 shares of outstanding stock options, respectively, from the calculation of diluted earnings per share because the exercise prices of these stock options were greater than or equal to the average market value of the common shares during the  respective periods.  Inclusion of these shares would be antidilutive.  These options could be included in the calculation in the future if the average market value of the common shares increases and is greater than the exercise price of these options. 

NOTE 4: BUSINESS COMBINATIONS

@Road, Inc.
On December 10, 2006, the Company and @Road, Inc. (@Road) entered into a definitive merger agreement.  The acquisition became effective on February 16, 2007.  @Road is a global provider of solutions designed to automate the management of mobile resources and to optimize the service delivery process for customers across a variety of industries. The acquisition of @Road has expanded the Company’s investment and reinforces the existing growth strategy for its Mobile Solutions segment.  @Road’s results of operations since February 17, 2007 have been included in the Company’s Consolidated Statements of Income within the Mobile Solutions business segment.
Purchase Price
Under the terms of the agreement, the Company acquired all of the outstanding shares of @Road common stock for $7.50 per share.  The Company elected to issue $2.50 per share of the consideration in the form of the Company’s common stock (Common Stock) to be based upon the five-day average closing price of the Company’s shares six trading days prior to the closing of the transaction and the remaining $5.00 per share consideration was paid in cash. Further, each share of Series A-1 and Series A-2 Redeemable Preferred Stock, par value $0.001 per share, of @Road was converted into the right to receive an amount in cash equal to $100.00 plus all declared or accumulated but unpaid dividends with respect to such shares outstanding immediately prior to the effective time of the merger and each share of Series B-1 and B-2 Redeemable Preferred Stock, par value $0.001 per share, of @Road was converted into the right to receive an amount in cash equal to $831.39 plus all declared or accumulated but unpaid dividends with respect to such shares as of immediately prior to the effective time of the merger. In addition, all @Road vested stock options were terminated and the holders of each such options were entitled to receive the excess, if any, of the aggregate consideration over the exercise price. At the effective time of the merger, all unvested @Road stock options with an exercise price in excess of $7.50 were terminated and all unvested stock options that had exercise prices of $7.50 or less were assumed by the Company.


Concurrent with the merger, the Company amended its existing $200 million unsecured revolving credit agreement with a syndicate of 11 banks with The Bank of Nova Scotia as the administrative agent (the 2007 Credit Facility) and incurred a five-year term loan under the 2007 Credit Facility.  See Note 9 to the Consolidated Financial Statements for additional information.

The Company paid approximately $327.4 million in cash from debt and existing cash, and issued approximately 5.9 million shares of the Company’s common stock based on an exchange ratio of 0.0893 shares of the Company’s common stock for each outstanding share of @Road common stock as of February 16, 2007. The common stock issued had a fair value of $161.9 million and was valued using the average closing price of the Company’s common stock of $27.69 over a range of two trading days (February 14, 2007 through February 15, 2007) prior to, and including, the close date (February 16, 2007) of the transaction, which is also the date that the amount of the Company’s shares to be issued in accordance with the merger agreement was settled. The total purchase price was estimated as follows (in thousands):
Cash consideration $327,370 
Common stock consideration  161,947 
Merger costs *  5,712 
Total purchase price $495,029 

* Merger costs consist of legal, advisory, accounting and administrative fees.

Purchase Price Allocation
In accordance with SFAS 141, "Business Combinations,” the total purchase price was allocated to @Road net tangible assets, identifiable intangible assets and in-process research and development based upon their estimated fair values as of February 16, 2007. The excess purchase price over the net tangible, identifiable intangible assets and in-process research and development was recorded as goodwill.
The total purchase price has been allocated as follows (in thousands):
Value to be allocated to assets, based upon merger consideration $495,029 
Less: value of @Road’s assets acquired:    
Net tangible assets acquired  137,492 
     
Amortizable intangibles assets:    
Developed product technology  66,600 
Customer relationships  75,300 
Trademarks and tradenames  5,200 
Subtotal  147,100 
 
    
In-process research and development  2,100 
Deferred tax liability  (56,855)
     
Goodwill $265,192 


Net Tangible Assets
 
  As of 
  February 16, 
(in thousands) 2007 
Cash and cash equivalents $74,729 
Accounts receivable, net  14,255 
Other receivables  8,774 
Inventories, net  15,272 
Other current assets  12,627 
Property and equipment, net  5,854 
Deferred income taxes  40,435 
Other non-current assets  7,935 
     
Total assets acquired $179,881 
     
Accounts payable  19,285 
Deferred revenue  7,365 
Other current liabilities  15,739 
     
Total liabilities assumed $42,389 
     
Total net assets acquired $137,492 

The Company reviewed and adjusted @Road's net tangible assets and liabilities to fair value, as necessary, as of February 16, 2007, including the following adjustments:
Fixed assets – the Company decreased @Road's historical value of fixed assets by $2.1 million to adjust fixed assets to an amount equivalent to fair value.
Deferred revenue and cost of sales – the Company reduced @Road's historical value of deferred revenue by $39.6 million to adjust deferred revenue to the fair value of the direct cost associated with servicing the underlying obligation plus a reasonable margin. @Road’s deferred revenue balance consists of upfront payments of its hosted product, licensed product, extended warranty and maintenance. The Company reduced @Road's historical value of deferred product cost by $47.1 million to adjust deferred product cost to the asset's underlying fair value. The deferred product costs adjustment to fair value related to deferral of cost of sales of hardware that have shipped, resulting in no fair value relating to the associated deferred product costs.
Other receivables and non-current assets – Other receivables and non-current assets were increased by $15.4 million to adjust for the fair value of future cash collections from customer contracts assumed for products delivered prior to the acquisition date.  As the products were delivered prior to the acquisition date, revenue is not recognizable in the Company’s Consolidated Statements of Income.
Intangible Assets
Developed product technology, which is comprised of products that have reached technological feasibility, includes products in @Road's current product offerings. @Road's technology includes hardware, software and services that serve the mobile resource management market internationally. The Company expects to amortize the developed and core technology over a weighted average estimated life of seven years.
Customer relationships represent the value placed on @Road’s distribution channels and end users. The Company expects to amortize the fair value of these assets over a weighted average estimated life of seven years.
Trademarks and trade names represent the value placed on the @Road brand and recognition in the mobile resource management market. The Company expects to amortize the fair value of these assets over a weighted average estimated life of eight years.
In-process Research and Development
The Company recorded an expense of $2.1 million relating to in-process research and development projects in @Road’s license business.  In-process research and development represents incomplete @Road research and development projects that had not reached technological feasibility and had no alternative future use as of the consummation of the merger.

Goodwill
The excess purchase price over the net tangible, identifiable intangible assets and in-process research and development was recorded as goodwill. The goodwill was attributed to the premium paid for the opportunity to expand and better serve the global mobile resource management market and achieve greater long-term growth opportunities than either company had operating alone. The Company believes these opportunities could include accelerating the rate at which products are brought to market and increasing the diversity and global reach of those products. In addition, the Company expects that the combined companies may be able to obtain greater operating leverage by reducing costs in areas of redundancy.   Of the total $265.2 million assigned to goodwill, approximately $6.7 million is expected to be deductible for tax purposes.
Restructuring
Liabilities related to restructuring @Road's operations that meet the requirements of EITF 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination,” were recorded as adjustments to the purchase price and an increase in goodwill. Liabilities related to restructuring the Company's operations were recorded as expense in the Company's Consolidated Statements of Income in the period that the costs were incurred.

Deferred Income Tax Assets/Liabilities
NOTE 4: BUSINESS COMBINATIONSThe Company recognized $56.9 million in net deferred tax liabilities for the tax effects of differences between assigned values in the purchase price and the tax bases of assets acquired and liabilities assumed.

@Road Stock Options Assumed
In accordance with the merger agreement, the Company assumed all @Road unvested stock options that had exercise prices of $7.50 or less.  The Company issued approximately 795,000 stock options based on an exchange ratio of 0.268 shares of the Company’s common stock for each unvested stock option with exercise prices of $7.50 or less as of February 16, 2007.  The fair value of these assumed options was determined to be $10.1 million which will be expensed over the remaining vesting terms of the assumed options which is approximately three to four years.  The assumed options were valued using the binomial model similar to previously granted Trimble stock options.
Pro-Forma Results
The following table presents pro-forma results of operations of the Company and @Road, as if the companies had been combined as of December 31, 2005.  The unaudited pro-forma results of operations are not necessarily indicative of results that would have occurred had the acquisition taken place on December 31, 2005 or of future results.  Included in the pro-forma results are fair value adjustments based on the fair values of assets acquired and liabilities assumed as of the acquisition date of February 16, 2007 and adjustments for interest expense related to debt and stock options assumed as part of the merger consideration.

The Company excluded the effect of non-recurring items for both periods presented as the impact is short-term in nature. The pro-forma information is as follows:
  Fiscal Years Ended 
  December 28,  December 29, 
  2007 (a)  2006 (b) 
(in thousands, except per share data)      
Pro-forma revenue $1,239,319  $1,017,852 
Pro-forma net income  114,835   69,959 
Pro-forma basic net income per share $0.96  $0.60 
Pro-forma diluted net income per share $0.92  $0.57 
(a)
The pro-forma results of operations represent the Company’s results for fiscal 2007 together with @Road’s historical results through the acquisition date of February 16, 2007 as though they had been combined as of December 31, 2005.  Pro-forma adjustments have been made based on the fair values of assets acquired and liabilities assumed as of February 16, 2007.  Pro-forma revenue includes a $2.8 million increase due to the timing of recognizing deferred revenue write-downs and customer contracts where the product was delivered prior to the acquisition date.   Pro-forma net income includes a $0.7 million increase due to the timing of recognizing revenue write-downs and related deferred cost of sales write-downs, amortization of intangible assets related to the acquisition of $2.2 million, and interest expense for debt used to purchase @Road of $1.4 million. The year to date amounts provided herein include adjustments to previously filed pro-forma numbers in the Company’s 10-Q’s.


(b)
The pro-forma results of operations represent the Company’s results for fiscal 2006 together with @Road’s historical results had they been combined as of December 31, 2005.  Pro-forma adjustments have been made based on the fair values of assets acquired and liabilities assumed as of the acquisition date of February 16, 2007.  Pro-forma revenue for fiscal 2006 includes a $22.0 million decrease due to deferred revenue write-downs and customer contracts for which the product was delivered prior to the acquisition date.  Pro-forma net income for fiscal 2006 includes revenue write-downs and related deferred cost of sales write-downs of $3.1 million, amortization of intangible assets related to the acquisition of $18.3 million, and interest expense for debt used to purchase @Road of $11.2 million.

Other Acquisitions

The following is a summary of acquisitionsbusiness combinations other than @Road made by Trimblethe Company during fiscal 2006, 20052008, 2007 and 2004 all of which were accounted for as purchases:2006:

Acquisition Primary Service or Product 
Operating
Segment
 
Acquisition
Date
Rawson Control SystemsHydraulic and electronic controls for the agriculture equipment industryField SolutionsDecember 3, 2008
FastMap
and GeoSite
Field-based software suite for GIS and software solution for land surveyors and construction professionals
Field Solutions
        and
Engineering & Construction
November 28, 2008
Callidus Precision Systems Assets3D laser scanning solutionsEngineering & ConstructionNovember 28, 2008
ToposysAerial data collection systems comprised of LiDAR and metric camerasEngineering & ConstructionNovember 13, 2008
TruCountAir and electric clutches that automate individual planter row shut-offField SolutionsOctober 30, 2008
RolleiMetricMetric camera systems for aerial imaging and terrestrial close range photogrammetryEngineering & ConstructionOctober 20, 2008
SECOAccessories for the geomatics, surveying, mapping, and construction industriesEngineering & ConstructionJuly 29, 2008
Géo-3DRoadside infrastructure asset inventory solutionsEngineering & ConstructionJanuary 22, 2008
Crain EnterprisesAccessories for the geomatics, surveying, mapping, and construction industriesEngineering & ConstructionJanuary 8, 2008
HHK Datentechnik GmbHOffice and field software solutions for the cadastral survey marketEngineering & ConstructionDecember 19, 2007
UtilityCenterField service management software for utilitiesField SolutionsNovember 8, 2007
Ingenieurbüro Breining GmbHOffice and field software solutions for the cadastral survey marketEngineering & ConstructionSeptember 19, 2007
Inpho GmbHPhotogrammetry and digital surface modeling software for aerial surveying, mapping and remote sensing applicationsEngineering & ConstructionFebruary 13, 2007
Spacient Technologies, Inc. Enterprise field service management and mobile mapping solutions Field  Solutions November 21, 2006
Meridian Project Systems, Inc. Enterprise project management and lifecycle software Engineering & Construction November 7, 2006
XYZ Solutions, Inc. Real-time, interactive 3D intelligence software Engineering & Construction October 27, 2006
Visual Statement, Inc. Desktop software tools Mobile Solutions October 11, 2006
Intransix Mobile GPS applications Advanced Devices April 21, 2006
BitWyse Solutions, Inc. Engineering and construction information management software Engineering & Construction May 1, 2006
Eleven Technology, Inc. Mobile application software Mobile Solutions April 28, 2006
Quantm International, Inc. Transportation route optimization solution Engineering & Construction April 5, 2006
XYZs of GPS, Inc..
 Real-time Global Navigation Satellite System Engineering & Construction February 26, 2006
Advanced Public Safety, Inc. Mobile and handheld software for public safety Mobile Solutions December 30, 2005
MobileTech Solutions, Inc.Field workforce automation solutionsMobile SolutionsOctober 25, 2005
Apache Technologies, Inc.Laser detection technologyEngineering & ConstructionApril 19, 2005
Pacific Crest CorporationWireless data communication systemsEngineering & ConstructionJanuary 10, 2005
GeoNav GmbHCustomized field data collection solutionsEngineering and ConstructionJuly 5, 2004
TracerNET Corp.Wireless fleet management solutionsMobile SolutionsMarch 5, 200429, 2006


The Consolidated Financial Statements include the operating results of each businessof these businesses from the date of acquisition. Pro formaPro-forma results of operations have not been presented because the effects of each of these acquisitions were not material to the Company’s results.

The total purchase consideration for each of the above acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. The fair value of intangible assets acquired is generally determined based on the discounta discounted cash flow analysis performed by third-party experts.analysis. Acquisition costs directly related to the acquisitions were capitalized.

At the date of each acquisition, the projects associated with in-process research and development (IPR&D) efforts had not yet reached technological feasibility and the research and development in process had no alternative future uses. Accordingly, the value assigned to these IPR&D amounts were charged to expense on the respective acquisition date of each of the acquired companies. TrimbleThe Company recorded IPR&D expense of $1.9 million and $1.1 million relating to acquisitions made in fiscal 2006 and 2005. We did not record any2006.   The IPR&D expenseof $2.1 million recorded during fiscal 2007 related entirely to the acquisition of @Road. There was no IPR&D associated with acquisitions in fiscal 2004.2008.
 
The following table summarizes the Company’s business combinations completed during fiscal years 2008, 2007 and 2006 2005 and 2004other than @Road (in thousands):
 
Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
        
Purchase price $114,442 $63,830 $12,246 
Purchase price adjustments  4,964  1,595  1,167 
Acquisition costs  2,127  466  279 
Total purchase price $121,533 $65,891 $13,692 
           
Purchase price allocation:          
Fair value of net assets acquired $1,142 $1,237 $2,649 
Identified intangible assets  52,471  21,171  2,117 
In-Process Research & Development  1,930  1,100  - 
Goodwill  65,990  42,383  8,926 
Total $121,533 $65,891 $13,692 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
          
Purchase price $99,948  $49,311  $114,442 
Acquisition costs *  2,623   956   2,650 
Total purchase price $102,571  $50,267  $117,092 
             
Purchase price allocation:            
Fair value of net assets acquired $7,238  $9,504  $7,960 
Identified intangible assets  50,242   19,937   51,613 
In-process research and development  -   -   1,930 
Deferred tax liability  (3,426)  (2,763)  (14,723)
Goodwill  48,517   23,589   70,312 
Total $102,571  $50,267  $117,092 

* Acquisition costs consist of legal, advisory, and accounting fees as well as $0.4 million of restructuring related liabilities in fiscal 2008.
None of the amounts assigned to goodwill above are expected to be deductible for tax purposes.

Certain acquisitions include additional earn-out cash payments based on future revenue derived from existing products.products and other product milestones. These earn-out payments are considered additional purchase price consideration. Earn-out cash payments made for fiscal 2006,2008, fiscal 20052007 and fiscal 20042006 were $4.5$7.2 million, $1.6$11.8 million and $1.2$4.5 million respectively. Earn-outs and changes in purchase price allocation estimates were recorded as purchase price adjustments and goodwill adjustments. Acquisitions made by Trimblethe Company have additional potential earn-out cash payments in excess of that recorded on the Company’s Consolidated Balance Sheet not to exceed approximately $73.3$44.7 million.


Intangible Assets

The following tables present details of the Company’s total intangible assets:

As of 
December 29,
 2006
 
 December 30,
 2005
 
(In thousands)
      
       
Intangible assets:      
Intangible assets with definite life:      
Existing technology $92,430 $48,100 
Trade names, trademarks, patents, backlog and other intellectual properties  37,690  26,808 
Total intangible assets with definite life  130,120  74,908 
Less accumulated amortization  (62,948) (47,598)
Total net intangible assets $67,172 $27,310 
 
55
  January 2, 2009 
          
  Gross       
  Carrying  Accumulated  Net Carrying 
(in thousands)
 Amount  Amortization  Amount 
Developed product technology $188,391  $(78,867) $109,524 
Trade names and trademarks  20,254   (13,100)  7,154 
Customer relationships  124,596   (40,263)  84,333 
Distribution rights and other intellectual properties (*)  37,913   (10,023)  27,890 
  $371,154  $(142,253) $228,901 
Total intangible assets before
(*) Included within Other intellectual properties is a $25.0 million distribution right that the Company bought from Caterpillar, a related party, during fiscal 2008.   The fair value of the distribution right was estimated using a discounted cash flow analysis.  The distribution right will be amortized over its estimated economic life of eight years.  Since the distribution right became effective at year end, there is no accumulated amortization increased by $55.2 million primarily due to $52.5 million in intangible assets purchased in connection with acquisitions in fiscal 2006recorded as of January 2, 2009.

  December 28, 2007 
          
  Gross       
  Carrying  Accumulated  Net Carrying 
(in thousands)
 Amount  Amortization  Amount 
Developed product technology $157,394  $(58,273) $99,121 
Trade names and trademarks  19,192   (12,490)  6,702 
Customer relationships  110,802   (24,435)  86,367 
Distribution rights and other intellectual properties  13,479   (7,892)  5,587 
  $300,867  $(103,090) $197,777 

The weighted-average amortization period is six years for developed product technology, eight years for trade names and $2.4 million in foreign exchange rate translation impact on non-US currency denominated intangible assets. Accumulated amortization increased by $15.4 million primarily due to amortization expenses of $13.3 milliontrademarks, seven years for customer relationships and $2.1 million in foreign exchange rate translation impact on non-US currency denominated intangible assets.seven years for distribution rights and other intellectual properties.

The following table presents details of the amortization expense of purchased and other intangible assets as reported in the Consolidated Statements of Income:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
       
        
Reported as:       
Cost of sales $5,168 $165 $183 
Operating expenses  8,091  6,855  8,327 
Total $13,259 $7,020 $8,510 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Reported as:         
Cost of sales $22,690  $19,778  $5,353 
Operating expenses  22,376   18,966   7,906 
Total $45,066  $38,744  $13,259 

The estimated future amortization expense of intangible assets as of December 29, 2006,January 2, 2009, is as follows (in thousands):

2009 $50,329 
2010  48,164 
2011  43,474 
2012  34,727 
2013  31,146 
Thereafter  21,061 
Total $228,901 

Goodwill

The changes in the carrying amount of goodwill for fiscal 2008 are as follows (in thousands):

  Amortization Expense 
2007 $17,805 
2008  15,916 
2009  12,919 
2010  10,721 
2011  6,470 
Thereafter  3,341 
Total $67,172 

Goodwill

Goodwill consisted of the following:

As of 
December 29,
2006
 
December 30,
2005
 
(In thousands)
      
       
Goodwill, Spectra Precision acquisition $209,693 $196,676 
Goodwill, other acquisitions  164,817  89,470 
Goodwill $374,510 $286,146 
  Engineering and Construction  Field Solutions  Mobile Solutions  Advanced Devices Total
              
Balance as of December 28, 2007 $317,886  $5,224  $337,661  $15,079 $675,850
Additions due to acquisitions          44,999          3,518               -                 -  48,517
Purchase price adjustments          15,280          1,909       (4,675)                 -  12,514
Foreign currency translation adjustments        (14,257)               -       (4,265)         (2,788)      (21,310)
Balance as of January 2, 2009 $363,908  $10,651  $328,721  $12,291 $715,571

The increase in goodwillpurchase price adjustments relate entirely to business acquisitions prior to fiscal 2008.  Total purchase price adjustments of approximately $88.4$12.5 million recorded during fiscal 2006 was primarily due to $56.52008 are comprised of earn-out payments of $7.2 million, tax adjustments of $4.4 million, and $0.9 million for changes in goodwill from acquisitions in fiscal 2006 and $4.5 million in earn-out amounts recorded in fiscal 2006 related to the Apache, Mensi, XYZs of GPS, Mobile-Tech Solutions and Tracer-Net acquisitions. Goodwill also increased by $13.5 million due to the foreign exchange rate translation impact on non-US currency denominated goodwill assets. See Note 7 of the Notes to the Consolidated Financial Statements for additional information regarding Trimble’s goodwill by operating segment.purchase price allocation estimates.


NOTE 5: JOINT VENTURES

Caterpillar Trimble Control Technologies Joint Venture

On April 1, 2002, Caterpillar Trimble Control Technologies LLC (“CTCT”)(CTCT), a joint venture formed by Trimblethe Company and Caterpillar began operations. CTCT develops advanced electronic guidance and control products for earth moving machines in the construction and mining industries. The joint venture is 50% owned by Trimblethe Company and 50% owned by Caterpillar, with equal voting rights. The joint venture is accounted for under the equity method of accounting. Under the equity method, Trimble’sthe Company’s share of profits and losses are included in expenses for affiliated operations, netIncome from joint ventures in the non-operatingNon-operating income, (expense), net section of the Consolidated Statements of Income. The Company recorded a profit of $8.0 million, $7.8 million and $5.7 million as its proportionate share of CTCT developsnet income (loss) in fiscal 2008, 2007 and markets advanced electronic guidance2006, respectively.  During fiscal 2008, 2007 and control products for earth moving machines2006, dividends received from CTCT, amounted to $10.5 million, $2.3 million and $2.0 million, and were recorded against Other non-current assets on the Consolidated Balance Sheets.  The carrying amount of the investment in CTCT was $7.0 million at January 2, 2009 and $9.6 million at December 28, 2007, and is included in Other non-current assets on the construction and mining industries.Consolidated Balance Sheets.

During the first quarter of fiscal 2002, Trimble received a special cash distribution of $11.0 million from CTCT. Trimble had recorded the cash distribution of $11.0 million as a deferred gain and amortized it to the extent that losses were attributable from CTCT under the equity method of accounting. Since the joint venture is now profitable on a sustainable basis and future operating losses are not anticipated, Trimble recognized the unamortized portion of the gain or $9.2 million in fiscal 2005 as income in non operating income/expense.

TrimbleThe Company acts as a contract manufacturer for CTCT. Products are manufactured based on orders received from CTCT and are sold at direct cost plus a mark upmark-up for the Company’s overhead costs to CTCT. CTCT then resells products at cost plus a mark-up in consideration for CTCT’s research and development efforts to both Caterpillar and Trimbleto the Company for sales through their respective distribution channels. Generally, Trimblethe Company sells products to the after marketthrough its after-market dealer channel, and Caterpillar sells products for factory and dealer installation. CTCT does not holdhave net inventory on its balance sheet in that the resale of products to Caterpillar and Trimblethe Company occur simultaneously when the products are purchased from Trimble.

Beginning in the firstCompany. In fiscal quarter2008, 2007 and 2006, the Company recorded $11.7 million, $11.5 million and $8.4 million of 2006, Trimble included the impactrevenue, respectively, and $10.5 million, $10.3 million and $7.3 million of certain transactions with CTCT in revenue and cost of sales. Revenue and cost of sales, were recordedrespectively, for the manufacturing of products that are sold by the Company to CTCT and then sold through the Caterpillar distribution channel.  CostIn addition, in fiscal 2008, 2007 and 2006, the Company recorded $21.4 million, $25.1 million and $19.5 million in net cost of sales transactions also includefor the purchasingmanufacturing of products fromsold by the Company to CTCT at a higher price than Trimble's original manufacturing costs for products soldand then repurchased by the Company upon sale through the TrimbleCompany’s distribution channel. Prior to the first fiscal quarter


In addition, the Company’s exclusive manufacturing agreement with CTCT ended during fiscal 2005. As a result, during the first quarter of fiscal 2006, the Company deemed transactions between CTCT and Trimble to be arms-length and concluded they should be presented similarly to other vendor and customer relationships. The impact of this change in presentation was an $18.1 million decrease in gross margins for fiscal 2006. There was no impact on net income.

Trimble received reimbursement of employee-related costs from CTCT for Trimblecompany employees dedicated to CTCT or performingperformance of work for CTCT totaling $13.6 million, $13.7 million and $13.5 million for fiscal 2008, 2007 and 2006, and $9.7 million for both fiscal 2005 and fiscal 2004.respectively.  The reimbursements were offset against operating expenses. Dividends receivedexpense.

At January 2, 2009 and December 28, 2007, the Company had amounts due to and from CTCT.  Receivables and payables to CTCT are settled individually with terms comparable to other non-related parties.  The amounts due to and from CTCT amountedare presented on a gross basis in the Consolidated Balance Sheets.  At January 2, 2009 and December 28, 2007, the receivables from CTCT were $4.1 million and $5.6 million, respectively, and are included within Accounts receivable, net, on the Consolidated Balance Sheets.  As of the same dates, the payables due to $2.0CTCT were $3.1million and $5.2 million, in fiscal 2006respectively, and $0 in fiscal 2005 and were recorded against long-term investmentsare included within Accounts payable on the Consolidated Balance Sheets.

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In millions)
       
        
CTCT incremental pricing effects, net $- $11.4 $8.8 
Trimble's 50% share of CTCT's reported (gain) loss  (5.7) (2.0) 0.5 
Amortization of deferred gain  -  (9.2) (0.7)
Total CTCT expense (gain) for affiliated operations, net  ($5.7)$0.2 $8.6 

The net outstanding balance due from CTCT was $0.3 million at December 29, 2006 and $0.2 million at December 30, 2005 and was included in other receivables, net on the Consolidated Balance Sheets.


Nikon-Trimble Joint Venture

On March 28, 2003, Nikon-Trimble Co., Ltd (“Nikon-Trimble”)(Nikon-Trimble), a joint venture was formed by Trimblethe Company and Nikon Corporation. The joint venture began operations in July 2003 and is 50% owned by Trimblethe Company and 50% owned by Nikon, with equal voting rights. It focuses on the design and manufacture of surveying instruments including mechanical total stations and related products.

The joint venture is accounted for under the equity method of accounting. Under the equity method, the Company’s share of profits and losses are included in Income from joint ventures in the Non-operating income (expense) section of the Consolidated Statements of Income. In fiscal 2008, 2007 and 2006, the Company recorded a profit of $23,000, $0.6 million and $1.3 million, respectively, as its proportionate share of Nikon-Trimble net income (loss). During fiscal 2008, 2007 and 2006, dividends received from Nikon-Trimble, amounted to $0.2 million, $0.6 million and $0.3 million, and were recorded against Other non-current assets on the Consolidated Balance Sheets. The carrying amount of the investment in Nikon-Trimble was approximately $13.9 million at January 2, 2009 and $13.4 million at December 28, 2007, and is included in Other non-current assets on the Consolidated Balance Sheets.

Nikon-Trimble is the distributor in Japan for Nikon and Trimblethe Company’s products. TrimbleThe Company is the exclusive distributor outside of Japan for Nikon branded survey products. For products sold from Trimbleby the Company to the Nikon-Trimble, revenue is recognized by Trimblethe Company on a sell-through basis from Nikon-Trimble to the end customer. Profits from these inter-company sales are eliminated.

The terms and conditions of the sales of products from Trimblethe Company to Nikon-Trimble are comparable with those of the standard distribution agreements which Trimblethe Company maintains with its dealer channel and margins earned are similar to those from third party dealers. Similarly, the purchases of product by Trimblethe Company from the Nikon-Trimble are made on terms comparable with the arrangements which Nikon maintained with its international distribution channel prior to the formation of the joint venture with Trimble.the Company.  The Company recorded $15.3 million, $12.6 million and $13.9 million of revenue, and $11.0 million, $6.7 million and $6.6 million of cost of sales for the manufacturing of products sold by the Company to Nikon-Trimble.

Trimble usesAt January 2, 2009 and December 28, 2007, the equity method of accounting for its investment inCompany had amounts due to and from Nikon-Trimble.  Receivables and payables to Nikon-Trimble are settled individually with 50% share of profit or lossterms comparable to other non-related parties.  The amounts due to and from this joint venture reported by TrimbleNikon-Trimble are presented on a gross basis in the non-operating income (expense),Consolidated Balance Sheets. At January 2, 2009 and December 28, 2007, the amounts due from Nikon-Trimble were $2.0 million and $3.3 million, respectively, and are included within Accounts receivable, net sectionon the Consolidated Balance Sheets.  As of the Consolidated Statements of Income undersame dates, the heading of income (expense) for affiliated operations, net. Trimble reported a profit of approximately $1.3amounts due to Nikon-Trimble were $2.3 million for fiscal 2006, a loss of $36,000 for fiscal 2005 and a profit of $1.1$5.7 million, for fiscal 2004, respectively, as its proportionate share of the net income. In the second quarter of fiscal 2006, Trimble began recording its proportionate share of profit or loss in the joint venture one month in arrears.  The impact of this change was not material. In fiscal 2006 and 2005, dividends received from Nikon-Trimble, amounted to $257,000 and $515,000, respectively, and were recorded against long-term investmentsare included within Accounts payable on the Consolidated Balance Sheets.

At December 29, 2006,VirtualSite Solutions Joint Venture

On October 3, 2008, VirtualSite Solutions (VSS), a joint venture formed by the net payableCompany and Caterpillar began operations.  The Company contributed $7.8 million in exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35% ownership in VSS.  VSS develops software for fleet management and connected worksite solutions for both Caterpillar and Trimble and in turn, sells software subscription services to Caterpillar and Trimble, by Nikon-Trimble, related towhich are sold through Caterpillar's and the purchaseCompany's respective distribution channels.  For financial reporting purposes, VSS’s assets and saleliabilities are consolidated with those of products fromthe Company, as are its results of operations, which are reported under the Engineering and to Nikon-Trimble,Construction segment.  Caterpillar’s 35% interest is $0.5 million and is recorded within accounts payable, net on the Consolidated Balance Sheet. At December 30, 2005, the net payable by Trimble to Nikon-Trimble, related to the purchase and sale of products from and to Nikon-Trimble, was $2.0 million and was included in accounts payable on the overall Consolidated Balance Sheet. The carrying amountFinancial Statements as minority interests in consolidated subsidiaries. 




NOTE 6: CERTAIN BALANCE SHEET COMPONENTS

The following tables provide details of selected balance sheet items (in thousands):items:

As of 
December 29,
2006
 
December 30,
2005
 
Inventories:     
Raw materials $66,853 $52,199 
Work-in-process  6,181  7,249 
Finished goods  39,518  48,403 
Total $112,552 $107,851 
        
Property and equipment, net:     
Machinery and equipment $79,238 $72,273 
Furniture and fixtures  12,399  10,110 
Leasehold improvements  13,124  8,695 
Buildings  5,689  5,707 
Land  1,231  1,231 
   111,681  98,016 
Less accumulated depreciation  (63,683) (55,352)
Total $47,998 $42,664 
      
Other Non-Current Liabilities:     
Deferred compensation $5,887 $3,231 
Pension  6,616  5,529 
Deferred Rent  5,327  3,364 
Other long term liabilities  9,689  6,917 
Total $27,519 $19,041 
58
During the year, accumulated depreciation increased by $8.3 million primarily due to $13.5 million in depreciation expense and $2.1 million in foreign exchange translation rate impact, offset by the write-off of fully depreciated assets and disposals in the amount of $7.6 million.

Other non-current liabilities include deferred rent primarily as a result of the Sunnyvale, California lease, executed in fiscal 2005 and a new Westminster, Colorado lease, executed in fiscal 2006.
  January 2, December 28,
As of 2009 2007
(in thousands)      
Inventories:    
Raw materials $71,319 $63,465
Work-in-process  5,551  9,267
Finished goods  84,023  70,286
Total inventories, net $160,893 $143,018


Deferred costs of revenue are included within finished goods and were $15.4 million at January 2, 2009 and $11.0 million at December 28, 2007.

  January 2, December 28,
As of 2009 2007
(in thousands)      
Property and equipment, net:      
Machinery and equipment  $        88,067 $        79,956
Furniture and fixtures  12,140  10,974
Leasehold improvements  16,432  15,391
Buildings  6,519  6,527
Land  1,383  1,384
   124,541  114,232
Less accumulated depreciation        (74,366)        (62,788)
Total $        50,175  $        51,444


  January 2,  December 28, 
As of 2009  2007 
(in thousands)        
Other Non-Current Liabilities:      
Deferred compensation $                6,631  $8,646 
Pension                  5,439   6,646 
Deferred rent                  4,303   5,215 
Unrecognized tax benefits                34,275   25,774 
Other non-current liabilities                10,905   9,847 
Total $61,553  $56,128 


As of January 2, 2009, the Company has $34.3 million of unrecognized tax benefits included in Other non-current liabilities that, if recognized, would favorably impact the effective income tax rate in future periods and interest and/or penalties related to income tax matters.


NOTE 7: REPORTING SEGMENT AND GEOGRAPHIC INFORMATION

Trimble is a designer and distributor of positioning products and applications enabled by GPS, optical, laser, and wireless communications technology. The Company provides products for diverse applications in its targeted markets.


To achieve distribution, marketing, production, and technology advantages, the Company manages its operations in the following four segments:

 ·Engineering and Construction — Consists of products currently used by survey and construction professionals in the field for positioning, data collection, field computing, data management, and machine guidance and control. The applications served include surveying, road, runway, construction, site preparation and building construction.

 ·Field Solutions — Consists of products that provide solutions in a variety of agriculture and geographic information systems (GIS) applications. In agriculture these include precise land leveling and machine guidance systems. In GIS they include handheld devices and software that enable the collection of data on assets for a variety of governmental and private entities.

 ·Mobile Solutions — Consists of products that enable end users to monitor and manage their mobile assets by communicating location and activity-relevant information from the field to the office. Trimble offers a range of products that address a number of sectors of this market including truck fleets, security, and public safety vehicles.

 ·Advanced Devices — The various operations that comprise this segment were aggregated on the basis that no single operation accounted for more than 10% of Trimble’s total revenue, operating income andor assets. This segment is comprised of the Component Technologies, Military and Advanced Systems, Applanix and Trimble Outdoors businesses.

Trimble evaluates each of its segment's performance and allocates resources based on segment operating income from operations before income taxes, and some corporate allocations. Trimble and each of its segments employ the sameconsistent accounting policies.

In the first quarter of 2006, Trimble combined the operating results of the former Components Technologies and Portfolio Technologies segments and included the combined operating results in the Advanced Devices segment. The change in presentation was made in recognition of the small size of each of the businesses relative to the total company. The presentation of prior period’s segment operating results has been changed to conform to the Company’s current segment presentation.

The following table presents revenues,revenue, operating income (loss), and identifiable assets for the four segments. Operating income (loss) is net revenue less operating expenses,expense, excluding general corporate expenses,expense, amortization of intangibles, amortization of inventory step-up charges, in-process research and development expenses,expense, restructuring charges, non-operating income (expense), and income taxes. The identifiable assets that Trimble's Chief Operating Decision Maker, its Chief Executive Officer, views by segment are accounts receivable and inventory.inventories.

59
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
Engineering & Construction         
Revenue $741,668  $743,291  $637,118 
Operating income  126,014   174,177   136,157 
Field Solutions            
Revenue $300,708  $200,614  $139,230 
Operating income  109,489   60,933   37,377 
Mobile Solutions            
Revenue $167,113  $157,673  $60,854 
Operating income  11,328   12,517   2,550 
Advanced Devices            
Revenue $119,745  $120,692  $102,948 
Operating income  24,445   17,276   10,084 
Total            
Revenue $1,329,234  $1,222,270  $940,150 
Operating income  271,276   264,903   186,168 
Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
Engineering & Construction
       
Revenue $637,118 $524,461 $440,478 
Operating income before corporate allocations  136,157  117,993  79,505 
Accounts receivable  127,567  105,980  90,743 
Inventories  82,827  80,590  65,116 
Goodwill  296,597  229,176  238,801 
Field Solutions
          
Revenue $139,230 $127,843 $105,591 
Operating income before corporate allocations  37,377  32,527  25,151 
Accounts receivable  21,016  21,823  19,141 
Inventories  10,946  11,790  7,016 
Goodwill  1,517  -  - 
Mobile Solutions
          
Revenue $60,854 $31,481 $23,531 
Operating income (loss) before corporate allocations  2,550  (3,072) (5,997)
Accounts receivable  15,630  10,789  9,073 
Inventories  1,666  1,983  5,735 
Goodwill  63,430  44,118  7,660 
Advanced Devices
          
Revenue $102,948 $91,128 $99,208 
Operating income before corporate allocations  10,084  13,212  18,746 
Accounts receivable  16,474  14,033  17,660 
Inventories  17,113  13,488  9,878 
Goodwill  12,966  12,852  13,061 
Total
          
Revenue $940,150 $774,913 $668,808 
Operating income before corporate allocations  186,168  160,660  117,405 
Accounts receivable (1)  180,687  152,625  136,617 
Inventories  112,552  107,851  87,745 
Goodwill  374,510  286,146  259,522 
Engineering & Construction          
Accounts receivable $125,734  $158,913     
Inventories  104,934   89,780     
Goodwill  363,908   317,886     
Field Solutions            
Accounts receivable $37,791  $37,294     
Inventories  21,778   15,745     
Goodwill  10,651   5,224     
Mobile Solutions            
Accounts receivable $23,736  $25,469     
Inventories  16,391   18,781     
Goodwill  328,721   337,661     
Advanced Devices            
Accounts receivable $17,008  $18,208     
Inventories  17,790   18,712     
Goodwill  12,291   15,079     
Total            
Accounts receivable (1)
 $204,269  $239,884     
Inventories  160,893   143,018     
Goodwill  715,571   675,850     

(1) As presented, accounts receivable represents trade receivables, gross,net, which are specified between segments.

The following are reconciliations corresponding to totals in the accompanying Consolidated Financial Statements:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
Consolidated segment operating income $186,168 $160,660 $117,405 
Unallocated corporate expense  (35,798) (27,483) (22,901)
Restructuring charges     (278) (552)
Amortization of purchased intangible assets  (13,074) (6,855) (8,327)
In-process research and development  (1,930) (1,100) - 
Non-operating expense, net  12,726  (156) (10,701)
Consolidated income before income taxes $148,092 $124,788 $74,924 


As of 
December 29,
2006
 
December 30,
2005
 
(in thousands)
     
Assets:     
Accounts receivable total for reportable segments $180,687 $152,625 
Unallocated (1)  (8,679) (7,525)
Accounts receivable, net $172,008 $145,100 
(1) Includes trade-related accruals, allowances, and cash received in advance.


The distribution
A reconciliation of Trimble’s grossthe Company’s consolidated revenue by segment operating income to consolidated income before income taxes is summarized in the table below. Gross consolidated revenue includes external and internal sales. Total external consolidated revenue is reported net of eliminations of internal sales between segments.as follows:

  
December 29,
2006
 
December 30,
2005
 
      
(In thousands)
     
      
Engineering and Construction $641,352 $529,034 
Field Solutions  139,230  127,843 
Mobile Solutions  60,854  31,481 
Advanced Devices  102,873  91,182 
Total Gross Consolidated Revenue  944,309  779,540 
Eliminations  (4,159) (4,627)
Total External Consolidated Revenue $940,150 $774,913 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
Consolidated segment operating income $271,276  $264,903  $186,168 
Unallocated corporate expense  (36,284)  (42,914)  (35,798)
Restructuring charges  (4,641)  (3,025)  - 
Amortization of purchased intangible assets  (44,891)  (38,585)  (13,074)
In-process research and development  -   (2,112)  (1,930)
Consolidated operating income  185,460   178,267   135,366 
Non-operating expense, net  6,502   5,489   12,726 
Consolidated income before income taxes $191,962  $183,756  $148,092 

The geographic distribution of Trimble’s revenuesrevenue and identifiable assets is summarized in the tables below. Other foreign countries include Canada, and countries in South and Central America, the Middle East, and Africa.  Revenue is defined as revenuesrevenue from external customers.  Identifiable assets indicated in the table below exclude inter-company receivables, investments in subsidiaries, goodwill, and intangibles assets.

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
        
Revenue (1):       
United States $511,030 $415,443 $331,607 
Europe  231,428  191,734  186,197 
Asia Pacific  112,465  88,315  86,117 
Other Non-US Countries  85,227  79,421  64,886 
Total Consolidated Revenue $940,150 $774,913 $668,808 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Revenue (1):         
United States $646,734  $608,137  $511,030 
Europe  333,436   325,888   231,428 
Asia Pacific  182,952   146,545   112,465 
Other non-US countries  166,112   141,700   85,227 
Total consolidated revenue $1,329,234  $1,222,270  $940,150 

(1) Revenue attributed to countries based on the location of the customer.


As of 
December 29,
2006
 
December 30,
2005
 
(in thousands)
     
      
Identifiable assets:     
United States $347,474 $295,196 
Europe  143,038  120,582 
Asia Pacific and Other Non-US Countries  30,190  13,853 
Total Identifiable Assets $520,702 $429,631 

Transfers between USU.S. and non-USnon-U.S. geographic areas are made at prices based on total costs and contributions of the supplying geographic area. The Company's subsidiaries in Asia have derived revenue from commissions from USU.S. operations in each of the periods presented. TheseThis commission revenuesrevenue and expenses areexpense is excluded from total revenue and operating income (loss) in the preceding table. OtherNo single customer or country other than the United States no other country comprised more than 10% of sales to unaffiliated customers for any periods presented, except as disclosed above.

No single customer accounted for 10% or more of Trimble's total revenuesrevenue in fiscal years 2006, 2005,2008, 2007, and 2004.2006.

  January 2,  December 28, 
As of 2009  2007 
(in thousands)      
       
Identifiable assets:      
United States $441,947  $381,755 
Europe  179,350   217,422 
Asia Pacific and other non-US countries  42,649   36,167 
Total identifiable assets $663,946  $635,344 

NOTE 8: RESTRUCTURING CHARGES

Restructuring expense for the three years ended January 2, 2009 was as follows:

  2008  2007  2006 
(in thousands)         
          
Severance and benefits $4,641  $3,025  $- 

During fiscal 2008, restructuring expense of $4.6 million was related to decisions to streamline processes and reduce the cost structure of the Company, with approximately 100 employees affected worldwide. Of the total restructuring expense, $2.7 million is shown as a separate line within Operating expense on the Company’s Consolidated Statements of Income, and $1.9 million is included within Cost of sales.  Additionally, $4.1 million is related to the Engineering and Construction segment and $0.5 million is related to the Mobile Solutions segment. As a result of above decisions, the Company expects restructuring activities in the Engineering and Construction segment to result in additional restructuring expense totaling approximately $1.8 million through the first quarter of 2010.

During fiscal 2007, restructuring expense of $3.0 million was for charges associated with the Company’s acquisition of @Road. The restructuring expense was related to the acceleration of vesting of employee stock options for certain terminated @Road employees, of which $1.4 million was settled in cash and $1.6 million was recorded as Shareholders’ equity.

Restructuring costs associated with business combinations:
In addition to the restructuring expense in fiscal 2008, costs associated with exiting activities of companies the Company acquired in fiscal 2008 was $0.4 million, consisting of severance and benefits costs. These costs were recognized as a liability assumed in the purchase business combinations and were included in the allocation of the cost to acquisitions and accordingly, resulted in an increase to goodwill rather than an expense in fiscal 2008. The Company also had $0.9 million in restructuring activity reversals related to costs associated with exiting activities of pre-merger @Road.  The reversals were primarily due to severance and benefits costs for employees whose positions were retained in a variety of functions. The reversals were recognized in the first quarter of fiscal 2008 as a reduction of the liability assumed in the purchase business combination that had been included in the allocation of the cost to acquire @Road and, accordingly, resulted in a decrease to goodwill rather than an expense reduction in fiscal 2008.

In addition to the restructuring expense in fiscal 2007, costs associated with exiting activities of pre-merger @Road of $3.6 million, consisted of severance and benefits costs.  These costs were recognized as a liability assumed in the purchase business combination and were included in the allocation of the cost to acquire @Road and accordingly, resulted in an increase to goodwill rather than an expense in fiscal 2007.


Restructuring liability:
The following table summarizes the restructuring activity for 2007 and 2008 (in thousands):

Balance as of December 30, 2006 $744 
Acquisition related  3,547 
Charges  3,025 
Payments  (6,004)
Adjustment  14 
Balance as of December 28, 2007 $1,326 
Acquisition related  355 
Charges  4,641 
Payments  (3,351)
Adjustment  (1,054)
Balance as of January 2, 2009 $1,917 

As of January 2, 2009, the $1.9 million restructuring accrual consists of severance and benefits.  Of the $1.9 million restructuring accrual, $0.7 million is included in Other current liabilities and is expected to be settled by the first half of fiscal 2009.  The remaining balance of $1.2 million is included in Other non-current liabilities and is expected to be settled by the first quarter of fiscal 2010.


NOTE 8: RESTRUCTURING CHARGES

There were no restructuring charges recorded in fiscal 2006. Restructuring charges of $0.3 million, and $0.6 million were recorded in fiscal years 2005 and 2004 respectively. The charges in fiscal 2005 were primarily related to office closure costs due to integration efforts of the Mensi acquisition. The charges in fiscal 2004 were primarily related to severance costs due to the realignment of Trimble Mobile Solutions Inc. As a result of the realignment, the headcount decreased by 36 in fiscal 2004. As of December 29, 2006, an accrual balance of $0.1 million, related to the fiscal 2005 office closure, is expected to be paid over the next several years. The restructuring accrual is included in the Condensed Consolidated Balance Sheets under the heading of “Accrued Liabilities”.

NOTE 9: LONG-TERM DEBT

Long-term debt consisted of the following:

As of 
December 29,
2006
 
December 30,
2005
 
(In thousands)
     
      
Credit Facilities:     
Term loan $- $- 
Revolving credit facility  -  - 
Promissory notes and other  481  649 
   481  649 
        
Less current portion of long-term debt  -  216 
Non-current portion $481 $433 
  January 2,  December 28, 
As of 2009  2007 
(in thousands)      
       
 Credit Facilities:      
Term loan $-  $60,000 
Revolving credit facility  151,000   - 
Promissory notes and other  588   690 
Total debt  151,588   60,690 
         
Less current portion of long-term debt  124   126 
Non-current portion $151,464  $60,564 

The following summarizes the future cash payment obligations (excluding interest) as of December 29, 2006:

  Total 2007 2008 2009 2010 2011 
2011 and
Beyond
 
(in thousands)
               
                
Promissory note and other  481  -  115  366       -  - 
Total contractual cash obligations $481 
$
-
 $115 $366 $      $- $- 

Credit Facilities

On July 28, 2005, the Company entered into a $200 million unsecured revolving credit agreement (“(the 2005 Credit Facility”)Facility) with a syndicate of 10 banks with The Bank of Nova Scotia as the administrative agent.  On February 16, 2007, the Company amended its existing $200 million unsecured revolving credit agreement with a syndicate of 11 banks with The 2005Bank of Nova Scotia as the administrative agent (the 2007 Credit Facility). Under the 2007 Credit Facility, replaces the Company’s $175Company exercised the option in the existing credit agreement to increase the availability under the revolving credit line by $100 million, secured 2003for an aggregate availability of up to $300 million, and extended the maturity date of the revolving credit line by 18 months, from July 2010 to February 2012.  Up to $25 million of the availability under the revolving credit line may be used to issue letters of credit, and up to $20 million may be used for paying off other debts or loans.  The maximum leverage ratio under the 2007 Credit Facility.Facility is 3.00:1.00.   The funds available under the new 20052007 Credit Facility may be used by the Company for acquisitions, stock repurchases, and general corporate purposes and uppurposes. As of August 20, 2008, the Company amended its 2007 Credit Facility to $25 millionallow it to redeem, retire or purchase common stock of the 2005Company. In addition, the definition of the fixed charge was amended to exclude the impact of redemptions, retirements, or purchases common stock of the Company from the fixed charges coverage ratio.

In addition, during the first quarter of fiscal 2007 the Company incurred a five-year term loan under the 2007 Credit Facility may be used for lettersin an aggregate principal amount of credit.$100 million, which was repaid in full during fiscal 2008.  As of January 2, 2009, the Company had an outstanding balance on the revolving credit line of $151.0 million.
 
The Company may borrow funds under the 20052007 Credit Facility in U.S. Dollars or in certain other currencies, and borrowings will bear interest, at the Company's option, at either: (i) a base rate, based on the administrative agent's prime rate, plus a margin of between 0% and 0.125%, depending on the Company's leverage ratio as of its most recently ended fiscal quarter, or (ii) a reserve-adjusted rate based on LIBOR, EURIBOR, STIBORthe London Interbank Offered Rate (LIBOR), Euro Interbank Offered Rate (EURIBOR), Stockholm Interbank Offered Rate (STIBOR), or other agreed-upon rate, depending on the currency borrowed, plus a margin of between 0.625% and 1.125%, depending on the Company's leverage ratio as of the most recently ended fiscal quarter. The Company's obligations under the 20052007 Credit Facility are guaranteed by certain of the Company's domestic subsidiaries.


The 20052007 Credit Facility contains customary affirmative, negative and financial covenants including, among other requirements, negative covenants that restrict the Company's ability to dispose of assets, create liens, incur indebtedness, repurchase stock, pay dividends, make acquisitions, make investments, enter into mergers and consolidations and make capital expenditures, within certain limitations, and financial covenants that require the maintenance of leverage and fixed charge coverage ratios. The 20052007 Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments, and events constituting a change of control. Upon the occurrence and during the continuance of an event of default, interest on the obligations will accrue at an increased rate and the lenders may accelerate the Company's obligations under the 20052007 Credit Facility, however that acceleration will be automatic in the case of bankruptcy and insolvency events of default. Trimble incurs a commitment fee ifAs of January 2, 2009 the 2005 Credit Facility is not used. The commitment fee is not material to the Company’s results during all periods presented.

At December 29, 2006, the Company has a zero balance outstanding and was in compliance with all financial debt covenants.

Notes Payable

As of January 2, 2009 and December 29, 2006,28, 2007, the Company had other notes payable totaling approximately $0.5 million$588,000 and $690,000, respectively, consisting of government loans to foreign subsidiaries and loans assumed from acquisitions.subsidiaries.


NOTE 10: COMMITMENTS AND CONTINGENCIES

Operating Leases

On February 16, 2007, the Company acquired @Road and assumed the lease for its primary facility in Fremont, California.  The lease agreement has a five year term, commencing February 1, 2005 and ending May 16, 2010.

On January 13, 2006, Trimblethe Company entered into a lease agreement for the lease of real property located in Westminster, Colorado.   The lease agreement has a seven year term, commencing June 1, 2006 and ending May 31, 2013.

On May 13, 2005, Trimblethe Company entered into a lease agreement for the lease of real property located in Sunnyvale, California. The lease agreement has a seven year term, commencing January 1, 2006 and ending December 31, 2012.

Trimble'sThe Company's principal facilities in the United States are leased under various cancelable and non-cancelable operating leases that expire at various dates through 2013. For tenant improvement allowances and rent holidays, Trimble records a deferred rent liability on the consolidated balance sheetsConsolidated Balance Sheets and amortizes the deferred rent over the terms of the leases as reductions to rent expense on the consolidated statements of income. The Company has options to renew certain of these leases for an additional five years.

Future minimum payments required under non-cancelable operating leases are as follows:follows (in thousands):

  
Operating
Lease Payments
 
(In thousands)
   
    
2007 $10,852 
2008  9,318 
2009  8,187 
2010  6,414 
2011  3,530 
Thereafter  3,556 
Total $41,857 
2009 $17,598 
2010  12,084 
2011  7,666 
2012  5,631 
2013  1,044 
Thereafter  156 
Total $44,179 

Net rent expense under operating leases was $16.2 million in fiscal 2008, $14.2 million in fiscal 2007, and $10.5 million in fiscal 2006, $12.6 million in fiscal 2005, and $10.9 million in fiscal 2004.2006. Sublease income was $44,000,$49,000, $39,000 and $38,000,$44,000 for fiscal 2006, 2005,2008, 2007, and 2004,2006, respectively.

Purchase Commitments with a Supplier

Trimble entered into a significant supply agreementAdditionally, as of January 2, 2009, the Company had acquisition earn-outs of $6.3 million and holdbacks of $20.8 million recorded in fiscal 2004“Other current liabilities” and “Other non-current liabilities.” The maximum remaining payments, including the $6.3 million and $20.8 million recorded, will not exceed $71.7 million. The remaining payments are based upon targets achieved or events occurring over time that sets forth minimum purchase commitments for outsourced services.would result in amounts paid that may be lower than the maximum remaining payments.  The term of the supply agreement is the earlier of four years from the initial product ship date, or when Trimble has paid for a cumulative total of 200,000 billable hours (approximately $10.4 million). Should Trimble not purchaseremaining earn-outs and pay for 200,000 hours, then Trimble will compensate the supplier for 20% of the shortfall. Thereafter, the contract continues in effect until terminated by either party with 30 days prior written notice to the other party. As of December 29, 2006, based on current hours earned to date the future obligation is approximately $380,000 which is expected to be paid over the next year. Trimble does not expect a shortfall based on current hours earned to date.holdbacks are payable through 2012.


At January 2, 2009, the company had unconditional purchase obligations of approximately $68.7 million. These unconditional purchase obligations primarily represent open non-cancelable purchase orders for material purchases with our vendors.  Purchase obligations exclude agreements that are cancelable without penalty.

NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimatedAs discussed in Note 2, SFAS No. 157, which defines fair valuesvalue, establishes a framework for measuring fair value, and requires enhanced disclosures about assets and liabilities measured at fair value, became effective for the Company beginning in its first quarter of financialfiscal 2008. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments outstandingor market and the instruments’ complexity.

Assets and liabilities recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by SFAS No. 157 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

  
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Values
 
  December 29, 2006 December 30, 2005 
As of         
(In thousands)
         
          
Assets:
         
Cash and cash equivalents $129,621 $129,621 $73,853 $73,853 
Forward foreign currency exchange contracts  -  -  516  577 
Accounts receivable, net  172,008  172,008  145,100  145,100 
              
Liabilities:
             
Credit facilities $- $- $- $- 
Forward foreign currency exchange contracts  70  157  -  - 
Promissory note and other  481  406  649  562 
Accounts payable  44,418  44,418  45,206  45,206 
Level I – Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II – Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability.  These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level III – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations.

  Fair Values as of January 2, 2009 
(in thousands) Level I  Level II  Level III  Total 
Assets            
Money market funds (1) $16,246  $-  $-  $16,246 
Commercial paper (2)  -   12,000   -   12,000 
Deferred compensation plan assets (3)  -   6,679   -   6,679 
Derivative assets (4)  -   627   -   627 
Total $16,246  $19,306  $-  $35,552 
                 
Liabilities                
Deferred compensation plan liabilities (3) $-  $6,631  $-  $6,631 
Derivative liabilities (4)  -   1,775   -   1,775 
Total $-  $8,406  $-  $8,406 


(1)The Company may invest some of its cash and cash equivalents in highly liquid investments such as money market funds. The fair values are determined using observable quoted prices.

(2)The Company may invest some of its cash and cash equivalents in highly liquid investments such as commercial paper. The fair values are determined using observable quoted prices for similar assets in active markets. The Company’s investment in commercial paper is part of the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program (TLGP), which is fully guaranteed by FDIC.

(3)The Company maintains a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees. The investment assets and liabilities included in Level II are valued using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

(4)Derivative assets and liabilities included in Level II primarily represent forward currency exchange contracts. The fair values are determined using inputs based on observable quoted prices.

Additional Fair Value Information

The following table provides additional fair value information relating to the Company’s financial instruments outstanding:

  Carrying  Fair  Carrying  Fair 
  Amount  Value  Amount  Value 
As of January 2, 2009  December 28, 2007 
(in thousands)            
             
Assets:            
Cash and cash equivalents $147,531  $147,531  $103,202  $103,202 
Forward foreign currency exchange contracts  627   627   374   374 
                 
Liabilities:                
Credit facility $151,000  $127,754  $60,000  $49,000 
Forward foreign currency exchange contracts  1,775   1,775   552   552 
Promissory note and other  588   554   690   630 

The fair value of the bank borrowings and promissory notes havehas been estimatedcalculated using an estimate of the interest rate Trimblethe Company 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.

The fair value of forward foreign exchange contracts is estimated based on the difference between the market price and the carrying amount of comparable contracts. These contracts are adjusted to fair value at the end of every month. 


NOTE 12: INCOME TAXES

The components of income before income taxes are as follows:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
       
        
United States $123,800  99,500  70,000 
Foreign  $24,300  25,300  4,900 
Total $148,100 $124,800  74,900 

  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
United States $89,696  $126,768  $123,800 
Foreign   102,266   57,362   24,300 
Total $191,962  $184,130  $148,100 
Trimble's income tax provision consisted
74

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
        
(In thousands)
       
        
US Federal:       
Current $47,795 $36,493  18,196 
Deferred  (2,972) (1,534) (17,995)
   44,823  34,959  201 
US State:       
Current  2,967  3,500  2,895 
Deferred  (2,168) (2,348) (897)
   799  1,152  1,998 
Foreign:       
Current  (1,493) 3,102  3,137 
Deferred  305  720  1,908 
   (1,188) 3,822  5,045 
Income tax provision $44,434 $39,933  7,244 
 
64

The Company's income tax provision consisted of the following:       
          
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
US Federal:         
Current $42,473  $48,833  $47,795 
Deferred  (7,024)  (1,658)  (2,972)
   35,449   47,175   44,823 
US State:            
Current  5,165   6,374   2,967 
Deferred  (2,271)  (3,669)  (2,168)
   2,894   2,705   799 
Foreign:            
Current  13,976   10,403   (1,493)
Deferred  (1,829)  6,099   305 
   12,147   16,502   (1,188)
Income tax provision $50,490  $66,382  $44,434 
The income tax provision differs from the amount computed by applying the statutory US federal income tax rate to income before taxes. The sources and tax effects of the differences are as follows:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(In thousands)
       
        
Expected tax from continuing operations at 35% in all years $51,832 $43,677 $26,223 
Change in valuation allowance  -0-  -0-  (24,004)
US State income taxes  (110) 749  1,299 
Export sales incentives  (4,138) (2,316) (1,176)
NonForeign components  (7,682) 3,684  5,134 
US Federal research and development credit  (662) (895) (508)
In process research & development  1,046  
-0-
  -0- 
Stock option compensation  3.626  -0-  -0- 
Benefit from repatriation legislation  (1,050) (6,445) -0- 
Other  1,572  1,479  276 
Income tax provision $44,434 $39,933 $7,244 
        
Effective tax rate  30% 32% 10%
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Expected tax from continuing operations at 35% in all years $67,187  $64,446  $51,832 
             
US State income taxes  3,339   1,654   (110)
Export sales incentives  -   (365)  (4,138)
Foreign tax rate differential  (23,553)  (711)  (7,682)
US Federal and  California research and development credits  (3,651)  (2,206)  (662)
Stock option compensation  3,550   3,889   3,626 
Other  3,618   (325)  1,568 
Income tax provision $50,490  $66,382  $44,434 
             
Effective tax rate  26%  36%  30%

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

The components of deferred taxes consist of the following:
  January 2,  December 28, 
As of 2009  2007 
(in thousands)      
       
Deferred tax liabilities:      
Purchased intangibles $64,737  $68,561 
Depreciation and amortization  24,085   26,720 
Other  568   183 
Total deferred tax liabilities  89,390   95,464 
         
Deferred tax assets:        
Inventory valuation differences  8,298   7,359 
Expenses not currently deductible  8,091   10,044 
US Federal credit carryforwards  2,314   2,313 
Deferred revenue  10,850   8,000 
US State credit carryforwards  11,350   10,011 
Warranty  2,418   2,177 
US Federal net operating loss  carryforward  16,272   24,765 
Net foreign tax credits on undistributed foreign earnings  19,689   12,857 
Accruals not currently deductible  15,280   17,104 
Total deferred tax assets  94,562   94,630 
Valuation allowance  (5,787)  (6,471)
Total deferred tax assets  88,775   88,159 
         
Total net deferred tax liabilities $(615) $(7,305)

As of 
December 29,
2006
 
December 30,
2005
 
(In thousands)
     
      
Deferred tax liabilities:     
Purchased intangibles $25,263 $11,058 
Depreciation and amortization  21,283  11,711 
Other  
175
  1,516 
Total deferred tax liabilities  46,721  24,285 
      
Deferred tax assets:     
Inventory valuation differences  9,469  8,983 
Expenses not currently deductible  8,546  6,233 
US Federal credit carryforwards  -0-  -0- 
Deferred revenue  1,298  564 
US State credit carryforwards  8,869  8,530 
Warranty  2,738  2,361 
      
US Federal net operating losscarryforward  2,055  2,669 
Net foreign tax credits on undistributed foreign earnings  9,344  5,743 
Accruals not currently deductible  8,803  7,452 
Total deferred tax assets  51,121  42,535 
Valuation allowance  (4,254) (5,855)
Total deferred tax assets  46,867  36,680 
      
Total net deferred tax assets $146 $12,395 

The Company has $2.1$15.3 million, $0.6 million and $7.7 million of tax effected USU.S. federal, state and foreign net operating loss carryforwards (expiring in years 2020 through 2028 for federal and state carryovers, no expiration for foreign carryovers) from an acquisition.acquisitions. Utilization of the Company’s net operating loss carryforwards are subject to annual limitations due to ownership changes provided by the Internal Revenue Code of 1986, as amended. The Company has federal research and development credit carryforwards of $2.0 million (expiring in years 2019 through 2024) and state research and development credit carryforwards of approximately $13.6$15.2 million whichthat can be carried over indefinitely.


The company’sCompany’s valuation allowance is primarily attributable to primarily, the California Research Creditacquisition related net operating loss and acquisition Net Operating Lossresearch and development credit carryforwards.  Valuation allowance amounts are offsets to related deferred tax assets.  Management believes that it is more likely than not that the Company will not realize these deferred tax assets, and, accordingly, a valuation allowance has been established for such amounts. When

On September 30, 2008, the State of California enacted Assembly Bill 1452 into law which among other provisions, suspends net operating loss deductions for 2008 and 2009 and extends the carryforward period of any net operating losses not utilized due to such suspension; adopts the federal 20-year net operating loss carryforward period; phases-in the federal two-year net operating loss carryback periods beginning in 2011 and limits the utilization of tax credits are utilized andto the valuation allowance is released, the benefitextent of the release50 percent of the valuation allowance will be accounted fora taxpayer’s taxable income.  The Company recorded additional state tax provision, net of federal benefits as a credit to shareholder’s equity rather than as a reductionresult of the income tax provision.

The American Jobs Creation Act of 2004 (the Act) provides for a special one-time elective dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer equal to 85% of the eligible distribution. Duringthis law change in the fourth quarter of 2005,2008.

The U.S. Federal Tax Extenders and Alternative Minimum Tax Relief Act of 2008 was signed into law on October 3, 2008. Under this law, the federal research and development tax credit was retroactively extended for amounts paid or incurred after December 31, 2007 and before January 1, 2010. The effect of the change in this law for the Company repatriated $39.5was an increase of $2.4 million of which $24 million qualifiedin credits for the special one-time electivequarter ended January 2, 2009.

The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider some of those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal and state income taxes has been provided.  Upon distribution of those earnings in the form of dividends received deductionor otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and $15.5 million constitutedforeign withholding taxes.  As of January 2, 2009 the Company’s foreign subsidiary accumulated undistributed earnings that doare intended to be indefinitely reinvested outside the U.S. is approximately $58.3 million.  The amount of the unrecognized deferred tax liability on this amount is approximately $19.2 million.


A reconciliation of the change in the unrecognized tax balances (UTB) from December 28, 2007 to January 2, 2009 is as follows:
 
(in thousands)
 Federal, State and Foreign Tax  Accrued Interest and Penalties  Unrecognized Income Tax Benefits 
          
Balance at December 29, 2006 $21,500  $2,200  $23,700 
             
Additions for tax positions related to the current year  2,800   1,000   3,800 
             
Additions for tax positions related to prior years  800   -   800 
             
Other reductions for tax positions related to prior years  (400)  (100)  (500)
             
Foreign exchange  600   -   600 
             
Balance at December 28, 2007 $25,300  $3,100  $28,400 
             
Total UTBs that, if recognized, would impact the effective tax rate as of December 28, 2007 $25,300  $3,100  $28,400 
             
Additions for tax positions related to the current year  5,300   1,320   6,620 
             
Additions for tax positions related to prior years  3,800   -   3800 
             
Other reductions for tax positions related to prior years  (900)  (20)  (920)
             
Foreign exchange  (600)  -   (600)
             
Balance at January 2, 2009 $32,900  $4,400   37,300 
             
Total UTBs that, if recognized, would impact the effective tax rate as of January 2, 2009 $32,900  $4,400   37,300 

The Company and its subsidiaries are subject to U.S. federal, state, and foreign income taxes.  The Company has substantially concluded all U.S. federal and state income tax matters for years through 1992.  Non-U.S. income tax matters have been concluded for years through 2000. The Company is currently in various stages of multiple year examinations by Federal, State, and foreign taxing authorities.  The Company does not qualify under the Act; previously taxed income and return of capital. The company recordedanticipate a $6.4 million tax benefit from these foreign earnings in 2005. The $1.0 million tax benefit recorded in 2006 represents a true-up adjustmentsignificant impact to the amount recorded in 2005.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to SFAS 109, “Accounting for Income Taxes.”  Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the incomeunrecognized tax benefits from thebalance with respect to current tax positions that are recognized, provides guidance as toexaminations. Although the timing of the derecognition of previously recognizedresolution and/or closure on audits is highly uncertain, the Company does not believe that the unrecognized tax benefits and describeswould materially change in the methods for classifying and disclosing the liabilities within the financial statements for any unrecognizednext twelve months.

The Company’s continuing practice is to recognize interest and/or penalties related to income tax benefits.    FIN 48 also addresses when a company should recordmatters in income tax expense. The Company’s liability includes interest and penalties related to tax positionsat January 2, 2009 and how the interestDecember 30, 2007, of $4.4 million and penalties may be classified within the income statement and presented$3.1 million, respectively, which were recorded in Other non-current liabilities in the balance sheet.  FIN 48 is effective for fiscal years beginning after December 15, 2006.  For Trimble, FIN 48 will be effective for the first quarteraccompanying Consolidated Balance Sheets.




NOTE 13: COMPREHENSIVE INCOME

The components of comprehensive income and related tax effects are as follows:

 
Fiscal Years Ended
 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
Net income $103,658 $84,855 $67,680 
Foreign currency translation adjustments, net of tax of $(108) in 2006 and $308 in 2005  21,709  (24,690) 14,025 
Net gain (loss) on hedging transactions  -  (106) 106 
Adjustment to initially apply SFAS 158, net of tax  (136) -  - 
Net unrealized gain (loss) on investments  3  (34) (6)
Total comprehensive income $125,234 $60,025 $81,805 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
Net income $141,472  $117,374  $103,658 
Foreign currency translation adjustments, net of tax of $583 in 2008 and $(636) in 2007  (31,722)  18,655   21,709 
Net unrealized actuarial gain (loss)  43   (13)  - 
Net unrealized gain (loss) on investments  (392)  (33)  4 
Total comprehensive income $109,401  $135,983  $125,371 

The components of accumulated other comprehensive income, net of related tax were as follows:

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
(in thousands)
     
Accumulated foreign currency translation adjustments $41,214 $19,504 
Adjustment to initially apply FASB Statement No. 158, net of tax  (136) 
-
 
Accumulated net unrealized gain on foreign currency  33  30 
Total accumulated other comprehensive income $41,111 $19,534 
66
  January 2,  December 28, 
Fiscal Years Ended 2009  2007 
(in thousands)      
Accumulated foreign currency translation adjustments $28,147  $59,869 
Net unrealized loss on investments  (392)  - 
Net unrealized actuarial losses  (106)  (149)
Total accumulated other comprehensive income $27,649  $59,720 

NOTE 14: EMPLOYEE STOCK BENEFIT PLANS

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an aggregate of 11,550,000 shares of Common Stock have been reserved for sale to eligible employees as approved by the shareholders to date. The plan permits full-time employees to purchase Common Stock through payroll deductions at 85% of the lower of the fair market value of the Common Stock at the beginning or at the end of each offering period, which is generally six months. The amended Purchase Plan terminates on September 8, 2008.30, 2018. In fiscal 20062008, 2007 and 2005,2006, the shares issued under the Purchase Plan were 195,398437,833, 430,068 and 359,998195,398 shares, respectively. Compensation expense recognized during fiscal 2008, 2007 and 2006 related to shares granted under the Employee Stock Purchase Plan was $3.4 million, $2.6 million and $1.8 million, respectively. At December 29, 2006,January 2, 2009, the number of shares reserved for future purchases by eligible employees was 1,440,274.572,217.

Restricted Stock Award

Trimble did not grant any restricted stock awards in fiscal 20062008 or fiscal 2004.2007.  During the second quarter of fiscal 2005,2006, the Company granted 40,000 shares of restricted common stock. The award vests 20% on June 30, 2005 and an additional 20% each June 30 thereafter. The Company recorded compensation expense in the Consolidated Statements of Income of $155,000, $191,000 and $120,000$191,000 for fiscal 20062008, 2007 and 2005,2006, respectively.

2002 Stock Plan

In 2002, Trimble’s Boardboard of Directorsdirectors adopted the 2002 Stock Plan (“2002 Plan”). The 2002 Plan approved by the shareholders provides for the granting of incentive and non-statutory stock options and stock awards for up to 12,000,000 shares plus any shares currently reserved but un-issuedunissued to employees, consultants, and directors of Trimble. Incentive stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant. Employee stock options granted under the 2002 Plan generally have 84-120 month terms, and vest at a rate of 20% at the first anniversary of grant and monthly thereafter at an annual rate of 20%, with full vesting occurring at the fifth anniversary of the grant. In certain instances, grants vest at a rate of 40% at the second anniversary of grant and monthly thereafter at an annual rate of 20% with full vesting occurring at the fifth anniversary of the grant. The Company issues new shares for option exercises. The majority of the restricted share units granted under this plan vest 100% after three years.  As of December 29, 2006,January 2, 2009, options to purchase 8,038,6108,651,279 shares were outstanding, 156,497 restricted stock units were unvested, and 4,453,8381,928,329 were available for future grant under the 2002 Plan.

@Road Plan
In connection with the acquisition of @Road in February 2007, the Company assumed all of the outstanding stock options of @Road’s 2000 Stock Option Plan (“@Road Plan”) as well as the plan itself.  The @Road Plan provides for the granting of incentive and non-statutory stock options.  Incentive stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant.  Employee stock options granted under the @Road Plan generally 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 the grant.  The Company issues new shares for option exercises.  As of January 2, 2009 options to purchase 581,342 shares were outstanding under the @Road Plan.  Shares under this plan are no longer available for grant due to the Merger of @Road into Trimble.

1993 Stock Option Plan

In 1992, Trimble's Boardboard of Directorsdirectors adopted the 1993 Stock Option Plan (“1993 Plan”). The 1993 Plan, as amended to date and approved by shareholders, provided for the granting of incentive and non-statutory stock options for up to 19,125,000 shares of Common Stock to employees, consultants, and directors of Trimble. Incentive stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant. Employee stock options granted under the 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 Company issues new shares for option exercises. As of December 29, 2006January 2, 2009 options to purchase 2,692,7361,088,594 shares were outstanding and no shares were available for future grant.

1992 Management DiscountEmployee Stock OptionBonus Plan

In 1992, Trimble's Boardboard of Directorsdirectors approved the 1992 Management DiscountEmployee Stock OptionBonus Plan ("DiscountBonus Plan"). As of December 29, 2006,January 2, 2009, there were no options outstanding to purchase 295,000 shares were outstanding and no shares5,578 were available for future grant under the 1992 Management DiscountEmployee Stock OptionBonus Plan.

1990 Director Stock Option Plan

In December 1990, Trimble adopted a Director Stock Option Plan under which an aggregate of 1,140,000 shares of Common Stock have been reserved for issuance to non-employee directors as approved by the shareholders to date. At December 29, 2006,January 2, 2009, options to purchase 285,000135,000 shares were outstanding, and no shares were available for future grants under the Director Stock Option Plan.

Options Outstanding and Exercisable


Exercise prices for options outstanding as of December 29, 2006,January 2, 2009, ranged from $2.67 to $25.48.$40.59. In view of the wide range of exercise prices, Trimble considers it appropriate to provide the following additional information with respect to options outstanding at December 29, 2006:January 2, 2009:

   Options Outstanding  Options Exercisable 
         Weighted-       
      
Weighted-
  Average     
Weighted-
 
      
Average
  Remaining     
Average
 
Range  
Number
Outstanding
  
Exercise Price
per Share
  Contractual Life (Years)  
Number
Exercisable
  
Exercise Price
per Share
 
(in thousands, except for per share data) 
  
 $2.67 – $5.82   1,263  $5.05   2.78   1,263  $5.05 
 $6.00 – $7.85   281   6.77   2.30   281   6.77 
 $8.02 – $8.50   1,077   8.50   4.46   1,078   8.50 
 $8.77 – $14.53   1534   13.65   4.78   1305   13.56 
 $14.56 – $17.00   1,514   16.59   6.58   967   16.49 
 $17.06 – $19.78   339   18.66   6.44   247   18.73 
 $19.96   1,280   19.96   6.77   -   - 
 $20.04 – $23.36   227   21.80   6.87   154   21.91 
 $23.44   1,206   23.44   4.74   499   23.44 
 $23.55 – $40.59   1,735   32.96   6.07   200   30.00 
Total   10,456  $17.76   5.25   5,994  $12.81 

 
  Options Outstanding Options Exercisable 
Range 
Number
Outstanding
 Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Life (Years) 
Number
Exercisable
 Weighted- Average Exercise Price per Share 
$  2.67 - 4.27  1,198,584 $3.40  2.84  1,151,164 $3.38 
    4.40 - 5.45  1,137,822  5.08  5.38  962,556  5.08 
    5.60 - 6.50  1,185,640  5.88  4.04  1,185,640  5.88 
    6.52 - 8.02  251,048  7.29  4.84  238,928  7.29 
    8.50  1,468,152  8.5  6.55  832,356  8.5 
    8.78 - 13.71  1,144,950  12.44  5.03  922,590  12.82 
    13.78  4,350  13.78  7.07  600  13.78 
    14.53  1,244,334  14.53  7.81  457,570  14.53 
    15.29 - 16.53  525,700  15.98  8.04  204,620  15.99 
    17.00 - 25.48  3,147,600  20.41  7.95  356,744  17.80 
Total  11,308,180 $12.04  6.18  6,312,768 $8.35 


  Number Of Shares Weighted- Average Exercise Price per Share 
Weighted- Average Remaining Contractual Term (in years)
 
Aggregate Intrinsic Value (in thousands)
 
Options Outstanding  11,308,180 $12.04  6.2 $150,669 
Options Outstanding and Expected to Vest  10,977,900  11.84  6.1  148,469 
Options Exercisable  6,312,768  8.35  5.1  107,456 
  
Number Of Shares (in thousands)
 Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in years) 
Aggregate Intrinsic Value (in thousands)
 
 
 
 
 
Options outstanding  10,456 $17.76  5.27 $67,317 
Options outstanding and expected to vest  9,696  17.26  5.20  65,915 
Options exercisable  5,594  12.81  4.60  59,012 

Options outstanding and expected to vest are adjusted for expected forfeitures. The aggregate intrinsic value is the total pretax intrinsic value based on the Company’s closing stock price of $25.37$22.30 as of December 29, 2006,January 2, 2009, which would have been received by the option holders had all option holders exercised their options as of that date.

As of December 29, 2006,January 2, 2009, the total unamortized stock option expense is $22.0$31.3 million with a weighted-average recognition period of 1.73.3 years.

Option Activity

Activity during fiscal 2006, 2005, and 2004,2008, under the combined plans was as follows:
  Options  Weighted average exercise price 
(in thousands, except for per share data)      
       
Outstanding at beginning of year  10,123  $15.88 
Granted  1,998   23.32 
Assumed from @Road  -   - 
Exercised  (1,262)  9.99 
Cancelled  (403)  22.49 
Outstanding at end of year  10,456  $17.76 
         
Available for grant  1,934     

  December 29, 2006 December 30, 2005 December 31, 2004 
Fiscal Years Ended Options Weighted average exercise price Options Weighted average exercise price Options Weighted average exercise price 
(In thousands, except for per share data)
             
              
Outstanding at beginning of year  12,828 $9.35  13,442 $8.05  15,202 $6.81 
Granted  1,744  22.94  1,748  17.05  2,238  14.1 
Exercised  (3,082) 6.95  (2,120) 7.37  (3,420) 6.46 
Cancelled  (178) 12.99  (242) 10.20  (578) 8.28 
Outstanding at end of year  11,308  12.04  12,828  9.35  13,442  8.05 
                    
Available for grant  4,460     3,026     4,550    
Weighted-average fair value of options granted during year    $8.04    $7.27    $6.93 

The total intrinsic value of options exercised during fiscal 2008, 2007 and 2006 was $28.3 million, $68.4 million and $48.8 million, respectively.  Compensation expense recognized during fiscal 2008, 2007 and 2006 related to stock options was $11.8 million, $12.3 million and $10.7 million, respectively.

Restricted Stock Unit Activity

Activity during fiscal 2008 was as follows:
 
  Restricted Stock Units  Weighted Average Grant-Date Fair Value 
(in thousands, except for per share data)      
       
Nonvested at beginning of year  63  $40.55 
Granted  99  $20.19 
Vested  -   - 
Cancelled  (6) $38.56 
Nonvested at end of year  156  $27.78 

Compensation expense recognized during fiscal 2008 and 2007 related to restricted stock units was $1.0 million and $65,000, respectively. There were no restricted stock units granted prior to fiscal 2007. As of January 2, 2009, there was $2.9 million of total unamortized restricted stock unit compensation expense related to nonvested restricted stock units, with a weighted-average recognition period of 2.42 years.


Warrants

Warrants

On April 12, 2002, the Company issued to Spectra-Physics Holdings USA, Inc., a warrant to purchase up to 1,128,700 shares of Trimble’s Common Stock over a fixed period of time. Initially, Spectra-Physics’ warrant entitled it to purchase 600,000 shares of Common Stock over a five-year period at an exercise price of $5.04 per share. On a quarterly basis beginning July 14, 2002, Spectra-Physics’ warrant became exercisable for an additional 750 shares of Common Stock for every $1 million of principal and interest outstanding to Spectra-Physics until the obligation was paid off in full. These shares are purchasable at a price equal to the average of Trimble’s closing price for the five days immediately proceeding the last trading day of each quarter. On July 14, 2002 an additional 52,092 shares became exercisable at an exercise price of $4.82 per share. On October 14, 2002 an additional 53,472 shares became exercisable at an exercise price of $3.06. On January 14, 2003, an additional 54,852 shares became exercisable at an exercise price of $4.52. On April 14, 2003, an additional 28,62428,623 shares became exercisable at an exercise price of $6.69. The approximate fair value of the warrants of $2.4 million was determined using the Black-Scholes pricing model with the following assumptions: contractual life of 5-year period, risk-free interest rate of 4%; volatility of 65%; and no dividends during the contractual term. The additional shares are exercisable over a 5-year period. No additional shares will be issuable under the warrant as the underlying obligation has been paid off in full. ForDuring fiscal 2006 and 2005,2008 there were no28,623 shares exercised related to the warrants.  For fiscal 2007, 760,416 shares were exercised and for fiscal 2006, no shares were exercised.  As of December 29, 2006,January 2, 2009, there are 789,040no shares outstanding and exercisable under the warrants.

On December 21, 2001 and January 14, 2002, in connection with the first and second closing of the private placement of the Company’s Common Stock, Trimble granted five-year warrants to purchase an additional 1,838,016 shares of Common Stock, subject to certain adjustments, at an exercise price of $6.49 per share. As of December 29, 2006, there are 162,562 shares outstanding and exercisable under the warrants.


NOTE 15: BENEFIT PLANS

401(k) Plan

Under Trimble’sthe Company’s 401(k) Plan, USU.S. employee participants (including employees of certain subsidiaries) may direct the investment of contributions to their accounts among certain mutual funds and the Trimble Navigation Limited Common Stock Fund. The Trimble Fund sold 106,931 net 129,834 shares of Common Stock for an aggregate of $3.0$3.2 million in fiscal 2006. Trimble,2008. The Company, at its discretion, matches individual employee 401(k) Plan contributions at a rate of fifty cents of every dollar that the employee contributes to the 401(k) Plan up to 5% of the employee’s annual salary to an annual maximum of $2,500. Trimble’sThe Company’s matching contributions to the 401(k) Plan were $3.3 million in fiscal 2008, 3.1 million in fiscal 2007, and $2.5 million in fiscal 2006, $2.2 million in fiscal 2005, and $1.9 million in fiscal 2004.2006.

Defined Contribution Pension Plans

Certain of the Company’s European subsidiaries participate in state sponsored pension plans.  Contributions are based on specified percentages of employee salaries.  For these plans, Trimblethe Company contributed and charged to expense approximately $0.9 million for fiscal 2008, $0.8 million for fiscal 2007 and $0.7 million for fiscal 2006, $0.6 million for fiscal 2005, and $0.6 million for fiscal 2004.2006.

Defined Benefit Pension Plan

TrimbleThe Company provides defined benefit pension plans in Sweden Germany, and the Netherlands.Germany. The largest of these plans is provided by the Swedish subsidiary which 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 as 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 the liability will only increase for interest cost.

On December 29, 2006,28, 2007, the Company adopted the recognition and disclosure provisions of SFAS158.SFAS 158. The Company adopted the measurement date provision in fiscal year 2008. SFAS 158 required the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of itspension plan in the December 29, 2006 Consolidated Balance Sheet, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The adjustment to accumulated other comprehensive income at adoption represents the net unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of SFAS 87, all of which were previously netted against the plan’s funded status in the Company’s Consolidated Balance Sheets pursuant to the provisions of Statement 87. These amounts will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized as a component of other comprehensive income. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of SFAS 158.


The incremental effects of adopting the provisions of SFAS 158 on the Company’s consolidated balance sheet at December 29, 2006 are presented in the following table.  The adoption of SFAS 158 had no effectdid not have a material impact on the Company’s consolidated statement of income for the year ended December 29, 2006, or for any prior period presented, and it will not effectpresented.


The pension related balances on the Company’s operating results in future periods. Had the Company not been required to adopt SFAS 158Consolidated Balance Sheet at January 2, 2009 and December 29, 2006, it would have recognized an additional minimum liability pursuant to then provisions of SFAS 87. The effect of recognizing the additional minimum liability is included in table below28, 2007 are presented in the column labeled “Prior to Application of SFAS 158.”following table.

  At December 29. 2006 
  Prior to Application of SFAS 158 Effect of Application of SFAS 158 As Reported at December 29. 2006 
(in thousands)
       
        
Intangible asset (pension) $82 $(82)$- 
Total assets  978,513  (82) 978,431 
           
Current accrued pension liability  -  218  218 
Non-current accrued pension liability  6,594  22  6,616 
Deferred income taxes  4,629  (104) 4,525 
Total liabilities  230,630  136  230,766 
           
Accumulated other comprehensive income  41,128  (17) 41,111 
Total shareholders’ equity  747,682  (17) 747,665 

Fiscal Years Ended January 2, 2009  December 28, 2007 
(in thousands)      
       
Current accrued pension liability $140  $276 
Non-current accrued pension liability  5,439   6,646 
         
Unrecognized actuarial loss  (106)  (149)
The changes in the benefit obligations and plan assets of the significant non-USnon-U.S. defined benefit pension plans for fiscal 20062008 and 20052007 were as follows:

Fiscal Years Ended December 29, 2006 December 30, 2005 
(in thousands)
     
      
Change in benefit obligation:     
Benefit obligation at beginning of year $6,929 $7,208 
Adjustment to include benefit obligation for the Netherlands subsidiary (1)  1,412  - 
Benefit obligation at beginning of year (restated)  8,341 $7,208 
Service cost  323  90 
Interest cost  396  270 
Benefits paid  (311) (312)
Foreign exchange impact  1,253  (1,145)
Actuarial (gains) losses  (268) 818 
Benefit obligation at end of year  9,734  6,929 
Change in plan assets:       
Fair value of plan assets at beginning of year  980  1,088 
Adjustment to include fair value of plan assets for the Netherlands subsidiary (1)  1,242  - 
Fair value of plan assets at beginning of year (restated)  2,222  1,088 
Actual return on plan assets  106  36 
Employer contribution  455  339 
Plan participants’ contributions  -  - 
Benefits paid  (311) (312)
Foreign exchange impact  428  (172)
Fair value of plan assets at end of year  2,900  980 
           
Benefit obligation in excess of plan assets at end of year $6,834 $5,949 
        
Current portion (included in accrued compensation and benefits)  218  - 
Non-current portion (included in other non-current liabilities)  6,616  5,529 
 
Fiscal Years Ended January 2, 2009  December 28, 2007 
(in thousands)      
       
Change in benefit obligation:      
Benefit obligation at beginning of year $10,231  $9,398 
Adjustment to (exclude)/include benefit obligation for the Netherlands subsidiary*  (2,334)  336 
Benefit obligation at beginning of year (restated)  7,897   9,734 
Service cost  33   411 
Interest cost  337   460 
Benefits paid  (303)  (359)
Foreign exchange impact  (963)  173 
Actuarial (gains) losses  (62)  (188)
Benefit obligation at end of year  6,939   10,231 
Change in plan assets:        
Fair value of plan assets at beginning of year  3,309   2,913 
Adjustment to include fair value of plan assets for the Netherlands subsidiary  (1,984)  (13)
Fair value of plan assets at beginning of year (restated)   1,325   2,900 
Actual return on plan assets  38   (92)
Employer contribution  68   355 
Plan participants’ contributions  -   - 
Benefits paid  (59)  (123)
Foreign exchange impact  (12)  269 
Fair value of plan assets at end of year  1,360   3,309 
         
Benefit obligation in excess of plan assets at end of year $5,579  $6,922 
         
Current portion (included in accrued compensation and benefits)  140   276 
Non-current portion (included in other non-current liabilities)  5,439   6,646 

*The Company changed its defined benefit pension plan in Netherlands to a defined contribution plan in fiscal 2008.
 
(2)In 2006, the Company began incorporating the net effect of the projected benefit obligation and the plan assets of its defined benefit plan in the Netherlands in its Consolidated Balance Sheets. In prior years, the Company could not obtain the necessary information to include the net impact of this plan on its Consolidated Balance Sheets. As a result, the benefit obligation and fair value of plan assets at the beginning of year have been restated. The net effect of recording the benefit obligation in excess of plan assets of this plan to the Consolidated Statements of Income and the Consolidated Balance Sheets was not material for both fiscal 2006 and fiscal 2005.

The underfundedunder-funded status of the plan of $6.8$5.6 million at December 29, 2006January 2, 2009 is recognized in the accompanying consolidated balance sheetsConsolidated Balance Sheets as a short-term and a long-term accrued pension liability.  No plan assets are expected to be returned to Trimble during the fiscal year-ended December 28, 2007.2008.

Net periodic benefit costscost in fiscal 2006, 2005, and 2004 were2008 was not material.

Actuarial assumptions used to determine the net periodic pension costs for the year ended December 29, 2006fiscal 2008 were as follows:

 Swedish SubsidiaryGerman SubsidiariesNetherlands Subsidiary
Discount rate4.5%4.3%4.0%
Rate of compensation increase2.0%2.0%2.0%
Measurement Date12/29/0612/29/0612/29/06
  Swedish Subsidiary  German Subsidiaries 
Discount rate  4.8%  6.5%
Rate of compensation increase  2.0%  2.0%
Measurement Date 1/2/2009  1/2/2009 

Trimble’sThe Company’s accumulated benefits obligation was $7.5approximately $6.9 million and $7.0$10.2 million for fiscal 20062008 and 2005,fiscal 2007, respectively.

Trimble’sThe Company’s plan assets are primarily located in ourthe Company's German subsidiaries and the Netherlands subsidiary.subsidiaries. For German subsidiaries, for fiscal 2005 and fiscal 2004,2008, the asset allocation of ourthe total plan assets was approximately as follows:  89% local government bonds, 7% real estate and 4% equity securities. Long-term asset allocation and expected return on assets assumptions are derived from detailed annual studies conducted by Trimble’sthe Company's asset management group and actuaries. Trimble’sThe Company’s asset management group limits allocation to equity securities and real estate to a maximum of 10% and 25%, respectively, with the remaining assets to be allocated to local government bonds. For the Netherlands subsidiary, 100% of the assets are invested in an insurance contract. While the asset allocation give appropriate consideration to recent performance and historical returns, the strategy is focused primarily on conservative and sustainable long-term returns. Based on historical returns, Trimblethe Company expects future return on assets to be approximately 4%.

TrimbleThe Company expects to contribute approximately $500,000$372,000 to plan assets in fiscal year ended 2007.2009.

The following benefit payments, which reflect estimated future employee service, as appropriate, are expected to be paid:paid (in thousands):

  Expected Benefit Payments 
(In thousands)
   
    
2007 $320 
2008 $380 
2009 $461 
2010 $529 
2011 $558 
2012-2016 $3,040 
Total $5,288 


71
 2009 $390 
 2010  422 
 2011  431 
 2012  434 
 2013  465 
 Thereafter  6,457 
Total  $8,599 

NOTE 16: STATEMENT OF CASH FLOW DATA

Fiscal Years Ended 
December 29,
2006
 
December 30,
2005
 
December 31,
2004
 
(in thousands)
       
        
Supplemental disclosure of cash flow information:       
Interest paid $8 $1,081 $3,142 
Income taxes paid $36,000 $8,938 $6,694 
           
Significant non-cash investing activities:          
Issuance of shares related to acquisition related earn-out payments $- $- $1,798 
  January 2,  December 28,  December 29, 
Fiscal Years Ended 2009  2007  2006 
(in thousands)         
          
Supplemental disclosure of cash flow information:         
Interest paid $2,451  $6,250  $8 
Income taxes paid $73,756  $35,170  $36,000 
             
Significant non-cash investing activities:            
Issuance of shares to acquire @Road $-  $161,947  $- 
             


NOTE 17: LITIGATION

From time to time, the Company is involved in litigation arising out of the ordinary course of its business. There are no known claims or pending litigation expected to have a material effect on the Company’s overall financial position, results of operations, or liquidity.


NOTE 18: SUBSEQUENT EVENTSSELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Acquisition of @Road, Inc.

On February 16, 2007, we acquired @Road, Inc. of Fremont, California for a total purchase price of approximately $493.1 million. @Road, Inc. is a global provider of solutions designed to automate the management of mobile resources and to optimize the service delivery process for customers across a variety of industries. @Road will be reported within our Mobile Solutions business segment. This acquisition was the largest in acquisition value in the company’s history. It significantly increases our presence in the mobile resource management (MRM) market which Trimble believes is a large and fast growing market. With the addition of @Road, Trimble’s TMS segment will be better able to service larger customers, with a broader and more robust solution set.

Trimble elected to pay the $7.50 per share purchase consideration with $5.00 in cash and $2.50 in newly issued shares of Trimble common stock, payable to @Road stockholders. Pursuant to this election and the merger agreement, the stock portion of the merger consideration payable to @Road shareholders was 0.0447 shares of Trimble common stock per share of @Road common stock or a total of 2.9 million shares valued at $164.4 million.

Amended and Restated Credit Facilities

On February 16, 2007, the Company amended and restated its existing $200 million unsecured revolving credit agreement with a syndicate of 11 banks with The Bank of Nova Scotia as the administrative agent (the “2007 Credit Facility”). Under the 2007 Credit Facility, the Company exercised the accordion option in the existing credit agreement to increase the availability under the revolving credit line by $100,000,000, for an aggregate availability of up to $300,000,000, and extended the maturity date of the revolving credit line by 18 months, from July 2010 to February 2012.  Up to $25 million of the availability under the revolving credit line may be used to issue letters of credit, and up to $20 million may be used for swing line loans. In addition, the Company incurred five-year term loan under the 2007 Credit Facility in an aggregate principal amount of $100,000,000, which will mature concurrently with the revolving credit line.  The term loan will be repaid in quarterly installments, with principal being amortized at the following annual rates: year 1 at 10%, year 2 at 15%, year 3 at 15%, year 4 at 20%, year 5 at 20%, and the last quarterly payment to be made at maturity, together with a final payment of 20%.  Under the existing facility, the Company was required to maintain a maximum leverage ratio of 2:75:1. The 2007 Credit Facility increased the maximum leverage ratio to 3.00:1.   The funds available under the new 2007 Credit Facility may be used by the Company for acquisitions and general corporate purposes.
  March 28,  June 27,  September 26,  January 2, 
Fiscal period ended 2008  2008  2008  2009 
(in thousands, except per share data)            
             
Revenue $355,296  $377,767  $328,087  $268,084 
Gross margin  174,376   187,099   165,623   122,038 
Net income  40,067   48,599   39,067   13,739 
                 
Basic net income per share  0.33   0.40   0.32   0.12 
Diluted net income per share  0.32   0.39   0.31   0.11 


As of February 20, 2007, the Company had $150 million drawn on the revolving credit line and $100 million in term loan outstanding. 

2-for-1 Stock Split

On January 17, 2007, Trimble’s Board of Directors approved a 2-for-1 split of all outstanding shares of the Company’s Common Stock, payable February 22, 2007 to stockholders of record on February 8, 2007. All shares and per share information presented has been adjusted to reflect the stock split on a retroactive basis for all periods presented.
  March 30,  June 29,  September 28,  December 28, 
Fiscal period ended 2007  2007  2007  2007 
(in thousands, except per share data)            
             
Revenue $285,732  $327,732  $296,023  $312,783 
Gross margin  143,130   167,169   146,940   155,666 
Net income  28,683   35,026   27,374   26,291 
                 
Basic net income per share  0.25   0.29   0.23   0.22 
Diluted net income per share  0.24   0.28   0.22   0.21 


NOTE 19: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Fiscal period ended 
March 31,
2006
 
June 30,
2006
 
September 29,
2006
 
December 29,
2006
 
(in thousands, except per share data)
         
          
Revenue $225,854 $245,326 $234,851 $234,120 
Gross margin  107,463  121,656  116,191  115,771 
Net income  25,828  28,503  25,342  23,983 
              
Basic net income per share  0.24  0.26  0.23  0.22 
Diluted net income per share  0.23  0.25  0.22  0.21 

Fiscal period ended 
April 1,
2005
 
July 1,
2005
 
September 30,
2005
 
December 30,
2005
 
(in thousands, except per share data)
         
Revenue $195,383 $204,225 $188,484 $186,821 
Gross margin  97,807  102,407  97,292  92,299 
Net income  17,439  23,787  20,236  23,393 
              
Basic net income per share  0.17  0.23  0.19  0.22 
Diluted net income per share  0.16  0.21  0.18  0.21 

Trimble has a 52-53 week fiscal year, ending on the Friday nearest to December 31. Fiscal 2008 was a 53-week year and fiscal 2007 was a 52-week year. As a result of the extra week, year-over-year results aremay not exactlybe comparable. The Company was shut down an additional week during the fourth quarter of fiscal 2008. Thus, due to the inherent nature of adopting a 52-53 week fiscal year, the Company, analysts, shareholders, investors, and others will have to make appropriate adjustments to any analysis performed when comparing our activities and results.

Significant quarterly items for fiscal 2006 include the following: (i) in the first quarter of 2006 a $2.6 million benefit, or a $0.03 per diluted share resulting from the settlement of foreign income tax audits; (ii) in the second quarter of 2006 a $1.0 million charge, or $0.00 per diluted share relating to in-process research and development and a $2.2 million benefit, or a $0.02 per diluted share resulting from the settlement of foreign income tax audits; (iii) in the third quarter a $1.7 million benefit, or a $0.02 per diluted share resulting from the amendment of a federal income tax return; (iv) in the fourth quarter of 2006 a $930,000 charge, or $0.00 per diluted share relating to in-process research and development and $1.8 million benefit, or a $0.02 per diluted share resulting from the settlement of foreign income tax audits.

Significant quarterly items for fiscal 2005 include the following: (i) in the first quarter of 2005 a $0.2 million charge, or less than $0.01 per diluted share relating to facilities closure; (ii) in the third quarter of 2005 a $0.9 million charge, or $0.02 per diluted share relating to a write-off of debt issuance costs; (iii) in the fourth quarter of 2005 a $1.1 million charge, or $0.02 per diluted share relating to in-process research and development and $9.2 million or $0.16 per diluted share related to deferred gain on joint venture.


Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders of Trimble Navigation Limited

We have audited the accompanying consolidated balance sheets of Trimble Navigation Limited as of December 29, 2006January 2, 2009 and December 30, 2005,28, 2007, and the related consolidated statements of income, shareholder’sshareholders’ equity, and cash flows for each of the three years in the period ended December 29, 2006.January 2, 2009. Our audits also included the financial statement schedule listed in the index at Item 15(a)(2).15 (a) Schedule II. 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 the standards of the Public Company Accounting Oversight Board (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 referred to above present fairly, in all material respects, the consolidated financial position of Trimble Navigation Limited at December 29, 2006January 2, 2009 and December 30, 2005,28, 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 29, 2006,January 2, 2009, in conformity with U.S generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, in fiscal 2006 the Company changed its method of accounting for stock based compensation in accordance with guidance provided in Statementuncertain tax positions as of Financial Accounting Standards No. 123R, “Share-Based Payment”.December 30, 2006.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Trimble Navigation Limited’s internal control over financial reporting as of December 29, 2006,January 2, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2007,27, 2009, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

San Jose, California
February 22, 200727, 2009

 
Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders of Trimble Navigation Limited


We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting at Item 9A, that Trimble Navigation Limited maintained effectiveLimited's internal control over financial reporting as of December 29, 2006,January 2, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Trimble Navigation Limited’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting.reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment,assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Trimble Navigation Limited maintained effective internal control over financial reporting as of December 29, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Trimble Navigation Limited maintained, in all material respects, effective internal control over financial reporting as of December 29, 2006,January 2, 2009, based onthe COSO criteria.criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Trimble Navigation Limited as of December 29, 2006January 2, 2009 and December 30, 2005,28, 2007, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 29, 2006, of Trimble Navigation LimitedJanuary 2, 2009 and our report dated February 22, 200727, 2009 expressed an unqualified opinion thereon.


/s/ Ernst & Young LLP


San Jose, California
February 22, 200727, 2009

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None

NoneItem 9A.   Controls and Procedures.

Item 9A.
Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures

(3)
Evaluation of Disclosure Controls and Procedures

Trimble’sThe management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer, (“CFO”), after evaluatinghas evaluated the effectiveness of the company’s “disclosureour disclosure controls and procedures”procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act")), as of December 29, 2006,the end of the period covered by this report.  Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 29, 2006, the company’send of such period, our disclosure controls and procedures were effective and designed to provide reasonable assurance that material information relating to the company and its consolidated subsidiaries required to be included in the company’s periodic filings under the Exchange Act would be made known to them by others within those entities.are effective.

Inherent Limitations on Effectiveness of Controls

The company’sCompany’s management, including the CEO and CFO, does not expect that our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Management’s Report on Internal Control over Financial Reporting

The company’sCompany’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The company’sCompany’s management, including the CEO and CFO, conducted an evaluation of the effectiveness of its internal control over financial reporting based on the Internal Control -– Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, the company’sCompany’s management concluded that its internal control over financial reporting was effective as of December 29, 2006.January 2, 2009.

Management’s assessment of theThe effectiveness of our internal control over financial reporting as of December 29, 2006January 2, 2009 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.


Changes in Internal Control over Financial Reporting

During the quarter ended December 29, 2006,January 2, 2009, there were no changes in the company’sCompany’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company’sCompany’s internal control over financial reporting.

Item 9B.Item 9B.   Other Information.
Other Information.

None.



PART III


Item 10.Item 10.   Directors, Executive Officers and Corporate Governance.
Directors, Executive Officers and Corporate Governance.

The information required by this item, insofar as it relates to Trimble’s directors, will be contained under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement and is incorporated herein by reference. The information required by this item relating to executive officers is set forth above in Item 1 Business Overview under the caption “Executive Officers.”

The information required by this item in so far as it relates to the nominating and audit committees will be contained in the Proxy Statement under the caption “Board Meetings and Committees.”

Code of Ethics

The Company’s Business Ethics and Conduct Policy applies to, among others, to the Company’s Chief Executive Officer, Chief Financial Officer, Vice President of Finance, Corporate Controller, and other finance organization employees. The Business Ethics and Conduct Policy is available on the Company’s website at www.trimble.com under the heading “Corporate Governance and Policies” on the Investor Information page of our website. A copy will be provided, without charge, to any shareholder who requests one by written request addressed to General Counsel, Trimble Navigation Limited, 935 Stewart Drive, Sunnyvale, CA 94085.

If any substantive amendments to the Business Ethics and Conduct Policy are made or any waivers are granted, including any implicit waiver, from a provision of the Business Ethics and Conduct Policy, to its Chief Executive Officer, Chief Financial Officer, Vice President of Finance, or Corporate Controller, the Company will disclose the nature of such amendment or waiver on the Company’s website at www.trimble.com or in a report on Form 8-K.
 
Item 11.Item 11.   Executive Compensation.
Executive Compensation.

The information required by this item will be contained in the Proxy Statement under the caption “Executive Compensation” and is incorporated herein by reference.
 
Item 12.Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item will be contained in the Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and is incorporated herein by reference.
 
Item 13.Item 13.   Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be contained in the Proxy Statement under the caption “Certain Relationships and Related Transactions, and Director Independence” and is incorporated herein by reference.

Item 14.Item 14.   Principal Accounting Fees and Services.
Principal Accounting Fees and Services.

The information required by this item will be contained in the Proxy Statement under the caption “Principal Accounting Fees and Services” and is incorporated herein by reference.


PART IV

PART IVItem 15. Exhibits and Financial Statement Schedules.

Item 15.
Exhibits, Financial Statement Schedules.

(a)
(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 Reporton
on Form 10-K
Consolidated Balance Sheets at December 29, 2006January 2, 2009 and December 30, 200528, 20074246
  
Consolidated Statements of Income for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4347
  
Consolidated Statement of Shareholders’ Equity for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4448
  
Consolidated Statements of Cash Flows for each of the three fiscal years in the period endedJanuary 2, 2009, December 28, 2007 and December 29, 2006
4549
  
Notes to Consolidated Financial Statements4650
  
Reports of Independent Registered Public Accounting Firm7485

(4)
(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 AccountsS-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.

(5)
(b) Exhibits

Exhibit
Number

2.1Agreement and Plan of Merger, by and among Trimble Navigation Limited, Roadrunner Acquisition Corp. and @Road, Inc., dated as of December 10, 2006. (27)
2.2Form of Voting Agreement, by and among Trimble Navigation Limited and certain stockholders of @Road, Inc., dated as of December 10, 2006. (28)
3.1Restated Articles of Incorporation of the Company filed June 25, 1986. (5)
3.2Certificate of Amendment of Articles of Incorporation of the Company filed October 6, 1988. (6)
3.3Certificate of Amendment of Articles of Incorporation of the Company filed July 18, 1990. (7)
3.4Certificate of Determination of the Company filed February 19, 1999. (8)
3.5Certificate of Amendment of Articles of Incorporation of the Company filed May 29, 2003. (15)(14)
3.6Certificate of Amendment of Articles of Incorporation of the Company filed March 4, 2004. (19)(16)
3.7Certificate of Amendment of Articles of Incorporation of the Company filed February 21, 2007. (23)
3.8Bylaws of the Company (amended and restated through July 20, 2006). (18)(15)
4.1Specimen copy of certificate for shares of Common Stock of the Company. (1)
4.2Preferred Shares Rights Agreement dated as of February 18, 1999. (4)
4.3Agreement of Substitution and Amendment of Preferred Shares Rights Agreement dated September 10, 2004. (20)
4.4Form of Warrant dated April 12, 2002. (13)(17)
10.1+Form of Indemnification Agreement between the Company and its officers and directors. (26)(19)

10. 2+1990 Director Stock Option Plan, as amended, and form of Outside Director Non-statutory Stock Option Agreement. (3)
10.3+1992 Management Discount Stock Option and form of Non-statutory Stock Option Agreement. (2)
10.4+1993 Stock Option Plan, as amended October 24, 2003. (11)
10.5+Trimble Navigation 1988 Employee Stock Purchase Plan, as amended January 17, 2007. (31)(25)
10.6+Employment Agreement between the Company and Steven W. Berglund dated March 17, 1999. (9)
10.7+Trimble Navigation Limited Deferred Compensation Plan effective December 30, 2004, as amended Mayand restated October 19, 2005.2007. (10)
10.8+Australian Addendum to the Trimble Navigation Limited 1988 Employee Stock Purchase Plan. (12)
10.9+Trimble Navigation Limited 2002 Stock Plan (as amended and restated October 20, 2006)December 31, 2008), including forms of option and restricted stock unit agreements. (32)(27)
10.10Amended and Restated Credit Agreement dated February 16, 2007 (amending and restating the Credit Agreement dated as of July 28, 20052005)  among Trimble Navigation Limited, the Subsidiary Borrowers, The Bank of Nova Scotia (Administrative Agent, Issuing Bank and Swing Line Bank), The Bank of New YorkCitibank N.A. and Harris NesbittBMO Capital Markets  (Co-Syndication Agents), Bank of America, N.A. and Wells Fargo Bank N.A. (Co-Documentation Agents), The Bank of Nova Scotia and BNY Capital Markets, Inc. (Joint Lead Arrangers), and The Bank of Nova Scotia (Sole Book Runner). (14)(13)
10.11+Employment Agreement between the Company and Rajat Bahri dated December 6, 2004. (21)(18)
10.12+Board of Directors Compensation Policy effective JanuaryJuly 1, 2004. (22)2007. (26)
10.13+FormAmended and Restated form of Change in Control severance agreement between the Company and certain Company officers. (16)(27)
10.14+Letter of AssignmentAmendment to Employment Agreement between the Company and Alan TownsendSteven W. Berglund dated November 12, 2003. (23)December 19, 2008. (27)
10.15+Supplemental agreementAmendment to Letterletter of Assignmentemployment between the Company and Alan TownsendRajat Bahri dated January 19, 2004. (24)December 31, 2008. (27)
10.16+Trimble Navigation Limited 2006 Management Incentive Plan Description. (25)
10.1710.16Lease dated May 11, 2005 between CarrAmerica Realty Operating Partnership, L.P. and the Company. (30)(22)
10.18+10.17+Trimble Navigation Limited 2007 Management Incentive Plan Description. (29)(20)
10.19+10.18+@Road, Inc. 2000 Stock Option Plan. (31)Plan, as amended May 16, 2000. (24)
10.19Amendment No. 1 to the Amended and Restated Credit Agreement. (27)
10.20+Trimble Navigation Limited Annual Management Incentive Plan Description. (21)
21.1Subsidiaries of the Company. (31)(27)
23.1Consent of Ernst & Young LLP, independent registered public accounting firm. (31)Independent Registered Public Accounting Firm. (27)
24.1Power of Attorney included on signature page herein.
31.1Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(27)
31.2Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(27)
32.1Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)(27)
32.2Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)(27)
  
+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 14I thereof.arrangement.
(1)Incorporated by reference to exhibit number 4.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 33-35333), which became effective July 19, 1990.
(2)Incorporated by reference exhibit number 10.46 to the Company’s Registration Statement on Form S-1 (File No. 33-45990), which was filed February 25, 1992.
(3)Incorporated by reference to exhibit number 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
(4)Incorporated by reference to exhibit number 1 to the Company’s Registration Statement on Form 8-A, which was filed on February 18, 1999.
(5)Incorporated by reference to exhibit number 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(6)Incorporated by reference to exhibit number 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(7)Incorporated by reference to exhibit number 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(8)Incorporated by reference to exhibit number 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(9)Incorporated by reference to exhibit number 10.67 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(10)Incorporated by reference to exhibit number 10.110.2 to the Company’s CurrentQuarterly Report on Form 8-K filed on May 25, 2005.10-Q for the quarter ended September 28, 2007.
(11)Incorporated by reference to exhibit number 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2003.

(12)Incorporated by reference to exhibit number 10.77 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2000.
(13)Incorporated by reference to exhibit number 4.1 to the Company’s Registration Statement on Form S-3 filed on April 19, 2002.
(14)Incorporated by reference to exhibit number 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended SeptemberMarch 30, 2005.2007.
(15)(14)Incorporated by reference to exhibit number 3.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.
(16)Incorporated by reference to exhibit number 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(18)(15)Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2006.
(19)(16)Incorporated by reference to exhibit number 3.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2004.
(20)(17)Incorporated by reference to exhibit number 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(21)(18)Incorporated by reference to exhibit number 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(22)Incorporated by reference to exhibit number 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(23)Incorporated by reference to exhibit number 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(24)Incorporated by reference to exhibit number 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(25)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on January 24, 2006.
(26)(19)Incorporated by reference to exhibit number 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 20, 3005.30, 2005.
(27)Incorporated by reference to exhibit number 2.1 to the Company’s Current Report on Form 8-K filed on December 11, 2006.
(28)Incorporated by reference to exhibit number 2.2 to the Company’s Current Report on Form 8-K filed on December 11, 2006.
(29)(20)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on January 30, 2006.2007.
(30)(21)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on April 24, 2008.
(22)Incorporated by reference to exhibit number 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 30, 2005.
(31)(23)Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2007.
(24)Incorporated by reference to exhibit number 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2006.
(25)Incorporated by reference to exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2006.
(26)Incorporated by reference to exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 28, 2007.
(27)Filed herewith.



EXHIBIT LIST

Exhibit
Number
2.1Agreement and Plan of Merger, by and among Trimble Navigation Limited, Roadrunner Acquisition Corp. and @Road, Inc., dated as of December 10, 2006. (27)
2.2Form of Voting Agreement, by and among Trimble Navigation Limited and certain stockholders of @Road, Inc., dated as of December 10, 2006. (28)
3.1Restated Articles of Incorporation of the Company filed June 25, 1986. (5)
3.2Certificate of Amendment of Articles of Incorporation of the Company filed October 6, 1988. (6)
3.3Certificate of Amendment of Articles of Incorporation of the Company filed July 18, 1990. (7)
3.4Certificate of Determination of the Company filed February 19, 1999. (8)
3.5Certificate of Amendment of Articles of Incorporation of the Company filed May 29, 2003. (15)(14)
3.6Certificate of Amendment of Articles of Incorporation of the Company filed March 4, 2004. (19)(16)
3.7Certificate of Amendment of Articles of Incorporation of the Company filed February 21, 2007. (23)
3.8Bylaws of the Company (amended and restated through July 20, 2006). (18)(15)
4.1Specimen copy of certificate for shares of Common Stock of the Company. (1)
4.2Preferred Shares Rights Agreement dated as of February 18, 1999. (4)
4.3Agreement of Substitution and Amendment of Preferred Shares Rights Agreement dated September 10, 2004. (20)
4.4Form of Warrant dated April 12, 2002. (13)(17)
10.1+Form of Indemnification Agreement between the Company and its officers and directors. (26)(19)
10. 2+1990 Director Stock Option Plan, as amended, and form of Outside Director Non-statutory Stock Option Agreement. (3)
10.3+1992 Management Discount Stock Option and form of Non-statutory Stock Option Agreement. (2)
10.4+1993 Stock Option Plan, as amended October 24, 2003. (11)
10.5+
Trimble Navigation 1988 Employee Stock Purchase Plan, as amended January 17, 2007. (31)(25)
10.6+Employment Agreement between the Company and Steven W. Berglund dated March 17, 1999. (9)
10.7+Trimble Navigation Limited Deferred Compensation Plan effective December 30, 2004, as amended Mayand restated October 19, 2005.2007. (10)
10.8+Australian Addendum to the Trimble Navigation Limited 1988 Employee Stock Purchase Plan. (12)
10.9+
Trimble Navigation Limited 2002 Stock Plan (as amended and restated October 20, 2006)December 31, 2008), including forms of option and restricted stock unit agreements. (32)(27)
10.10Amended and Restated Credit Agreement dated February 16, 2007 (amending and restating the Credit Agreement dated as of July 28, 20052005)  among Trimble Navigation Limited, the Subsidiary Borrowers, The Bank of Nova Scotia (Administrative Agent, Issuing Bank and Swing Line Bank), The Bank of New YorkCitibank N.A. and Harris NesbittBMO Capital Markets  (Co-Syndication Agents), Bank of America, N.A. and Wells Fargo Bank N.A. (Co-Documentation Agents), The Bank of Nova Scotia and BNY Capital Markets, Inc. (Joint Lead Arrangers), and The Bank of Nova Scotia (Sole Book Runner). (14)(13)
10.11+Employment Agreement between the Company and Rajat Bahri dated December 6, 2004. (21)(18)
10.12+Board of Directors Compensation Policy effective JanuaryJuly 1, 2004. (22)2007. (26)
10.13+
FormAmended and Restated form of Change in Control severance agreement between the Company and certain Company officers. (16)(27)
10.14+
Letter of AssignmentAmendment to Employment Agreement between the Company and Alan TownsendSteven W. Berglund dated November 12, 2003. (23)December 19, 2008. (27)
10.15+
Supplemental agreementAmendment to Letterletter of Assignmentemployment between the Company and Alan TownsendRajat Bahri dated January 19, 2004. (24)December 31, 2008. (27)
10.16+Trimble Navigation Limited 2006 Management Incentive Plan Description. (25)
10.1710.16Lease dated May 11, 2005 between CarrAmerica Realty Operating Partnership, L.P. and the Company. (30)(22)
10.18+10.17+Trimble Navigation Limited 2007 Management Incentive Plan Description. (29)(20)
10.19+
10.18+@Road, Inc. 2000 Stock Option Plan. (31)Plan, as amended May 16, 2000. (24)
10.19
Amendment No. 1 to the Amended and Restated Credit Agreement. (27)
10.20+Trimble Navigation Limited Annual Management Incentive Plan Description. (21)
21.1
Subsidiaries of the Company. (31)(27)
23.1
Consent of Ernst & Young LLP, independent registered public accounting firm. (31)Independent Registered Public Accounting Firm. (27)
24.1Power of Attorney included on signature page herein.
31.1
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(27)
31.2
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(27)
32.1
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)(27)
32.2
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)(27)
+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 14I thereof.arrangement.
(1)Incorporated by reference to exhibit number 4.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 33-35333), which became effective July 19, 1990.

(2)Incorporated by reference exhibit number 10.46 to the Company’s Registration Statement on Form S-1 (File No. 33-45990), which was filed February 25, 1992.
(3)Incorporated by reference to exhibit number 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
(4)Incorporated by reference to exhibit number 1 to the Company’s Registration Statement on Form 8-A, which was filed on February 18, 1999.
(5)Incorporated by reference to exhibit number 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(6)Incorporated by reference to exhibit number 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(7)Incorporated by reference to exhibit number 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(8)Incorporated by reference to exhibit number 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(9)Incorporated by reference to exhibit number 10.67 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(10)Incorporated by reference to exhibit number 10.110.2 to the Company’s CurrentQuarterly Report on Form 8-K filed on May 25, 2005.10-Q for the quarter ended September 28, 2007.
(11)Incorporated by reference to exhibit number 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2003.
(12)Incorporated by reference to exhibit number 10.77 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2000.
(13)Incorporated by reference to exhibit number 4.1 to the Company’s Registration Statement on Form S-3 filed on April 19, 2002.
(14)Incorporated by reference to exhibit number 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended SeptemberMarch 30, 2005.2007.
(15)(14)Incorporated by reference to exhibit number 3.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.
(16)Incorporated by reference to exhibit number 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(18)(15)Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2006.
(19)(16)Incorporated by reference to exhibit number 3.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2004.
(20)(17)Incorporated by reference to exhibit number 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(21)(18)Incorporated by reference to exhibit number 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(22)Incorporated by reference to exhibit number 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(23)Incorporated by reference to exhibit number 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(24)Incorporated by reference to exhibit number 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
(25)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on January 24, 2006.
(26)(19)Incorporated by reference to exhibit number 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 20, 3005.30, 2005.
(27)Incorporated by reference to exhibit number 2.1 to the Company’s Current Report on Form 8-K filed on December 11, 2006.
(28)Incorporated by reference to exhibit number 2.2 to the Company’s Current Report on Form 8-K filed on December 11, 2006.
(29)(20)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on January 30, 2006.2007.
(30)(21)Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K filed on April 24, 2008.
(22)Incorporated by reference to exhibit number 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 30, 2005.
(31)(23)Incorporated by reference to exhibit number 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2007.
(24)Incorporated by reference to exhibit number 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2006.
(25)Incorporated by reference to exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2006.
(26)Incorporated by reference to exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 28, 2007.
(27)Filed herewith.


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

 February 23, 200727, 2009

 
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.


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 
    
    
/s/ Steven W. Berglund President, Chief Executive Officer, DirectorFebruary 21, 200727, 2009
Steven W. Berglund
    
    
/s/ Rajat Bahri Chief Financial Officer and AssistantFebruary 23, 200727, 2009
Rajat Bahri Secretary (Principal Financial Officer and Principal Accounting Officer) 
    
    
/s/ Julie ShepardVice President of Finance andFebruary 27, 2009
Julie ShepardPrincipal Accounting Officer 
/s/ Robert S. CooperDirectorFebruary 22, 2007
Robert S. Cooper    
    
  Director
John B. Goodrich   
/s/ John B. Goodrich  DirectorFebruary 21, 2007
John B. Goodrich    
    
/s/ William Hart DirectorMarch 2, 2009
William Hart   
/s/ William HartDirectorFebruary 22, 2007
William Hart    
    
/s/ Ulf J. Johansson DirectorMarch 2, 2009
Ulf J. Johansson   
/s/ Ulf J. JohanssonDirectorFebruary 20, 2007
Ulf J. Johansson    
    
/s/ Bradford W. Parkinson DirectorFebruary 25, 2009
Bradford W. Parkinson   
/s/ Bradford W. ParkinsonDirectorFebruary 20, 2007
Bradford W. Parkinson    
    
Director
Nickolas W. Vande Steeg 
 
    
/s/ Nickolas W. Vande SteegMerit E. Janow DirectorFebruary 22, 200726, 2009
Nickolas W. Vande SteegMerit E. Janow   
 

SCHEDULE II

TRIMBLE NAVIGATION LIMITED
VALUATION AND QUALIFYING ACCOUNTS
(in thousands, except for per share data)

 
Allowance for doubtful accounts:
 
January 2,
2009
  
December 28,
2007
  
December 29,
2006
 
Balance at beginning of period $5,221  $4,063  $5,230 
Acquired allowance  131   1,812   494 
Bad debt expense  2,667   1,303   163 
Write-offs, net of recoveries  (2,020)  (1,957)  (1,824)
Balance at end of period $5,999  $5,221  $4,063 
             
Inventory allowance:            
Balance at beginning of period $29,626  $28,582  $23,238 
Acquired allowance  1,720   560   1 
Additions to allowance  4,892   4,524   7,061 
Write-offs, net of recoveries  (6,481)  (4,040)  (1,718)
Balance at end of period $29,757  $29,626  $28,582 
             
Sales return reserve:            
Balance at beginning of period $1,684  $859  $1,500 
Acquired allowance  -   295   55 
Additions (Reductions) to allowance  162   465   (586)
Write-offs, net of recoveries  (27)  64   (110)
Balance at end of period $1,819  $1,683  $859 
 
SCHEDULE II

TRIMBLE NAVIGATION LIMITED
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)

 
Allowance for doubtful accounts:
 
December 29,
2006
 
December 30,
2005
 
December 31,
2005
 
Balance at beginning of period $5,230 $8,952 $9,953 
Acquired allowance  494  237  116 
Bad debt expense  163  502  1,210 
Write-offs, net of recoveries  (1,824) (3,459) (2,327)
Balance at end of period $4,063 $5,230 $8,952 
           
Inventory allowance:
          
Balance at beginning of period $23,238 $26,217 $25,885 
Acquired allowance  1  357  591 
Additions to allowance  7,061  5,612  3,765 
Write-offs, net of recoveries  (1,718) (8,948) (4,024)
Balance at end of period $28,582 $23,238 $26,217 
           
Sales return reserve:
          
Balance at beginning of period $1,500 $2,210 $3,252 
Acquired allowance  55  21  - 
Additions (Reductions) to allowance  (586) (383) (809)
Write-offs, net of recoveries  (110) (348) (233)
Balance at end of period $859 $1,500 $2,210 

S-196