Trimble Reports Third Quarter 2018 Results

SUNNYVALE, Calif., Nov. 1, 2018 /PRNewswire/ -- Trimble Inc. (NASDAQ: TRMB) today announced financial results for the third quarter of 2018.

Third Quarter 2018 Financial Summary

Third quarter 2018 GAAP revenue of $795.2 million was up 18 percent as compared to the third quarter of 2017. Third quarter 2018 non-GAAP revenue of $804.7 million was up 19 percent as compared to the third quarter of 2017.

Buildings and Infrastructure revenue was $295.8 million, up 36 percent. Geospatial revenue was $185.4 million, up 9 percent. Resources and Utilities revenue was $133.2 million, up 13 percent. Transportation revenue was $190.3 million, up 11 percent. Segment revenues reflect the results of Trimble's reportable segments under its management reporting system and are non-GAAP measures.

GAAP operating income was $77.4 million, up 17 percent as compared to the third quarter of 2017. GAAP operating margin was 9.7 percent of revenue as compared to 9.8 percent of revenue in the third quarter of 2017.

GAAP net income was $73.7 million, up 29 percent as compared to the third quarter of 2017. Diluted GAAP earnings per share were $0.29 as compared to diluted GAAP earnings per share of $0.22 in the third quarter of 2017.

Non-GAAP operating income of $167.0 million was up 32 percent as compared to the third quarter of 2017. Non-GAAP operating margin was 20.8 percent of revenue as compared to 18.7 percent of revenue in the third quarter of 2017.

Non-GAAP net income of $125.2 million was up 23 percent as compared to the third quarter of 2017. Diluted non-GAAP earnings per share were $0.49 as compared to diluted non-GAAP earnings per share of $0.39 in the third quarter of 2017.

The GAAP tax rate for the quarter resulted in a benefit of 15 percent as compared to an expense of 20 percent in the third quarter of 2017, and the non-GAAP tax rate was 19 percent as compared to 23 percent in the third quarter of 2017.

Operating cash flow for the first three quarters of 2018 was $384.8 million, up 19 percent as compared to the first three quarters of 2017. Deferred revenue for the third quarter of 2018 was $364.3 million, up 28 percent as compared to the third quarter of 2017.

"Third quarter revenue was consistent with expectations and income exceeded expectations, with software revenue and gross margin performance providing much of the momentum," said Steven W. Berglund, Trimble's president and chief executive officer. "Although trade, currency and geopolitical considerations have introduced incremental uncertainties, we anticipate continuing improvement in both revenue and profitability in 2019."

Forward Looking Guidance

For the fourth quarter of 2018, Trimble expects to report GAAP revenue between $784 million and $814 million and GAAP earnings per share of $0.22 to $0.26, and non-GAAP revenue between $791 million and $821 million and non-GAAP earnings per share of $0.44 to $0.48. Non-GAAP guidance excludes purchase accounting adjustments to acquired deferred revenue of $7 million, purchase accounting adjustments for amortization of commission expense of $2 million, the amortization of intangibles of $46 million, anticipated acquisition costs of $2 million, the anticipated impact of stock-based compensation expense of $22 million, and $2 million in anticipated restructuring charges. GAAP guidance assumes a tax rate of 6 percent and non-GAAP guidance assumes a tax rate of 19 percent. Both GAAP and non-GAAP earnings per share assume approximately 255 million shares outstanding.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on November 1 at 2:00 p.m. PT to review its third quarter 2018 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 7378187. The replay will also be available on the web at the address above.

Segment Data

Segment data reflects the results of Trimble's reportable segments under its management reporting system. Segment revenue and operating income are consistent with the respective non-GAAP measures discussed below and in the attached supplemental schedules.

Use of Non-GAAP Financial Information

In addition to financial information prepared in accordance with GAAP, this press release also contains certain non-GAAP financial measures based upon management's view of performance, including:

    --  Non-GAAP revenue
    --  Non-GAAP operating income
    --  Non-GAAP operating margin
    --  Non-GAAP net income
    --  Diluted non-GAAP earnings per share
    --  Non-GAAP tax rate

Beginning in the third quarter of 2018, the Company is reporting a non-GAAP revenue measure. Trimble believes this measure helps investors understand the performance of the business as non-GAAP revenue excludes the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Management believes that excluding fair value purchase accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company's operations and facilitates analysis of revenue growth and business trends. Prior periods have also been restated to reflect this non-GAAP measure.

Investors are encouraged to review the specific non-GAAP measures, which Trimble uses 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 the financial condition and results of operations and why management chose to exclude selected items, which can be found at the end of this press release. Additional financial information about Trimble's use of non-GAAP results can be found on the investor relations page of Trimble's website 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 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 ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the fourth quarter of 2018, and fiscal 2018, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, restructuring charges, the anticipated number of diluted shares outstanding, the Company's long-term growth targets and operating margins. These forward-looking statements are subject to change, and actual results may materially differ due to certain risks and uncertainties. Trimble's expected tax rate and current expected income are based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 ("TCJA"), and may be affected by evolving interpretations of TCJA, the jurisdictions in which profits are determined to be earned and taxed, changes in the estimates of credits, benefits and deductions, the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties, and the ability to realize deferred tax assets. The Company's results may be adversely affected if the company is unable to market, manufacture and ship new products, obtain new customers, or effectively integrate new acquisitions, including the recent acquisition of Viewpoint. The Company's results would also be negatively impacted by adverse geopolitical developments, weakening in the macro environment, foreign exchange fluctuations, critical part supply chain shortages, and 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. 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.

FTRMB


                                                                      
          
       CONDENSED CONSOLIDATED STATEMENTS OF INCOME


                                                                             
     (In millions, except per share data)


                                                                                   
            (Unaudited)




                                                         
     Third Quarter of                   First Three Quarters of



                                                                        2018                                       2017            2018                     2017


                                                                                          
            * As Adjusted                        
     * As Adjusted






     Revenue:


                     
            Product                                 $499.7                                     $449.4        $1,528.5                 $1,304.4


                     
            Service                                  156.5                                      124.3           421.4                    342.8


                     
            Subscription                             139.0                                      102.5           373.0                    299.5




     Total revenue                                                  795.2                                      676.2         2,322.9                  1,946.7






     Cost of sales:


                     
            Product                                  237.5                                      226.8           723.1                    642.6


                     
            Service                                   64.6                                       46.9           183.8                    141.1


                     
            Subscription                              38.0                                       28.3            95.0                     82.4


                              Amortization of purchased
                               intangible assets                        28.2                                       23.0            75.2                     62.5



     Total cost of sales                                            368.3                                      325.0         1,077.1                    928.6






     Gross margin                                                   426.9                                      351.2         1,245.8                  1,018.1




     Gross margin (%)                                              53.7 %                                    51.9 %         53.6 %                  52.3 %





     Operating expense:


                              Research and
                               development                             114.1                                       92.6           333.5                    272.1


                              Sales and
                               marketing                               119.7                                      100.0           354.6                    294.5


                              General and
                               administrative                           91.6                                       74.0           262.6                    218.4


                              Restructuring
                               charges                                   2.5                                        1.3             6.3                      6.5


                              Amortization of
                               purchased
                               intangible
                               assets                                   21.6                                       17.0            57.7                     46.6


                     
            Total operating expense                  349.5                                      284.9         1,014.7                    838.1








     Operating income                                                77.4                                       66.3           231.1                    180.0





     Non-operating income (expense), net:


                              Interest
                               expense, net                           (22.7)                                     (6.3)         (50.8)                  (18.4)


                              Foreign currency
                               transaction
                               gain (loss),
                               net                                     (0.1)                                       1.6             0.6                      3.0


                              Income from
                               equity method
                               investments,
                               net                                       8.8                                        8.7            23.2                     22.8


                              Other income,
                               net                                       0.7                                        1.6             5.9                     12.2


                              Total non-operating income
                               (expense), net                         (13.3)                                       5.6          (21.1)                    19.6






     Income before taxes                                             64.1                                       71.9           210.0                    199.6




      Income tax provision (benefit)                                 (9.6)                                      14.7            13.5                     45.3




     Net income                                                      73.7                                       57.2           196.5                    154.3


                              Net gain
                               attributable to
                               noncontrolling
                               interests                                                                                          0.2                        -



      Net income attributable to Trimble
       Inc.                                                          $73.7                                      $57.2          $196.3                   $154.3



                                                                                                                                                        ===




     Earnings per share attributable to Trimble Inc.:


                     
            Basic                                    $0.29                                      $0.23           $0.79                    $0.61



                     
            Diluted                                  $0.29                                      $0.22           $0.78                    $0.60






     Shares used in calculating earnings per share:


                     
            Basic                                    250.5                                      252.6           249.6                    252.5



                     
            Diluted                                  253.6                                      257.9           253.0                    257.0

               *  Prior-period information has
                been restated for the adoption of
                ASC 606, Revenue from Contracts
                with Customers.


                             
              
                CONDENSED CONSOLIDATED BALANCE SHEETS


                                                
              (In millions)


                                                 
              (Unaudited)






                                                                             Third Quarter of     Fiscal Year End


                                                                                      2018                 2017



       As of                                                                                 
     * As Adjusted

    ---


       
                Assets





       Current assets:


                           Cash and cash
                            equivalents                                                $205.4               $358.5


                           Short-term
                            investments                                                                     178.9


                           Accounts
                            receivable, net                                             476.0                427.7


                           Other
                            receivables                                                  27.2                 42.8


                           Inventories                                                  286.3                264.6


                           Other current
                            assets                                                       66.3                 39.2



                
              Total current assets                                       1,061.2              1,311.7





       Property and equipment, net                                                  206.1                174.0



       Goodwill                                                                   3,548.6              2,287.1


        Other purchased intangible assets, net                                       780.0                364.8



       Deferred costs, non-current                                                   37.2                 35.0



       Other non-current assets                                                     149.1                143.7





                
              Total assets                                              $5,782.2             $4,316.3





                     Liabilities and Stockholders' Equity





       Current liabilities:


                           Short-term debt                                             $226.1               $128.4


                           Accounts payable                                             155.7                146.0


                           Accrued
                            compensation
                            and benefits                                                137.5                143.9


                           Deferred revenue                                             326.1                237.6


                           Accrued warranty
                            expense                                                      16.4                 18.3


                           Other current
                            liabilities                                                 117.5                 99.2



                           Total current liabilities                                    979.3                773.4





       Long-term debt                                                             1,786.6                785.5



       Non-current deferred revenue                                                  38.2                 39.0



       Deferred income tax liabilities                                               88.5                 47.8



       Income taxes payable                                                          72.4                 94.1



       Other non-current liabilities                                                168.6                162.0


                
              Total liabilities                                          3,133.6              1,901.8








       Stockholders' equity:


                           Common stock                                                   0.3                  0.2


                           Additional paid-
                            in-capital                                                1,574.8              1,461.1


                           Retained
                            earnings                                                  1,227.2              1,084.6


                           Accumulated
                            other
                            comprehensive
                            loss                                                      (153.9)             (131.4)



        Total Trimble Inc. stockholders' equity                                    2,648.4              2,414.5



       Noncontrolling interests                                                       0.2



                           Total stockholders' equity                                 2,648.6              2,414.5





                           Total liabilities and
                            stockholders' equity                                     $5,782.2             $4,316.3

               *  Prior-period information has
                been restated for the adoption of
                ASC 606, Revenue from Contracts
                with Customers.


                                               
              
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                     
              (In millions)


                                                                      
              (Unaudited)


                                                                                                                                                       First Three Quarters
                                                                                                                                                                 of



                                                                                                                                                  2018                                  2017



                                                                                                                                                       
              * As Adjusted






     Cash flow from operating activities:


                                                            Net income                                                                        $196.5                                $154.3




                                                            Adjustments to
                                                             reconcile net
                                                             income to net cash
                                                             provided by


                                                            operating
                                                             activities:


                                                                                   
              Depreciation expense                                26.2                                  26.4


                                                                                   
              Amortization expense                               132.9                                 109.1


                                                                                   
              Stock-based compensation                            53.1                                  45.0


                                                                                              Income from equity method
                                                                                               investments                                       (0.2)                                (9.9)


                                                                                   
              Other non-cash items                                 6.9                                 (6.3)




                                                            Decrease (increase)
                                                             in assets:


                                                                                   
              Accounts receivable, net                          (15.8)                               (33.9)


                                                                                   
              Inventories                                       (29.0)                               (18.3)


                                                                                              Other current and non-current
                                                                                               assets                                           (15.7)                               (16.7)




                                                            Increase (decrease)
                                                             in liabilities:


                                                                                   
              Accounts payable                                     9.2                                  27.7


                                                                                              Accrued compensation and benefits                 (13.8)                                  7.7


                                                                                   
              Deferred revenue                                    53.8                                  27.7


                                                                                   
              Other liabilities                                 (19.3)                                  9.8



     Net cash provided by operating activities                                                                                              384.8                                 322.6






     Cash flow from investing activities:


                                                            Acquisitions of
                                                             businesses, net of
                                                             cash acquired                                                      (1,741.4)                                (279.0)


                                                            Acquisitions of
                                                             property and
                                                             equipment                                                             (53.1)                                (26.4)


                                                            Purchases of short-
                                                             term investments                                                      (24.0)                               (220.0)


                                                            Proceeds from
                                                             maturities of
                                                             short-term
                                                             investments                                                              6.2                                   84.6


                                                            Proceeds from sales
                                                             of short-term
                                                             investments                                                            196.8                                   92.1


                                                   
            Other                                                                     2.7                                   20.5



     Net cash used in investing activities                                                                                              (1,612.8)                              (328.2)






     Cash flow from financing activities:


                                                            Issuance of common
                                                             stock, net of tax
                                                             withholdings                                                            52.3                                   73.0


                                                            Repurchases of
                                                             common stock                                                          (53.0)                               (111.5)


                                                            Proceeds from debt
                                                             and revolving
                                                             credit lines                                                         2,592.0                                  517.0


                                                            Payments on debt and
                                                             revolving credit
                                                             lines                                                              (1,499.4)                                (444.3)


                                                   
            Other                                                                   (8.9)                                 (7.3)




     Net cash provided by financing activities                                                                                            1,083.0                                  26.9





      Effect of exchange rate changes on cash and cash
       equivalents                                                                                                                           (8.1)                                 17.6





      Net increase (decrease) in cash and cash equivalents                                                                                 (153.1)                                 38.9


      Cash and cash equivalents -beginning of period                                                                                         358.5                                 216.1






     Cash and cash equivalents - end of period                           $205.4                                                    $255.0

               *  Prior period information has
                been restated for the adoption
                of ASC 606, Revenue from
                Contracts with Customers, and
                ASU No. 2016-15, Statement of
                Cash Flows: Classification of
                Certain Cash Receipts and Cash
                Payments.


                                                                
            
               REPORTING SEGMENTS


                                                             
          
              GAAP TO NON-GAAP RECONCILIATION


                                                                    
            (Dollars in millions)


                                                                        
             (Unaudited)






                                                                     
            Reporting Segments



                                                                     
            Buildings                                                  
       Resources


                                                                       
             and                                                       
        and


                                                                  
            Infrastructure                      
     Geospatial              
       Utilities                 
     Transportation






     
     THIRD QUARTER OF FISCAL 2018 :


                     Revenue                                                           $286.6                            $185.4                       $133.0                            $190.2


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    9.2                                                                     0.2                           0.1



                     Non-GAAP Revenue                    $295.8                                      $185.4                       $133.2                        $190.3





                     Operating income
                      before corporate
                      allocations                         $60.9                                       $47.4                        $38.3                         $37.0


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    9.2                                                                     0.2                           0.1


                     Amortization
                      of acquired
                      capitalized
                      commissions                  ( G )  (1.8)



                     Non-GAAP
                      Operating income
                      before corporate
                      allocations                         $68.3                                       $47.4                        $38.5                         $37.1





                    Operating
                      margin (% of
                      segment
                      external net
                      revenue)                           21.2 %                                     25.6 %                      28.8 %                       19.5 %


                    Non-GAAP
                      Operating
                      margin (% of
                      segment Non-
                      GAAP
                      external net
                      revenue)                           23.1 %                                     25.6 %                      28.9 %                       19.5 %




        THIRD QUARTER OF FISCAL 2017 as adjusted :


                     Revenue                                                           $217.9                            $169.4                       $117.2                            $171.7


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    0.1                                                                     0.4                           0.2



                     Non-GAAP Revenue                    $218.0                                      $169.4                       $117.6                        $171.9





                     Operating income
                      before corporate
                      allocations                         $55.1                                       $36.3                        $27.2                         $30.3


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    0.1                                                                     0.4                           0.2


                     Amortization
                      of acquired
                      capitalized
                      commissions                  ( G )  (0.2)



                     Non-GAAP
                      Operating income
                      before corporate
                      allocations                         $55.0                                       $36.3                        $27.6                         $30.5





                    Operating
                      margin (% of
                      segment
                      external net
                      revenue)                           25.3 %                                     21.4 %                      23.2 %                       17.6 %


                    Non-GAAP
                      Operating
                      margin (% of
                      segment Non-
                      GAAP
                      external net
                      revenue)                           25.2 %                                     21.4 %                      23.5 %                       17.7 %





     
     FIRST THREE QUARTERS OF 2018 :


                     Revenue                                                           $785.6                            $544.3                       $437.2                            $555.8


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )   15.1                                                                     0.8                           0.3



                     Non-GAAP Revenue                    $800.7                                      $544.3                       $438.0                        $556.1





                     Operating income
                      before corporate
                      allocations                        $171.8                                      $126.3                       $132.3                         $98.5


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )   15.1                                                                     0.8                           0.3


                     Amortization
                      of acquired
                      capitalized
                      commissions                  ( G )  (2.7)                                                                  (0.2)



                     Non-GAAP
                      Operating income
                      before corporate
                      allocations                        $184.2                                      $126.3                       $132.9                         $98.8





                    Operating
                      margin (% of
                      segment
                      external net
                      revenue)                           21.9 %                                     23.2 %                      30.3 %                       17.7 %


                    Non-GAAP
                      Operating
                      margin (% of
                      segment Non-
                      GAAP
                      external net
                      revenue)                           23.0 %                                     23.2 %                      30.3 %                       17.8 %




        FIRST THREE QUARTERS OF 2017 as adjusted :


                     Revenue                                                           $625.0                            $483.6                       $349.0                            $489.1


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    0.4                                                                     0.6                           0.5



                     Non-GAAP Revenue                    $625.4                                      $483.6                       $349.6                        $489.6





                     Operating income
                      before corporate
                      allocations                        $134.6                                       $94.0                       $104.8                         $79.2


                     Acquired
                      deferred
                      revenue
                      adjustment                   ( A )    0.4                                                                     0.6                           0.5


                     Amortization
                      of acquired
                      capitalized
                      commissions                  ( G )  (0.7)                                                                  (0.1)                        (0.1)



                     Non-GAAP
                      Operating income
                      before corporate
                      allocations                        $134.3                                       $94.0                       $105.3                         $79.6





                    Operating
                      margin (% of
                      segment
                      external net
                      revenue)                           21.5 %                                     19.4 %                      30.0 %                       16.2 %


                    Non-GAAP
                      Operating
                      margin (% of
                      segment Non-
                      GAAP
                      external net
                      revenue)                           21.5 %                                     19.4 %                      30.1 %                       16.3 %

               Note: Third quarter and first three
                quarters of fiscal 2017
                information has been restated for
                the adoption of ASC 606, Revenue
                from Contracts with Customers.


                                                                                                                                                             
          
                GAAP TO NON-GAAP RECONCILIATION


                                                                                                                                                             
          (Dollars in millions, except per share data)


                                                                                                                                                                         
              (Unaudited)




                                                                                                       
              Third Quarter of                             
           First Three Quarters of



                                                                                                                                     2018                           2017                                                    2018                     2017


                                                                                                                                                                                      * As Adjusted                                                                           
     * As Adjusted



                                                                                                            
              Dollar               
       % of                           
              Dollar               
       % of                
     Dollar             
       % of                          
     Dollar            
       % of


                                                                                                            
              Amount             
       Revenue                          
              Amount             
       Revenue               
     Amount           
       Revenue                         
     Amount          
       Revenue




     
     REVENUE:


                   GAAP revenue:                                                                                                   $795.2                                                      $676.2                                           $2,322.9                                               $1,946.7


                   Acquired deferred revenue
                    adjustment                                       ( A )                                                            9.5                                                         0.7                                               16.2                                                    1.5


                   Non-GAAP Revenue:                                                                                               $804.7                                                      $676.9                                           $2,339.1                                               $1,948.2






     
     GROSS MARGIN:


                   GAAP gross margin:                                                                                              $426.9             53.7 %                                   $351.2                     51.9 %                $1,245.8                53.6 %                         $1,018.1                52.3 %


                   Acquired deferred revenue
                    adjustment                                       ( A )                                                            9.5                                                         0.7                                               16.2                                                    1.5


        
              Restructuring charges                             ( B )                                                            0.1                                                         0.3                                                0.5                                                    1.3


                   Amortization of purchased
                    intangible assets                                ( C )                                                           28.2                                                        23.0                                               75.2                                                   62.5


        
              Stock-based compensation                          ( D )                                                            1.1                                                         1.1                                                3.3                                                    2.8


                   Amortization of acquisition-
                    related inventory step-up                        ( E )                                                                                                                       2.2                                                                                                      2.8


                   Acquisition /divestiture items                    ( F )                                                                                                                                                                         2.0



                   Non-GAAP gross
                    margin:                                                                                                        $465.8             57.9 %                                   $378.5                     55.9 %                $1,343.0                57.4 %                         $1,089.0                55.9 %






     
     OPERATING EXPENSES:


                   GAAP operating
                    expenses:                                                                                                      $349.5             44.0 %                                   $284.9                     42.1 %                $1,014.7                43.7 %                           $838.1                43.1 %


        
              Restructuring charges                             ( B )                                                          (2.5)                                                      (1.3)                                             (6.3)                                                 (6.5)


                   Amortization of purchased
                    intangible assets                                ( C )                                                         (21.6)                                                     (17.0)                                            (57.7)                                                (46.6)


        
              Stock-based compensation                          ( D )                                                         (17.7)                                                     (15.0)                                            (49.8)                                                (42.2)


                   Acquisition /divestiture items                    ( F )                                                         (10.7)                                                        0.3                                             (32.8)                                                 (6.1)


                   Amortization of acquired
                    capitalized commissions                          ( G )                                                            1.8                                                         0.2                                                2.9                                                    0.9


                   Non-GAAP
                    operating
                    expenses:                                                                                                      $298.8             37.1 %                                   $252.1                     37.2 %                  $871.0                37.2 %                           $737.6                37.9 %






     
     OPERATING INCOME:


                   GAAP operating
                    income:                                                                                                         $77.4              9.7 %                                    $66.3                      9.8 %                  $231.1                 9.9 %                           $180.0                 9.2 %


                   Acquired deferred revenue
                    adjustment                                       ( A )                                                            9.5                                                         0.7                                               16.2                                                    1.5


        
              Restructuring charges                             ( B )                                                            2.6                                                         1.6                                                6.8                                                    7.8


                   Amortization of purchased
                    intangible assets                                ( C )                                                           49.8                                                        40.0                                              132.9                                                  109.1


        
              Stock-based compensation                          ( D )                                                           18.8                                                        16.1                                               53.1                                                   45.0


                   Amortization of acquisition-
                    related inventory step-up                        ( E )                                                                                                                       2.2                                                                                                      2.8


                   Acquisition /divestiture items                    ( F )                                                           10.7                                                       (0.3)                                              34.8                                                    6.1


                   Amortization of acquired
                    capitalized commissions                          ( G )                                                          (1.8)                                                      (0.2)                                             (2.9)                                                 (0.9)


                   Non-GAAP
                    operating income:                                                                                              $167.0             20.8 %                                   $126.4                     18.7 %                  $472.0                20.2 %                           $351.4                18.0 %





        NON-OPERATING INCOME (EXPENSE), NET:


                   GAAP non-
                    operating income
                    (expense), net:                                                                                               $(13.3)                                                       $5.6                                            $(21.1)                                                 $19.6


                   Acquisition /divestiture items                    ( F )                                                            0.8                                                                                                         (1.3)                                                 (8.9)


        
              Debt issuance costs                               ( H )                                                                                                                                                                         6.7



                   Non-GAAP non-
                    operating income
                    (expense), net:                                                                                               $(12.5)                                                       $5.6                                            $(15.7)                                                 $10.7





                                                                                                                                          
       GAAP and                                                       
       GAAP and                                 
       GAAP and                                          
       GAAP and


                                                                                                                                          
       Non-GAAP                                                       
       Non-GAAP                                 
       Non-GAAP                                          
       Non-GAAP


                                                                                                                                                 Tax Rate %      ( M )                                             Tax Rate %    ( M )                         Tax Rate %        ( M )                              Tax Rate %        ( M )




     
     INCOME TAX PROVISION (BENEFIT):


                   GAAP income tax
                    provision
                    (benefit):                                                                                                     $(9.6)            (15) %                                    $14.7                       20 %                   $13.5                   6 %                            $45.3                  23 %


                   Non-GAAP items tax effected                       ( I )                                                           12.4                                                        12.0                                               36.8                                                   36.8


                   Difference in GAAP and Non-GAAP
                    tax rate                                         ( J )                                                            8.1                                                         3.7                                               18.0                                                    1.2


        
              Tax reform impacts                                ( K )                                                            3.6                                                                                                           3.6


                   Reserve release upon statute of
                    limitations expiration                           ( L )                                                           14.8                                                                                                          14.8



                   Non-GAAP income
                    tax provision:                                                                                                  $29.3               19 %                                    $30.4                       23 %                   $86.7                  19 %                            $83.3                  23 %






     
     NET INCOME:


                   GAAP net income
                    attributable to
                    Trimble Inc.:                                                                                                   $73.7                                                       $57.2                                             $196.3                                                 $154.3


                   Acquired deferred revenue
                    adjustment                                       ( A )                                                            9.5                                                         0.7                                               16.2                                                    1.5


        
              Restructuring charges                             ( B )                                                            2.6                                                         1.6                                                6.8                                                    7.8


                   Amortization of purchased
                    intangible assets                                ( C )                                                           49.8                                                        40.0                                              132.9                                                  109.1


        
              Stock-based compensation                          ( D )                                                           18.8                                                        16.1                                               53.1                                                   45.0


                   Amortization of acquisition-
                    related inventory step-up                        ( E )                                                                                                                       2.2                                                                                                      2.8


                   Acquisition /divestiture items                    ( F )                                                           11.5                                                       (0.3)                                              33.5                                                  (2.8)


                   Amortization of acquired
                    capitalized commissions                          ( G )                                                          (1.8)                                                      (0.2)                                             (2.9)                                                 (0.9)


        
              Debt issuance costs                               ( H )                                                                                                                                                                         6.7


        
              Non-GAAP tax adjustments                     ( I ) + ( J ) +
                                                                 ( K ) + ( L )                                                     (38.9)                                                     (15.7)                                            (73.2)                                                (38.0)


                   Non-GAAP net
                    income
                    attributable to
                    Trimble Inc.:                                                                                                  $125.2                                                      $101.6                                             $369.4                                                 $278.8






     
     DILUTED NET INCOME PER SHARE:


                   GAAP diluted net
                    income per share
                    attributable to
                    Trimble Inc.:                                                                                                   $0.29                                                       $0.22                                              $0.78                                                  $0.60


                   Acquired deferred revenue
                    adjustment                                       ( A )                                                           0.04                                                                                                          0.06                                                   0.01


        
              Restructuring charges                             ( B )                                                           0.01                                                        0.01                                               0.03                                                   0.03


                   Amortization of purchased
                    intangible assets                                ( C )                                                           0.20                                                        0.15                                               0.52                                                   0.42


        
              Stock-based compensation                          ( D )                                                           0.07                                                        0.06                                               0.21                                                   0.17


                   Amortization of acquisition-
                    related inventory step-up                        ( E )                                                                                                                      0.01                                                                                                     0.01


                   Acquisition /divestiture items                    ( F )                                                           0.04                                                                                                          0.13                                                 (0.01)


                   Amortization of acquired
                    capitalized commissions                          ( G )                                                         (0.01)                                                                                                       (0.01)


        
              Debt issuance costs                               ( H )                                                                                                                                                                        0.03


        
              Non-GAAP tax adjustments                     ( I ) + ( J )+
                                                                 ( K ) + ( L )                                                     (0.15)                                                     (0.06)                                            (0.29)                                                (0.15)


                  Non-GAAP diluted
                    net income per
                    share
                    attributable to
                    Trimble Inc.:                                                                                                   $0.49                                                       $0.39                                              $1.46                                                  $1.08





                   *  Prior-period information has been restated for the adoption of ASC 606, Revenue from Contracts with
                    Customers.


                                                         
              
                FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION




                                                                                
              (Unaudited)




      To help investors understand Trimble's past financial performance and future results, as well as its performance relative to competitors,
       Trimble supplements the financial results that the Company provides in accordance with generally accepted accounting principles, or GAAP, with
       non-GAAP financial measures. These non-GAAP measures can be used to evaluate Trimble's historical and prospective financial performance, as
       well as its performance relative to competitors. The Company's management regularly uses supplemental non-GAAP financial measures internally
       to understand, manage and evaluate the business, and to make operating decisions. These non-GAAP measures are among the primary factors
       management uses in planning for and forecasting future periods. Trimble believes that these non-GAAP financial measures reflect an additional
       way of viewing aspects of the Company's operations that, when viewed with GAAP results, provide a more complete understanding of factors and
       trends affecting the business. Further, Trimble believes some of the Company's investors track "core operating performance" as a means of
       evaluating performance in the ordinary, ongoing, and customary course of the Company's 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 Trimble's
       core operating performance provides a supplemental way to provide consistency in period to period comparisons.




      The method the Company uses to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other
       companies including industry peer companies, limiting the usefulness of these measures for comparative purposes.




      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 Trimble's consolidated financial statements prepared in accordance with GAAP. 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 revenue




      We believe this measure helps investors understand the performance of our business, as non-GAAP revenue excludes the effects of certain
       acquired deferred revenue that was written down to fair value in purchase accounting. Management believes that excluding fair value purchase
       accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company's operations and facilitates
       analysis of revenue growth and business trends.





     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 the effects of acquired deferred revenue that was written down to
       fair value in purchase accounting, restructuring charges, amortization of purchased intangible assets, stock-based compensation, amortization
       of acquisition-related inventory step-up, and acquisition/divestiture items associated with the acceleration of acquisition stock options
       from GAAP gross margin. We believe that these adjustments 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 items
       associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence,
       integration and other costs including the acceleration of acquisition stock options, as well as adjustment to the fair value of earn-out
       liabilities, and the effects of certain acquired capitalized commissions that were eliminated in purchase accounting from GAAP operating
       expenses. We believe that these adjustments 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 the effects of purchase accounting adjustments to certain acquired deferred revenue and acquired
       capitalized commissions, restructuring charges, amortization of purchased intangible assets, stock-based compensation, amortization of
       acquisition-related inventory step-up, and acquisition/divestiture items from GAAP operating income.  We believe that these adjustments
       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/divestiture gains/losses associated with unusual acquisition related items such as intangible asset impairment charges, gains or
       losses related to the acquisitions, or sale of certain businesses and investments, and debt issuance costs. 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 the effects of purchase accounting adjustments to certain acquired deferred revenue and acquired capitalized
       commissions, restructuring charges, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-
       related inventory step-up, acquisition/divestiture items, debt issuance costs, and non-GAAP tax adjustments from GAAP net income. We
       believe our investors benefit from understanding these adjustments 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 the effects of purchase
       accounting adjustments to certain acquired deferred revenue and acquired capitalized commissions, restructuring charges, amortization of
       purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition/divestiture
       items, debt issuance cost, and non-GAAP tax adjustments from GAAP diluted net income per share. We believe that these adjustments 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 the effects
       of purchase accounting adjustments to certain acquired deferred revenue and acquired capitalized commissions, restructuring charges,
       amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition/
       divestiture items, debt issuance costs, and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP
       measures, see items (A) - ( M ) below.





     ( A )                            Acquired deferred revenue adjustment.  Purchase
                                        accounting generally requires us to write-down acquired
                                        deferred revenue to fair value. Our GAAP revenue
                                        includes the fair value impact from purchase accounting
                                        for post contract support and subscriptions contracts
                                        assumed in connection with our acquisitions. This non-
                                        GAAP adjustment to our revenue is intended to reflect
                                        the full amount of such revenue. We believe this
                                        adjustment is useful to investors as a measure of the
                                        ongoing performance of our business and facilitates
                                        analysis of revenue growth and business trends.





     ( B )                            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.





     ( C )                            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-acquisition 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.





     ( D )                            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 third quarter and first
                                        three quarters of fiscal years 2018 and 2017, stock-
                                        based compensation was allocated as follows:




                                                                                            Third Quarter of                       First Three
                                                                                                                                    Quarters of



                                       (Dollars in millions)                                            2018                                2017       2018  2017



               
              Cost of sales                                                                 $1.1                                $1.1       $3.3  $2.8


               
              Research and development                                                       3.9                                 2.7       10.2   7.7


               
              Sales and marketing                                                            2.5                                 2.4        7.2   7.0


                          General and administrative                                                    11.3                                 9.9       32.4  27.5


                          Total stock-based compensation                                               $18.8                               $16.1      $53.1 $45.0






     ( E )                            Amortization of acquisition-related inventory step-up.
                                        The purchase accounting entries associated with our
                                        business acquisitions require us to record inventory at
                                        its fair value, which is sometimes greater than the
                                        previous book value of the inventory. Included in our
                                        GAAP presentation, the increase in inventory value is
                                        amortized to cost of sales over the period that the
                                        related product is sold. We exclude inventory step-up
                                        amortization from our non-GAAP measures because it is a
                                        non-cash expense that we do not believe is indicative
                                        of our ongoing operating results. We further believe
                                        that excluding this item from our non-GAAP results is
                                        useful to investors in that it allows for period-over-
                                        period comparability.





     ( F )                            Acquisition / divestiture items.  Included in our GAAP
                                        presentation of cost of sales and 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, integration and other closing costs,
                                        including the acceleration of acquisition stock options,
                                        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.





     ( G )                            Amortization of acquired capitalized commissions.
                                        Purchase accounting generally requires us to eliminate
                                        capitalized sales commissions balances as of the
                                        acquisition date. Our GAAP sales and marketing expenses
                                        generally do not reflect the amortization of these
                                        capitalized sales commissions balances. The non-GAAP
                                        adjustment to increase our sales and marketing expenses
                                        is intended to reflect the full amount of amortization
                                        related to such balances as though the acquired
                                        companies operated independently in the periods
                                        presented. We believe this adjustment to sales and
                                        marketing expenses is useful to investors as a measure
                                        of the ongoing performance of our business.





     ( H )                            Debt issuance costs.  Included in our non-operating
                                        income (loss), net this amount represents incurred costs
                                        in connection with the Bridge Facility, costs associated
                                        with the issuance of new credit facilities and Senior
                                        Notes that were not capitalized as debt issuance costs
                                        and a write-off of debt issuance costs for terminated
                                        and/or modified credit facilities. We excluded the debt
                                        issuance cost write-off from our non-GAAP measures. We
                                        believe that investors benefit from excluding this item
                                        from our non-operating income to facilitate an
                                        evaluation of our non-operating income trends.





     ( I )                            Non-GAAP items tax effected.   This amount adjusts the
                                        provision for income taxes to reflect the effect of the
                                        non-GAAP items ( A ) - ( H ) 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.





     ( J )                            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. We
                                        believe that investors benefit from excluding this
                                        amount from our non-GAAP income tax provision because
                                        it facilitates a comparison of the non-GAAP tax
                                        provision in the current and prior periods.





     ( K )                            Tax reform impacts.  This amount represents the provision
                                        for income taxes recorded as a result of the Tax Act
                                        enacted in December 22, 2017.  The provision primarily
                                        includes a one-time transition tax on accumulated
                                        foreign earnings and related adjustments to deferred
                                        taxes and reserves, and revaluation of deferred taxes
                                        due to the reduction of U.S. income tax rate. We are
                                        required to recognize the effect of the tax law changes
                                        in the period of enactment. We excluded this item as it
                                        is a non-recurring expense. We believe that investors
                                        benefit from excluding this item from our non-GAAP
                                        income tax provision because it allows for period-over-
                                        period comparability.





     ( L )                            Reserve release upon statute of limitations expiration.
                                        This amount represents a one time benefit of $14.8
                                        million in the third quarter of 2018 resulting from a
                                        reserve release due to the expiration of year 2010 and
                                        2014 statute of limitations.  We excluded this because
                                        it is non-recurring and is not indicative of our core
                                        operating performance.





     ( M )                            GAAP and non-GAAP tax rate percentages.  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.

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SOURCE Trimble Inc.