EXHIBIT 99.1
Trimble Reports Second Quarter 2005 Revenue and Earnings
Record Revenue of $204.2 Million and Record GAAP Earnings of $0.42 Per Share
SUNNYVALE, Calif., July 26, 2005 - Trimble (Nasdaq: TRMB) today announced
results for its second quarter of 2005, ended July 1, 2005. Revenue for the
second quarter was $204.2 million, up approximately 14 percent from revenue of
$179.5 million in the second quarter of fiscal 2004. Operating income for the
second quarter of 2005 was $38.7 million, up 45 percent when compared to
operating income of $26.7 million in the second quarter of 2004. Net income for
the second quarter of 2005 was $23.8 million, or $0.42 per share, up
approximately 16 percent when compared to net income of $20.5 million, or $0.38
per share for the second quarter of fiscal 2004.
Although operating income was up 45 percent, net income was up 16 percent due to
a 34 percent effective tax rate in the second quarter of 2005, compared to an 18
percent effective tax rate for the second quarter of 2004. The 2004 effective
tax rate benefited from a research and development tax credit and net operating
loss carry-forwards which should be factored into year-over-year comparisons.
"The second quarter was the strongest in Trimble's history in terms of revenue,
operating profits and cash flow," said Steven W. Berglund, Trimble's president
and chief executive officer. "Although we were well above our profit
expectations, we were slightly below our revenue guidance because of
lower-than-forecasted sales of our EZ-Steer(TM) guidance product due to the end
of the agricultural buying season. Overall TFS segment sales, where agricultural
products are captured, were up 40 percent for the first half of the year. We
believe the condition of the agricultural market remains unchanged and has the
potential to contribute strong double-digit growth in the second half of the
year," Berglund continued.
"We continue to see strength in our Engineering and Construction segment and
fundamental improvements in our mobile solutions segment as it moves toward
profitability. Looking forward, we feel positive about the business environment
and our target markets. Our growth will fluctuate quarter to quarter, but we
continue to reaffirm our guidance of 12 to 15 percent annual revenue growth. We
expect the revenue growth in the second half of the year to be consistent with
this expectation at 12 to 15 percent year-over-year growth," concluded Berglund.
Trimble Results by Business Segment
Following are Trimble's results by segment:
Engineering and Construction (E&C) revenue in the second quarter of fiscal 2005
was $141.1 million, up approximately 20 percent compared to revenue of $117.2
million in the second quarter of fiscal 2004. Demand for both the Trimble(R) S6
Total Station for survey and for construction products remained strong.
Operating margins for E&C were 26.3 percent, up from 19.5 percent in the second
quarter of 2004.
<page>
In addition, Trimble's unconsolidated joint venture with Caterpillar had strong
double-digit annual growth.
Trimble Field Solutions (TFS) revenue in the second quarter was $32.2 million,
up approximately 4 percent compared to the second quarter of 2004. Operating
margins were 25.0 percent, compared to 29.3 percent in the second quarter of
2004. Operating margins were impacted by new product introductions, as well as
increased marketing efforts.
Component Technologies (CT) revenue in the second quarter was $14.8 million,
down from $18.6 million in the same period of 2004. As the company guided on its
last earnings conference call, this softness was expected and can be attributed
to reduced sales of its in-vehicle navigation products, as well as variable
demand in its timing products. CT operating margins were at 19.0 percent in the
second quarter of 2005, compared to 21.8 percent in the second quarter of 2004.
Trimble Mobile Solutions (TMS) revenue for the second quarter was $6.4 million,
up 23 percent from revenue of $5.2 million in the second quarter of 2004.
Operating losses were $1.9 million, compared to losses of $1.8 million in the
second quarter of fiscal 2004. The second quarter's operating loss was mainly
due to the write off of excess and obsolete inventory, of approximately $1.1
million dollars. TMS subscriber growth more than tripled compared to the second
quarter of 2004. The company expects this segment to reach profitability by the
end of the current fiscal year.
Portfolio Technologies revenue was $9.7 million, up 29 percent from revenue of
$7.5 million in the second quarter of fiscal 2004. Operating margins were 18
percent compared to 9.8 percent in the second quarter of 2004.
Non-GAAP Net Income and Earnings Per Share
Non-GAAP net income for the second quarter of fiscal 2005 was $24.9 million, up
approximately 44 percent compared to non-GAAP net income of $17.3 million in the
second quarter of fiscal 2004. Non-GAAP earnings per share for the second
quarter of fiscal 2005 were $0.44, up approximately 38 percent from $0.32 per
share in the second quarter of fiscal 2004.
GAAP and non-GAAP earnings per share for the second quarter of 2005 were
calculated on a diluted basis using approximately 57.1 million shares.
Forward Looking Guidance
The company expects revenue for the second half of the year to grow by 12 to 15
percent when compared to the second half of 2004. For the third quarter of
fiscal 2005, the company is guiding 10 to 13 percent revenue growth, versus the
prior year, which represents revenue of $187 to $192 million, with operating
margins between 15.6 and 16.0 percent of revenue. Non-operating expenses are
expected to be approximately $3.4 million. The Company expects to use a 34
percent effective tax rate for GAAP income tax provision. Trimble expects GAAP
<page>
earnings per share between $0.29 and $0.31 per share, using approximately 57.7
million shares outstanding. Included in the assumptions regarding our GAAP
earnings per share projections are approximately $1.0 million for amortization
of purchased intangibles, and $1.0 million for the write-off of old financing
charges related to the refinancing of a revolving loan which is expected to be
completed in the third quarter.
Non-GAAP vs. GAAP Financials
The Company provides non-GAAP financial measures called "non-GAAP net income"
and "non-GAAP EPS" to supplement its consolidated financial statements presented
in accordance with GAAP. These non-GAAP financial measures are intended to
supplement the user's overall understanding of the Company's current financial
performance and its prospects for the future. In many cases, non-GAAP financial
measures are used by analysts and investors to evaluate the Company.
The Company excluded amortization of purchased intangibles, restructuring
charges, the amortization of acquisition related inventory step-up charges, and
revaluation of minority investments because the chief executive officer excludes
these items when budgeting and evaluating the business. The Company uses a
fully-taxed rate of 35 percent for non-GAAP net income and earnings per share
because it is used by outside analysts and investors, as well as for internal
analysis, to provide comparable information for use in evaluating Trimble's
performance versus prior periods and other companies. However, these non-GAAP
financial measures are not intended to supersede or replace the Company's GAAP
results. Please see the supplemental financial statements, attached to this
press release, for a reconciliation of GAAP to non-GAAP results.
Investor Conference Call / Webcast Details
The Company will hold a conference call on Tuesday, July 26, 2005 at 1:30 p.m.
PDT to review its first quarter 2005 results. It will be broadcast live on the
Web at www.trimble.com/investors.shtml. A replay of the call will be available
for seven days beginning at 8:00 p.m., PDT. The replay number is (800) 642-1687
(U.S.), or (706) 645-9291 (international), and the passcode is 7700207.
About Trimble
Trimble is a leading innovator of Global Positioning System (GPS) technology. In
addition to providing advanced GPS components, Trimble augments GPS with other
positioning technologies as well as wireless communications and software to
create complete customer solutions. Trimble's worldwide presence and unique
capabilities position the Company for growth in emerging applications including
surveying, automobile navigation, machine guidance, asset tracking, wireless
platforms, and telecommunications infrastructure. Founded in 1978 and
headquartered in Sunnyvale, California, Trimble has more than 2,000 employees in
more than 20 countries worldwide.
Certain statements made in this press release are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. These statements include the revenue,
non-operating expenses, operating margins, effective tax rate, amortization of
purchased intangibles and earnings per share estimates for the third fiscal
quarter of 2005, as well as expectations for revenue growth for the second half
of 2005 and fiscal 2005, and the timing of expected profitability for the TMS
<page>
unit. These forward-looking statements are subject to change, and actual results
may materially differ from those set forth in this press release due to certain
risks and uncertainties. For example, recent strong demand for the Company's
products may not continue because of a decline in the overall health of the
economy and international markets, which may result in reduced capital spending.
The company's expenses could also increase as a result of the recent revaluation
of the Chinese yuan. In addition, the Company's results may be adversely
affected if its joint ventures and recent acquisitions do not achieve
anticipated results or if the Company is unable to market, manufacture and ship
new products such as the GPS Pathfinder(R) ProXH(TM) receiver. Any failure to
achieve predicted results could negatively impact the Company's revenues, gross
margin and other financial results. Whether the Company achieves its guidance
for the third fiscal quarter of 2005 will also depend on a number of other
factors, including the risks detailed from time to time in reports filed with
the SEC, including its quarterly reports on Form 10-Q and its annual report on
Form 10-K. Undue reliance should not be placed on any forward-looking statement,
contained herein. These statements reflect the Company's position as of the date
of this release. The Company expressly disclaims any undertaking to release
publicly any updates or revisions to any statements to reflect any change in the
Company's expectations or any change of events, conditions, or circumstances on
which any such statement is based.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<table>
<caption>
Three Months Ended Six Months Ended
------------------ ----------------
Jul-01, Jul-02, Jul-01, Jul-02,
2005 2004 2005 2004
---- ---- ---- ----
<s> <c> <c> <c> <c>
Revenue $ 204,225 $ 179,451 $ 399,608 $ 335,961
Cost of sales 101,818 91,132 199,394 171,882
------- ------ ------- -------
Gross margin 102,407 88,319 200,214 164,079
------- ------ ------- -------
Gross margin (%) 50.1% 49.2% 50.1% 48.8%
Operating expenses
Research and development 20,865 19,937 42,693 38,785
Sales and marketing 28,704 27,358 59,075 53,662
General and administrative 11,924 11,952 24,756 22,338
Restructuring charges - 327 278 327
Amortization of purchased intangible assets 2,177 2,075 4,475 4,059
----- ----- ----- -----
Total operating expenses 63,670 61,649 131,277 119,171
------ ------ ------- -------
Operating income 38,737 26,670 68,937 44,908
Non-operating income (expense), net
Interest expense, net (419) (878) (1,030) (1,856)
Foreign currency transaction gain / (loss), net 163 507 6 (129)
Expenses for affiliated operations, net (2,499) (2,453) (5,538) (4,052)
Other income, net 138 1,240 168 1,320
--- ----- --- -----
Total non-operating expense, net (2,617) (1,584) (6,394) (4,717)
------ ------ ------ ------
Income before taxes 36,120 25,086 62,543 40,191
Income tax provision 12,333 4,568 21,317 6,833
Net income $ 23,787 $ 20,518 $ 41,226 $ 33,358
========= ========== ========== ========
Earnings per share :
Basic $ 0.45 $ 0.40 $ 0.78 $ 0.66
Diluted $ 0.42 $ 0.38 $ 0.73 $ 0.61
Shares used in calculating earnings per share :
Basic 52,959 50,817 52,729 50,617
====== ====== ====== ======
Diluted 57,057 54,627 56,780 54,424
====== ====== ====== ======
</table>
FULLY TAXED NON-GAAP RECONCILIATION
( Dollars in thousands, except per share data)
(Unaudited)
<table>
<caption>
Three Months Ended Six Months Ended
------------------ ----------------
Jul-01, Jul-02, Jul-01, Jul-02,
2005 2004 2005 2004
---- ---- ---- ----
<s> <c> <c> <c> <c>
GAAP income before taxes $ 36,120 $ 25,086 $ 62,543 $ 40,191
Non-GAAP adjustments
Amortization of purchased intangibles 2,177 2,075 4,475 4,059
Amortization of acquisition-related inventory step-up - 290 228 475
Restructuring charges - 327 278 327
Step up costs - -
Warrants charges - -
Investment revaluation (1,243) (1,243)
------ ------
Total Non-GAAP adjustments 2,177 1,449 4,981 3,618
----- ----- ----- -----
Non-GAAP income before taxes 38,297 26,535 67,524 43,809
Income tax provision-35% 13,404 9,287 23,633 15,333
-- ------ ----- ------ ------
Non-GAAP net income $ 24,893 $ 17,248 $ 43,891 $ 28,476
======== ======== ========== ==========
Diluted Non-GAAP earnings per share $ 0.44 $ 0.32 $ 0.77 $ 0.52
======== ======== ========== ==========
Shares used in calculating diluted non-GAAP earnings per
share 57,057 54,627 56,780 54,424
====== ====== ====== ======
</table>
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<table>
<caption>
Jul-01, Dec-31,
2005 2004
Assets
<s> <c> <c>
Current assets:
Cash and cash equivalents $ 56,860 $ 71,872
Accounts receivables, net 150,592 123,938
Other receivables 2,717 4,182
Inventories, net 89,853 87,745
Deferred income taxes 21,674 21,852
Other current assets 9,747 7,878
----- -----
Total current assets 331,443 317,467
Property and equipment, net 32,290 30,991
Goodwill and other purchased intangible assets, net 271,292 273,357
Deferred income taxes 8,136 8,019
Other assets 22,426 24,144
------ ------
Total non-current assets 334,144 336,511
------- -------
Total assets $ 665,587 $ 653,978
============= ============
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ - $ 12,500
Accounts payable 41,904 43,551
Accrued compensation and benefits 31,081 31,202
Accrued liabilities 17,371 17,935
Deferred revenues 11,379 9,317
Deferred income taxes 4,501 2,521
Income taxes payable 16,797 11,951
------ ------
Total current liabilities 123,033 128,977
Non-current portion of long-term debt 661 26,496
Deferred gain on joint venture 9,304 9,179
Deferred income taxes 5,634 5,435
Other non-current liabilities 13,138 11,730
------ ------
Total liabilities 151,770 181,817
------- -------
Shareholders' equity:
Common stock 368,467 345,127
Retained earnings 123,896 82,670
Accumulated other comprehensive income 21,454 44,364
------ ------
Total shareholders' equity 513,817 472,161
------- -------
Total liabilities and shareholders' equity $ 665,587 $ 653,978
============= ============
</table>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<table>
<caption>
Three Months Ended Six Months Ended
------------------ ----------------
Jul-01, Jul-02, Jul-01, Jul-02,
2005 2004 2005 2004
---- ---- ---- ----
<s> <c> <c> <c> <c>
Cash flow from operating activities:
Net Income $ 23,787 $ 20,518 $ 41,226 $ 33,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 2,378 1,981 4,890 4,172
Amortization expense 2,209 2,115 4,548 4,150
Provision for doubtful accounts (1,066) 1,162 (678) 1,552
Amortization of debt issuance cost 122 121 244 243
Deferred income taxes 3,358 219 3,846 126
Other 2 (347) (48) (460)
Add decrease (increase) in assets:
Accounts receivables, net 5,169 (19,937) (26,986) (38,416)
Other receivables 1,253 2,514 1,709 3,212
Inventories 678 (5,646) (4,061) 915
Other current and non-current assets (2,506) (1,828) (1,452) (2,588)
Effect of foreign currency translation
adjustment 909 1,624 1,852 1,221
Add increase (decrease) in liabilities:
Accounts payable (4,118) 9,864 (1,997) 15,464
Accrued compensation and benefits 3,191 2,863 158 1,188
Accrued liabilities (465) 227 300 (1,361)
Deferred revenue 697 3,004 2,210 3,689
Deferred gain on joint venture - - 124 (151)
Income taxes payable 4,016 2,890 12,537 3,715
----- ----- ------ -----
Net cash provided by operating activities 39,614 21,344 38,422 30,029
Cash flows from investing activities:
Acquisitions, net of cash acquired (9,036) (1,659) (20,233) (10,838)
Acquisition of property and equipment (4,570) (3,524) (7,734) (6,068)
Proceeds from disposal of property and equipment - 494 - 541
Dividend received 515 - 515 -
Cost of capitalized patents (14) - (89) (26)
--- --- ---
Net cash used in investing activities
(13,105) (4,689) (27,541) (16,391)
Cash flow from financing activities:
Issuance of common stock 9,887 5,287 15,453 9,498
Collections of notes receivable 197 12 307 65
Proceeds from long-term debt and revolving credit
lines 6,000 5,000 6,000 14,000
Payments on long-term debt and revolving credit
lines (34,125) (12,162) (44,250) (26,985)
------- ------- ------- -------
Net cash used in financing activities
(18,041) (1,863) (22,490) (3,422)
Effect of exchange rate changes on cash and cash
equivalents (1,801) (336) (3,403) (975)
Net increase (decrease) in cash and cash equivalents 6,667 14,456 (15,012) 9,241
Cash and cash equivalents - beginning of period 50,193 40,201 71,872 45,416
------ ------ ------ ------
Cash and cash equivalents - end of period $ 56,860 $ 54,657 $ 56,860 $ 54,657
</table>
<table>
<caption>
Q2'04 Q4'04 Q1'05 Q2'05
Actual Actual Actual Actual
------ ------ ------ ------
<s> <c> <c> <c> <c>
Total Revenue $ 179,451 $ 162,683 $ 195,383 $ 204,225
---------- ---------- ---------- ---------
Engineering & Construction 117,236 107,766 120,198 141,096
Trimble Field Solutions 30,831 23,754 45,425 32,187
Component Technologies 18,616 15,619 14,197 14,830
Trimble Mobile Solutions 5,225 6,691 7,401 6,437
Portfolio Technologies 7,543 8,853 8,162 9,675
Gross Margin 49.2% 47.6% 50.1% 50.1%
---- ---- ---- ----
Total Segment Income $ 34,895 $ 23,998 $ 39,663 $ 47,916
---------- ---------- ---------- --------
Engineering & Construction 22,836 16,169 21,490 37,173
Trimble Field Solutions 9,026 4,221 15,577 8,044
Component Technologies 4,051 3,121 2,600 2,821
Trimble Mobile Solutions (1,754) (542) (636) (1,879)
Portfolio Technologies 736 1,029 632 1,757
Corporate and Other Charges $ (8,225) $ (8,080) $ (9,463) $ (9,179)
Non-operating expense and income taxes $ (6,152) $ 488 $ (12,761) $(14,951)
---------- ---------- ---------- --------
Net Income $ 20,518 $ 16,406 $ 17,439 $ 23,786
========== ========== ========== ========
GAAP operating margin% 14.9% 9.8% 15.5% 19.0%
Non-GAAP operating margin% 16.4% 11.3% 16.9% 20.0%
GAAP EPS $ 0.38 $ 0.29 $ 0.31 $ 0.42
Fully-taxed (35%) Non-GAAP EPS $ 0.32 $ 0.19 $ 0.34 $ 0.44
Cash & Cash Equivalents $ 54,657 $ 71,872 $ 50,193 $ 56,860
Accounts Receivables, Net $ 139,221 $ 123,199 $ 154,540 $149,098
Inventories, Net $ 69,836 $ 87,745 $ 91,309 $ 89,853
Total Debt $ 77,462 $ 38,996 $ 28,836 661
Short Term Debt 12,745 12,500 12,500 -
Long Term Debt 64,717 26,496 16,336 661
Equity $ 385,572 $ 472,161 $ 490,188 $513,817
Cash Flow from (used in) Operations $ 21,344 $ 19,130 $ (1,192) $ 39,613
Working Capital $ 155,966 $ 188,490 $ 197,372 $208,410
Capital Expenditures $ 3,524 $ 3,841 $ 3,164 $ 4,570
Cash Interest $ 777 $ 724 $ 562 $ 497
EBITDA $ 30,060 $ 18,820 $ 31,885 $ 41,126
Amortization of Intangibles 2,115 2,295 2,339 2,209
Depreciation 1,981 2,625 2,512 2,378
Days Sales Outstanding 65 63 62 60
Inventory Turns (trailing 12 months) 4.3 4.5 4.3 4.1
Current ratio 2.2 2.5 2.5 2.7
Debt to Equity 0.2 0.1 0.1 0.0
Headcount 2,155 2,160 2,231 2,308
</table>
EBITDA RECONCILIATION
(Dollars in thousands)
(Unaudited)
<table>
<caption>
Three Months Ended Six Months Ended
------------------ ----------------
Jul-01, Jul-02, Jul-01, Jul-02,
2005 2004 2005 2004
---- ---- ---- ----
<s> <c> <c> <c> <c>
GAAP net income $ 23,787 $ 20,518 $ 41,226 $ 33,358
Add back :
Interest expenses, net 419 878 1,030 1,856
Income tax 12,333 4,568 21,317 6,833
Depreciation expense 2,378 1,981 4,890 4,172
Amortization of purchased intangibles 2,209 2,115 4,548 4,150
----- ----- ----- -----
EBITDA $ 41,126 $ 30,060 $73,011 $ 50,369
======== ======== ======= ========
</table>