TRIMBLE, INC. SUNNYVALE, Calif., Feb. 8, 2017 /PRNewswire/ -- Trimble (NASDAQ: TRMB) today announced financial results for the fourth quarter and fiscal year end 2016 results.
Fourth Quarter 2016 Financial Summary
Fourth quarter 2016 revenue of $585.5 million was up 5 percent as compared to the fourth quarter of 2015. Engineering and Construction revenue was $320.2 million, up less than 1 percent. Field Solutions revenue was $83.3 million, up 5 percent. Mobile Solutions revenue was $146.8 million, up 11 percent. Advanced Devices revenue was $35.2 million, up 21 percent.
GAAP operating income was $55.3 million, up 68 percent as compared to the fourth quarter of 2015. GAAP operating margin was 9.4 percent of revenue as compared to 5.9 percent of revenue in the fourth quarter of 2015.
GAAP net income was $37.7 million, up 57 percent as compared to the fourth quarter of 2015. Diluted GAAP earnings per share were $0.15 as compared to diluted GAAP earnings per share of $0.09 in the fourth quarter of 2015.
Non-GAAP operating income of $107.2 million was up 18 percent as compared to the fourth quarter of 2015. Non-GAAP operating margin was 18.3 percent of revenue as compared to 16.3 percent of revenue in the fourth quarter of 2015.
Non-GAAP net income of $79.8 million was up 19 percent as compared to the fourth quarter of 2015. Diluted non-GAAP earnings per share were $0.31 as compared to diluted non-GAAP earnings per share of $0.27 in the fourth quarter of 2015. The GAAP tax rate for the quarter was 34 percent as compared to 16 percent in the fourth quarter of 2015, and the non-GAAP tax rate was 24 percent, unchanged from the fourth quarter of 2015.
During the fourth quarter, Trimble repurchased approximately 0.6 million shares of its common stock for $17 million.
"Both the fourth quarter and full year performances demonstrated progression," said Steve Berglund, Trimble's president and chief executive officer. "For the second half of the year, every segment reported both organic revenue growth and margin expansion. We anticipate 2017 will demonstrate continued growth and margin improvement."
Fiscal 2016 Financial Summary
Fiscal 2016 revenue of $2.4 billion was up 3 percent as compared to fiscal 2015. Engineering and Construction revenue was $1.3 billion, up 2 percent. Field Solutions revenue was $354.3 million, down slightly. Mobile Solutions revenue was $559.7 million, up 8 percent. Advanced Devices revenue was $134.6 million, up 2 percent.
GAAP operating income was $181.0 million, up 17 percent as compared to fiscal 2015. GAAP operating margin was 7.7 percent of revenue as compared to 6.7 percent of revenue in fiscal 2015.
GAAP net income was $132.4 million, up 9 percent as compared to fiscal 2015. Diluted GAAP earnings per share were $0.52 as compared to diluted GAAP earnings per share of $0.47 in fiscal 2015.
Non-GAAP operating income of $405.5 million was up 4 percent as compared to fiscal 2015. Non-GAAP operating margin was 17.2 percent of revenue as compared to 17.0 percent of revenue in fiscal 2015.
Non-GAAP net income of $302.4 million was up 4 percent as compared to fiscal 2015. Diluted non-GAAP earnings per share were $1.19 as compared to diluted non-GAAP earnings per share of $1.13 in fiscal 2015. The GAAP tax rate for the year was 25 percent as compared to 20 percent in fiscal 2015, and the non-GAAP tax rate was 24 percent, unchanged from fiscal 2015.
Operating cash flow for fiscal 2016 was $407.1 million, up 15 percent as compared to fiscal 2015. Deferred revenue for fiscal 2016 was $284.2 million, up 8 percent as compared to fiscal 2015.
During fiscal 2016, Trimble repurchased approximately 4.9 million shares of its common stock for $119 million. Approximately $130 million remains under the current share repurchase authorization.
Forward Looking Guidance
For the first quarter of 2017 Trimble expects revenue to be between $585 million and $615 million with GAAP earnings per share of $0.12 to $0.17 and non-GAAP earnings per share of $0.27 to $0.32. Non-GAAP guidance excludes the amortization of intangibles of $32 million related to previous acquisitions, anticipated acquisition costs of $3 million, the anticipated impact of stock-based compensation expense of $14 million, and $2 million in anticipated restructuring charges. GAAP and non-GAAP guidance assumes a tax rate of 24 percent. Both GAAP and non-GAAP earnings per share assume approximately 256 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on February 8 at 2:00 p.m. PT to review its fourth quarter and full year 2016 results. An accompanying slide presentation will be made available on the "Investors" section of the Trimble website, www.trimble.com, under the subheading "Events & Presentations". The call will be broadcast live on the web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international). The passcode is 61296487. The replay will also be available on the Web at the address above.
Use of Non-GAAP Financial Information
To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Further, we believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons.
The specific non-GAAP measures, which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at: http://investor.trimble.com.
About Trimble
Trimble is transforming the way the world works by delivering products and services that connect the physical and digital worlds. Core technologies in positioning, modeling, connectivity and data analytics enable customers to improve productivity, quality, safety and sustainability. From purpose built products to enterprise lifecycle solutions, Trimble software, hardware and services are transforming a broad range of industries such as agriculture, construction, geospatial and transportation and logistics. For more information about Trimble (NASDAQ:TRMB), visit: www.trimble.com.
Safe Harbor
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 expectations for future financial market and economic conditions, the potential for growth and margin expansion in 2017, the impact of acquisitions, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the first quarter of 2017, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, restructuring charges, and the anticipated number of diluted shares outstanding. 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. The Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products, obtain new customers, or integrate new acquisitions. The Company's results could be negatively impacted by weakening in the macro economic environment, foreign exchange fluctuations, or the imposition of barriers to international trade. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company's financial results will also depend on a number of other factors and 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, such as changes in economic conditions, further worsening in the geospatial market, critical part supply chain shortages, and possible write-offs of goodwill. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. 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.
FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Fourth Quarter of Fiscal Years
----------------- ------------
2016 2015 2016 2015
---- ---- ---- ----
Revenue:
Product $376.5 $365.3 $1,562.0 $1,533.5
Service 113.3 109.4 430.2 419.9
Subscription 95.7 85.0 370.0 337.0
Total revenue 585.5 559.7 2,362.2 2,290.4
----- ----- ------- -------
Cost of sales:
Product 184.8 177.1 760.8 731.1
Service 43.6 41.2 169.9 164.2
Subscription 25.6 24.5 104.9 100.3
Amortization of purchased
intangible assets 18.7 23.8 88.6 92.6
Total cost of sales 272.7 266.6 1,124.2 1,088.2
----- ----- ------- -------
Gross margin 312.8 293.1 1,238.0 1,202.2
----- ----- ------- -------
Gross margin (%) 53.4 % 52.4 % 52.4 % 52.5 %
Operating expense:
Research and
development 83.0 85.4 349.6 336.7
Sales and
marketing 94.9 92.8 377.6 374.6
General and
administrative 62.9 63.2 256.0 255.3
Restructuring
charges 1.8 2.4 11.6 11.4
Amortization of
purchased
intangible
assets 14.9 16.4 62.2 69.8
Total operating expense 257.5 260.2 1,057.0 1,047.8
----- ----- ------- -------
Operating income 55.3 32.9 181.0 154.4
Non-operating income (expense), net:
Interest expense,
net (6.1) (6.5) (25.9) (25.6)
Foreign currency
transaction gain
(loss), net (0.3) (1.0) (1.9) 0.2
Income from
equity method
investments, net 3.7 3.8 17.6 17.9
Other income
(expense), net 4.2 (0.9) 5.9 4.9
Total non-operating income
(expense), net 1.5 (4.6) (4.3) (2.6)
--- ---- ---- ----
Income before taxes 56.8 28.3 176.7 151.8
Income tax provision 19.1 4.4 44.5 31.1
Net income 37.7 23.9 132.2 120.7
Less: Net loss
attributable to
noncontrolling
interests - (0.1) (0.2) (0.4)
Net income attributable to Trimble
Inc. $37.7 $24.0 $132.4 $121.1
===== ===== ====== ======
Earnings per share attributable to Trimble Inc.
Basic $0.15 $0.10 $0.53 $0.47
-----
Diluted $0.15 $0.09 $0.52 $0.47
-------
Shares used in calculating earnings per share:
Basic 250.7 250.5 250.5 255.8
-----
Diluted 254.4 252.9 253.9 258.5
-------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
Fiscal Year End Fiscal Year End
As of 2016 2015
----- ---- ----
Assets
Current assets:
Cash and cash
equivalents $216.1 $116.0
Short term
investments 111.1 -
Accounts
receivable, net 354.8 361.9
Other receivables 35.4 14.9
Inventories, net 218.8 261.1
Other current
assets 42.5 44.5
Total current assets 978.7 798.4
Property and equipment, net 144.2 159.2
Goodwill 2,077.6 2,106.4
Other purchased intangible assets, net 333.3 487.1
Other non-current assets 140.0 129.6
----- -----
Total assets $3,673.8 $3,680.7
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt $130.3 $118.3
Accounts payable 109.8 99.8
Accrued
compensation and
benefits 97.5 98.9
Deferred revenue 246.5 234.6
Accrued warranty
expense 17.2 18.5
Other current
liabilities 86.9 90.8
Total current liabilities 688.2 660.9
Long-term debt 489.6 611.4
Non-current deferred revenue 37.7 29.6
Deferred income tax liabilities 38.8 51.7
Other non-current liabilities 113.8 106.5
Total liabilities 1,368.1 1,460.1
------- -------
Stockholders' equity:
Common stock 0.3 0.3
Additional paid-
in capital 1,348.3 1,238.0
Retained earnings 1,177.1 1,148.2
Accumulated other
comprehensive
loss (219.9) (166.8)
Total Trimble Inc. stockholders' equity 2,305.8 2,219.7
Noncontrolling interests (0.1) 0.9
----
Total stockholders' equity 2,305.7 2,220.6
------- -------
Total liabilities and
stockholders' equity $3,673.8 $3,680.7
======== ========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Fiscal Years
------------
2016 2015
---- ----
Cash flow from operating activities:
Net Income $132.2 $120.7
Adjustments to
reconcile net income
to net cash provided
by
operating
activities:
Depreciation expense 37.0 36.7
Amortization expense 150.8 162.4
Provision for doubtful accounts 3.0 1.9
Deferred income taxes 0.4 0.9
Stock-based compensation 52.6 50.1
Income from equity method
investments (17.6) (17.9)
Divestiture gain, net (3.5) (3.9)
Excess tax benefit for stock-based
compensation (6.5) (2.1)
Provision for excess and obsolete
inventories 15.8 12.3
Other non-cash items 3.3 10.0
Decrease (increase)
in assets:
Accounts receivables 1.2 0.3
Other receivables 1.4 8.5
Inventories 24.0 (2.9)
Other current and non-current assets (1.2) (7.6)
Increase (decrease)
in liabilities:
Accounts payable 10.9 (6.4)
Accrued compensation and benefits 0.6 (0.1)
Deferred revenue 26.1 28.1
Accrued warranty expense (1.1) (2.0)
Other liabilities (22.3) (34.1)
Net cash provided by operating activities 407.1 354.9
----- -----
Cash flow from investing activities:
Acquisitions of
businesses, net of
cash acquired (38.8) (156.3)
Acquisitions of
property and
equipment (26.0) (43.9)
Purchases of equity
method investments (1.5) (5.5)
Acquisitions of
intangible assets (0.3) (0.1)
Purchases of
available-for-sale
investments (113.3) -
Proceeds from
maturities of
available-for-sale
investments 2.4 -
Net proceeds from
sales of businesses 14.4 12.1
Dividends received
from equity method
investments 17.6 20.0
Other 1.1 1.3
Net cash used in investing activities (144.4) (172.4)
------ ------
Cash flow from financing activities:
Issuance of common
stock, net of tax
withholdings 67.5 29.7
Repurchases and
retirement of common
stock (119.5) (234.4)
Excess tax benefit
for stock-based
compensation 6.5 2.1
Proceeds from debt
and revolving credit
lines 355.0 555.0
Payments on debt and
revolving credit
lines (465.3) (555.2)
Net cash used in financing activities (155.8) (202.8)
------ ------
Effect of exchange rate changes on cash and cash
equivalents (6.8) (11.7)
---- -----
Net increase (decrease) in cash and cash equivalents 100.1 (32.0)
Cash and cash equivalents - beginning of period 116.0 148.0
----- -----
Cash and cash equivalents - end of period $216.1 $116.0
====== ======
REPORTING SEGMENTS
(Dollars in millions)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
FOURTH QUARTER OF FISCAL 2016 :
Revenue $320.2 $83.3 $146.8 $35.2
Operating
income before
corporate
allocations $55.5 $23.7 $28.7 $15.3
Operating
margin (%
of
segment
external
net
revenue) 17.3 % 28.5 % 19.6 % 43.5 %
FOURTH QUARTER OF FISCAL 2015 :
Revenue $319.1 $79.4 $132.2 $29.0
Operating
income before
corporate
allocations $52.5 $23.6 $23.1 $9.8
Operating
margin (%
of
segment
external
net
revenue) 16.5 % 29.7 % 17.5 % 33.8 %
FISCAL YEAR 2016 :
Revenue $1,313.6 $354.3 $559.7 $134.6
Operating
income before
corporate
allocations $230.5 $105.2 $88.9 $51.4
Operating
margin (%
of
segment
external
net
revenue) 17.5 % 29.7 % 15.9 % 38.2 %
FISCAL YEAR 2015 :
Revenue $1,283.3 $355.3 $520.3 $131.5
Operating
income before
corporate
allocations $218.8 $108.6 $85.6 $46.9
Operating
margin (%
of
segment
external
net
revenue) 17.0 % 30.6 % 16.5 % 35.7 %
GAAP TO NON-GAAP RECONCILIATION
(Dollars in millions, except per share data)
(Unaudited)
Fourth Quarter of Fiscal Years
----------------- ------------
2016 2015 2016 2015
---- ---- ---- ----
Dollar % of Dollar % of Dollar % of Dollar % of
Amount Revenue Amount Revenue Amount Revenue Amount Revenue
------ ------- ------ ------- ------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $312.8 53.4 % $293.1 52.4 % $1,238.0 52.4 % $1,202.2 52.5 %
Restructuring charges ( A ) 0.5 0.1 % 0.6 0.1 % 1.7 0.1 % 1.4 0.1 %
Amortization of purchased intangible
assets ( B ) 18.7 3.2 % 23.8 4.2 % 88.6 3.8 % 92.6 4.0 %
Stock-based compensation ( C ) 1.0 0.2 % 1.0 0.2 % 3.8 0.1 % 3.9 0.2 %
--- ---
Non-GAAP gross
margin: $333.0 56.9 % $318.5 56.9 % $1,332.1 56.4 % $1,300.1 56.8 %
------ ------ -------- --------
OPERATING EXPENSES:
GAAP operating
expenses: $257.5 44.0 % $260.2 46.5 % $1,057.0 44.7 % $1,047.8 45.7 %
Restructuring charges ( A ) (1.8) (0.3)% (2.4) (0.4)% (11.6) (0.5)% (11.4) (0.5)%
Amortization of purchased intangible
assets ( B ) (14.9) (2.5)% (16.4) (2.9)% (62.2) (2.6)% (69.8) (3.1)%
Stock-based compensation ( C ) (11.6) (2.0)% (11.8) (2.1)% (48.8) (2.1)% (46.2) (2.0)%
Acquisition / divestiture items ( D ) (3.4) (0.6)% (1.9) (0.4)% (6.8) (0.3)% (9.9) (0.4)%
Executive transition costs ( E ) - -% - -% (1.0) -% - -%
Litigation ( F ) - -% (0.3) (0.1)% - -% (0.3) -%
--- ----- --- ---
Non-GAAP
operating
expenses: $225.8 38.6 % $227.4 40.6 % $926.6 39.2 % $910.2 39.7 %
------ ------ ------ ------
OPERATING INCOME:
GAAP operating
income: $55.3 9.4 % $32.9 5.9 % $181.0 7.7 % $154.4 6.7 %
Restructuring charges ( A ) 2.3 0.4 % 3.0 0.5 % 13.3 0.6 % 12.8 0.6 %
Amortization of purchased intangible
assets ( B ) 33.6 5.7 % 40.2 7.2 % 150.8 6.4 % 162.4 7.1 %
Stock-based compensation ( C ) 12.6 2.2 % 12.8 2.3 % 52.6 2.2 % 50.1 2.2 %
Acquisition / divestiture items ( D ) 3.4 0.6 % 1.9 0.3 % 6.8 0.3 % 9.9 0.4 %
Executive transition costs ( E ) - -% - -% 1.0 -% - -%
Litigation ( F ) - -% 0.3 0.1 % - -% 0.3 -%
--- --- ---- --- --- ---
Non-GAAP
operating income: $107.2 18.3 % $91.1 16.3 % $405.5 17.2 % $389.9 17.0 %
------ ----- ------ ------
NON-OPERATING INCOME (EXPENSE), NET:
GAAP non-
operating income
(expense), net: $1.5 $(4.6) $(4.3) $(2.6)
Acquisition / divestiture items ( D ) (3.6) 1.9 (3.5) (3.9)
---- ----
Non-GAAP non-
operating income
(expense), net: $(2.1) $(2.7) $(7.8) $(6.5)
GAAP and GAAP and GAAP and GAAP and
Non-GAAP Non-GAAP Non-GAAP Non-GAAP
Tax Rate % ( I ) Tax Rate % ( I ) Tax Rate % ( I ) Tax Rate % ( I )
--------- --------- --------- ---------
INCOME TAX PROVISION:
GAAP income tax
provision: $19.1 34 % $4.4 16 % $44.5 25 % $31.1 20 %
Non-GAAP items tax effected ( G ) 16.4 9.3 55.3 47.1
Difference in GAAP and Non-GAAP tax
rate ( H ) (10.2) 7.5 (4.3) 13.8
Non-GAAP income
tax provision: $25.3 24 % $21.2 24 % $95.5 24 % $92.0 24 %
----- ----- ----- -----
NET INCOME:
GAAP net income
attributable to
Trimble Inc. $37.7 $24.0 $132.4 $121.1
Restructuring charges ( A ) 2.3 3.0 13.3 12.8
Amortization of purchased intangible
assets ( B ) 33.6 40.2 150.8 162.4
Stock-based compensation ( C ) 12.6 12.8 52.6 50.1
Acquisition / divestiture items ( D ) (0.2) 3.8 3.3 6.0
Executive transition costs ( E ) - - 1.0 -
Litigation ( F ) - 0.3 - 0.3
Non-GAAP tax adjustments ( G ) & ( H ) (6.2) (16.8) (51.0) (60.9)
Non-GAAP net
income
attributable to
Trimble Inc. $79.8 $67.3 $302.4 $291.8
DILUTED NET INCOME PER SHARE:
GAAP diluted net
income per share
attributable to
Trimble Inc. $0.15 $0.09 $0.52 $0.47
Restructuring charges ( A ) 0.01 0.01 0.06 0.05
Amortization of purchased intangible
assets ( B ) 0.13 0.16 0.59 0.63
Stock-based compensation ( C ) 0.04 0.05 0.20 0.19
Acquisition / divestiture items ( D ) - 0.02 0.01 0.02
Executive transition costs ( E ) - - - -
Litigation ( F ) - - - -
Non-GAAP tax adjustments ( G ) & ( H ) (0.02) (0.06) (0.19) (0.23)
Non-GAAP diluted
net income per
share
attributable to
Trimble Inc. $0.31 $0.27 $1.19 $1.13
FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The non-GAAP financial measures
included in the previous table as well as detailed explanations to the adjustments to comparable GAAP measures, are set forth below:
Non-GAAP gross margin
We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions and
manufacturing costs influence our business. Non-GAAP gross margin excludes restructuring charges, amortization of purchased intangible assets and
stock-based compensation from GAAP gross margin. We believe that these exclusions offer investors additional information that may be useful to view
trends in our gross margin performance.
Non-GAAP operating expenses
We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating expenses exclude
restructuring charges, amortization of purchased intangible assets, stock-based compensation, acquisition/divestiture costs associated with external
and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, and integration costs, executive transition
costs and litigation expenses from GAAP operating expenses. We believe that these exclusions offer investors supplemental information to facilitate
comparison of our operating expenses to our prior results.
Non-GAAP operating income
We believe our investors benefit by understanding our non-GAAP operating income trends which are driven by revenue, gross margin, and spending. Non-GAAP
operating income excludes restructuring charges, amortization of purchased intangible assets, stock-based compensation, acquisition/divestiture costs
associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, and integration
costs, executive transition costs and litigation expenses. We believe that these exclusions offer an alternative means for our investors to evaluate
current operating performance compared to results of other periods.
Non-GAAP non-operating income (expense), net
We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income (expense), net excludes acquisition and
divestiture gains/losses associated with unusual acquisition related items such as intangible asset impairment charges and gains or losses related to
the acquisition or sale of certain businesses and investments. We believe that these exclusions provide investors with a supplemental view of our ongoing
financial results.
Non-GAAP income tax provision
We believe that providing investors with the non-GAAP income tax provision is beneficial because it provides for consistent treatment of the excluded
items in our non-GAAP presentation.
Non-GAAP net income
This measure provides a supplemental view of net income trends which are driven by non-GAAP income before taxes and our non-GAAP tax rate. Non-GAAP net
income excludes restructuring charges, amortization of purchased intangible assets, stock-based compensation, acquisition/divestiture costs, executive
transition costs, litigation expenses and non-GAAP tax adjustments from GAAP net income. We believe our investors benefit from understanding these
exclusions and from an alternative view of our net income performance as compared to our past net income performance.
Non-GAAP diluted net income per share
We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-
GAAP operating performance by ownership in the company. Non-GAAP diluted net income per share excludes restructuring charges, amortization of purchased
intangible assets, stock-based compensation, acquisition/divestiture costs, executive transition costs, litigation expenses and non-GAAP tax
adjustments from GAAP diluted net income per share. We believe that these exclusions offer investors a useful view of our diluted net income per share as
compared to our past diluted net income per share.
These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors.
We believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary
course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial
results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period
comparisons. Accordingly, management excludes from non-GAAP those items relating to restructuring charges, amortization of purchased intangible assets,
stock-based compensation, acquisition/divestiture costs, executive transition costs, litigation expenses and non-GAAP tax adjustments. For detailed
explanations of the adjustments made to comparable GAAP measures, see items (A) - ( I ) below.
( A ) Restructuring charges. Included in our GAAP presentation
of cost of sales and operating expenses, restructuring
charges recorded are primarily for employee compensation
resulting from reductions in employee headcount in
connection with our company restructurings. We exclude
restructuring charges from our non-GAAP measures because
we believe they do not reflect expected future operating
expenses, they are not indicative of our core operating
performance, and they are not meaningful in comparisons
to our past operating performance. We have incurred
restructuring expense in each of the periods presented.
However the amount incurred can vary significantly based
on whether a restructuring has occurred in the period and
the timing of headcount reductions.
( B ) Amortization of purchased intangible assets.Included in
our GAAP presentation of gross margin and operating
expenses is amortization of purchased intangible assets.
U.S. GAAP accounting requires that intangible assets are
recorded at fair value and amortized over their useful
lives. Consequently, the timing and size of our
acquisitions will cause our operating results to vary
from period to period, making a comparison to past
performance difficult for investors. This accounting
treatment may cause differences when comparing our
results to companies that grow internally because the
fair value assigned to the intangible assets acquired
through acquisition may significantly exceed the
equivalent expenses that a company may incur for similar
efforts when performed internally. Furthermore, the
useful life that we use to amortize our intangible assets
over may be substantially different from the time period
that an internal growth company incurs and recognizes
such expenses. We believe that by excluding the
amortization of purchased intangible assets, which
primarily represents technology and/or customer
relationships already developed, it provides an
alternative way for investors to compare our operations
pre-acquisition to those post-acquisitions and to those
of our competitors that have pursued internal growth
strategies. However, we note that companies that grow
internally will incur costs to develop intangible assets
that will be expensed in the period incurred, which may
make a direct comparison more difficult.
( C ) Stock-based compensation.Included in our GAAP
presentation of cost of sales and operating expenses,
stock-based compensation consists of expenses for
employee stock options and awards and purchase rights
under our employee stock purchase plan. We exclude stock-
based compensation expense from our non-GAAP measures
because some investors may view it as not reflective of
our core operating performance as it is a non-cash
expense. For the fourth quarter and fiscal years 2016
and 2015, stock-based compensation was allocated as
follows:
Fourth Quarter of Fiscal Years
----------------- ------------
(Dollars in millions) 2016 2015 2016 2015
---- ---- ---- ----
Cost of sales $1.0 $1.0 $3.8 $3.9
Research and development $2.2 2.3 $9.1 8.7
Sales and Marketing $2.0 2.4 $8.3 9.1
General and administrative $7.4 7.1 $31.4 28.4
---- -----
$12.6 $12.8 $52.6 $50.1
----- ----- ----- -----
( D ) Acquisition / divestiture items. Included in our GAAP
presentation of operating expenses, acquisition costs
consist of external and incremental costs resulting
directly from merger and acquisition and strategic
investment activities such as legal, due diligence, and
integration costs, as well as adjustments to the fair
value of earn-out liabilities. Included in our GAAP
presentation of non-operating income (expense), net,
acquisition / divestiture items includes unusual
acquisition, investment, and/or divestiture gains/
losses. Although we do numerous acquisitions, the costs
that have been excluded from the non-GAAP measures are
costs specific to particular acquisitions. These are one-
time costs that vary significantly in amount and timing
and are not indicative of our core operating performance.
( E ) Executive transition costs. Included in our GAAP
presentation of operating expenses are amounts paid to
the Company's former CFO upon his departure under the
terms of his executive severance agreement. We excluded
these payments from our non-GAAP measures because they
represent non-recurring expenses and are not indicative
of our ongoing operating expenses. We further believe
that excluding the executive transition costs from our
non-GAAP results is useful to investors in that it
allows for period-over-period comparability.
( F ) Litigation. These amounts represents costs incurred to
settle litigation, generally as a result of an
arbitration agreement. We have excluded these costs from
our non-GAAP measures because they are non-recurring
expenses that are not indicative of our ongoing operating
results. We further believe that excluding these items
from our non-GAAP results is useful to investors in that
it allows for period-over-period comparability.
( G ) Non-GAAP items tax effected. This amount adjusts the
provision for income taxes to reflect the effect of the
non-GAAP items ( A ) - ( F ) on non-GAAP net income.
We believe this information is useful to investors
because it provides for consistent treatment of the
excluded items in this non-GAAP presentation.
( H ) Difference in GAAP and Non-GAAP tax rate. This amount
represents the difference between the GAAP and Non-GAAP
tax rates applied to the Non-GAAP operating income plus
the Non-GAAP non-operating income (expense), net.
( I ) GAAP and non-GAAP tax rate %. These percentages are
defined as GAAP income tax provision as a percentage of
GAAP income before taxes and non-GAAP income tax
provision as a percentage of non-GAAP income before
taxes. We believe that investors benefit from a
presentation of non-GAAP tax rate percentage as a way of
facilitating a comparison to non-GAAP tax rates in prior
periods.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/trimble-reports-fourth-quarter-and-full-year-2016-results-300404499.html
SOURCE Trimble
