Connecting the Physical
and Digital Worlds
2016 ANNUAL REPORT
To Our Shareholders
2016 was a year of progress for Trimble. Although many of our end
markets remained challenged and geopolitical environments presented
new uncertainties, we re-established the Trimble financial model, as
demonstrated by our financial results in the second half of the year.
Second-half results represented the best financial results of any six-month
period since the first half of 2014, with all of our reporting segments
generating year-over-year organic revenue growth and margin expansion.
Overall, Trimble’s revenue increased 3 percent for the year, up
2 percent in the first half and 4 percent in the second half of
2016. We continue to strengthen our leadership position in our
end markets and are poised to benefit from improvements in
macro conditions. Strong performance in our transportation
business, civil engineering and construction business outside
North America, and second-half organic growth in agriculture
was partially offset by challenges in our geospatial business
and relative weakness in North American construction.
Field Solutions; and transportation and logistics in Mobile
Solutions. Beyond these relatively large core markets, we are
also developing a number of smaller emerging markets such
as forestry, electrical and water utilities, rail, and field service.
In each of these markets, our formula remains consistent:
we combine an extensive knowledge of the workflow and
user needs with innovative development to create significant
customer value and competitive differentiation. To help ensure
this strategic and organizational focus, we divested five
businesses in 2016.
On a regional basis, North American results reflected
continued weakness in our agriculture and geospatial markets,
offset by strong growth in our transportation business.
European results were impacted by declines in the UK after
Our market and customer position remains strong and is
growing. For example, Trimble serves more than 70 percent
of the top geospatial firms, 80 percent of the top 25 building
the Brexit vote. Excluding the UK, the European market posted
contractors and 100 percent of the top 10 civil contractors
solid growth. In the rest of the world, markets including Japan,
in North America. In agriculture, Trimble solutions are used
Australia, Russia, India and South America grew at double-
on more than 125 million acres of farmland worldwide.
digit rates. China remained volatile and Africa and the Middle
In transportation, greater than 85 percent of the top 200
East remained weak.
trucking companies in North America use our technology,
and our software solutions enable fleets to manage more
Non-GAAP operating margins were 17.2 percent in 2016.
than 2 million vehicles.
The margin picture improved significantly in the second half
of 2016, with second-half operating leverage well above our
Innovation was the driving theme for geospatial in 2016, with
historical averages. Margins are expected to show continued
the fourth quarter launches of a new total station, a new 3D
progression during 2017.
laser scanner and software-enabled GNSS technologies.
In civil engineering and construction, we continued to
Trimble solutions transform work processes in some of the
expand our set of OEM relationships and grew our software
world’s largest industries by delivering hardware, software
and services that connect the physical and digital worlds.
offering encompassing all phases of the construction
continuum. In building construction, we released new
Our strategic emphasis is focused on five core components:
software for architecture and design and structural design;
geospatial, civil engineering and construction, and building
construction in Engineering & Construction; agriculture in
we also acquired Building Data in the mechanical, electrical
and plumbing (MEP) space, which will further strengthen
2 0 1 6 H I G H L I G H T S
+3%
+8%
+15%
Revenue
Recurring Revenue
Operating Cash Flow
our building information modeling (BIM) solutions. At our
Dimensions User Conference, Trimble attracted over 4,400
registered attendees and held over 625 educational sessions.
In agriculture, we continued to develop our precision
agriculture portfolio. We consolidated a number of software
brands and platforms into a single agriculture software
solution, expanded our OEM relationships and demonstrated
solid growth outside of the North American market.
In transportation, we continued to expand the breadth of
our mobile and enterprise portfolio for the trucking industry,
including new product offerings such as video intelligence
and SaaS-based enterprise solutions. We initiated our first
integrated PeopleNet and TMW in.sight User Conference,
which attracted over 2,400 attendees and held over 350
educational sessions.
Trimble continues to maintain a strong financial position.
We are leveraging strong operating cash flows as well as using
our balance sheet to invest internally and externally through
strategic acquisitions to add value to our overall portfolio.
Operating cash flow of $407 million was up 15 percent.
Deferred revenue and recurring revenue both increased 8
percent to record levels in 2016, reflecting ongoing changes
in the mix of our revenue toward software and subscription
offerings, a trend which we expect to continue. We reduced
debt by $110 million and repurchased $119 million of our
stock. During the year, we completed our reincorporation
in Delaware and changed our corporate name from Trimble
Navigation Limited to Trimble Inc. While we do not place
undue importance on the name change, it does recognize the
fundamental change the company has undergone since its
With a strong financial and strategic foundation entering
2017, we expect to demonstrate organic growth and operating
margin expansion throughout the year. While acquisition
activity was light in 2016, we expect acquisitions to increase
and to accelerate the execution of our strategy. Acquisitions
in 2017 will be focused on the core franchises of construction,
agriculture and transportation as well as building the emerging
businesses of rail, water, forestry and utilities.
Our fundamental goals remain unchanged:
(cid:88) Breakout market leadership—achieved by leading
transformations in our markets.
(cid:88) Top-tier financial performance—focused on revenue
growth, incremental margin performance and return
on equity.
(cid:88) A new standard of excellence that transcends best
current practices—focused on following a unique path
emphasizing “always better.”
Our success starts with the competency, commitment and
loyalty of our employees. They deliver the domain knowledge
and innovation that has been the cornerstone of our historic
success. Once again I thank them for their contributions.
Steven W. Berglund
origination and signifies a non-constrained view of the future.
President and Chief Executive Officer
Financial Information
Revenue
(in U.S. $ Millions)
Non-GAAP Operating Income
(in U.S. $ Millions)
Cash Flow from Operations
(in U.S. $ Millions)
6
9
3
,
2
$
8
8
2
,
2
$
0
9
2
,
2
$
2
6
3
,
2
$
0
4
0
2
$
,
4
7
4
$
0
8
4
$
7
9
3
$
0
9
3
$
6
0
4
$
5
1
4
$
7
0
4
$
7
0
4
$
5
5
3
$
1
4
3
$
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Diverse Business Mix
Revenue by Segment
Global Opportunity
Revenue by Region
Growing Software Mix
Revenue by Offering
6%
15%
24%
55%
12%
15%
24%
49%
≈47%
≈53%
(cid:122) Engineering & Construction
(cid:122) Field Solutions
(cid:122) United States
(cid:122) Asia
(cid:122) Hardware
(cid:122) Mobile Solutions
(cid:122) Advanced Devices
(cid:122) Europe
(cid:122) Rest of World
(cid:122) Software/Services/Recurring
Comparison of Cumulative Five-Year Total Return*
Among Trimble Inc., the NASDAQ Composite Index®, and the S&P® Information Technology Index.
250
200
150
100
50
2011
2012
2013
2014
2015
2016
(cid:122) Trimble
(cid:122) NASDAQ Composite Index®
(cid:122) S&P® Information Technology Index
The graph compares the cumulative five-year
total return provided shareholders on Trimble Inc.
common stock relative to the cumulative total
returns of the NASDAQ Composite Index and the
S&P Information Technology Index. An investment
of $100 (with reinvestment of all dividends) is
assumed to have been made in our common
stock and in each of the indexes on 12/31/2011,
and its relative performance is tracked through
12/31/2016. The company has never paid dividends
on its common stock and has no present plans to
do so. *The company adopted a 52-53-week fiscal
year effective upon the end of fiscal year 1997, and
the actual date of the company’s 2016 fiscal year
end was December 30, 2016. Any variations due
to any differences between the actual date of a
particular fiscal year end and the calendar year
end for such year are not expected to be material.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2016
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-14845
____________________________________________________
TRIMBLE INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
935 Stewart Drive, Sunnyvale, CA
(Address of principal executive offices)
94-2802192
(I.R.S. Employer
Identification No.)
94085
(Zip Code)
Registrant’s telephone number, including area code: (408) 481-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value
Preferred Share Purchase Rights
(Title of Class)
Name of each exchange on which stock registered
NASDAQ Global Select Market
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: NONE
TRIMBLE NAVIGATION LIMITED
(Former name or former address, if changed since last report.)
No
No
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
No
No
Large Accelerated Filer
Non-accelerated Filer
(Do not check if a smaller reporting company)
Accelerated Filer
Smaller Reporting Company
1
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 1, 2016, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $6.1
billion based on the closing price as reported on the NASDAQ Global Select Market. Shares of common stock held by each officer
and director of the registrant have been excluded in that such person may be deemed to be an affiliate. This determination of affiliate
status is not necessarily a conclusive determination for any other purpose.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
No
Class
Common stock, $0.001 par value
Outstanding at February 22, 2017
252,283,685 shares
2
DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of Trimble Inc. Proxy Statement relating to the annual meeting of stockholders to be held on May 2, 2017 (the
“Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.
3
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, which are subject to the “safe harbor” created by those sections.
These statements include, among other things:
•
•
•
•
•
•
•
•
the portion of our revenue coming from sales to international customers;
seasonal fluctuations in our construction and agricultural equipment business revenues, macroeconomic conditions, and
business conditions in the markets we serve;
our plans to continue to invest in research and development at a rate consistent with our past, to develop and introduce
new products, to improve our competitive position, and to enter new markets;
our belief that increases in recurring revenue from our software and solutions will provide us with enhanced business
visibility over time;
our potential exposure in connection with pending proceedings;
our belief that our cash and cash equivalents and short-term investments, together with borrowings under our 2014 Credit
Facility, will be sufficient to meet our anticipated operating cash needs, debt service, planned capital expenditures, and
stock purchases under the stock repurchase program for at least the next twelve months;
fluctuations in interest rates; and
the imposition of barriers to international trade.
The forward-looking statements regarding future events and the future results of Trimble Inc. (formerly Trimble Navigation
Limited) (“Trimble” or “the Company” or “we” or “our” or “us”) are based on current expectations, estimates, forecasts, and
projections about the industries in which Trimble operates and the beliefs and assumptions of the management of
Trimble. Discussions containing such forward-looking statements may be found in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” In some cases, forward-looking statements can be identified by terminology such
as “may,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” and similar expressions. These forward-looking statements involve certain risks and uncertainties that
could cause actual results, levels of activity, performance, achievements, and events to differ materially from those implied by
such forward-looking statements, but are not limited to those discussed in this Report under the section entitled “Risk Factors”
and elsewhere, and in other reports Trimble files with the Securities and Exchange Commission (“SEC”), specifically the most
recent reports on Form 8-K and Form 10-Q, each as it may be amended from time to time. These forward-looking statements are
made as of the date of this Annual Report on Form 10-K. We reserve the right to update these statements for any reason, including
the occurrence of material events. The risks and uncertainties under the caption “Risks and Uncertainties” contained herein, among
other things, should be considered in evaluating our prospects and future financial performance.
4
TRIMBLE INC.
2016 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Business
Item 1
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Properties
Legal Proceedings
Item 3
Item 4 Mine Safety Disclosures
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Item 6
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A Quantitative and Qualitative Disclosures about Market Risk
Item 8
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9
Item 9A Controls and Procedures
Item 9B Other Information
PART III
Item 10 Directors, Executive Officers, and Corporate Governance
Item 11 Executive Compensation
Item 12
Item 13 Certain Relationships, Related Transactions, and Director Independence
Item 14
Principal Accountant Fees and Services
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
PART IV
Item 15 Exhibits and Financial Statement Schedules
Item 16
Form 10-K Summary
5
6
15
26
27
27
27
28
29
30
49
52
87
87
87
88
88
88
88
88
89
89
Item 1.
Business
PART I
Trimble Inc., a Delaware corporation, is a leading provider of technology solutions that enable professionals and field mobile
workers to improve or transform their work processes. Our solutions are used across a range of industries including agriculture,
architecture, civil engineering, survey and land administration, construction, geospatial, environmental management, government,
natural resources, transportation and utilities. Representative Trimble customers include engineering and construction firms,
surveying companies, farmers and agricultural companies, enterprise firms with large-scale fleets, energy, mining and utility
companies, and state, federal and municipal governments.
Our focus is on integrating our broad technological and application capabilities to create solutions that transform how work is
done within the industries we serve. Our products are sold based on return on investment and provide benefits such as lower
operational costs, higher productivity, improved quality, enhanced safety and regulatory compliance, and reduced environmental
impact. Representative products include equipment that automates and enables increased precision within large industrial
equipment such as tractors and bulldozers; integrated systems that track fleets of vehicles and workers and provide real-time
information and analytics to the back-office; data collection systems that enable the management of large amounts of geo-referenced
information; software solutions that connect all aspects of a construction site or a farm; and building information modeling (BIM)
software that is used throughout the design, build, and operation of buildings.
Our customers increasingly demand integration of individual point solutions, whether hardware sensors or software applications,
in order to improve their complete work processes. Our solutions provide the connections between hardware and applications,
rather than requiring customers to integrate point solutions on their own. We also increasingly provide additional services (training,
consulting, technical support and integration services) to link our solutions with existing customer solutions, such as ERP systems.
Many of our products integrate real-time positioning or location technologies with wireless communications and software or
information technologies. Information about location or position is transmitted via a wireless link to a domain-specific software
application which enhances the productivity of the worker, asset or work process. Position is provided through a number of
technologies including the Global Positioning System (GPS), other Global Navigation Satellite Systems (GNSS) and their
augmentation systems, and systems that use laser, optical, inertial or other technologies to establish real-time position. Integration
of wireless communications in our solutions facilitates real-time data flow, communication and situational awareness within sites
and between work sites or vehicles and offices.
Software is a key element of most of our solutions and accounts for a steadily increasing portion of our business. Our software
products and services range from embedded real-time firmware, through field service and location oriented solutions on handheld
and other small footprint devices, to application software that integrates field data with large scale enterprise back-office
applications. Many of our software solutions are built on configurable and enterprise grade scalable platforms that can be tailored
to the workflows that our customers follow to implement their customized business processes. Our software capabilities include
extensive 3-D modeling, analysis and design solutions, civil engineering alignment selection solutions, design and data preparation
software, BIM software, cloud-based collaboration solutions, applications for advanced surveying and geospatial data collection
and analysis, as well as a large suite of domain-specific software applications used across a host of industries including agriculture,
construction, utilities, and transportation. Our software is sold as a perpetual license or as a subscription, and can be delivered for
on-premise installation or in a hosted environment as Software as a Service (SaaS). Our software products allow our customers
to optimize their work processes for targeted outcomes, improve their productivity, gain insight into their projects and operations,
to enhance their decision making and to gain maximum benefit from a broad range of other Trimble products and systems.
Our global operations include major development, manufacturing, or logistics operations in the United States, Sweden, Finland,
Germany, New Zealand, Canada, the United Kingdom, the Netherlands, China, and India. Products are sold in more than 100
countries, through dealers, representatives, joint ventures and other channels throughout the world, as well as direct sales to end
users. Sales are supported by our own offices located in more than 35 countries around the world.
We began operations in 1978 and were originally incorporated in California as Trimble Navigation Limited in 1981. On October
1, 2016, Trimble Navigation Limited changed its name to Trimble Inc. and changed its state of incorporation from the State of
California to the State of Delaware. Our common stock has been publicly traded on NASDAQ since 1990 under the symbol TRMB.
Business Strategy
Our growth strategy is centered on multiple elements:
• Focus on attractive markets with significant growth and profitability potential - We focus on large markets historically
underserved by technology that offer significant potential for long-term revenue growth, profitability and market
leadership. Our core industries such as construction, agriculture, and transportation are each multi-trillion dollar global
6
industries which operate in demanding environments with technology adoption in the early phases relative to other
industries. With the emergence of mobile computing capabilities, the increasing technological know-how of end users
and compelling return on investment, we believe many of our markets are ripe for substituting Trimble’s technology and
solutions in place of traditional operating methods.
•
• Domain knowledge and technological innovation that benefit a diverse customer base - We have over time redefined our
technological focus from hardware-driven point solutions to integrated work process solutions by developing domain
expertise and heavily reinvesting in R&D and acquisitions. We have been spending an average of 14% of revenue over
the past several years on R&D and currently have over 1,200 unique patents. We intend to continue to take advantage of
our technology portfolio and deep domain knowledge to quickly and cost-effectively deliver specific, targeted solutions
to each of the vertical markets we serve. We look for opportunities where the opportunity for technological change is
high and which have a requirement for the integration of multiple technologies into complete vertical solutions.
Increasing focus on software and services - Software and services are increasingly important elements of our solutions
and are core to our growth strategy. Trimble generally has an open application programming interface (API) philosophy
and open vendor environment which leads to increased adoption of our software offerings. The increased recurring revenue
from these solutions is expected to provide us with enhanced business visibility over time. Professional services constitute
an additional growth channel that helps our customers integrate and optimize the use of our offerings in their environment.
• Geographic expansion with localization strategy - We view international expansion as an important element of our strategy
and we continue to position ourselves in geographic markets that will serve as important sources of future growth. We
currently have a physical presence in over 35 countries and distribution channels in over 100 countries. In 2016, over
50% of our sales were to customers located in countries outside of the U.S.
• Optimized go to market strategies to best access our markets - We utilize vertically-focused distribution channels that
leverage domain expertise to best serve the needs of individual markets domestically and abroad. These channels include
independent dealers, joint ventures, original equipment manufacturers (OEM) sales, and distribution alliances with key
partners, such as CNH Global, Caterpillar and Nikon, as well as direct sales to end-users, that provide us with broad
market reach and localization capabilities to effectively serve our markets.
Strategic acquisitions - Organic growth continues to be our primary focus, while acquisitions serve to enhance our market
position. We acquire businesses that bring domain expertise, technology, products, or distribution capabilities that augment
our portfolio and allow us to penetrate existing markets more effectively, or to establish a market beachhead. Our success
in targeting and effectively integrating acquisitions is an important aspect of our growth strategy.
•
Business Segments and Markets
We are organized into four reporting segments encompassing our various applications and product lines: Engineering and
Construction, Field Solutions, Mobile Solutions and Advanced Devices. Our segments are distinguished by the markets they
serve. Each segment consists of businesses which are responsible for product development, marketing, sales, strategy and financial
performance. For further financial information about our segments, see Note 6 to the Consolidated Financial Statements.
Engineering and Construction
The Engineering and Construction segment primarily serves customers working in architecture, engineering, construction,
surveying, natural resources and government. Within this segment our most substantial product portfolios are focused on civil
engineering and construction, building construction, and geospatial.
Civil Engineering and Construction. Before dirt is ever moved in civil construction, feasibility, design and scheduling are critical
steps to site construction. Trimble provides the industry with a continuum of field solutions, software solutions and services at
every stage of the project - from planning and design, to construction, operation and maintenance. Our civil construction solutions
are used in civil infrastructure such as roads, railways, airports, land management, solar farms, marine and landfills. Our solutions
are used across the entire project life cycle to improve productivity, reduce waste and re-work, and enable more informed decision
making through enhanced situational awareness, data flow and project collaboration. At the same time, our solutions can improve
worker safety and reduce environmental impact. Our suite of integrated solutions and technologies in this area includes field and
office software for optimized route selection and design, systems to automatically guide and control construction equipment such
as excavators, bulldozers, wheel loaders, motor graders and paving equipment, systems to monitor, track and manage assets,
equipment and workers, and software to facilitate the sharing and communication of data in real time. Together, these solutions
are designed to transform how work is done within the heavy civil construction industry.
The Connected Site describes our civil construction market portfolio, which integrates data and information across the entire
construction process and across mixed fleets. This includes data from site positioning and machine control systems, construction
asset management equipment and services, and various software applications. Utilizing wireless and internet-based site
communications infrastructure, our Connected Site solutions include the ability to track and control equipment, perform remote
7
machine diagnostics and reduce re-work. By leveraging the Connected Site technology, contractors gain greater insight into their
operations, helping them to lower costs and improve productivity, worker safety, and asset utilization.
To bolster the software solutions we provide to the Connected Site, we formed a joint venture with Caterpillar in October of 2008,
called VirtualSite Solutions (VSS). VSS develops software for fleet management and connected worksite solutions, including
subscription-based software as a service solutions. VSS solutions are part of the Connected Site portfolio, and are sold through a
world-wide independent dealer channel under the name of SITECH. A separate joint venture with Caterpillar, Caterpillar-Trimble
Control Technologies (CTCT) was formed in 2002 to develop the next generation of advanced electronic guidance and control
products for earthmoving machines. The joint venture develops machine control and guidance products that use site design
information combined with accurate positioning technology to automatically control dozer blades and other machine tools.
Caterpillar generally offers joint venture products as a factory-installed option, while Trimble focuses on the aftermarket with
products for mixed fleets of earthmoving machines from Caterpillar and other equipment manufacturers to allow improved
management of construction sites and projects. Effective in January 2014, Caterpillar and Trimble amended the joint ventures and
related agreements between the parties to expand the range of productivity applications and services the companies will provide,
and to support development of comprehensive unified fleet solutions for the construction industry.
During 2016, we announced a number of developments, including the formation of factory fit, Trimble-Ready programs, with
various original equipment manufacturers (OEM) within our Civil Engineering and Construction business. We also announced
the introduction of office software, site positioning and machine control solutions designed for site and utility contractors and
owner/operators. These solutions offer small to mid-sized contractors a reliable, flexible and affordable option to leverage
construction technology.
Building Construction. The Trimble Buildings portfolio of solutions for the commercial and industrial building industry spans the
entire lifecycle of a building and is used by architects, designers, general contractors, sub-contractors, engineers, and facility
owners or lessees. These solutions serve to improve productivity and to enhance data sharing and collaboration across different
teams and stakeholders to help keep projects within cost, time and quality targets. The suite of technologies and solutions we
provide to the building industry includes software for 3D conceptual design and modeling, BIM software which is used in design,
construction and maintenance, advanced integrated site layout and measurement systems, cost estimating, scheduling, and project
controls solutions for contractors, applications for sub-contractors and trades such as steel, concrete and mechanical, electrical
and plumbing, and a best of breed integrated workplace management services (IWMS) software suite for real estate management,
project coordination, capital program planning and management, and facility management for building owners and program
managers. In addition, Trimble’s Connect collaboration platform streamlines customer workflows and enables interoperability
between Trimble’s solutions. Our joint venture with Hilti, a leading global provider of solutions to the building trades, develops
products which integrate Trimble’s positioning and asset management technologies with Hilti’s tools capabilities to create smarter
tools and smarter construction sites. Together, these solutions for the building industry serve to automate, streamline and transform
work processes across the building construction industry. Our solutions provide customer benefits such as reduced costs, reduced
waste and re-work, increased worker safety and efficiencies, faster project completion times, improved information flow, better
decision making and enhanced quality control.
During the year, we announced advances in several of our software packages and solutions. We launched Trimble ProjectSight, a
new generation of our cloud-based project controls solution for construction managers and general contractors, which is a web
and mobile solution that streamlines the creation, access and sharing of project information between the office and the jobsite for
more efficient, accurate and predictable project delivery. Additionally, we collaborated with the Hilti Group to deliver new software
integration and data exchange solutions, which are intended to facilitate the sharing of design information between software
applications, provide easy access to data in the cloud, and provide more design content, specification information and pricing to
our users. We also launched our SketchUp Viewer for Microsoft HoloLens, which is a new mixed-reality solution that allows users
to virtually inhabit and experience their designs to improve quality, communication and efficiency in the design, construction and
operation of buildings.
During 2016, we acquired Building Data, whose managed content and software solutions enable Mechanical, Electrical and
Plumbing (MEP) contractors and engineers to produce intelligent, constructible models by including manufacturing-specific
content from a proprietary database of over 6 million 3D data components. The combination of Building Data’s experience in
Building Information Modeling (BIM) content, paired with Trimble’s leadership in providing software and hardware solutions
for building construction, will enhance our offerings designed to provide contractors and engineers with increased efficiencies
throughout the building lifecycle.
Geospatial. In our geospatial business, professional surveyors and engineers providing services to the construction, engineering,
mining, oil and gas, energy and utilities, government and land management sectors use our survey and geospatial solutions to
replace less productive conventional methods of surveying, mapping, 2D or 3D modeling, measurement, reporting and analysis.
Our suite of solutions used in these activities include field based data collection systems and field software, real time
communications systems and back-office software for data processing, modeling, reporting and analysis. Our field based
8
technologies are used in handheld, land mobile and airborne applications and incorporate technologies such as mobile application
software, high precision GNSS, robotic measurement systems, inertial positioning, 3D laser scanning, digital imaging, optical or
laser measurement and unmanned aerial vehicles. We maintain a joint venture with Nikon which focuses on the design and
manufacture in Japan of surveying instruments including mechanical total stations and related products. Our office based products
include software for planning, data processing and editing, quality control, 3D modeling, intelligent data analysis and feature
extraction, deformation monitoring, project reporting and data export. Our customers in this area gain benefits from the use of our
products including significantly improved productivity in both field and office activities, improved safety through non-contact
measurement and detection of potentially dangerous ground or structure movement and improved data flow which enables better
decision making.
In 2016, we launched a next-generation survey instrument, the Trimble SX10 Scanning Total Station, which merges high-speed
3D scanning, enhanced Trimble VISION imaging technology and high-accuracy total station measurements into familiar field
and office workflows for surveyors. We also launched Trimble® Catalyst, a software-defined Global Navigation Satellite System
(GNSS) receiver that works with select Android mobile handhelds, smartphones and tablets, which, when combined with a small,
lightweight, plug-and-play digital antenna and subscription to the Catalyst service, provides on-demand GNSS, geo-location
capabilities to transform consumer devices into high-accuracy mobile data collection systems.
We sell and distribute our products in the Engineering and Construction segment through multiple global networks of independent
dealers with expertise and customer relationships in their respective segments, each supported by Trimble personnel. In 2016, the
network of SITECH Technology Dealers, which serves the civil construction industry, expanded to 111 dealers worldwide across
all regions, including the Americas, Europe, Middle East, Africa, Asia, China, and the South Pacific. We also made significant
progress during the year with BuildingPoint, an initiative to form a global network of distribution partners to serve the needs of
the building construction industry.
Competitors in this segment are typically companies that provide optical, laser or GNSS positioning products as well as companies
that produce software specific to the construction process. Our principal competitors are Topcon Corporation, Hexagon AB and
Autodesk. We compete principally on the basis of innovative, differentiated products, service, quality and geographic reach.
Field Solutions
Our Field Solutions segment primarily addresses the agriculture and geographic information systems (GIS) markets.
Agriculture. Our precision agriculture products consist of guidance and positioning systems, automated application systems and
information management solutions that enable farmers and their partners to improve crop performance, profitability and
environmental quality. Trimble precision agriculture solutions can assist farmers throughout every step of their farming process,
beginning with land preparation and continuing through the planting, nutrient and pest management, and harvesting phases of a
crop cycle. We provide manual and automated navigation guidance for tractors and other farm equipment used in spraying, planting,
cultivating, and harvesting applications. The benefits to the farmer include faster machine operation, higher yields, and lower
consumption of fuel and chemicals than conventional equipment. In addition, we provide solutions to automate application of
pesticide and seeding. Our water solutions help farmers minimize their water costs and distribute water more efficiently, and
include applications for leveling agricultural fields for irrigation, aligning drainage systems to better manage water flow in fields,
and controlling water application in linear and pivot irrigation systems.
During 2016, we continued to develop our precision agriculture portfolio. We expanded our portfolio of Android-based display
with the introduction of the MMX-070 tablet and continued to add more applications to our in-field mobile environment. We
launched Vertical RTK, a grade control system for agriculture, which enables land improvement contractors to reduce downtime
and costly delays by significantly enhancing vertical accuracy and stability of single baseline RTK systems. In the water
management area, we released an industry-first technology for irrigation called Irrigate-IQ optimal flow. This technology enables
farmers to utilize no-spray areas on center pivot irrigation systems that do not have a variable frequency drive pump, while keeping
the pressure regulated across the pivot. Now, farmers who were unable to change the application across the pivot due to pumping
equipment limitations can benefit from using no spray areas to focus water where it is needed, without the risk of damage due to
significant pressure changes. In addition to Irrigate-IQ optimal flow, we also launched Irrigate-IQ uniform corner which enables
farmers to apply a consistent application in areas covered by the corner arm. The solution utilizes individual nozzle control to
minimize gaps and overlaps that are typically seen in traditional corner arm systems. As a result, farmers can extend the capabilities
of their current corner arm by optimizing water use and preventing over- or under-watering.
Solutions which use data to enhance farm productivity are an increasing focus in our agriculture business. In 2016, we consolidated
a number of Trimble Agriculture's software brands and platforms into a single Trimble Ag Software solution. This integrated
solution is designed to not only help farmers seeking solutions to integrate all of the information on the farm, but where advisors,
suppliers, and purchasers can share information to improve efficiencies. Trimble Ag Software enables a chain of custody where
the farm can pass critical food safety and sustainability information to processors, distributors and ultimately to consumers who
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seek transparency. Acquired in 2015, Agri-Trend’s Professional Agricultural Coaching services help farmers allocate scarce
resources to produce a safe, reliable, and profitable food supply in an environmentally sustainable manner. The combination of
our software platform and the coaching advisory services enables farmers to make more informed decisions leading to higher
yields, better quality crops, increased profitability, and reduced environmental impact. Trimble Ag Software and Agri-Trend
Coaching services are available in many locations including within our Vantage distribution channel.
In the course of 2016, we continued to add third-party applications to our Android-based TMX-2050 display platform, enabling
customers to view more complete data from multiple industry software platforms and machines, in addition to the wide range of
applications Trimble already offers.
We use multiple distribution approaches to access the agricultural market, including independent dealers and direct selling to
enterprise accounts. A significant portion of our sales are through CNH Global and affiliated dealer networks. During 2016 we
expanded our Vantage global distribution channel. Vantage distributors provide a premier level of technical expertise, customer
service and support capabilities and operate with a strategy that fosters technology interoperability in mixed fleets used on a farm.
Vantage partners are committed to providing reliable, responsive and dedicated infield service and support as well as creating a
hassle free experience for the grower and their advisors when implementing advanced technology solutions. They also provide
training so farmers and advisors have a better understanding of how to use the technology in a way that best meets their farming
needs. We currently have Vantage partners in over 12 countries across 4 continents. Competitors in this market are vertically
integrated farm equipment and implement companies such as John Deere and agricultural instrumentation companies such as
Raven and Ag Junction. As we expand our business in agronomic services and data oriented applications, we expect to increasingly
compete with major input suppliers such as Monsanto. We compete principally on the basis of robust performance, ease of use,
price, interoperability, interconnectedness and the completeness of our solutions.
Geographic Information Systems (GIS). Our GIS product line collects authoritative field data and integrate that data into GIS
databases. Our handheld data collection systems allow users to quickly log positions and descriptive information about their assets,
ensure the integrity and accuracy of GIS information and ultimately, enable better decision-making. Through a combination of
wireless technologies and software solutions, fieldwork results are seamlessly delivered to the back-office GIS, and mobile workers
can also access GIS information remotely. This capability provides significant advantages to users including improved productivity,
accuracy and access to information in the field.
Primary markets for our GIS products and solutions include both governmental and commercial users. Distribution for GIS products
is primarily through a network of independent dealers and business partners, supported by Trimble personnel. Competitors in this
market are typically survey instrument companies utilizing GNSS technology such as Topcon and Leica. We compete principally
on the basis of robust performance, ease of use, price, interoperability and interconnectedness.
Mobile Solutions
Our Mobile Solutions segment primarily consists of two businesses, transportation and logistics and field service management.
Transportation and Logistics. In the transportation and logistics market, we offer a suite of solutions marketed under the Trimble,
PeopleNet, GEOTrac, TMW and ALK Technologies brands. Together, this range of products provides a comprehensive fleet and
transportation management, analytics, routing, mapping, reporting and predictive modeling solution to enable the transportation
and logistics industry to achieve greater overall operational efficiency, fleet performance, and profitability while ensuring regulatory
compliance. Our fleet productivity and enterprise software offerings are comprised primarily of the PeopleNet, TMW, Vusion,
PC*Miler, CoPilot and FleetWorks mobile platforms. Our enterprise strategy focuses on sales to large enterprise accounts with
more than 1,000 vehicles. In addition to Trimble-hosted solutions, we also integrate our applications and services directly into the
customer’s IT infrastructure.
The PeopleNet mobile communications system includes solutions encompassing route management, safety and compliance, end-
to-end vehicle management, and supply chain communications. PeopleNet's products are used by more than 1,500 transportation
fleets in the US and Canada. GEOTrac’s telematics systems provide end-to-end solutions for oil & gas road mapping, vehicle
monitoring, geofencing, messaging and alerting, driver productivity, distress notification, lone worker monitoring, reporting and
maintenance monitoring. The CarCube/FleetWorks solution is tailored for transportation and logistics companies in Europe and
Australia. TMW's transportation software platform serves as a central hub from which the core operations of transportation
organizations are managed, data is stored and analyzed, and mission critical business processes are automated. Our software
platform automates business processes spanning the entire surface transportation lifecycle, order-to-cash, delivering visibility,
control, and decision support for the intricate relationships and complex processes involved in the movement of freight. TMW
software technologies serve more than 2,300 customers, including many of the most sophisticated and complex transportation
companies, as well as hundreds of smaller regional and local operations in North America. In our Mobile Solutions segment,
customers manage nearly two million vehicles and mobile assets with $71 billion in annual freight spend, and direct more than
500,000 trucks in North America, Europe, Latin America and Australia-New Zealand. Furthermore, TMW acquired ALK
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Technologies in 2013. ALK is a transportation technology company dedicated to innovative routing, mileage, mapping and mobile
navigation solutions. We are known for providing trusted industry standard data to seamless integration. ALK solutions are
developed for commercial and consumer end users.
Together the PC*Miler, CoPilot and ALK Maps products provide a truck routing, mileage and mapping solution and a voice guided
turn-by-turn navigation solution. TMW's enterprise software also integrates with more than 215 partners, including PeopleNet's
fleet productivity solutions.
Field Service Management. Trimble’s Field Service Management offerings provide owners and operators of fleets of vehicles, such
as service vehicles, with visibility into field and fleet operations so they can increase efficiency and productivity. The Field Service
Management suite includes applications for fleet management, work management and scheduling, worker safety and mobility that
improve the effectiveness of work, workers and assets in the field. This cloud-based portfolio allows Trimble to offer customers
industry-specific, enterprise-level solutions for enhanced performance and ease of use. Our market strategy targets opportunities
in specific vertical markets where we believe we can provide unique value to the end-user by tailoring our solutions. Major markets
include telecommunications, utilities, mobile workers, construction logistics, forestry, public safety and oil and gas.
The Mobile Solutions segment generally sells directly to end-users. Sales cycles tend to be long due to field trials followed by an
extensive decision-making process. Key competitors in this segment include Omnitracs, Fleetmatics, Teletrac, and McLeod, among
others. We compete principally on the basis of interoperability, customer support and service, price, innovative product offerings,
quality, and provision of a complete solution.
Advanced Devices
Advanced Devices includes the product lines from our Embedded Technologies, Timing, Applanix, Military and Advanced Systems
(MAS) businesses. These businesses share several common characteristics: they are hardware centric, generally market to OEMs,
system integrators and service providers, and have products that can be utilized in a number of different end user markets and
applications. The various operations that comprise this segment were aggregated on the basis that these operations do not exceed
10% of our total revenue, operating income or assets.
Within Embedded Technologies and Timing, we supply GNSS modules, licensing and complementary technologies, and GNSS-
integrated sub-system solutions for applications requiring precise position, time or frequency. Embedded Technologies and Timing
serve a broad range of vertical markets including telecommunications, automotive electronics, and commercial electronics. Sales
are made directly to OEMs, system integrators, value-added resellers and service providers who incorporate our components into
a complete system-level solution. Competitors in this market include Microsemi and u-blox. We compete principally on the basis
of product performance, price and quality.
Our MAS business supplies GPS receivers and embedded modules that use the military’s advanced GPS capabilities. The modules
are principally used in aircraft navigation and timing applications. Military products are sold directly to either the U.S. government
or defense contractors. Sales are also made to authorized foreign end-users. Competitors in this market include Rockwell Collins,
L3 and Raytheon.
Our Applanix business is a leading provider of advanced products and enabling solutions that maximize productivity through
mobile mapping and positioning to professional markets worldwide. Applanix develops, manufactures, sells, and supports high-
value, precision products that combine GNSS with inertial sensors for accurate measurement of position and attitude, flight
management systems, and scalable mobile mapping solutions used in airborne, land, marine and autonomy-related applications.
Sales are made by our direct sales force to end-users, systems integrators, and OEMs, and through regional agents. Competitors
include OxTS, IGI and Novatel. We compete principally on the basis of product features, performance and domain knowledge.
Patents, Licenses and Intellectual Property
We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights,
trademarks, and trade secret laws. We have a program to file applications for and obtain patents, copyrights, and trademarks in
the United States and in selected foreign countries where we believe filing for such protection is appropriate. We hold over 1,200
unique issued and enforceable patents, the majority of which cover GNSS based technologies and other applications such as optical
and laser technology. We are not dependent on any one patent. We also own numerous trademarks and service marks that contribute
to the identity and recognition of Trimble and its products and services globally. We generally prefer to own the intellectual
property used in our products, either directly or through subsidiaries. From time to time we license technology from third parties.
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Competition
Our markets are highly competitive and we expect that both direct and indirect competition will increase in the future. Within
our markets, we encounter direct competition from other GNSS, software, optical and laser suppliers such as Hexagon and Topcon,
and competition may intensify from various larger U.S. and non-U.S. competitors. Our hardware products are increasingly subject
to competition from existing and new entrants from emerging markets such as China, which compete aggressively on price at the
lower priced end of the market. Our integrated hardware and software products may also be subject to increasing competition
from mass market devices such as smartphones and tablets combined with relatively inexpensive applications, which have not
been heavily used for commercial applications in the past.
Many of our products and solutions are focused on specific industries. In each of these industries we face competition from
companies providing point solutions or more traditional, less technology intensive products and services, and these companies
often have greater financial resources and more established and recognized brands in those industries. Competing in vertical
markets with more established industry participants requires that we successfully establish a market position and market new and
sometimes unfamiliar technology and automated solutions to customers that have not previously used such products. We also
increasingly offer enterprise level solutions designed to meet the specific needs of our target industries. In doing so, we face
competition from larger and more well established providers of enterprise software and services with whom we have not previously
competed. See also "Risk Factors - We face substantial competition in our markets which could decrease our revenue and growth
rates or impair our operating results and financial condition."
Sales and Marketing
We tailor our distribution to the needs of our products and regional markets around the world. Many of our products are sold
worldwide primarily through indirect channels, including distributors, dealers and authorized representatives. Occasionally we
grant exclusive rights to market certain products, or within specific countries. These channels are supported by our regional sales
offices throughout the world. We also utilize distribution alliances, OEM relationships, and joint ventures with other companies
as a means to serve selected markets, as well as direct sales to end-users.
During fiscal 2016, sales to customers in the United States represented 49%, Europe represented 24%, Asia Pacific represented
15%, and other regions represented 12% of our total revenue.
Seasonality of Business
Construction purchases tend to occur in early spring, and U.S. governmental agencies tend to utilize funds available at the end of
the government’s fiscal year for additional purchases at the end of our third fiscal quarter in September of each year. Our agricultural
equipment business revenues have historically been the highest in the first quarter, followed by the second quarter, reflecting
buying in anticipation of the spring planting season in the Northern hemisphere. However, overall as a company, as a result of
diversification of our business across segments and the increased impact of subscription revenues, we may experience less
seasonality in the future. Changes in global macroeconomic conditions could also impact the level of seasonality we experience.
Backlog
In most of our markets, the time between order placement and shipment is short. Orders are generally placed by resellers and
customers on an as-needed basis. In general, customers may cancel or reschedule orders without penalty. For these reasons, we
do not believe that backlog is a meaningful indicator of future revenue or material to understanding our business.
Manufacturing
We outsource the manufacturing of many of our hardware products to our key contract manufacturing partners that include
Flextronics International Limited, Benchmark Electronics Inc. and Jabil. Our contract manufacturing partners are responsible for
significant material procurement, assembly and testing. We continue to manage product design through pilot production for the
subcontracted products, and we are directly involved in qualifying suppliers and key components used in all our products. Our
current contract with Flextronics continues in effect until either party gives the other ninety days written notice. We also utilize
original design manufacturers for some of our products.
We manufacture our laser and optics-based products, as well as some of our GPS products, at our plants in Dayton, Ohio; Danderyd,
Sweden and Shanghai, China. Some of these products or portions of these products are also subcontracted to third parties for
assembly.
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Our design manufacturing and distribution sites in Dayton, Ohio; Sunnyvale, California; Danderyd, Sweden; Eersel, Netherlands,
Auckland, New Zealand and Shanghai, China are registered to ISO9001:2015, covering the design, production, distribution, and
servicing of all our products.
Research and Development
We believe that our competitive position is maintained through the development and introduction of new products, including
software and services, that incorporate improved features and functionality, better performance, smaller size and weight, lower
cost, or some combination of these factors. We invest substantially in the development of new products. We also make significant
investment in the positioning, communication and information technologies that underlie our products and will likely provide
competitive advantages.
We expect to continue investing in research and development at a rate consistent with our past, with the goal of maintaining or
improving our competitive position, and entering new markets.
Employees
At the end of fiscal 2016, we employed 8,388 employees, with approximately 55% of employees in locations outside the United
States.
Some employees in Sweden and Finland are represented by unions. Some employees in Germany and France are represented by
works councils. We also employ temporary and contract personnel that are not included in the above headcount numbers. We
have not experienced work stoppages or similar labor actions.
Available Information
The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments
to those reports are available free of charge on the Company’s web site through investor.trimble.com, as soon as reasonably
practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Financial
news and reports and related information about our Company as well as non-GAAP to GAAP reconciliations can also be found
on this web site. Information contained on our web site is not part of this annual report on Form 10-K.
In addition, you may request a copy of these filings (excluding exhibits) at no cost by writing or telephoning us at our principal
executive offices at the following address or telephone number:
Trimble Inc.
935 Stewart Drive, Sunnyvale, CA 94085
Attention: Investor Relations Telephone: 408-481-8000
Executive Officers
The names, ages and positions of the Company’s executive officers as of February 20, 2017 are as follows:
Name
Steven W. Berglund
Robert G. Painter
Bryn A. Fosburgh
Christopher W. Gibson
James A. Kirkland
Jürgen D. Kliem
Darryl R. Matthews
Sachin J. Sankpal
Julie A. Shepard
James A. Veneziano
Age
65
45
54
55
57
59
49
49
59
55
Position
President and Chief Executive Officer
Chief Financial Officer
Senior Vice President
Senior Vice President
Senior Vice President, General Counsel and Secretary
Senior Vice President
Senior Vice President
Senior Vice President
Chief Accounting Officer
Senior Vice President
Steven W. Berglund—Steven Berglund has served as president and chief executive officer of Trimble since March 1999. Prior to
joining Trimble, Mr. Berglund was president of Spectra Precision, a group within Spectra Physics AB. Mr. Berglund’s business
13
experience includes a variety of senior leadership positions with Spectra Physics, and manufacturing and planning roles at Varian
Associates. He began his career as a process engineer at Eastman Kodak. He attended the University of Oslo and the University
of Minnesota where he received a B.S. in chemical engineering. Mr. Berglund received his M.B.A. from the University of Rochester.
Mr. Berglund is a member of the board of directors of the Silicon Valley Leadership Group and of the board of trustees of World
Educational Services. He is also a member of the board, as well as the construction sector board, of the Association of Equipment
Manufacturers. In December 2013, Mr. Berglund was appointed to the board of directors and compensation committee of Belden
Inc., a global provider of end-to-end signal transmission solutions.
Robert G. Painter—Robert Painter was appointed chief financial officer of Trimble in February 2016. He is responsible for
Trimble’s worldwide finance operations. Mr. Painter joined Trimble in 2006 and assumed leadership of Trimble’s business
development activities, leading all acquisition and corporate strategy activities. From 2009 to 2010, he served as general manager
of the Company’s Construction Services Division. From 2010 to 2015, he served as general manager of the Company’s joint
venture with Hilti, which was created to foster collaborative development of product innovations for the building construction
industry. In 2015, Mr. Painter was appointed vice president of Trimble Buildings, a Trimble group focused on BIM-centric
businesses that span the Design-Build-Operate continuum of the Building lifecycle. Prior to joining the Company, Mr. Painter
served in a variety of management and finance positions at Cenveo, Rapt Inc., Bain & Company, Whole Foods Markets, and Kraft
Foods. In 1993, he earned a Bachelor of Science degree in Finance from West Virginia University, and received an MBA in
Business from Harvard University in 1998.
Bryn A. Fosburgh—Bryn Fosburgh is senior vice president responsible for the Caterpillar, Hilti, and Nikon Joint Ventures, U.S.
Federal government strategy and accounts, OEM construction machine business and professional services groups. From 2014 to
2016, he served as senior vice president for Trimble's Geospatial, Civil Engineering and Construction (CEC), and Building
businesses, and the Caterpillar and Hilti-related joint ventures. From 2010 to 2014, Mr. Fosburgh was responsible for our Buildings
and Heavy Civil construction businesses along with our Caterpillar and Hilti joint ventures. From 2009 to 2010, Mr. Fosburgh
served as vice president for Trimble's Construction Division, Transportation and Logistics, Fields Service Management (FSM)
and a number of corporate functions and geographical regions. From 2007 to 2009, Mr. Fosburgh was vice president for Trimble's
Construction and Agriculture Divisions, and from 2005 to 2007, Mr. Fosburgh served as vice president and general manager of
Trimble's Engineering and Construction Division. Mr. Fosburgh joined Trimble in 1994 and has held numerous roles, including
vice president and general manager for Trimble's geomatics and engineering division, and division vice president of survey and
infrastructure. Prior to Trimble, Mr. Fosburgh was a civil engineer and also held various positions for the U.S. Army Corps of
Engineers and Defense Mapping Agency. Mr. Fosburgh received a B.S. in geology from the University of Wisconsin in Green
Bay in 1985 and an M.S. from the school of civil engineering at Purdue University in 1989.
Christopher W. Gibson—Christopher Gibson currently serves as senior vice president responsible for Trimble’s channel
development and regional development in Latin & South America, Russia, India, China and Africa. Mr. Gibson also oversees
emerging markets, key accounts and major project capabilities across the company, and is responsible for the company’s corporate
marketing functions. From 2012 to 2015, Mr. Gibson served as vice president for Trimble's Survey, Geospatial, Geographic
Information System (GIS), Infrastructure, Rail, Land Administration and Environmental Solutions businesses. Mr. Gibson joined
Trimble in 1998 as European finance and operations director. In 2009, he was appointed to serve as vice president responsible for
Trimble's Survey Division, and in December 2010, those responsibilities were expanded to include oversight of geographic regions
and divisions, including Building Construction, Construction Tools, and the Hilti joint venture. From 2008 to 2009, Mr. Gibson
served as the general manager for the Survey Division, and from 2005 to 2008, he was general manager for the Global Services
Division. Prior to Trimble, Mr. Gibson's business experience includes a number of financial management roles with Tandem
Computers, and financial analyst roles with Unilever subsidiaries. Mr. Gibson received a BA in Business Studies in 1985 from
Thames Polytechnic, now the University of Greenwich, and was admitted as a Fellow to the Chartered Institute of Management
Accountants in 1994.
James A. Kirkland—James Kirkland currently serves as senior vice president, General Counsel and Secretary. He joined the
company as vice president and general counsel in July 2008. Prior to joining Trimble, he served as general counsel and executive
vice president, strategic development at Covad Communications. Mr. Kirkland also served as senior vice president of spectrum
development and general counsel at Clearwire Technologies, Inc. Mr. Kirkland began his career in 1984 as an associate at Mintz
Levin and in 1992 he was promoted to partner. Mr. Kirkland received his BA from Georgetown University in Washington, D.C.
in 1981 and his J.D. from Harvard Law School in 1984.
Jürgen D. Kliem—Jürgen Kliem currently serves as senior vice president overseeing Trimble's Distribution Holdings, activities
in Germany and various corporate functions and initiatives. Between 2012 and 2016, he was vice president for several businesses
within the Advanced Devices segment, and was also responsible for various corporate functions, including key accounts and
government funded projects. Mr. Kliem previously served as vice president of strategy and business development from 2008 until
2012. From 2002 to 2008, Mr. Kliem served as general manager of Trimble's Survey Division, and prior to that, Mr. Kliem was
responsible for Trimble's Engineering and Construction Division in Europe. Mr. Kliem held various leadership roles at Spectra
14
Precision, which was acquired by Trimble, and at Geotronics, a company acquired by Spectra Precision. Before joining Geotronics,
Mr. Kliem worked in a privately-held surveying firm addressing cadastral, construction, plant and engineering projects. Mr. Kliem
received a Diplom Ingenieur degree from the University of Essen, Germany in 1982.
Darryl R. Matthews—Darryl Matthews currently serves as senior vice president and sector head responsible for Trimble’s
Agriculture, Forestry, Positioning Services and HarvestMark Divisions. From 2010 to 2015, Mr. Matthews served as president
and general manager of the NAFTA Region for Nufarm Americas, Inc., a subsidiary of Nufarm Limited, a publicly-traded
multinational agricultural chemical company. From 2008 to 2010, Mr. Matthews served as general manager of Nufarm Agriculture
Inc., the Canadian subsidiary of Nufarm Limited. Mr. Matthews began his career at Dow AgroSciences in Canada where he held
management roles in sales and marketing. From 2010 to 2015, he served on the Board of Directors for CropLife America. He
received an Honors B.Sc. in Agriculture majoring in Horticultural Science and Business from the University of Guelph in Ontario,
Canada in 1994.
Sachin J. Sankpal—Sachin Sankpal currently serves as senior vice president and sector head of Trimble’s Intelligent Transportation
Systems. From 2012 to 2015, Mr. Sankpal held various general management positions within Honeywell, including president of
Honeywell International’s Global Safety Products Division in Paris, France, vice president and general manager of Honeywell’s
Safety Products Division for Europe, Middle East, Africa and India. From 2010 to 2012, he served as vice president of Global
Strategic Marketing for Honeywell’s Life Safety Division. From 2003 to 2010, he held various business and operational roles at
Avaya, Inc., including director of Strategy and Product Management, chief operating officer of Avaya-Japan, Ltd., operations
leader in India, and director of Global Restructuring. From 2001 to 2003, he served as a director of Strategy and Finance for
Trimble’s Engineering & Construction Division. From 1994 to 1999, Mr. Sankpal was a consultant for Navigant Consulting based
in Boston, Mass. He began his career at Langan Engineering & Environmental Services as a staff engineer. He holds a BS in Civil
Engineering from Rutgers University, an MS in Civil Engineering from the University of Maryland and an MBA from Dartmouth
College.
Julie A. Shepard—Julie Shepard joined Trimble in December of 2006 as vice president of finance, and was appointed chief
accounting officer in May 2007. Prior to joining Trimble, Ms. Shepard served as vice president of finance and corporate controller
at Quantum Corporation. Ms. Shepard brings with her over 25 years of experience in a broad range of finance roles, with diverse
experience ranging from early stage private equity backed technology companies to large multinational corporations. Ms. Shepard
began her career at Price Waterhouse and is a Certified Public Accountant. She received a B.S in Accounting from California State
University. She is a member of the AICPA, Financial Executive Institute and the California Society of CPAs.
James A. Veneziano—James Veneziano has served as a vice president of Trimble since 2009 and is currently senior vice president
responsible for portions of Trimble's Mobile Solutions, Data Services and Hosting, Global Services and portions of the Advanced
Devices segment. Mr. Veneziano joined Trimble in 1990 as a manufacturing engineer in the Company's Operations group. In 1993,
he was appointed director of Operations. In 1998, Mr. Veneziano was appointed director of marketing for Agriculture and Mapping
and GIS. From 2000 to 2005, Mr. Veneziano served as the general manager of Trimble's Agriculture business. From 2005 to 2009,
he was the general manager of Trimble's Construction business. Prior to joining Trimble, Mr. Veneziano worked for Hewlett-
Packard in a variety of manufacturing positions including development engineer and engineering supervisor as well as new product
introduction manager. He received a B.S. in electrical engineering from Colorado State University in Fort Collins in 1984.
Item 1A. Risk Factors
RISKS AND UNCERTAINTIES
You should carefully consider the following risk factors, in addition to the other information contained in this Form 10-K and in
any other documents to which we refer you in this Form 10-K, before purchasing our securities. The risks and uncertainties
described below are not the only ones we face.
Our annual and quarterly performance may fluctuate which could negatively impact our operations, financial results, and stock
price
Our operating results have fluctuated and can be expected to continue to fluctuate in the future on a quarterly and annual basis as
a result of a number of factors, many of which are beyond our control. Results in any period could be affected by:
•
•
•
•
•
changes in market demand,
competitive market conditions,
the timing of recognizing revenues,
fluctuations in foreign currency exchange rates,
the cost and availability of components,
15
•
•
•
•
•
•
the mix of our customer base and sales channels,
the mix of products sold,
pricing of products,
changes in U.S. or foreign policies on trade, taxes or spending,
global or regional economic and political developments, and
other risks, including those described below.
Seasonal variations in demand for our products may also affect our quarterly results. Construction purchases tend to occur in
early spring, and U.S. governmental agencies tend to utilize funds available at the end of the government’s fiscal year for additional
purchases at the end of our third fiscal quarter in September of each year. Our agricultural equipment business revenues have
historically been the highest in the first quarter, followed by the second quarter, reflecting buying in anticipation of the spring
planting season in the Northern hemisphere. If we do not accurately forecast seasonal demand we may be left with unsold inventory
or have a shortage of inventory, which could negatively impact our financial results.
Due in part to the buying patterns of our customers, a significant portion of our quarterly revenue occurs from orders received and
immediately shipped to customers in the last few weeks and days of each quarter, while our operating expense tends to remain
fairly predictable. A majority of our sales force earns commissions on a quarterly basis which may cause concentrations of orders
at the end of any fiscal quarter. It could harm our operating results if for any reason expected sales are deferred, orders are not
received, or shipments are delayed a few days at the end of a quarter.
The price of our common stock could decline substantially in the event any of these risks result in our financial performance being
below the expectations of public market analysts and investors, which are based on historical and predictive models that are not
necessarily accurate representations of the future.
The volatility of our stock price could adversely affect an investment in our common stock
The market price of our common stock has been, and may continue to be, highly volatile. During fiscal 2016, our stock price
ranged from $18.36 to $30.84. We believe that a variety of factors could cause the price of our common stock to fluctuate, perhaps
substantially, including:
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announcements and rumors of developments related to our business or the industry in which we compete, or related to
the industries in which our customers compete,
quarterly fluctuations in our actual or anticipated operating results and order levels,
general conditions in the worldwide economy,
acquisition announcements,
new products or product enhancements announced or introduced by us or our competitors,
disputes with respect to developments in patents or other intellectual property rights,
security breaches,
developments in our relationships with our partners, customers and suppliers,
political, economic or social uncertainty, and
acts of terrorism.
In addition, the stock market in general and the markets for shares of “high-tech” companies in particular, have frequently
experienced extreme price fluctuations which have often been unrelated to the operating performance of affected companies. Any
such fluctuations in the future could adversely affect the market price of our common stock.
Global and regional economic conditions and the cyclicality of some of our key markets may negatively impact our businesses
and our operating results
Our earnings and financial position are and will continue to be influenced by various macroeconomic factors, including increases
or decreases in gross domestic product, the level of consumer and business confidence and spending, changes in the interest rates
on consumer and business credit, fluctuations in foreign currency exchange rates, changes in tax rates or policy, energy prices,
changes in international trade policies and the demand for and the cost of commodities such as corn, which exist in the various
countries in which we operate. During 2016, we experienced a strengthening U.S. Dollar which had the impact of making some
of our products and services more expensive than many of our local competitors. Developments with respect to trade policy and
laws, treaties or international accords related to imports and exports, such as NAFTA, or tariffs or other trade barriers which could
be imposed by the U.S. or by other countries, could have a material adverse effect on our or on our suppliers’ or customers’ business.
In the recent past, uncertainties in the financial and credit markets have caused our customers to postpone purchases, and negative
economic conditions may reduce future sales of, or demand for, our products and services. Negative economic conditions or
changes in tax policy may depress the tax revenues of government entities, which are significant purchasers of our products. Many
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of our products are sold through dealer channels, and our dealers depend on the availability of credit both to finance purchases of
our products for their inventory, and to finance purchases by their customers. Sources of credit could disappear or the financial
situation of our channel partners and customers could become such that they are no longer eligible for such financing, or financing
becomes more costly. Negative economic conditions may result in increased collection times or greater write-offs, affecting our
cash flow and operating results. Our suppliers may be impacted by economic pressures, which may adversely affect their ability
to fulfill their obligations to us, or result in increased prices, and therefore cause a disruption in our supply chain or impact our
operating results.
Financial conditions in several regions continue to place significant economic pressures on existing and potential customers,
including our dealer channels. There is ongoing concern about economic conditions in Europe, which has experienced negative
impacts from sovereign debt levels and government taxing and spending actions to address such issues, as well as the United
Kingdom’s exit from the European Union. Other governments may continue to implement measures which may slow the economic
growth rate in those countries (e.g., higher interest rates and reduced bank lending). Growth rates in key emerging markets,
including China, have slowed, which could affect demand for our products, both with respect to the products we sell directly into
emerging markets, and indirectly by reducing demand for our customers’ products. Falling commodity prices have also negatively
affected markets such as the U.S., Canada, the Middle East and Australia.
We are subject to the cyclicality of the agricultural and engineering and construction industries, which can cause sudden (and
sometimes material) declines in demand, with negative effects on sales, inventory levels and product pricing. In general, demand
in the engineering and construction industries for our products is highly correlated to the economic cycle and can be subject to
even greater levels of volatility. The agricultural spending cycle is influenced by general economic conditions as well as weather,
crop loads, commodity pricing, the availability of credit and the strength of the U.S. Dollar. Since 2014, the agricultural sector
has been experiencing a significant downturn and which has had and may have a negative effect on the company’s overall growth
rate. In addition, new sources of supply and a decline in demand have resulted in a substantial decline in the price of oil and gas
since 2014, and as a result, the oil and gas industry has been experiencing a significant downturn which has had and may continue
to have a negative effect on our engineering and construction business.
If there is significant deterioration in the global economy, the economies of the countries or regions where our customers are
located or do business, or the industries that we or our customers serve, the demand for our products and services would likely
decrease and our results of operations, financial position and cash flows could be materially and adversely affected. Changes in
economic conditions also make it difficult to make financial forecasts, which could cause us to miss our financial guidance and
adversely affect our stock price.
We may not be able to enter into or maintain important alliances and distribution relationships
We believe that in certain business opportunities our success will depend on our ability to form and maintain alliances with industry
participants, such as Caterpillar, Nikon, Hilti, and CNH Global. Our failure to form and maintain such alliances, or the preemption
or disruption of such alliances by actions of competitors, will adversely affect our ability to sell our products to customers. Our
relationships with substantial industry participants such as Caterpillar and CNH are complex and multifaceted, and are likely to
evolve over time based upon the changing business needs and objectives of the parties. Since these strategic relationships contribute
to significant ongoing business in certain of our important markets, changes in these relationships could adversely affect our sales
and revenues.
We utilize dealer networks, including those affiliated with some of our strategic allies such as Caterpillar and CNH Global, to
market, sell and service many of our products. Changes in our product mix, including increasing provision of software and bundled
solutions tailored to the needs of specific vertical markets, impose new demands on our distribution channels and may require
significant changes in the skills and expertise required to successfully distribute our products and services, or the creation of new
distribution channels. Recruiting and retaining qualified channel partners and training them in the use and the selling of our
technology and product offerings requires significant time and resources. In order to develop and expand our distribution channels,
we must continue to expand and improve our processes and procedures that support our distribution channels, including our
investment in systems and training, and those processes and procedures may become increasingly complex and difficult to manage.
The time and expense required for sales and marketing organizations of our channel partners to become familiar with our product
offerings, including our new product developments, and newer types of offering such as software and services, may make it more
difficult to introduce those products to end-users and delay end-user adoption, which could result in lower revenues.
Disruption of dealer coverage within specific geographic or end-user markets could cause difficulties in marketing, selling or
servicing our products and have an adverse effect on our business, operating results or financial condition. Moreover, dealers who
carry products that compete with our products may focus their inventory purchases and sales efforts on goods provided by
competitors due to industry demand or profitability. Such sourcing decisions can adversely impact our sales, financial condition
and results of operations.
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We are exposed to fluctuations in currency exchange rates which can adversely affect our operating results
Fluctuations in currencies impact our operating results, which are reported in U.S. Dollars. A significant portion of our business
is conducted outside the U.S., and as such, we face exposure to movements in the currency exchange rates between the U.S. Dollar
and other currencies. These exposures may change over time as economic conditions and business practices evolve and could
have a material adverse impact on our financial results and cash flows. During 2016, our business was negatively impacted by
the strong U.S. Dollar which increased the cost of some of our products and services relative to those of local competitors in some
jurisdictions. If the U.S. Dollar remains strong or there is a continued increase in the exchange rate of the U.S. Dollar against
other currencies, it could negatively impact foreign demand for our products or reduce the dollar value of local currency sales. A
significant portion of our revenue is derived from countries outside of the United States. Possible import, export, tariff and other
trade barriers, which could be imposed by the U.S. or other countries, might have a material adverse effect on the business.
Currently, we routinely hedge only those currency exposures associated with certain assets and liabilities denominated in non-
functional currencies. The hedging activities undertaken by us are intended to offset the short term impact of currency fluctuations
on certain non-functional currency assets and liabilities. Our attempts to hedge against these risks involve transaction costs, and
could be unsuccessful and expose us to losses.
Investing in and integrating new acquisitions could be costly, place a significant strain on our management systems and resources,
or may fail to deliver the expected return on investment, which could negatively impact our operating results
We typically acquire a number of businesses each year, and intend to continue to acquire other businesses. Acquisitions entail
numerous risks, including:
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potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated
benefits from integration;
loss of key employees or customers of acquired operations;
difficulty of assimilating geographically dispersed operations and personnel of the acquired companies;
potential disruption of our business or the acquired business;
unanticipated expenses related to acquisitions;
unanticipated difficulties in conforming business practices, policies, procedures, internal controls, and financial records
of acquisitions with our own business;
impairment of relationships with employees, customers, vendors, distributors or business partners of either an acquired
company or our own business;
inability to accurately forecast the performance of recently acquired businesses, resulting in unforeseen adverse effects
on our operating results;
potential liabilities, including liabilities resulting from known or unknown compliance or legal issues, associated with
an acquired business; and
negative accounting impact to our results of operations because of purchase accounting treatment and the business or
accounting practices of acquired companies.
Any such effects from acquisitions could be costly and place a significant strain on our management systems and resources.
As a result of acquisitions, we have significant assets that include goodwill and other purchased intangibles. The testing of this
goodwill and intangibles for impairment under established accounting guidelines requires significant use of judgment and
assumptions. Changes in business conditions or in the prospects or results of operations of the acquired business could require
negative adjustments to the valuation of these assets resulting in write-offs which adversely affect our results. If we divest a
business and the proceeds are less than the net book value at the time, we would be forced to write off the difference. In addition,
changes in the operating results or stock price of companies in which we have investments may have a direct impact on our financial
statements or could result in our having to write-down the value of such investment.
Even if successfully negotiated and closed, acquisitions may not yield expected synergies, may not advance our business strategy
as expected, may fall short of expected return-on-investment targets, or may not prove successful or effective for our business.
Companies that we acquire may operate with different cost and margin structures, which could further cause fluctuations in our
operating results and adversely affect our operating margins.
Our internal and customer-facing systems, and systems of third parties we rely upon, may be subject to disruption, delays or
cybersecurity breaches that could adversely impact our customers and operations
A cybersecurity incident in our own systems or the systems of our third party providers may compromise the confidentiality,
integrity, or availability of our own internal data, the availability of our products and websites designed to support our customers,
or our customer data. Computer hackers, foreign governments or cyber terrorists may attempt to or succeed in penetrating our
network security and our website. Unauthorized access to our proprietary business information or customer data may be obtained
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through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service
attacks, employee theft or misuse, breach of the security of the networks of our third party providers, or other misconduct. We
have experienced security breaches in the past, and despite our efforts to maintain the security and integrity of our systems, it is
virtually impossible to eliminate this risk. Because the techniques used by computer hackers who may attempt to penetrate and
sabotage our network security or our website change frequently, may take advantage of weaknesses in third party technology or
standards of which we are unaware or that we do not control, and may not be recognized until after they have been launched
against a target, we may be unable to anticipate or counter these techniques. It is also possible that unauthorized access to customer
data may be obtained through inadequate use of security controls by customers, vendors or business partners. A cybersecurity
incident affecting our systems may also result in theft of our intellectual property, proprietary data or trade secrets, which would
compromise our competitive position, reputation and operating results.
The systems we rely upon also remain vulnerable to damage or interruption from a number of other factors, including access to
the internet, the failure of our network or software systems, or significant variability in visitor traffic on our product websites,
earthquakes, floods, fires, power loss, telecommunication failures, computer viruses, human error, and similar events or disruptions.
Some of our systems are not fully redundant, and our disaster recovery planning is not sufficient for all eventualities. Our systems
are also subject to intentional acts of vandalism. Despite any precautions we may take, the occurrence of a natural disaster, a
decision by any of our third-party hosting providers to close a facility we use without adequate notice for financial or other reasons,
or other unanticipated problems at our hosting facilities could cause system interruptions and delays, and result in loss of critical
data and lengthy interruptions in our services.
We rely on our information systems and those of third parties for activities such as processing customer orders, delivery of products,
hosting and providing services and support to our customers, billing and tracking our customers, hosting and managing our customer
data, and otherwise running our business. Any disruptions or unexpected incompatibilities in our information systems and those
of the third parties upon whom we rely could have a significant impact on our business.
An increasing portion of our revenue comes from software as a service solutions and other hosted services in which we store,
retrieve, communicate and manage data which is critical to our customers’ business systems. Disruption of our systems which
support these services and solutions could cause disruptions in our customers’ systems and in the businesses that rely on these
systems. Any such disruptions could harm our reputation, create liabilities to our customers, hurt demand for our services and
solutions, and negatively impact our revenues and profitability.
Our products are highly technical and may contain undetected errors, product defects, security vulnerabilities or software errors,
which could result in damage to our reputation, lost revenue, diverted development resources and increased service costs, warranty
claims, and litigation
Our products, including our software products, are highly technical and complex and, when deployed, may contain errors, defects
or security vulnerabilities. We must develop our products quickly to keep pace with the rapidly changing market, and we have a
history of frequently introducing new products. Products and services as sophisticated as ours could contain undetected errors or
defects, especially when first introduced or when new models or versions are released. Such occurrences could result in damage
to our reputation, lost revenue, diverted development resources, increased customer service and support costs, warranty claims,
and litigation.
We warrant that our products will be free of defect for various periods of time, depending on the product. In addition, certain of
our contracts include epidemic failure clauses. If invoked, these clauses may entitle the customer to return or obtain credits for
products and inventory, or to cancel outstanding purchase orders even if the products themselves are not defective.
Errors, viruses or bugs may be present in software or hardware that we acquire or license from third parties and incorporate into
our products or in third party software or hardware that our customers use in conjunction with our products. Our customers’
proprietary software and network firewall protections may corrupt data from our products and create difficulties in implementing
our solutions. Changes to third party software or hardware that our customers use in conjunction with our software could also
render our applications inoperable. Any errors, defects or security vulnerabilities in our products or any defects in, or compatibility
issues with, any third party hardware or software or customers’ network environments discovered after commercial release could
result in loss of revenues or delay in revenue recognition, loss of customers, theft of trade secrets, data or intellectual property and
increased service and warranty cost, any of which could adversely affect our business, financial condition and results of operations.
Undiscovered vulnerabilities in our products alone or in combination with third party hardware or software could expose them to
hackers or other unscrupulous third parties who develop and deploy viruses, and other malicious software programs that could
attack our products. Actual or perceived security vulnerabilities in our products could harm our reputation and lead some customers
to return products, to reduce or delay future purchases or use competitive products.
If we are unable to effectively manage our increasingly diverse and complex businesses and operations, our ability to generate
growth and revenue from new or existing customers may be adversely affected
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Because our operations are geographically diverse and increasingly complex, our personnel resources and infrastructure could
become strained and our reputation in the market and our ability to successfully manage and grow our business may be adversely
affected. The size, complexity and diverse nature of our business and the expansion of our product lines and customer base have
placed increased demands on our management and operations, and further growth, if any, may place additional strains on our
resources in the future. Our ability to effectively compete and to manage our planned future growth will depend on, among other
things, the following:
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increasing the productivity of our existing employees,
attracting, retaining, training and motivating our employees, particularly our technical and management personnel,
deploying our solutions using third-party information systems, which may require changes to our applications,
documentation and operational processes,
improving our operational, financial and management controls, and
improving our information reporting systems and procedures.
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The company has increasingly diversified the nature of its businesses both organically and by acquisition. As a result, an increasing
amount of our business involves business models which require managerial techniques and skill sets which are different from
those required to manage our historical core businesses. We are increasingly selling products and solutions directly to large
enterprise customers and other end users of our products. A direct sales model requires different skills and management processes
and procedures from those we have generally used in our business in the past, and may create conflicts with our channel partners.
Over the last few years we have been increasing the portion of our business associated with professional services in order to
customize our solutions for the needs of individual customers. If we are not successful in executing on these new models, our
sales, revenue and financial performance may suffer.
Changes in our software and subscription businesses may negatively affect our operating results
An increasing portion of our revenue is generated through software maintenance and subscription revenue. Our customers have
no obligation to renew their agreements for our software maintenance or subscription services after the expiration of their initial
contract period, which typically ranges from one to five years. Our customer acquisition and renewal rates may decline or fluctuate
as a result of a number of factors, including overall economic conditions, the health of their businesses, competitive offerings and
customer dissatisfaction with our services. If customers do not renew their contracts for our products, our maintenance and
subscription revenue will decline and our financial results will suffer. Any reduction in the number of licenses that we sell, even
if our customer acquisition rates do not change, will have a negative impact on our future maintenance revenue growth. Since its
introduction, our software as a service delivery model has also contributed to subscription revenue. If any of our assumptions
about expenses, revenue or revenue recognition principles from these initiatives proves incorrect, or our attempts to improve
efficiency are not successful, our actual results may vary materially from those anticipated, and our financial results will be
negatively impacted.
We continually re-evaluate our software licensing programs and subscription renewal programs, including specific license models,
delivery methods, and terms and conditions. Changes to our licensing programs and subscription renewal programs, including the
timing of the release of enhancements, upgrades, maintenance releases, the term of the contract, discounts, promotions and other
factors, could impact the timing of the recognition of revenue for our products, related enhancements and services and could
adversely affect our operating results and financial condition. We may implement different licensing models which require the
Company to recognize licensing fees over a longer period. Over the last few years, we have increasingly offered additional products
in a software as a service (SaaS) model. SaaS revenues are currently recognized ratably over the subscription period. Any
significant increase in the percentage of our business generated from such a subscription model, could increase the amount of
revenue to be recognized over time as opposed to upfront, which would delay revenue recognition and have a negative impact on
our operating results in any quarterly period. Revenue recognition is complex and will change as we adopt new accounting standard
ASU No.
Due to these complexities, we may not be able to accurately forecast our non-deferred and deferred revenues,
which could cause us to miss our earnings estimates or revenue projections and negatively impact our stock price.
We face substantial competition in our markets which could decrease our revenue and growth rates or impair our operating results
and financial condition
Our markets are highly competitive and we expect that both direct and indirect competition will increase in the future. Our overall
competitive position depends on a number of factors including the price, quality and performance of our products, the effectiveness
of our distribution channel and direct sales force, the level of customer service, the development of new technology and our ability
to participate in emerging markets. Within each of our markets, we encounter direct competition from other GNSS, software,
optical and laser suppliers and competition may intensify from various larger U.S. and non-U.S. competitors and new market
entrants, particularly from emerging markets such as China. Our products, which commonly use GNSS for basic location
information, may be subject to competition from alternative location technologies such as simultaneous location and mapping
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technology. As we sell an increasing amount of software and subscription services, we face competition from a group of large
well established companies with whom we have not previously competed. Our integrated hardware and software products may
be subject to increasing competition from mass market devices such as smartphones and tablets used in conjunction with relatively
inexpensive applications, which have not been heavily used for commercial applications in the past. These developments may
require us to rapidly adapt to technological and customer preference changes that we have not previously been exposed to, including
those related to cloud computing, mobile devices and new computing platforms. Such competition has in the past resulted and in
the future may result in price reductions, reduced margins or loss of market share, any of which could decrease our revenue and
growth rates or impair our operating results and financial condition. We believe that our ability to compete successfully in the
future against existing and additional competitors will depend largely on our ability to execute our strategy to provide products
with significantly differentiated features compared to currently available products. We may not be able to implement this strategy
successfully, and our products may not be competitive with other technologies or products that may be developed by our competitors,
many of whom have significantly greater financial, technical, manufacturing, marketing, sales, and other resources than we do.
We are dependent on new products and services and if we are unable to successfully introduce them into the market, or to effectively
compete with new, disruptive product alternatives, our customer base may decline or fail to grow as anticipated
Our future revenue stream depends to a large degree on our ability to bring new products and services to market on a timely basis.
We must continue to make significant investments in research and development in order to continue to develop new products and
services, enhance existing products and achieve market acceptance of such products and services. We may encounter problems
in the future in innovating and introducing new products and services. Our development stage products may not be successfully
completed or, if developed, may not achieve significant customer acceptance. Development and manufacturing schedules for
technology products are difficult to predict, and we might not achieve our goals as to the timing of introducing new technology
products, or could encounter increased costs. The timely availability and cost effective production of these products in volume
and their acceptance by customers are important to our future success. If we are unable to introduce new products and services,
if other companies develop competing technology products and services, or if we do not develop compelling new products and
services, our number of customers may not grow as anticipated, or may decline, which could harm our operating results. Many
of our offerings are increasingly focused on software and subscription services. The software industry is characterized by rapidly
changing customer preferences which require us to address multiple delivery platforms, new mobile devices and cloud computing.
Life cycles of software products can be short and this can exacerbate the risks associated with developing new products. The
introduction of third-party solutions embodying new, disruptive technologies and the emergence of new industry standards could
make our existing and future software solutions and other products obsolete or non-competitive. If we are not able to develop
software and other solutions that address the increasingly sophisticated needs of our customers, or if we are unable to adapt to
new technologies or new industry standards that impact our markets, our ability to retain or increase market share and operating
results could be materially adversely affected.
Some of our products rely on third party technologies including open source software, so if integration or incompatibility issues
arise with these technologies or these technologies become unavailable, our product and services development may be delayed,
our reputation could be harmed and our business could be adversely affected
We license software, technologies and intellectual property underlying some of our software from third parties. The third party
licenses we rely upon may not continue to be available to us on commercially reasonable terms, or at all, and the software and
technologies may not be appropriately supported, maintained or enhanced by the licensors, resulting in development delays. Some
software licenses are subject to annual renewals at the discretion of the licensors. In some cases, if we were to breach a provision
of these license agreements, the licensor could terminate the agreement immediately. The loss of licenses to, or inability to support,
maintain and enhance, any such third party software or technology could result in increased costs, or delays in software releases
or updates, until such issues have been resolved. This could have a material adverse effect on our business, financial condition,
results of operations, cash flows and future prospects.
We also incorporate open source software into our products. Although we monitor our use of open source software, the terms of
many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a
manner that could impose unanticipated conditions or restrictions on our ability to market or sell our products or to develop new
products. In such event, we could be required to seek licenses from third-parties in order to continue offering our products, to
disclose and offer royalty-free licenses in connection with our own source code, to re-engineer our products or to discontinue the
sale of our products in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect
our business.
We are dependent on proprietary technology, which could result in litigation that could divert significant valuable resources
Our future success and competitive position is dependent upon our proprietary technology, and we rely on patent, trade secret,
trademark, and copyright laws to protect our intellectual property. The patents owned or licensed by us may be invalidated,
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circumvented, infringed or challenged. The rights granted under these patents may not provide competitive advantages to us. Any
of our pending or future patent applications may not be issued within the scope of the claims sought by us, if at all.
Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy or otherwise obtain our
software or develop software with the same functionality or to obtain and use information that we regard as proprietary. Others
may develop technologies that are similar or superior to our technology, duplicate our technology or design around the patents
owned by us. In addition, effective copyright, patent and trade secret protection may be unavailable, limited or not applied for in
certain countries. The steps taken by us to protect our technology might not prevent the misappropriation of such technology.
The value of our products relies substantially on our technical innovation in fields in which there are many current patent filings.
Third-parties may claim that we or our customers (some of whom are indemnified by us) are infringing their intellectual property
rights. For example, individuals and groups may purchase intellectual property assets for the purpose of asserting claims of
infringement and attempting to extract settlements from us or our customers. The number of these claims has increased in recent
years and may continue to increase in the future. As new patents are issued or are brought to our attention by the holders of such
patents, it may be necessary for us to secure a license from such patent holders, redesign our products, or withdraw products from
the market. In addition, the legal costs and engineering time required to safeguard intellectual property or to defend against
litigation could become a significant expense of operations. Any such litigation could require us to incur substantial costs and
divert significant valuable resources, including the efforts of our technical and management personnel, which could harm our
results of operations and financial condition.
Our global operations expose us to risks and challenges associated with conducting business internationally, and our results of
operations may be adversely affected by our efforts to comply with the laws of other countries, as well as U.S. laws which apply
to international operations, such as the Foreign Corrupt Practices Act (FCPA) and U.S. export control laws
We operate on a global basis with offices or activities in Europe, Africa, Asia, South America, Australasia and North America.
We face risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations
that apply to our international operations. These laws and regulations include data privacy requirements, labor relations laws, tax
laws, anti-competition regulations, import and trade restrictions, export control laws, and laws which prohibit corrupt payments
to governmental officials or certain payments or remunerations to customers, including the U.S. Foreign Corrupt Practices Act
(FCPA), the U.K. Bribery Act, or other anti-corruption laws that have recently been the subject of a substantial increase in global
enforcement. Many of our products are subject to U.S. export law restrictions that limit the destinations and types of customers
to which our products may be sold, or require an export license in connection with sales outside the United States. Given the high
level of complexity of these laws, there is a risk that some provisions may be inadvertently or intentionally breached, for example
through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal documentation
requirements or otherwise. Also, we may be held liable for actions taken by our local dealers and partners. Violations of these
laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions or conditions
on the conduct of our business. Any such violations could include prohibitions or conditions on our ability to offer our products
in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability
to attract and retain employees, our business and our operating results.
In addition, we operate in many parts of the world that have experienced significant governmental corruption to some degree and,
in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We may be
subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses or other preferential
treatment by making payments to government officials and others in positions of influence or through other methods that relevant
law and regulations prohibit us from using. Our success depends, in part, on our ability to anticipate these risks and manage these
difficulties.
In addition to the foregoing, engaging in international business inherently involves a number of other difficulties and risks,
including:
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longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal
systems,
political or economic instability,
potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers,
difficulties and costs of staffing and managing foreign operations,
differing local customer product preferences and requirements than our U.S. markets,
difficulties protecting or procuring intellectual property rights, and
fluctuations in foreign currency exchange rates.
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These factors or any combination of these factors may adversely affect our revenue or our overall financial performance.
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Changes in our effective tax rate may reduce our net income in future periods
As a global company, we are subject to income and other taxes in the United States and numerous foreign jurisdictions. Significant
judgment is required to determine and estimate worldwide tax liabilities. Our effective tax rate is largely based on the geographic
mix of earnings, statutory rates, inter-company transfer pricing, and enacted tax laws. A number of factors may increase our future
effective tax rates, including:
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the jurisdictions in which profits are determined to be earned and taxed,
the resolution of issues arising from tax audits with U.S. and foreign tax authorities,
changes in our intercompany transfer pricing methodology,
changes in the valuation of our deferred tax assets and liabilities,
increases in expense not deductible for tax purposes, including transaction costs and impairments of goodwill in connection
with acquisitions,
changes in the realizability of available tax credits,
changes in share-based compensation,
changes in tax laws or the interpretation of such tax laws, including the Base Erosion and Profit Shifting (“BEPS”)
project being conducted by the Organization for Economic Co-operation and Development (“OECD”) and the
potential tax reform of corporate tax system in the U.S.,
changes in generally accepted accounting principles, and
the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes.
On October 5, 2015, the OECD released the final reports from its BEPS Action Plans. The BEPS recommendations covered a
number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules and tax treaties.
These changes, which have been or are in the process of being adopted by numerous countries, could increase tax uncertainty and
may adversely affect our provision for income taxes. If our effective tax rates were to increase, our operating results, cash flows
or financial condition could be adversely affected.
In January 2016, the EC announced an Anti-Tax Avoidance Package containing measures to regulate certain elements of tax
planning further and to boost tax transparency for consideration by the European Parliament and Council. Meanwhile, in the U.S.,
a number of proposals for broad reform of the corporate tax system are under evaluation by various legislative and administrative
bodies. Future tax reform resulting from these developments may result in changes to long-standing tax principles, which could
adversely affect our effective tax rate or result in higher cash tax liabilities. It is not possible to accurately determine the overall
impact of such proposals on our effective tax rate at this time.
We are currently in various stages of multiple year examinations by federal, state, and foreign taxing authorities, including a review
of our 2010 to 2012 tax years by the U.S. Internal Revenue Service, or IRS. If the IRS or the taxing authorities of any other
jurisdiction were to successfully challenge a material tax position, we could become subject to higher taxes and our earnings would
be adversely affected.
Our reported financial results may be adversely affected by changes in accounting principles applicable to us
Generally accepted accounting principles in the U.S. are subject to interpretation by the Financial Accounting Standards Board,
or FASB, the SEC, and other bodies formed to promulgate and interpret appropriate accounting principles. For example, in May
2014, the FASB issued a comprehensive new revenue recognition standard that replaces the current revenue recognition guidance
under U.S. GAAP. This standard establishes a principle for recognizing revenue upon the transfer of promised goods or services
to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The standard
also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. We expect to adopt this
accounting standard update in the first quarter of fiscal 2018. Entities have the option of using either a full retrospective or modified
retrospective approach for the adoption of the standard. We are still evaluating which adoption method we will apply and are
continuing to assess the impact that the updated standard will have on our consolidated financial statements and related disclosures.
This new standard is both technical and complex, and we expect to incur significant ongoing costs to implement and maintain
compliance with this new standard. In addition, there may be greater uncertainty with respect to projecting revenue results from
future operations as we work through the new revenue recognition standard. The new standard may impact the timing and amounts
of revenue recognized. Adoption of the new revenue recognition standard along with any other changes in accounting principles
or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions
completed before the announcement of a change. Any difficulties in the implementation of new or changed accounting standards
could cause us to fail to meet our financial reporting obligations. If our estimates relating to our critical accounting policies are
based on assumptions or judgments that change or prove to be incorrect, our operating results could fall below expectations of
securities analysts and investors, resulting in a decline in our stock price.
We are dependent on a specific manufacturer and assembler for many of our products and on other manufacturers, and specific
suppliers of critical parts for our products
23
We are substantially dependent upon Flextronics International Limited as our preferred manufacturing partner for many of our
GNSS products. Under our agreement with Flextronics, we provide a twelve-month product forecast and place purchase orders
with Flextronics at least thirty calendar days in advance of the scheduled delivery of products to our customers, depending on
production lead time. Although purchase orders placed with Flextronics are cancelable, the terms of the agreement would require
us to purchase from Flextronics all inventory not returnable or usable by other Flextronics customers. Accordingly, if we
inaccurately forecast demand for our products, we may be unable to obtain adequate manufacturing capacity from Flextronics to
meet customers’ delivery requirements or we may accumulate excess inventories, if such inventories are not usable by other
Flextronics customers. Our current contract with Flextronics continues in effect until either party gives the other ninety days
written notice.
We rely on specific suppliers for a number of our critical components and on other contract manufacturers, including Benchmark
Electronics and Jabil, for the manufacture, test and assembly of certain products and components. We have experienced shortages
of components in the past. Our current reliance on specific or a limited group of suppliers and contract manufacturers involves
risks, including a potential inability to obtain an adequate supply of required components, reduced control over pricing and delivery
schedules, discontinuation of or increased prices for certain components, and economic conditions which may adversely impact
the viability of our suppliers and contract manufacturers. This situation may be exacerbated during any period of economic
recovery or a competitive environment. Any inability to obtain adequate deliveries or any other circumstance that would require
us to seek alternative sources of supply or to manufacture, assemble and test such components internally could significantly delay
our ability to ship our products, which could damage relationships with current and prospective customers and could harm our
reputation and brand as well as our operating results.
We are dependent on the availability and unimpaired use of allocated bands within the radio frequency spectrum and our products
may be subject to harmful interference from new or modified spectrum uses
Our GNSS technology is dependent on the use of satellite signals and on terrestrial communication bands. International allocations
of radio frequency are made by the International Telecommunications Union (ITU), a specialized technical agency of the United
Nations. These allocations are further governed by radio regulations that have treaty status and which may be subject to modification
every two to three years by the World Radio Communication Conference. Each country also has regulatory authority over how
each band is used in the country. In the United States, the Federal Communications Commission (FCC) and the National
Telecommunications and Information Administration share responsibility for radio frequency allocations and spectrum usage
regulations.
Any ITU or local reallocation of radio frequency bands, including frequency band segmentation and sharing of spectrum, or other
modifications of the permitted uses of relevant frequency bands, may materially and adversely affect the utility and reliability of
our products and have significant negative impacts on our customers, both of which could reduce demand for our products. For
example, the FCC has been considering proposals to repurpose spectrum adjacent to the GPS bands for terrestrial broadband
wireless operations throughout the United States. If the FCC were to permit implementation of such proposals, or similar proposals,
terrestrial broadband wireless operations could create harmful interference to GPS receivers within range of such operations and
impose costs to retrofit or replace affected receivers. Similarly, other countries have considered proposals for use of frequencies
used by our products as well as adjacent bands that could cause harmful interference to our products.
Many of our products use other radio frequency bands, such as the public land mobile radio bands, together with the GNSS signal,
to provide enhanced GNSS capabilities, such as real-time kinematics precision. The continuing availability of these non-GNSS
radio frequencies is essential to provide enhanced GNSS products to our precision survey, agriculture, and construction machine
controls markets. In addition, transmissions and emissions from other services and equipment operating in adjacent frequency
bands or in-band may impair the utility and reliability of our products. Any regulatory changes in spectrum allocation or in
allowable operating conditions could have a material adverse effect on our business, results of operations, and financial condition.
Many of our products rely on GNSS technology, GPS and other satellite systems, which may become degraded or inoperable and
result in lost revenue
GNSS technology, GPS satellites and their ground support systems are complex electronic systems subject to electronic and
mechanical failures and possible intentional disruption. Many of the GPS satellites currently in orbit were originally designed to
have lives of 7.5 years and are subject to damage by the hostile space environment in which they operate. However, of the current
deployment of 31 operational satellites in orbit, six have been in operation for more than 15 years, and over half have been in use
for more than 7.5 years. Repair of damaged or malfunctioning satellites is currently not economically feasible. If a significant
number of satellites were to become inoperable, there could be a substantial delay before they are replaced with new satellites. A
reduction in the number of operating satellites below the 24-satellite standard established for GPS may impair the utility of the
GPS system and the growth of current and additional market opportunities. In addition, software updates to GPS satellites and
ground control segments can cause problems, and we depend on public access to open technical specifications in advance of such
updates to mitigate these problems.
24
We are dependent on continued operation of GPS, the principal GNSS currently in operation. The GPS constellation is operated
by the U. S. Government, which is committed to maintenance and improvement of GPS. If supporting policies were to change,
or if user fees were imposed, it could have a material adverse effect on our business, results of operations, and financial condition.
Many of our products also use signals from systems that augment GPS, such as the Wide Area Augmentation System and National
Differential GPS System, and satellites transmitting signal corrections data on mobile satellite services frequencies utilized by our
RTX corrections services. Some of these augmentation systems are operated by the U.S. government and rely on continued funding
and maintenance of these systems. Any curtailment of the operating capability of these systems or limitations on access to, or use
of the signals, or discontinuance of service could result in degradation of our services or product performance, with an adverse
effect on our business.
Many of our products use satellite signals from the Russian GLONASS System. Other countries, including China and India, are
in the process of creating their own GNSS systems, and we either have developed or will develop products which use GNSS
signals from these systems. The European community is developing an independent radio navigation satellite system, known as
Galileo. National or European authorities may provide preferential access to signals to companies associated with their markets,
including our competitors, which could harm our competitive position. Use of non-US GNSS signals may also be subject to FCC
waiver requirements and to restrictions based upon international trade or geopolitical considerations. If we are unable to develop
timely and competitive commercial products using these systems, or obtain timely and equal access to service signals, this could
result in lost revenue. These authorities may also adopt protectionist measures favoring national companies who make use of their
GNSS systems, to the detriment of Trimble products using the U.S. GPS system, which would harm our business.
We are subject to the impact of governmental and other similar certifications processes and regulations which could adversely
affect our products and our business
We market certain products that are subject to governmental and similar certifications before they can be sold. For example, CE
certification is required for GNSS receivers and data communications products, conforming to the European harmonized GNSS
receiver standard and the radio equipment directive, to be sold in the European community. Delays in publication of the European
harmonized GNSS receiver standard could affect GNSS product access to European markets. In the future, U.S. governmental
authorities may propose GPS receiver testing and certification for compliance with published GPS signal interface or other
specifications. An inability to obtain any such certifications in a timely manner could have an adverse effect on our operating
results. Governmental authorities may also propose other forms of GPS receiver performance standards, which may limit design
alternatives, hamper product innovation or impose additional costs. Some of our products that use integrated radio communication
technology require product type certification and some products require an end-user to obtain licensing from the FCC for frequency-
band usage. These are secondary licenses that are subject to certain restrictions. An inability or delay in obtaining such certifications
or changes to the rules by the FCC could adversely affect our ability to bring our products to market which could harm our customer
relationships and therefore, our operating results. Any failure to obtain the requisite certifications could also harm our operating
results.
We have claims and lawsuits against us that may result in adverse outcomes
We are subject to a variety of claims and lawsuits. Adverse outcomes in some or all of these claims may result in significant
monetary damages or injunctive relief that could adversely affect our ability to conduct our business. Litigation and other claims
are subject to inherent uncertainties and the outcomes can be difficult to predict. Management may not adequately reserve for a
contingent liability, or may suffer unforeseen liabilities, which could then impact the results of a financial period. A material
adverse impact on our consolidated financial statements could occur for the period in which the effect of an unfavorable final
outcome becomes probable and reasonably estimable which, if not expected, could harm our results of operations and financial
condition.
Our debt could adversely affect our cash flow and prevent us from fulfilling our financial obligations
On November 24, 2014, we issued Senior Notes (Notes) due December 1, 2024 in an aggregate principal amount of $400.0 million.
The Notes accrue interest at a rate of 4.75% per annum, payable semiannually in arrears on December 1 and June 1 of each year,
beginning on June 1, 2015. When the Notes mature, we will have to expend significant resources to repay these Notes or seek to
refinance them. If we decide to refinance the Notes, we may be required to do so on different or less favorable terms or we may
be unable to refinance the Notes at all, both of which may adversely affect our financial condition.
On November 24, 2014, we entered into a new five-year credit agreement with a group of lenders (the 2014 Credit Facility). The
2014 Credit Facility provides for an unsecured revolving loan facility of $1.0 billion. Subject to the terms of the 2014 Credit
Facility, the revolving loan facility may be increased and term loan facilities may be established in an amount of up to $500.0
million. We also have two $75 million revolving credit facilities which are uncommitted and may be called by the lenders with
very little notice (the Uncommitted Facilities). At the end of fiscal 2016, our total debt was comprised primarily of Notes of
25
$400.0 million, a revolving loan balance of $94.0 million under the 2014 Credit Facility and a revolving credit line balance of
$130.0 million under the Uncommitted Facilities.
Our outstanding indebtedness could have important consequences, such as:
•
•
•
•
•
requiring us to dedicate a portion of our cash flow from operations and other capital resources to debt service, thereby
reducing our ability to fund working capital, capital expenditures, general corporate purposes, and other cash requirements,
particularly if the ratings assigned to our debt securities by rating organizations were revised downward,
increasing our vulnerability to adverse economic and industry conditions,
reducing our ability to make investments and acquisitions which support the growth of the company, or to repurchase
shares of our common stock,
limiting our flexibility in planning for, or reacting to, changes and opportunities in, our industry, which may place us at
a competitive disadvantage, and
limiting our ability to incur additional debt on acceptable terms, if at all.
There are various financial covenants and other restrictions in our debt instruments. If we fail to comply with any of these
requirements, the related indebtedness (and other unrelated indebtedness) could become due and payable prior to its stated maturity,
and we may not be able to repay the indebtedness that becomes due. A default under our debt instruments may also significantly
affect our ability to obtain additional or alternative financing.
Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness will depend on our operating
and financial performance, which in turn, is subject to prevailing economic conditions and to financial, business and other factors
beyond our control. A significant portion of our outstanding debt has interest rates which float based on prevailing interest rates.
If interest rates increase, our interest expense will also increase.
Our ability to incur additional indebtedness over time may be limited due to applicable financial covenants and restrictions, and
due to the risk that significantly increasing our level of indebtedness could impact the ratings assigned to our debt securities by
rating organizations, which in turn would increase the interest rates and fees that we pay in connection with our indebtedness.
Our business is subject to disruptions and uncertainties caused by war, terrorism, or civil unrest
Acts of war, acts of terrorism or civil unrest, especially any events that impact the GNSS signals or systems, could have a material
adverse impact on our business, operating results, and financial condition. The threat of terrorism and war and heightened security
and military activity in response to this threat, or any future acts of terrorism or hostilities, may involve a redeployment of the
satellites used in GNSS or interruptions of the system. Civil unrest, local conflicts, or other political instability may adversely
impact regional economies, cause work stoppages, or result in limitations on business transactions with the affected foreign
jurisdictions. To the extent that such interruptions result in delays or the cancellation of orders, disruption of the manufacturing
or shipment of our products, or reduced demand for our products it could have a material adverse effect on our business, results
of operations, and financial condition.
Item 1B.
Unresolved Staff Comments
None
26
Item 2.
Properties
The following table sets forth the significant real property that we own or lease as of December 30, 2016:
Segment(s) served
Size in Sq. Feet
Location
Sunnyvale, California
Huber Heights (Dayton), Ohio
Westminster, Colorado
Chennai, India
Danderyd, Sweden
All
All
All
All
Engineering & Construction
Mayfield Heights, Ohio
Mobile Solutions
Espoo, Finland
Engineering & Construction
Field Solutions
Minnetonka, Minnesota
Mobile Solutions
Christchurch, New Zealand
Richmond Hill, Canada
Corvallis, Oregon
Engineering & Construction
Mobile Solutions
Field Solutions
Advanced Devices
Engineering & Construction
167,000
310,000
125,000
67,288
113,000
74,000
65,678
63,000
60,000
50,200
40,000
In addition, we lease a number of smaller offices around the world primarily for sales, manufacturing and other functions. For
financial information regarding obligations under leases, see Note 8 to the Consolidated Financial Statements.
We believe that our facilities are adequate to support current and near term operations.
Item 3.
Legal Proceedings
On September 2, 2011, Recreational Data Services, LLC filed a lawsuit in the Superior Court for the State of Alaska in Anchorage
against Trimble Navigation Limited, Cabela’s Incorporated, AT&T Mobility and Alascom, Inc., alleging breach of contract, breach
of fiduciary duty, interference with contract, promissory estoppel, fraud, and negligent misrepresentation. The case was tried in
front of a jury in Alaska beginning on September 9, 2014. On September 26, 2014, the jury returned a verdict in favor of the
plaintiff and awarded the plaintiff damages of $51.3 million. On January 29, 2015, the court granted our Motion for Judgment
notwithstanding the Verdict, and on March 18, 2015, the Court awarded us a portion of our incurred attorneys’ fees and costs, and
entered judgment in our favor in the amount of $0.6 million. The judgment also provides that the plaintiff take nothing on its
claims. On April 17, 2015, the plaintiff filed a Notice of Appeal to the Alaska Supreme Court. The parties have completed all
appellate briefing, and oral arguments were heard before the Alaska Supreme Court on February 24, 2016. A decision by the Alaska
Supreme Court has not been made. Although an unfavorable outcome on appeal could have an adverse effect on the Company,
we believe the claims in the lawsuit are without merit.
From time to time, we are also involved in litigation arising out of the ordinary course of our business. There are no other material
legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party
or of which any of our or our subsidiaries' property is subject.
Item 4.
Mine Safety Disclosures
None.
27
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock is traded on the NASDAQ under the symbol “TRMB.” The table below sets forth, during the periods indicated,
the high and low per share sale prices for our common stock as reported on the NASDAQ.
Quarter Ended
First quarter
Second quarter
Third quarter
Fourth quarter
Stock Repurchase Program
2016
Sales Price
2015
Sales Price
High
$25.44
$27.79
$28.72
$30.84
Low
$18.36
$22.68
$23.69
$25.30
High
$27.62
$26.36
$23.94
$23.86
Low
$23.68
$22.28
$15.90
$16.40
In August 2015, our Board of Directors approved a stock repurchase program (2015 Stock Repurchase Program), authorizing us
to repurchase up to $400.0 million of Trimble’s common stock. The timing and amount of repurchase transactions will be determined
by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors.
The program may be suspended, modified or discontinued at any time without public notice.
During fiscal 2016, we repurchased approximately 4.9 million shares of common stock in open market purchases under the 2015
Stock Repurchase Programs, at an average price of $24.39 per share, for a total of $119.5 million. At the end of fiscal 2016, the
2015 Stock Repurchase Program had remaining authorized funds of $130.4 million.
The following table provides information relating to our common stock repurchase activity during the fourth quarter of 2016:
October 1, 2016 - November 4, 2016
November 5, 2016 - December 2, 2016
December 3, 2016 - December 30, 2016
Average
Price Paid
per Share
25.95
27.21
Total
Number of
Shares
Purchased
235,000
410,700
—
645,700
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program
235,000
410,700
$
— $
645,700
141,601,037
130,425,285
130,425,285
As of February 22, 2017, there were approximately 667 holders of record of our common stock.
Dividend Policy
We have not declared or paid any cash dividends on our common stock during any period for which financial information is
provided in this Annual Report on Form 10-K. At this time, we intend to retain future earnings, if any, to fund the development
and growth of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Stock Split
On March 20, 2013 we effected a 2 for 1 split of all outstanding shares of our Common Stock to shareholders of record on March
6, 2013. All shares and per share information presented has been adjusted to reflect the stock split on a retroactive basis for all
periods presented.
28
Item 6.
Selected Financial Data
The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere
in this annual report. Historical results are not necessarily indicative of future results. In particular, because the results of operations
and financial condition related to our acquisitions are included in our Consolidated Statements of Income and Consolidated Balance
Sheets data commencing on those respective acquisition dates, comparisons of our results of operations and financial condition
for periods prior to and subsequent to those acquisitions are not indicative of future results.
Fiscal Years
2016
2015
2014
2013
2012
(Dollar in millions, except per share data)
Revenue
Gross margin
Gross margin percentage
Net income attributable to Trimble
Inc.
Net income
Earnings per share
—Basic
—Diluted
Shares used in calculating basic
earnings per share
Shares used in calculating diluted
earnings per share
At the End of Fiscal Year
(Dollar in millions)
Total assets
Long-term debt and other non-current
liabilities
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,362.2
1,238.0
52.4%
132.4
132.2
0.53
0.52
250.5
253.9
$
$
$
$
$
$
2,290.4
1,202.2
52.5%
121.1
120.7
0.47
0.47
255.8
258.5
$
$
$
$
$
$
2,395.5
1,290.8
53.9%
214.1
213.9
0.82
0.81
260.1
264.5
$
$
$
$
$
$
2,288.1
1,203.8
52.6%
218.9
218.2
0.85
0.84
256.6
261.2
2,040.1
1,046.2
51.3%
191.1
189.7
0.76
0.74
251.1
256.8
2016
2015
2014
2013
2012
3,673.8
603.4
$
$
3,680.7
717.9
$
$
3,855.9
766.8
$
$
3,693.5
729.8
$
$
3,475.8
927.3
29
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and the related notes. The
following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could
differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences
include, but are not limited to, those discussed below and those listed under “Risks Factors.”
EXECUTIVE LEVEL OVERVIEW
Trimble Inc. is a leading provider of technology solutions that optimize the work processes of office and mobile field professionals
around the world. Our comprehensive work process solutions are used across a range of industries including agriculture,
architecture, civil engineering, construction, government, natural resources, transportation and utilities. Representative Trimble
customers include engineering and construction firms, contractors, surveying companies, farmers and agricultural companies,
transportation and logistics companies, energy, mining and utility companies, and state, federal and municipal governments.
Trimble focuses on integrating its broad technological and application capabilities to create vertically-focused, system-level
solutions that transform how work is done within the industries we serve. The integration of sensors, software, connectivity, and
information in our portfolio gives us the unique ability to provide an information model specific to the customer’s workflow. For
example, in construction, our strategy is centered on the concept of a “constructible model” which is at the center of our “Connected
Construction Site” solutions which provide real-time, connected, and cohesive information environments for the design, build,
and operational phases of projects. In agriculture, we continue to develop “Connected Farm” solutions to optimize operations
across the agriculture workflow. In transportation and logistics, our “Connected Fleet” solutions provide transportation companies
with tools to enhance fuel efficiency, safety, and transparency through connected vehicles and fleets across the enterprise.
Our growth strategy is centered on multiple elements:
• Focus on attractive markets with significant growth and profitability potential - We focus on large markets historically
underserved by technology that offer significant potential for long-term revenue growth, profitability and market
leadership. Our core industries such as construction, agriculture, and transportation markets are each multi-trillion dollar
global industries which operate in increasingly demanding environments with technology adoption in the early phases
relative to other industries. With the emergence of mobile computing capabilities, the increasing technological know-
how of end users and the compelling return on investment to our customers, we believe many of our markets are ripe for
substituting Trimble’s technology and solutions in place of traditional operating methods.
• Domain knowledge and technological innovation that benefit a diverse customer base - We have over time redefined our
technological focus from hardware-driven point solutions to integrated work process solutions by developing domain
expertise and heavily reinvesting in R&D and acquisitions. We have been spending approximately 14% of revenue over
the past several years on R&D and currently have over 1,200 unique patents. We intend to continue to take advantage
of our technology portfolio and deep domain knowledge to quickly and cost-effectively deliver specific, targeted solutions
to each of the vertical markets we serve. We look for opportunities where the opportunity for technological change is
high and which have a requirement for the integration of multiple technologies into complete vertical solutions.
Increasing focus on software and services - Software and services are increasingly important elements of our solutions
and are core to our growth strategy. Trimble has an open application programming interface (API) philosophy and open
vendor environment which leads to increased adoption of our software offerings. The increased recurring revenue from
these solutions will provide us with enhanced business visibility over time. Professional services constitute an additional
growth channel that helps our customers integrate and optimize the use of our offerings in their environment.
•
• Geographic expansion with localization strategy - We view international expansion as an important element of our strategy
and we continue to position ourselves in geographic markets that will serve as important sources of future growth. We
currently have a physical presence in over 35 countries and distribution channels in over 100 countries. In 2016, over
50% of our sales were to customers located in countries outside of the U.S.
• Optimized go to market strategies to best access our markets - We utilize vertically-focused distribution channels that
leverage domain expertise to best serve the needs of individual markets domestically and abroad. These channels include
independent dealers, joint ventures, original equipment manufacturers (OEM) sales, and distribution alliances with key
partners, such as CNH Global, Caterpillar, and Nikon, as well as direct sales to end-users, that provide us with broad
market reach and localization capabilities to effectively serve our markets.
Strategic acquisitions - Organic growth continues to be our primary focus, while acquisitions serve to enhance our market
position. We acquire businesses that bring domain expertise, technology, products, or distribution capabilities that augment
our portfolio and allow us to penetrate existing markets more effectively, or to establish a market beachhead. Our success
in targeting and effectively integrating acquisitions is an important aspect of our growth strategy.
•
30
Trimble’s focus on these growth drivers has led over time to growth in revenue and profitability as well as an increasingly diversified
business model. Software and services growth is driving increased recurring revenue, leading to improved visibility in some of
our businesses. As our solutions have expanded, our go to market model has also evolved, with a balanced mix between direct,
distribution and OEM customers, and an increasing number of enterprise level customer relationships.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles
requires us to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, costs of
sales, operating expenses, and related disclosures. We consider the accounting polices described below to be our critical accounting
policies. These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the
preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based
on these policies. Our accounting policies are more fully described in Note 2 of our accompanying Notes to Consolidated Financial
Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Revenue Recognition
We recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when
persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is reasonably
assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until
all acceptance criteria have been met.
Contracts and/or customer purchase orders are used to determine the existence of an arrangement. Shipping documents and customer
acceptance, when applicable, are used to verify delivery. We assess whether the fee is fixed or determinable based on the payment
terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectibility based
primarily on the creditworthiness of the customer as determined by credit checks and analyses, as well as the customer’s payment
history.
Revenue for orders is not recognized until the product is shipped and title has transferred to the buyer. We bear all costs and risks
of loss or damage to the goods up to that point. Our shipment terms for U.S. orders and international orders fulfilled from our
European distribution center typically provide that title passes to the buyer upon delivery of the goods to the carrier named by the
buyer at the named place or point. If no precise point is indicated by the buyer, delivery is deemed to occur when the carrier takes
the goods into its charge from the place determined by us. Other shipment terms may provide that title passes to the buyer upon
delivery of the goods to the buyer. Shipping and handling costs are included in Cost of sales.
Revenue from sales to distributors and dealers is recognized upon shipment, assuming all other criteria for revenue recognition
have been met. Distributors and dealers do not have a right of return.
Revenue from purchased extended warranty and post contract support (PCS) agreements is deferred and recognized ratably over
the term of the warranty or support period. Revenue from our subscription services related to our hardware and applications is
recognized ratably over the term of the subscription service period beginning on the date that service is made available to the
customer, assuming all revenue recognition criteria have been met.
We present revenue net of sales taxes and any similar assessments.
Our software arrangements generally consist of a perpetual license fee and PCS. We generally have established vendor-specific
objective evidence (VSOE) of fair value for our PCS contracts based on the renewal rate. The remaining value of the software
arrangement is allocated to the license fee using the residual method. License revenue is primarily recognized when the software
has been delivered and fair value has been established for all remaining undelivered elements. In cases where VSOE of fair value
for PCS is not established, revenue is recognized ratably over the PCS period after all software deliverables have been made and
the only the undelivered element is PCS.
For services performed on a fixed-fee basis, revenue is recognized using the proportional performance method, with performance
measured based on hours of work performed. For contracts that involve significant customization and implementation or consulting
services that are essential to the functionality of the software, the license and services revenues are recognized using the percentage-
of-completion method or, if we are unable to reliably estimate the costs to complete the services, we use the completed-contract
method of accounting. A contract is considered complete when all significant costs have been incurred or when acceptance from
the customer has been received.
Some of our subscription product offerings include hardware, subscription services and extended warranty. Under these hosted
arrangements, the customer typically does not have the contractual right to take possession of the software at any time during the
31
hosting period without incurring a significant penalty and it is not feasible for the customer to run the software either on its own
hardware or on a third-party’s hardware.
Our multiple deliverable product offerings include hardware with embedded firmware, extended warranty, software, PCS services
and subscription services, which are considered separate units of accounting. For certain of our products, software and non-software
components function together to deliver the tangible product’s essential functionality.
In evaluating the revenue recognition for our hardware or subscription agreements which contain multiple deliverables, we
determined that in certain instances we were not able to establish VSOE for some or all deliverables in an arrangement as we
infrequently sold each element on a standalone basis, did not price products within a narrow range, or had a limited sales history.
When VSOE cannot be established, we attempt to establish the selling price of each element based on relevant third-party evidence
(TPE). TPE is determined based on competitor prices for similar deliverables when sold separately. Our offerings may contain a
significant level of proprietary technology, customization or differentiation such that the comparable pricing of products with
similar functionality cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor products’
selling prices are on a stand-alone basis. Therefore, we typically are not able to establish the selling price of an element based on
TPE.
When we are unable to establish selling price using VSOE or TPE, we use our best estimate of selling price (BESP) in our allocation
of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or
service were sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or
for new or highly customized offerings. We determine BESP for a product or service by considering multiple factors including,
but not limited to, pricing practices, market conditions, competitive landscape, internal costs, geographies and gross margin. The
determination of BESP is made through consultation with and formal approval by our management, taking into consideration our
go-to-market strategy.
Income Taxes
We are a United States-based multinational company operating in multiple U.S. and foreign jurisdictions. Significant judgment
is required in evaluating our uncertain tax positions and determining our provision for income taxes. We consider many factors
when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately
forecast actual tax audit outcomes. Determining whether an uncertain tax position is effectively settled requires judgment. Changes
in recognition or measurement of our uncertain tax positions would result in the recognition of a tax benefit or an additional charge
to the tax provision.
We are subject to the periodic examination of our domestic and foreign tax returns by the IRS, state, local and foreign tax authorities
who may challenge our tax positions. We regularly assess the likelihood of adverse outcomes from these examinations in
determining the adequacy of our provision for income taxes.
Our income tax expense has differed from the tax computed at the U.S. federal statutory income tax rate primarily due to the
changes in nondeductible expenses, changes in the geographic mix of pretax income, and changes related to acquisitions and
divestitures. Unanticipated changes in our tax rates could affect our future results of operations. Our future effective tax rates
could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, by unanticipated decreases
in the amount of earnings in countries with low statutory tax rates, or by changes in the valuation of our deferred tax assets and
liabilities. The United States and foreign countries where we do business may change tax laws, regulations, and interpretations
and these potential changes could adversely affect our effective tax rates.
Business Combinations and Valuation of Goodwill and Purchased Intangible Assets
We allocate the fair value of purchase consideration to the assets acquired, liabilities assumed, and non-controlling interests in the
acquiree based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value
of these assets acquired, liabilities assumed and non-controlling interests in the acquiree is recorded as goodwill.
When determining the fair values of assets acquired, liabilities assumed, and non-controlling interests in the acquiree, management
makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible
assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins,
customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Fair value
estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability.
Identifiable intangible assets are comprised of distribution channels and distribution rights, patents, licenses, technology, acquired
backlog, trademarks, and in-process research and development. Amounts recorded in a business combination may change during
the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about
conditions existing at the acquisition date becomes available.
32
We evaluate goodwill, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the
carrying amount may not be recoverable. The annual goodwill impairment testing is performed in the fourth fiscal quarter of each
year based on the values on the first day of that quarter. Goodwill was reviewed for impairment utilizing a quantitative two-step
process. When we perform a quantitative assessment of goodwill impairment, the determination of fair value of a reporting unit
involves the use of significant estimates and assumptions. The discounted cash flows are based upon, among other things,
assumptions about expected future operating performance using risk-adjusted discount rates. Actual future results may differ from
those estimates.
Identifiable intangible assets are being amortized over the period of estimated benefit using the straight-line method, approximates
the pattern of economic benefits associated with these assets. Changes in circumstances such as technological advances, changes
to our business model, or changes in the capital strategy could result in the actual useful lives of intangible assets differing from
initial estimates. In cases where we determine that the useful life of an asset should be revised, the net book value in excess of the
estimated residual value will be depreciated over its revised remaining useful life. These assets are evaluated for impairment
whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable based on
their future cash flows. The estimated future cash flows are based upon, among other things, assumptions about expected future
operating performance and these estimates may differ from actual future cash flows. The assets evaluated for impairment are
grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying
value of the assets, the assets will be written down to the estimated fair value.
Stock-Based Compensation
We recognize compensation expense for all share-based payment awards made to our employees and directors, based on estimated
fair values, net of estimated forfeitures. The awards include restricted stock units with service-based, market-based and
performance-based vesting conditions, rights to purchase shares under our employee stock purchase plan and stock options.
The fair value of our service-based and performance-based restricted stock units is determined using the closing price of our
common stock on the date of grant and the total expense associated with the performance-based awards is based upon the expected
achievement of the underlying performance goals and may be adjusted in future periods based upon changes in expectations and
actual achievement. The fair value of restricted stock units with market-based vesting conditions is valued as of the grant date
using a Monte Carlo simulation. The fair value of rights to purchase shares under our employee stock purchase plan is estimated
using the Black-Scholes option-pricing model and the fair value of our options is estimated using a binomial valuation model.
The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by
our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include
our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors,
risk-free interest rates, and any expected dividends. In addition, the binomial model incorporates actual option-pricing behavior
and changes in volatility over the option’s contractual term. The Monte Carlo simulation takes into account the same input
assumptions as the binomial option pricing model as outlined above; however, it also incorporates into the fair-value determination
the possibility that the market-based vesting conditions may not be satisfied and the impact of the possible differing stock price
paths for Trimble and each of the constituents of the S&P 500. If factors change and we employ different assumptions to determine
the fair value of our share-based payment awards granted in future periods, the compensation expense that we record under it may
differ significantly from what we have recorded in the current period.
Stock-based compensation expense recognized in the Consolidated Statements of Income is based on awards ultimately expected
to vest, including the achievement of performance-based goals and estimated forfeitures. If the performance goals achieved are
different from what had been estimated or actual forfeitures differ materially from our estimates, stock-based compensation
recognized may not be reflective of what was earned in that period.
Inventory Valuation
Our inventories are stated at the lower of cost or market, which approximates net realizable value. Adjustments are also made to
reduce the cost of inventory for estimated excess or obsolete balances. Factors influencing these adjustments include declines in
demand which impact inventory purchasing forecasts, technological changes, product life cycle and development plans, component
cost trends, product pricing, physical deterioration and quality issues. If our estimates used to reserve for excess and obsolete
inventory are different from what we expected, we may be required to recognize additional reserves, which would negatively
impact our gross margin.
33
RESULTS OF OPERATIONS
Overview
The following table is a summary of revenue, gross margin and operating income for the periods indicated and should be read in
conjunction with the narrative descriptions below.
Fiscal Years
(Dollars in millions)
Revenues:
Product
Service
Subscription
Total revenue
Gross margin
Gross margin %
Total consolidated operating income
Operating income as a % of revenue
Basis of Presentation
2016
2015
2014
$
$
$
$
1,562.0
430.2
370.0
2,362.2
1,238.0
52.4%
181.0
7.7%
$
$
1,533.5
419.9
337.0
2,290.4
1,202.2
52.5%
154.4
6.7%
1,713.6
396.0
285.9
2,395.5
1,290.8
53.9%
260.8
10.9%
We have a 52-53 week fiscal year, ending on the Friday nearest to December 31, which for fiscal 2016 was December 30, 2016.
Fiscal 2016, 2015 and 2014 were all 52-week years.
Revenue
In fiscal 2016, total revenue increased by $71.8 million, or 3%, to $2.36 billion from $2.29 billion in fiscal 2015. Overall revenue
was primarily impacted by organic growth in building construction, civil engineering and construction, and transportation and
logistics, partially offset by declines in geospatial and GIS. We consider organic growth to include all revenue except for revenue
associated with acquisitions made within the last four quarters.
On a segment basis, the increase in fiscal 2016 was primarily due to Engineering and Construction and Mobile Solutions, to a
lesser extent Advanced Devices, partially offset by slight declines in Field Solutions. Engineering and Construction revenue
increased $30.3 million, or 2%, Mobile Solutions revenue increased $39.4 million, or 8%, Advanced Devices increased $3.1
million, or 2%, partially offset by a slight decrease in Field Solutions revenue of $1.0 million, or less than 1%, as compared to
fiscal 2015. Engineering and Construction revenue increased driven by building construction and civil engineering and
construction, partially offset by declines in geospatial. Field Solutions revenue was down due to softness in GIS markets. Mobile
Solutions revenue increased due to continued growth in the transportation and logistics market. Advanced Devices revenue
increased primarily due to strong OEM and end user sales.
By revenue category, overall product revenue increased $28.5 million, or 2%, service revenue increased $10.3 million, or 2%, and
subscription revenue increased $33.0 million, or 10%. The product revenue increase was primarily within Engineering and
Construction and Mobile Solutions, to a lesser extent Advanced Devices, partially offset by declines in Field Solutions. Service
and subscription increases were primarily due to organic growth within Engineering and Construction and Mobile Solutions as
we continue to expand software and services, including implementation, maintenance and subscription services, as a portion of
our revenue. Although to a lesser extent, acquisition growth within Field Solutions also contributed.
In fiscal 2015, total revenue decreased by $105.1 million, or 4%, to $2.29 billion from $2.40 billion in fiscal 2014. Overall revenue
was primarily impacted by negative foreign currency effects, and to a lesser extent declines due to oil and gas and agricultural
market conditions, partially offset by acquisitions and improved growth in building construction and transportation and logistics.
On a segment basis, the decrease in fiscal 2015 was primarily due to Engineering and Construction and Field Solutions, partially
offset by the increase in Mobile Solutions. Engineering and Construction revenue decreased $64.8 million, or 5%, Field Solutions
revenue decreased $66.8 million, or 16%, and Advanced Devices decreased $7.0 million, or 5%, partially offset by an increase in
Mobile Solutions of $33.5 million, or 7%, as compared to fiscal 2014. The decline in Engineering and Construction was primarily
driven by the impact of foreign currency effects due to the weaker Euro and to a lesser extent, oil price declines on regional
economies, primarily in geospatial. The decline was partially offset by building construction which was up due to organic growth
and to a lesser extent, acquisitions not applicable in the prior year. The decline in Field Solutions revenue was primarily due to
softness in agricultural markets and to a lesser extent, GIS and foreign currency effects. Mobile Solutions revenue increased due
34
to continued growth in the transportation and logistics market. Advanced Devices revenue decreased primarily due to weaker sales
of timing component products.
By revenue category, overall product revenue decreased $180.1 million, or 11%, service revenue increased $23.9 million, or 6%,
and subscription revenue increased $51.1 million, or 18%. The product revenue decrease was primarily within Engineering and
Construction and Field Solutions, slightly offset by a product revenue increase in Mobile Solutions. Service and subscription
increases were primarily due to organic growth within Engineering and Construction and Mobile Solutions, as we continue to
expand software and services, including implementation and maintenance, and subscription services as a portion of our revenue.
Although to a lesser extent, acquisitions growth within Engineering and Construction also contributed.
During fiscal 2016, sales to customers in the United States represented 49%, Europe represented 24%, Asia Pacific represented
15%, and other regions represented 12% of our total revenue. During fiscal 2015, sales to customers in the United States represented
50%, Europe represented 24%, Asia Pacific represented 14%, and other regions represented 12% of our total revenue. During
fiscal 2014, sales to customers in the United States represented 48%, Europe represented 24%, Asia Pacific represented 14%, and
other regions represented 14% of our total revenue. We anticipate that sales to international customers will continue to account
for a significant portion of our revenue.
No single customer accounted for 10% or more of our total revenue in fiscal 2016, 2015 or 2014. No single customer accounted
for 10% or more of our accounts receivable as of fiscal years ended 2016 and 2015.
Gross Margin
Our gross margin varies due to a number of factors including product mix, pricing, distribution channel, production volumes, new
product start-up costs, and foreign currency translations.
In fiscal 2016, our gross margin increased by $35.8 million as compared to fiscal 2015, primarily due to increased revenue in
Engineering and Construction and Mobile Solutions. Gross margin as a percentage of total revenue was 52.4% in fiscal 2016 and
52.5% in fiscal 2015. The slight decrease in the gross margin percentage was primarily in Engineering and Construction and
Mobile Solutions due to product mix, partially offset by lower intangible asset amortization.
In fiscal 2015, our gross margin decreased by $88.6 million as compared to fiscal 2014 primarily due to decreased revenue in
Engineering and Construction and Field Solutions. Gross margin as a percentage of total revenue was 52.5% in fiscal 2015 and
53.9% in fiscal 2014. The decrease in the gross margin percentage was primarily in Engineering and Construction due to product
mix and foreign currency effects due to the weaker Euro, and to a lesser extent, due to an increase in intangible asset amortization.
Operating Income
Operating income increased by $26.6 million for fiscal 2016 as compared to fiscal 2015. Operating income as a percentage of
total revenue for fiscal 2016 was 7.7% as compared to 6.7% for fiscal 2015. The increase in operating income and operating
income percentage was primarily due to revenue expansion in Engineering and Construction and Mobile Solutions, the effects of
strong operating expense control across the company and lower intangible asset amortization.
Operating income decreased by $106.4 million for fiscal 2015 as compared to fiscal 2014. Operating income as a percentage of
total revenue for fiscal 2015 was 6.7% as compared to 10.9% for fiscal 2014. The decrease in operating income and operating
income percentage was primarily due to revenue declines in Engineering and Construction and Field Solutions and increased
restructuring, partially offset by the effects of operating expense control. Also, higher revenue in Mobile Solutions partially offset
the declines.
Results by Segment
To achieve distribution, marketing, production, and technology advantages in our targeted markets, we manage our operations in
the following four segments: Engineering and Construction, Field Solutions, Mobile Solutions, and Advanced Devices. Segment
operating income equals net revenue less cost of sales and operating expense, excluding general corporate expense, amortization
of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition costs
and restructuring charges.
35
The following table is a breakdown of revenue and operating income by segment for the periods indicated and should be read in
conjunction with the narrative descriptions below.
Fiscal Years
(Dollars in millions)
Engineering and Construction
Revenue
Segment revenue as a percent of total revenue
Operating income
Operating income as a percent of segment revenue
Field Solutions
Revenue
Segment revenue as a percent of total revenue
Operating income
Operating income as a percent of segment revenue
Mobile Solutions
Revenue
Segment revenue as a percent of total revenue
Operating income
Operating income as a percent of segment revenue
Advanced Devices
Revenue
Segment revenue as a percent of total revenue
Operating income
Operating income as a percent of segment revenue
2016
2015
2014
$
$
$
$
$
$
$
$
1,313.6
55%
230.5
18%
354.3
15%
105.2
30%
559.7
24%
88.9
16%
134.6
6%
51.4
38%
$
$
$
$
$
$
$
$
1,283.3
56%
218.8
17%
355.3
15%
108.6
31%
520.3
23%
85.6
16%
131.5
6%
46.9
36%
$
$
$
$
$
$
$
$
1,348.1
56%
284.1
21%
422.1
18%
137.8
33%
486.8
20%
78.0
16%
138.5
6%
44.3
32%
A reconciliation of our consolidated segment operating income to consolidated income before income taxes follows:
Fiscal Years
2016
2015
2014
(in millions)
Consolidated segment operating income
Unallocated corporate expense
Restructuring charges
Stock-based compensation
Amortization of purchased intangible assets
Consolidated operating income
Non-operating income (expense), net
Consolidated income before taxes
$
$
476.0
(78.3)
(13.3)
(52.6)
(150.8)
181.0
(4.3)
176.7
$
$
459.9
(80.2)
(12.8)
(50.1)
(162.4)
154.4
(2.6)
151.8
$
$
544.2
(79.4)
(2.1)
(43.4)
(158.5)
260.8
5.2
266.0
Unallocated corporate expense includes general corporate expense, amortization of acquisition-related inventory step-up,
acquisition/divestiture costs, litigation expenses and executive transition costs.
Engineering and Construction
Engineering and Construction revenue increased by $30.3 million, or 2%, while segment operating income increased by $11.7
million, or 5%, for fiscal 2016 as compared to fiscal 2015. The revenue increase for fiscal 2016 was primarily due to organic
growth in building construction and civil engineering and construction. The increase was partially offset by a decline in geospatial
sales, primarily due to continued challenges in North American markets due to the impact of oil and gas market softness, which
continued to reduce product demand.
Segment operating income increased primarily due to stronger results in building construction, civil engineering and construction
and operating expense control across all businesses, partially offset by weaker geospatial results and growth related investments
in the segment.
Engineering and Construction revenue decreased by $64.8 million, or 5%, while segment operating income decreased by $65.3
million, or 23%, for fiscal 2015 as compared to fiscal 2014. The revenue decrease for fiscal 2015 was primarily driven by the
36
negative foreign currency effects due to the weaker Euro and to a lesser extent, the impact of oil and gas markets on regional
economies which impacted sales, primarily in geospatial. The decline was partially offset by building construction which was up
due to organic growth and acquisitions not applicable in the prior year.
Segment operating income decreased primarily due to decreased revenue and lower gross margin resulting from product mix and
foreign currency effects due to the weaker Euro, slightly offset by the effects of operating expense control. Although acquisitions
contributed to revenue, they also presented a short term negative impact on revenue and operating income, partly because of
deferred revenue accounting effects.
Field Solutions
Field Solutions revenue decreased by $1.0 million, or less than 1%, while segment operating income decreased by $3.4 million,
or 3%, for fiscal year 2016 as compared to fiscal 2015. The revenue decrease was primarily due to continued weakness in GIS
markets, partially offset by agriculture which was up in the second half of the year due to organic growth in Europe, Australia,
and emerging markets as well as the impact of acquisitions. Segment operating income decreased due to GIS and the impact of
acquisitions.
Field Solutions revenue decreased by $66.8 million, or 16%, while segment operating income decreased by $29.2 million, or 21%,
for fiscal year 2015 as compared to fiscal 2014. The revenue decrease was primarily due to continued softness in agriculture
markets, particularly in the OEM channels, and to a lesser extent, GIS and negative foreign currency effects due to the weaker
Euro. Segment operating income decreased due to the revenue decrease described above, partially offset by the effects of operating
expense control.
Mobile Solutions
Mobile Solutions revenue increased by $39.4 million, or 8%, while segment operating income increased by $3.3 million, or 4%,
for fiscal year 2016 as compared to fiscal 2015. The revenue increase was primarily due to continued organic growth in the
transportation and logistics business, with strength throughout the year as PeopleNet mobility and enterprise solutions continued
to benefit from U.S. regulatory mandates. Segment operating income increased due to increased revenue, partially offset by lower
margin product mix and growth related investments in the segment.
Mobile Solutions revenue increased by $33.5 million, or 7%, while segment operating income increased by $7.6 million, or 10%,
for fiscal year 2015 as compared to fiscal 2014. The revenue increase was primarily due to continued organic growth in the
transportation and logistics market, which focuses on enterprise solutions. This was partially offset by a decline in field services
and negative foreign currency effects due to the weaker Euro. Segment operating income increased due to increased revenue and
product mix.
Advanced Devices
Advanced Devices revenue increased by $3.1 million, or 2%, and segment operating income increased by $4.5 million, or 10%,
for fiscal 2016 as compared to fiscal 2015. Revenue and operating income increased primarily due to strong OEM and end user
sales. Operating income increased due to increased revenue and product mix as well as operating expense control.
Advanced Devices revenue decreased by $7.0 million, or 5%, and segment operating income increased by $2.6 million, or 6%,
for fiscal 2015 as compared to fiscal 2014. The decrease in revenue was primarily driven by decreased sales of timing component
products, while the increase in operating income was due to higher margin product mix and operating expense control.
37
Research and Development, Sales and Marketing, and General and Administrative Expenses
The following table shows research and development (“R&D”), sales and marketing, and general and administrative (“G&A”)
expenses in absolute dollars and as a percentage of total revenue for fiscal years 2016, 2015 and 2014 and should be read in
conjunction with the narrative descriptions of those operating expenses below.
Fiscal Years
(Dollars in millions)
Research and development
Percentage of revenue
Sales and marketing
Percentage of revenue
General and administrative
Percentage of revenue
Total
Percentage of revenue
2016
2015
2014
$
349.6
$
336.7
$
318.0
15%
377.6
16%
256.0
11%
15%
374.6
16%
255.3
11%
13%
387.6
16%
247.1
10%
$
983.2
$
966.6
$
952.7
42%
42%
39%
Overall, R&D, sales and marketing, and G&A expenses increased by approximately 16.6 million in fiscal 2016 compared to fiscal
2015. All of our R&D costs have been expensed as incurred.
Research and development expense increased by $12.9 million, or 4%, in fiscal 2016, as compared to fiscal 2015. Overall, research
and development spending was 15% of revenue in both fiscal 2016 and 2015. As compared to the prior year, fiscal 2016 research
and development expense increased 3% due to expense from fiscal 2016 business acquisitions, 2% due to higher compensation
expense, and 2% due to increased consulting costs, partially offset by a 2% decrease in other expenses and a 1% decrease due to
favorable foreign exchange rates.
Research and development expense increased by $18.7 million, or 6%, in fiscal 2015, as compared to fiscal 2014. Overall, research
and development spending was 15% of revenue in fiscal 2015 versus 13% in fiscal 2014. As compared to the prior year, fiscal
2015 research and development expense increased 7% due to higher compensation and other expenses and 5% due to fiscal 2015
business acquisitions, partially offset by a 6% decrease due to favorable foreign exchange rates.
We believe that the development and introduction of new products are critical to our future success and we expect to continue
active development of new products.
Sales and marketing expense increased by $3.0 million, or 1%, in fiscal 2016, as compared to fiscal 2015. Overall, spending for
sales and marketing was 16% of revenue in both fiscal 2016 and 2015. As compared to the prior year, fiscal 2016 sales and
marketing expense increased 2% due to expense from fiscal 2016 business acquisitions and 1% due to trade show expenses,
partially offset by a 1% decrease due to favorable foreign exchange rates and 1% due to lower travel expenses.
Sales and marketing expense decreased by $13.0 million, or 3%, in fiscal 2015, as compared to fiscal 2014. Overall, spending for
sales and marketing was 16% of revenue in both fiscal 2015 and 2014. As compared to the prior year, fiscal 2015 sales and
marketing expense decreased 6% due to favorable foreign exchange rates and 1% due to lower compensation and other expenses,
partially offset by a 4% increase due to fiscal 2015 business acquisitions.
General and administrative expense was flat in fiscal 2016, as compared to fiscal 2015. Overall, general and administrative spending
was 11% of revenue in both fiscal 2016 and 2015. As compared to the prior year, fiscal 2016 general and administrative expense
increased slightly 3% due to expense from fiscal 2016 business acquisitions and 1% due to higher compensation expense, partially
offset by a 3% decrease due to lower tax and legal costs and a 1% decrease due to favorable foreign exchange rates.
General and administrative expense increased by $8.2 million, or 3%, in fiscal 2015, as compared to fiscal 2014. Overall, general
and administrative spending was 11% of revenue in fiscal 2015 versus 10% in fiscal 2014. As compared to the prior year, fiscal
2015 general and administrative expense increased 8% due to fiscal 2015 business acquisitions, partially offset by a 4% decrease
due to favorable foreign exchange rates and 1% decrease due to lower compensation and other expenses.
38
Amortization of Purchased Intangible Assets
Fiscal Years
(in millions)
Cost of sales
Operating expenses
Total
2016
2015
2014
$
$
88.6
62.2
150.8
$
$
92.6
69.8
162.4
$
$
82.9
75.6
158.5
Total amortization expense of purchased intangibles represented 6.4% of revenue in fiscal 2016, a decrease of $11.6 million from
fiscal 2015 when it represented 7.1% of revenue. The decrease was primarily due to the expiration of amortization for prior
acquisitions, partially offset by acquisitions not included in fiscal 2015.
Total amortization expense of purchased intangibles represented 7.1% of revenue in fiscal 2015, an increase of $3.9 million from
fiscal 2014 when it represented 6.6% of revenue. The increase was primarily due to acquisitions not included in fiscal 2014,
partially offset by the expiration of amortization for prior acquisitions.
Non-operating Income (Expense), Net
The following table shows non-operating income, net for the periods indicated and should be read in conjunction with the narrative
descriptions below:
Fiscal Years
(in millions)
Interest expense, net
Foreign currency transaction gain (loss), net
Income from equity method investments, net
Other income, net
Total non-operating income (expense), net
2016
2015
2014
$
$
(25.9) $
(1.9)
17.6
5.9
(4.3) $
(25.6) $
0.2
17.9
4.9
(2.6) $
(18.7)
(5.1)
12.4
16.6
5.2
Total non-operating income (expense), net decreased by $1.7 million during fiscal 2016 compared with fiscal 2015. The decrease
was primarily due to the impact of foreign currency transaction fluctuations, partially offset by deferred compensation gains
included in Other income, net.
Total non-operating income (expense), net decreased by $7.8 million during fiscal 2015 compared with fiscal 2014. The decrease
was primarily due to higher interest expense and a gain on a partial equity sale of Virtual Site Solutions (VSS) included in the first
quarter of fiscal 2014, partially offset by the impact of foreign currency transaction fluctuations and increased income from equity
method investments due to joint venture profitability.
Income Tax Provision
Our effective income tax rates for fiscal 2016, 2015 and 2014 were 25%, 20% and 20%, respectively. The fiscal 2016 rate was
less than the U.S. federal statutory rate of 35% primarily due to the geographic mix of pre-tax income, a divestiture of a non-
strategic business, and the U.S. federal R&D credit. The fiscal 2015 rate was less than the U.S. federal statutory rate of 35%
primarily due to the geographical mix of our pre-tax income and, to a lesser extent, the inclusion of the current year U.S. federal
R&D credit. The fiscal 2014 rate was less than the U.S. federal statutory rate of 35% primarily due to the geographical mix of
our pre-tax income and, to a lesser extent, the inclusion of the current year U.S. federal R&D credit, partially offset by the effect
of a gain on a partial equity sale of VSS.
39
OFF-BALANCE SHEET ARRANGEMENTS
Other than operating leases, inventory purchases and other commitments incurred in the normal course of business (see Contractual
Obligations table below), we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained
or contingent interests in transferred assets, or any obligation arising out of a material variable interest in an unconsolidated entity.
We do not have any majority-owned subsidiaries that are not included in the consolidated financial statements. Additionally, we
do not have any interest in, or relationship with, any special purpose entities.
In the normal course of business to facilitate sales of our products, we indemnify other parties, including customers, lessors and
parties to other transactions with us, with respect to certain matters. We have agreed to hold the other party harmless against losses
arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against
certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the
claim. From time to time, in connection with divesting some of our businesses or assets, we may also indemnify purchasers for
certain matters in the normal course of business, such as breaches of representations, covenants or excluded liabilities. In addition,
we have entered into indemnification agreements with our officers and directors, and our bylaws contain similar indemnification
obligations to our agents.
It is not possible to determine the maximum potential exposure under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments
made by us under these agreements have not been material and no liabilities have been recorded for these obligations on the
Consolidated Balance Sheets at the end of fiscal 2016 and 2015.
LIQUIDITY AND CAPITAL RESOURCES
At the End of Fiscal Year
2016
2015
2014
(Dollars in millions)
Cash and cash equivalents and short-term investments
As a percentage of total assets
Principal balance of outstanding debt
Fiscal Years
(Dollars in millions)
Cash provided by operating activities
Cash used in investing activities
Cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and Cash Equivalents and Short-Term Investments
$
$
$
$
$
$
$
327.2
8.9%
624.8
2016
407.1
(144.4)
(155.8)
(6.8)
100.1
$
$
$
$
$
$
$
116.0
3.2%
735.2
2015
354.9
(172.4)
(202.8)
(11.7)
(32.0)
$
$
$
$
$
$
$
148.0
3.8%
741.6
2014
407.1
(344.0)
(51.5)
(10.8)
0.8
At the end of fiscal 2016, cash and cash equivalents and short-term investments totaled $327.2 million compared to $116.0 million
at the end of fiscal 2015. We had a principal balance of outstanding debt of $624.8 million at the end of fiscal 2016 compared to
$735.2 million at the end of fiscal 2015.
Our ability to continue to generate cash from operations will depend in large part on profitability, the rate of collections of accounts
receivable, our inventory turns and our ability to manage other areas of working capital.
Our cash, cash equivalents and short-term investments are maintained with several financial institutions. Deposits held with banks
may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are
maintained with financial institutions considered to be of reputable credit and to present little credit risk. Our investment policy
requires the portfolio to include only securities with high credit quality and a weighted average maturity not to exceed 6 months,
with the main objective of preserving capital and maintaining liquidity. We maintain an investment portfolio of various holdings,
types, and maturities. We classify our investments as short-term investments based on their nature and their availability for use in
current operations. We believe that our cash and cash equivalents, short-term investments, and borrowings under our 2014 Credit
Facility as described below under the heading “Debt”, will be sufficient to meet our anticipated operating cash needs, debt service,
planned capital expenditures, acquisitions and stock repurchases under the stock repurchase program for at least the next twelve
months.
40
Operating Activities
Cash provided by operating activities was $407.1 million for fiscal 2016, as compared to $354.9 million for fiscal 2015. The
increase of $52.2 million was due to an increase in net income before non-cash depreciation and amortization primarily due to
increased operating income in Engineering and Construction and Mobile Solutions, to a lesser extent Advanced Devices, also due
to a decrease in working capital requirements due to inventory improvements.
Cash provided by operating activities was $354.9 million for fiscal 2015, as compared to $407.1 million for fiscal 2014. The
decrease of $52.2 million was due to a decrease in net income before non-cash depreciation and amortization primarily due to
decreased operating income in Engineering and Construction and to a lesser extent, Field Solutions. This was partially offset by
a decrease in working capital requirements due to inventory improvements.
Investing Activities
Cash used in investing activities was $144.4 million for fiscal 2016, as compared to $172.4 million for fiscal 2015. The decrease
of cash used in investing activities is primarily due to less cash used for business and intangible asset acquisitions, partially offset
by the purchase of short-term investments. Fiscal 2016 acquisitions included Building Data and Sefaira and other acquisitions.
Fiscal 2015 acquisitions included PocketMobile and Vianova Systems and other acquisitions.
Cash used in investing activities was $172.4 million for fiscal 2015, as compared to $344.0 million for fiscal 2014. The decrease
is primarily due to cash used for business and intangible asset acquisitions. Fiscal 2015 acquisitions included PocketMobile and
Vianova Systems and other acquisitions. Fiscal 2014 acquisitions included Manhattan Software, Amtech and other acquisitions.
Financing Activities
Cash used by financing activities was $155.8 million for fiscal 2016, as compared to cash used of $202.8 million during fiscal
2015. The decrease of cash used by financing activities of $47.0 million was primarily due to a decrease in cash used for stock
repurchases, partially offset by payments on revolving credit facilities.
Cash used by financing activities was $202.8 million for fiscal 2015, as compared to cash used of $51.5 million during fiscal 2014.
The increase of $151.3 million was primarily due to an increase in cash used for stock repurchases.
Accounts Receivable and Inventory Metrics
At the End of Fiscal Year
Accounts receivable days sales outstanding
Inventory turns per year
2016
2015
55
4.8
59
4.0
Accounts receivable days sales outstanding were down at 55 days at the end of fiscal 2016, as compared to 59 days at the end of
fiscal 2015 due to improved collections. Our accounts receivable days sales outstanding are calculated based on ending accounts
receivable, net, divided by revenue for the fourth fiscal quarter, times a quarterly average of 91 days. Our inventory turns were
4.8 at the end of fiscal 2016, as compared to 4.0 at the end of fiscal 2015 due to improved inventory management. Our inventory
turnover is based on the total cost of sales for the fiscal period over the average inventory for the corresponding fiscal period.
Although favorable over the prior year, accounts receivable days sales outstanding and inventory turns are subject to a variety of
business factors and these favorable trends may not continue in the future.
Debt
Notes
On October 30, 2014, we filed a shelf registration statement with the Securities and Exchange Commission (“SEC”) for the issuance
of senior debt securities. On November 24, 2014, we issued $400.0 million of Senior Notes (“Notes”) under the shelf registration
statement. The Notes mature on December 1, 2024 and accrue interest at a rate of 4.75% per annum, payable semiannually in
arrears on December 1 and June 1 of each year, beginning on June 1, 2015. The Notes are classified as long-term in the Consolidated
Balance Sheet.
Prior to September 1, 2024, we may redeem the Notes at our option at any time, in whole or in part, at a redemption price equal
to the greater of (i) 100% of the aggregate principal amount of the Notes to be redeemed and (ii) the sum of the present values of
the remaining scheduled payments of interest and principal, calculated on a semiannual basis using a discount rate equal to the
U.S. Treasury rate plus 40 basis points. After September 1, 2024, we may redeem the Notes at our option at any time, in whole or
in part, at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed, plus accrued and
unpaid interest thereon. In addition, in the event of a change of control, as defined in the prospectus filed with the SEC, each
41
holder of the Notes will have the right to require us to purchase for cash all or a portion of such holder’s Notes at a purchase price
equal to 101% of the principal amount of the Notes, plus any accrued and unpaid interest.
In connection with the closing of the Notes offering, we entered into an Indenture with U.S. Bank National Association, as trustee.
The Indenture contains covenants limiting our ability to create certain liens, enter into sale and lease-back transactions, and
consolidate or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to, another person,
each subject to certain exceptions. We were in compliance with these covenants at the end of fiscal 2016. The Notes contain no
financial covenants.
2014 Credit Facility
On November 24, 2014, we entered into a new five-year credit agreement with a group of lenders (the “2014 Credit Facility”),
which replaced our previous 2012 Credit Facility. The 2014 Credit Facility provides for an unsecured revolving loan facility of
$1.0 billion. Subject to the terms of the 2014 Credit Facility, the revolving loan facility may be increased and/or term loan facilities
may be established in an amount up to $500.0 million. The outstanding balance of $94.0 million is classified as long-term in the
Consolidated Balance Sheet.
The funds available under the 2014 Credit Facility may be used for working capital and general corporate purposes, stock
repurchases and the financing of certain acquisitions. Under the 2014 Credit Facility, we may borrow, repay and reborrow funds
under the revolving loan facility until its maturity on November 24, 2019, at which time the revolving facility will terminate, and
all outstanding loans, together with all accrued and unpaid interest, must be repaid. Amounts not borrowed under the $1.0 billion
revolving facility will be subject to a commitment fee, to be paid in arrears on the last day of each fiscal quarter, ranging
from 0.10% to 0.30% per annum depending on either our credit rating at such time or our leverage ratio as of the most recently
ended fiscal quarter, whichever results in more favorable pricing to us.
We may borrow funds under the 2014 Credit Facility in U.S. Dollars, Euros or in certain other agreed currencies, and borrowings
will bear interest, at our option, at either: (i) a floating per annum base rate determined by reference to the highest of: (a) the
administrative agent’s prime rate; (b) 0.50% per annum above the federal funds effective rate; and (c) reserve-adjusted LIBOR
for an interest period of one month plus 1.00%, plus a margin of between 0.00% and 0.75%, or (ii) a reserve-adjusted fixed per
annum rate based on LIBOR or EURIBOR, depending on the currency borrowed, plus a margin of between 1.00% and 1.75%.
The applicable margin in each case is determined based on either Trimble’s credit rating at such time or Trimble’s leverage ratio
as of its most recently ended fiscal quarter, whichever results in more favorable pricing to us. Interest is payable on the last day
of each fiscal quarter with respect to borrowings bearing interest at the base rate, or on the last day of an interest period, but at
least every three months, with respect to borrowings bearing interest at LIBOR or EURIBOR rate.
The 2014 Credit Facility contains various customary representations and warranties by us, which include customary use of
materiality, material adverse effect and knowledge qualifiers. The 2014 Credit Facility also contains customary affirmative and
negative covenants including, among other requirements, negative covenants that restrict our ability to create liens and enter into
sale and leaseback transactions, and that restrict our subsidiaries’ ability to incur indebtedness. Further, the 2014 Credit Facility
contains financial covenants that require the maintenance of minimum interest coverage and maximum leverage ratios. Specifically,
we must maintain as of the end of each fiscal quarter a ratio of (a) EBITDA (as defined in the 2014 Credit Facility) to (b) interest
expense for the most recently ended period of four fiscal quarters of not less than 3.50 to 1.00. We must also maintain, at the end
of each fiscal quarter, a ratio of (x) total indebtedness (as defined in the 2014 Credit Facility) to (y) EBITDA (as defined in the
2014 Credit Facility) for the most recently ended period of four fiscal quarters of not greater than 3.00 to 1.00; provided, that on
the completion of a material acquisition, we may increase the ratio by 0.50 for the fiscal quarter during which such acquisition
occurred and each of the three subsequent fiscal quarters. We were in compliance with these covenants at the end of fiscal 2016.
The 2014 Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach
of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency
events, material judgments and events constituting a change of control. Upon the occurrence and during the continuance of an
event of default, interest on the obligations will accrue at an increased rate and the lenders may accelerate our obligations under
the 2014 Credit Facility, except that acceleration will be automatic in the case of bankruptcy and insolvency events of default.
In February 2016, we entered into an amendment to the 2014 Credit Facility to facilitate the Reincorporation from California to
Delaware and to effect other non-financial terms. In August 2016, we entered into a second amendment to revise a definition
used in determining when a change of control of the Company may occur.
The interest rate on the long-term debt outstanding under the credit facilities was 1.80% and 1.46% at the end of fiscal 2016 and
2015, respectively.
42
Uncommitted Facilities
We also have two $75 million revolving credit facilities which are uncommitted (the “Uncommitted Facilities”). The Uncommitted
Facilities may be called by the lenders at any time, have no covenants and no specified expiration date. The interest rate on the
Uncommitted Facilities is 1.00% plus either LIBOR or the bank’s cost of funds or as otherwise agreed upon by the bank and us.
The $130.0 million outstanding at the end of 2016 and the $118.0 million outstanding at the end of 2015 under the Uncommitted
Facilities are classified as short-term in our Consolidated Balance Sheet. The weighted average interest rate on the Uncommitted
Facilities was 1.65% at the end of fiscal 2016 and 1.37% at the end of fiscal 2015.
For additional discussion of our debt, see Note 7 to the Consolidated Financial Statements.
Repatriation of Foreign Earnings and Income Taxes
At the end of fiscal 2016, $310.1 million of cash, cash equivalents and short-term investment was held by our foreign subsidiaries,
of which $5.9 million was borrowed from the U.S. under intercompany financing arrangements. If these loaned funds are needed
for our operations in the U.S., we would not be required to accrue and pay U.S. federal and state taxes to repatriate the loaned
funds. To the extent of other repatriation of cash held by foreign subsidiaries, we generally would be required to pay U.S. federal
and state taxes. While a significant portion of our foreign earnings continue to be permanently reinvested in our foreign subsidiaries,
it is anticipated this reinvestment will not impede cash needs at the parent company level. However, if we were to make significant
acquisitions or stock repurchases, we may be required to increase our outstanding indebtedness, which could result in increased
borrowing costs. In our determination of which foreign earnings are permanently reinvested, we consider numerous factors,
including the financial requirements of the U.S. parent company, the financial requirements of the foreign subsidiaries, and the
tax consequences of remitting the foreign earnings back to the U.S. There are no other material impediments to our ability to
access sources of liquidity and our resulting ability to meet short and long-term liquidity needs, other than in the event we are not
in compliance with the covenants under our 2014 Credit Facility or the potential tax costs of remitting foreign earnings back to
the U.S.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations at the end of fiscal 2016:
Payments Due By Period
Total
Less
than 1
year
1-3
years
3-5
years
More
than
5 years
(in millions)
Principal payments on debt (1)
Interest payments on debt (2)
Operating leases
Other purchase obligations and commitments (3)
Total
$
$
624.8
160.0
115.9
150.7
1,051.4
$
$
130.2
22.6
30.4
136.9
320.1
$
$
0.4
60.6
40.8
13.1
114.9
$
$
94.2
38.4
21.5
0.7
154.8
$
$
400.0
38.4
23.2
—
461.6
(1)
(2)
(3)
Amount represents principal payments over the life of the debt obligations. (See Note 7 to the Consolidated Financial
Statements for further financial information regarding debt.)
Amount represents the expected interest payments relating to our debt. Our $400.0 million Notes accrue interest at 4.75%
per annum and are payable semi-annually in arrears on December 1 and June 1 each year. Interest on our Credit Facilities
and Uncommitted Facilities was estimated to be 1.80% and 1.65% per annum, respectively, based upon recent trends and
is payable at least quarterly.
Other purchase obligations and commitments primarily represent open non-cancelable purchase orders for material
purchases with our vendors, and also include estimated payments due for acquisition related earn-outs. Purchase obligations
exclude agreements that are cancelable without penalty.
At the end of fiscal 2016, we had unrecognized tax benefits (included in other non-current liabilities) of $65.3 million, including
interest and penalties. At this time, we cannot make a reasonably reliable estimate of the period of cash settlement with tax
authorities regarding this liability, and therefore, such amounts are not included in the contractual obligations table above.
43
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The impact of recent accounting pronouncements is disclosed in Note 2 of our accompanying Notes to Consolidated Financial
Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
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 following tables 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, stock-based compensation and amortization of acquisition-related inventory step-up
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, integration costs, executive transition costs and litigation expense 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, amortization of acquisition-related inventory step-up, acquisition/divestiture costs associated with
external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, 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, and an equity sale
gain. These gains/losses are specific to particular acquisitions and divestitures and vary significantly in amount and timing. Non-
GAAP non-operating income (expense), net also excludes the write-off of debt issuance costs associated with terminated and/or
modified credit facilities and costs associated with the issuance of new credit facilities and Senior Notes that were not capitalized
as 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. In fiscal 2015 we began calculating a non-GAAP tax rate separate
from the GAAP rate as we expect this to add consistency in the non-GAAP trends. The non-GAAP income tax provision excludes
material non-recurring items such as build and release of valuation allowances, reserve releases related to closure of tax audits,
and other non-recurring items. We have not retroactively restated prior periods’ non-GAAP results with a similar separate rate.
Therefore, comparability between periods may be affected.
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-
44
based compensation, amortization of acquisition-related inventory step-up, acquisition/divestiture costs, executive transition costs,
litigation expenses, an equity sale gain, debt issuance cost write-offs 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, amortization of acquisition-
related inventory step-up, acquisition/divestiture costs, executive transition costs, litigation expenses, an equity sale gain, debt
issuance cost write-offs 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, amortization of acquisition-related inventory step-up, acquisition/divestiture items, executive transition
costs, litigation expenses, a gain on an equity sale, write-off of debt issuance costs and non-GAAP tax adjustments. For detailed
explanations of the adjustments made to comparable GAAP measures, see items (A) - ( L) below,
(Dollars in millions, except per share data)
GROSS MARGIN:
GAAP gross margin:
Restructuring charges
Amortization of purchased intangible
assets
Stock-based compensation
Amortization of acquisition-related
inventory step-up
Non-GAAP gross margin:
OPERATING EXPENSES:
GAAP operating expenses:
Restructuring charges
Amortization of purchased intangible
assets
Stock-based compensation
Acquisition / divestiture items
Executive transition costs
Litigation
Non-GAAP operating expenses:
OPERATING INCOME:
GAAP operating income:
Restructuring charges
Amortization of purchased intangible
assets
Stock-based compensation
Amortization of acquisition-related
inventory step-up
Acquisition / divestiture items
Executive transition costs
2016
Fiscal Years
2015
2014
Dollar
Amount
% of
Revenue
Dollar
Amount
% of
Revenue
Dollar
Amount
% of
Revenue
$
1,238.0
52.4 % $
1,202.2
52.5 % $
1,290.8
$
$
$
$
( A )
( B )
( C )
( D )
( A )
( B )
( C )
( E )
( F )
( G )
( A )
( B )
( C )
( D )
( E )
( F )
1.7
88.6
3.8
—
0.1 %
3.8 %
0.1 %
— %
1.4
92.6
3.9
—
0.1 %
4.0 %
0.2 %
— %
0.4
82.9
3.2
0.8
1,332.1
56.4 % $
1,300.1
56.8 % $
1,378.1
1,057.0
(11.6)
44.7 % $
1,047.8
45.7 % $
1,030.0
(0.5)%
(11.4)
(0.5)%
(1.7)
(2.6)%
(2.1)%
(0.3)%
— %
— %
(69.8)
(46.2)
(9.9)
—
(0.3)
(3.1)%
(2.0)%
(0.4)%
— %
— %
(75.6)
(40.2)
(13.5)
—
(0.7)
39.2 % $
910.2
39.7 % $
898.3
7.7 % $
0.6 %
6.4 %
2.2 %
— %
0.3 %
— %
154.4
12.8
162.4
50.1
—
9.9
—
6.7 % $
260.8
0.6 %
7.1 %
2.2 %
— %
0.4 %
— %
2.1
158.5
43.4
0.8
13.5
—
(62.2)
(48.8)
(6.8)
(1.0)
—
926.6
181.0
13.3
150.8
52.6
—
6.8
1.0
45
53.9 %
— %
3.5 %
0.1 %
— %
57.5 %
43.0 %
(0.1)%
(3.2)%
(1.7)%
(0.5)%
— %
— %
37.5 %
10.9 %
0.1 %
6.6 %
1.8 %
— %
0.6 %
— %
Litigation
Non-GAAP operating income:
NON-OPERATING INCOME (EXPENSE),
NET:
GAAP non-operating income (expense), net:
Acquisition / divestiture items
Gain on an equity sale
Debt issuance cost write-off
Non-GAAP non-operating income (expense),
net:
$
$
( G )
( E )
( H )
( I )
—
405.5
— %
0.3
— %
0.7
17.2 % $
389.9
17.0 % $
479.8
— %
20.0 %
(4.3)
(3.5)
—
—
$
(2.6)
(3.9)
—
—
$
5.2
2.9
(15.1)
4.2
$
(7.8)
$
(6.5)
$
(2.8)
GAAP and
Non-GAAP
Tax Rate %
(L)
GAAP and
Non-GAAP
Tax Rate %
(L)
GAAP and
Non-GAAP
Tax Rate %
(L)
$
$
$
$
$
INCOME TAX PROVISION:
GAAP income tax provision:
Non-GAAP items tax effected:
Difference in GAAP and Non-GAAP
tax
( J )
( K )
Non-GAAP income tax provision:
NET INCOME:
GAAP net income attributable to Trimble
Inc.
Restructuring charges
Amortization of purchased intangible
assets
Stock-based compensation
Amortization of acquisition-related
inventory step-up
Acquisition / divestiture items
Executive transition costs
Litigation
Gain on an equity sale
Debt issuance cost write-off
Non-GAAP tax adjustments
Non-GAAP net income attributable to
Trimble Inc.
DILUTED NET INCOME PER SHARE:
GAAP diluted net income per share
attributable to Trimble Inc.
Restructuring charges
Amortization of purchased intangible
assets
Stock-based compensation
Amortization of acquisition-related
inventory step-up
Acquisition / divestiture items
Executive transition costs
Litigation
Gain on an equity sale
Debt issuance cost write-off
Non-GAAP tax adjustments
( A )
( B )
( C )
( D )
( E )
( F )
( G )
( H )
( I )
( J ) -
( K )
( A )
( B )
( C )
( D )
( E )
( F )
( G )
( H )
( I )
( J ) -
( K )
44.5
55.3
(4.3)
95.5
132.4
13.3
150.8
52.6
—
3.3
1.0
—
—
—
(51.0)
302.4
0.52
0.06
0.59
0.20
—
0.01
—
—
—
—
25 % $
24 % $
$
$
$
31.1
47.1
13.8
92.0
121.1
12.8
162.4
50.1
—
6.0
—
0.3
—
—
(60.9)
291.8
0.47
0.05
0.63
0.19
—
0.02
—
—
—
—
(0.19)
(0.23)
20 % $
24 % $
52.1
44.3
(5.8)
90.6
$
214.1
20 %
19 %
2.1
158.5
43.4
0.8
16.4
0.7
(15.1)
4.2
(38.5)
386.6
0.81
0.01
0.60
0.16
—
0.06
—
—
(0.06)
0.02
(0.14)
$
$
Non-GAAP diluted net income per share
attributable to Trimble Inc.
$
1.19
$
1.13
$
1.46
46
A.
B.
C.
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 last
three years. However the amount incurred can vary significantly based on whether a restructuring has occurred in the period
and the timing of headcount reductions.
Amortization of purchased intangible assets. Included in our GAAP presentation of gross margin and operating expenses
is amortization of purchased intangible assets. US 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.
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 fiscal years 2016, 2015 and
2014, stock-based compensation was allocated as follows:
(In millions)
Cost of sales
Research and development
Sales and Marketing
General and administrative
Total stock-based compensation expense
2016
Fiscal Years
2015
2014
3.8
9.1
8.3
31.4
52.6
$
$
3.9
8.7
9.1
28.4
50.1
$
$
3.2
6.8
7.6
25.8
43.4
$
$
D.
E.
F.
G.
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 of cost of sales, 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.
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 our earn-out liabilities. Included in
our GAAP presentation of non-operating income (expense), net, acquisition / divestiture items includes unusual acquisition,
investment, 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.
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.
Litigation. These amounts represent costs accrued to settle litigation, generally as a result of an arbitration agreement. The
fiscal 2014 amount includes $51.3 million of estimated costs that were reserved during the third quarter based on a jury
verdict in favor of the plaintiff, Recreational Data Services, Inc. and then reversed during the fourth quarter after the judge
overturned the verdict. We have excluded these costs from our non-GAAP measures because they are non-recurring expenses
47
H.
I.
J.
K.
L.
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.
Gain on an equity sale. Included in our GAAP presentation of non-operating income (expense), net this amount represents
a gain on a partial equity sale of Virtual Site Solutions. We excluded the gain from our non-GAAP measures. We believe
that investors benefit from excluding this item from our non-GAAP measures because it facilitates an evaluation of our
non-operating income trends.
Debt issuance cost write-off. Included in our GAAP non-operating income, net this amount represents a write-off of debt
issuance costs for terminated and/or modified credit facilities and costs associated with the issuance of new credit facilities
and Senior Notes in fiscal 2014 that were not capitalized as debt issuance costs. 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 a more meaningful evaluation of our non-operating income trends.
Non-GAAP items tax effected. This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP
items ( A ) - ( I ) 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.
Difference in GAAP and Non-GAAP tax . The non-GAAP income tax provision excludes material non-recurring items such
as build and release of valuation allowances, reserve releases related to closure of tax audits, and other non-recurring items.
We believe that investors benefit from excluding this item from our non-GAAP income tax provision because it facilitates
a comparison of the non-GAAP tax provision in the current and prior periods. For fiscal 2014, the Non-GAAP tax adjustment
represents the tax effect of a gain on a partial equity sale of Virtual Site Solutions. We excluded this item as it represents
the tax effect of a non-recurring gain. In fiscal 2015 we began calculating a non-GAAP tax rate separate from the GAAP
rate as we expect this to add consistency in the quarterly trends. For fiscal 2015 and 2016, 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.
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. However, this comparability may be impacted since we began separately calculating a
non-GAAP tax rate in fiscal 2015.
Non-GAAP Operating Income
Non-GAAP operating income increased by $15.6 million for fiscal 2016 as compared to fiscal 2015, and decreased by $89.9
million for fiscal 2015 as compared to fiscal 2014. Non-GAAP operating income as a percentage of total revenue was 17.2%,
17.0%, and 20.0% for fiscal years 2016, 2015, and 2014, respectively.
The Non-GAAP operating income and Non-GAAP operating income percentage for fiscal 2016 increased primarily due to revenue
expansion in Engineering and Construction and Mobile Solutions and strong operating expense control across the company. The
Non-GAAP operating income and Non-GAAP operating income percentage for fiscal 2015 decreased primarily due to revenue
declines in Engineering and Construction and Field Solutions, partially offset by a revenue increase in Mobile Solutions.
48
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. We use certain derivative
financial instruments to manage these risks. We do not use derivative financial instruments for speculative purposes. All financial
instruments are used in accordance with policies approved by our board of directors.
Market Interest Rate Risk
Our cash equivalents and short-term investments consisted primarily of treasury bills, debt securities and commercial paper, interest
and non-interest bearing bank deposits as well as bank time deposits. The main objective of these instruments is safety of principal
and liquidity while maximizing return, without significantly increasing risk.
Due to the nature of our cash equivalents and short-term investments where they are readily convertible to cash, we do not anticipate
any material effect on our portfolio due to fluctuations in interest rates.
We are exposed to market risk due to the possibility of changing interest rates under our credit facilities. Our 2014 Credit Facility
is comprised of a revolving credit agreement and a letter of credit sub-facility with maturity dates of November 24, 2019 and also
two unsecured uncommitted revolving credit agreements that are callable by the bank at any time. We may borrow funds under
these facilities in U.S. Dollars or in certain other currencies and borrowings will bear interest as described under Note 7 of Notes
to the Consolidated Financial Statements.
At the end of fiscal 2016, we had outstanding a revolving loan of $94.0 million under the 2014 Credit Facility and a revolving
credit line of $130.0 million under the Uncommitted Facilities. A hypothetical 10% increase in our borrowing rates at the end of
fiscal 2016 could result in approximately $0.2 million annual increase in interest expense on these existing principal balances.
The hypothetical changes and assumptions made above will be different from what actually occurs in the future.
Furthermore, the computations do not anticipate actions that may be taken by our management should the hypothetical market
changes actually occur over time. As a result, actual earnings effects in the future will differ from those quantified above.
Foreign Currency Exchange Rate Risk
We operate in international markets, which expose us to market risk associated with foreign currency exchange rate fluctuations
between the U.S. Dollar and various foreign currencies, the most significant of which is the Euro.
Historically, the majority of our revenue contracts are denominated in U.S. Dollars, with the most significant exception being
Europe, where we invoice primarily in Euros. Additionally, a portion of our expenses, primarily the cost to manufacture, cost of
personnel to deliver technical support on our products and professional services, sales and sales support and research and
development, are denominated in foreign currencies, primarily the Euro.
Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange
rate fluctuations which can affect our operating income. As exchange rates vary, operating income may differ from expectations.
In fiscal 2016, revenue was negatively impacted by foreign currency exchange rates by $12.1 million and operating income was
favorably impacted by $3.2 million, respectively. Currency translation subtracted approximately 1% of revenue and added 2% of
operating income in fiscal 2016.
49
We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations
on cash and certain trade and inter-company receivables and payables, primarily denominated in Swiss Franc, Euro, British pound
and New Zealand and Canadian dollars. These contracts reduce the exposure to fluctuations in foreign currency exchange rate
movements as the gains and losses associated with foreign currency balances are generally offset with the gains and losses on the
forward contracts. These instruments are marked to market through earnings every period and generally range from one to two
months in maturity. We do not enter into foreign currency forward contracts for trading purposes. We occasionally enter into
foreign currency forward contracts to hedge the purchase price of some of our larger business acquisitions. Foreign currency
forward contracts outstanding at the end of fiscal 2016 and 2015 are summarized as follows (in millions):
(In millions)
Forward contracts:
Purchased
Sold
At the End of Fiscal 2016
At the End of Fiscal 2015
Nominal
Amount
Fair
Value
Nominal
Amount
Fair
Value
$
$
(99.2) $
$
86.1
— $
$
0.1
(86.5) $
$
88.1
1.3
(0.5)
50
TRIMBLE INC.
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
52
53
54
55
56
57
85
51
Item 8.
Financial Statements and Supplementary Data
CONSOLIDATED BALANCE SHEETS
At the End of Fiscal Year
(In millions, except par values)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Other receivables
Inventories
Other current assets
Total current assets
Property and equipment, net
Goodwill
Other purchased intangible assets, net
Other non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt
Accounts payable
Accrued compensation and benefits
Deferred revenue
Accrued warranty expense
Other current liabilities
Total current liabilities
Long-term debt
Non-current deferred revenue
Deferred income tax liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value; 3.0 shares authorized; none issued and outstanding
Common stock, $0.001 par value; 360.0 shares authorized; 251.3 and 250.7 shares
issued and outstanding at the end of fiscal 2016 and 2015, respectively
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive loss
Total Trimble Inc. stockholders’ equity
Noncontrolling interests
Total stockholders' equity
Total liabilities and stockholders’ equity
See accompanying Notes to the Consolidated Financial Statements.
52
2016
2015
$
$
$
$
216.1
111.1
354.8
35.4
218.8
42.5
978.7
144.2
2,077.6
333.3
140.0
3,673.8
130.3
109.8
97.5
246.5
17.2
86.9
688.2
489.6
37.7
38.8
113.8
1,368.1
—
0.3
1,348.3
1,177.1
(219.9)
2,305.8
(0.1)
2,305.7
3,673.8
$
$
$
$
116.0
—
361.9
14.9
261.1
44.5
798.4
159.2
2,106.4
487.1
129.6
3,680.7
118.3
99.8
98.9
234.6
18.5
90.8
660.9
611.4
29.6
51.7
106.5
1,460.1
—
0.3
1,238.0
1,148.2
(166.8)
2,219.7
0.9
2,220.6
3,680.7
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years
(In millions, except per share data)
Revenue:
Product
Service
Subscription
Total revenues
Cost of sales:
Product
Service
Subscription
Amortization of purchased intangible assets
Total cost of sales
Gross margin
Operating expense
Research and development
Sales and marketing
General and administrative
Restructuring charges
Amortization of purchased intangible assets
Total operating expense
Operating income
Non-operating income (expense), net
Interest expense, net
Foreign currency transaction gain (loss), net
Income from equity method investments, net
Other income, net
Total non-operating income (expense), net
Income before taxes
Income tax provision
Net income
Less: Net loss attributable to noncontrolling interests
Net income attributable to Trimble Inc.
Basic earnings per share
Shares used in calculating basic earnings per share
Diluted earnings per share
Shares used in calculating diluted earnings per share
See accompanying Notes to the Consolidated Financial Statements.
2016
2015
2014
$
$
$
$
1,562.0
430.2
370.0
2,362.2
760.8
169.9
104.9
88.6
1,124.2
1,238.0
349.6
377.6
256.0
11.6
62.2
1,057.0
181.0
(25.9)
(1.9)
17.6
5.9
(4.3)
176.7
44.5
132.2
(0.2)
132.4
0.53
250.5
0.52
253.9
$
$
$
$
1,533.5
419.9
337.0
2,290.4
731.1
164.2
100.3
92.6
1,088.2
1,202.2
336.7
374.6
255.3
11.4
69.8
1,047.8
154.4
(25.6)
0.2
17.9
4.9
(2.6)
151.8
31.1
120.7
(0.4)
121.1
0.47
255.8
0.47
258.5
1,713.6
396.0
285.9
2,395.5
788.1
152.6
81.1
82.9
1,104.7
1,290.8
318.0
387.6
247.1
1.7
75.6
1,030.0
260.8
(18.7)
(5.1)
12.4
16.6
5.2
266.0
52.1
213.9
(0.2)
214.1
0.82
260.1
0.81
264.5
$
$
$
$
53
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Years
(In millions)
Net income
2016
2015
2014
$
132.2
$
120.7
$
213.9
Foreign currency translation adjustments, net of tax $(0.2) in 2016, $(4.3)
in 2015, and $(6.4) in 2014
Net unrealized actuarial gain (loss), net of tax
Comprehensive income
Less: Comprehensive loss attributable to noncontrolling interests
Comprehensive income attributable to Trimble Inc.
$
(53.4)
0.3
79.1
(0.2)
79.3
$
(90.2)
(104.0)
0.1
30.6
(0.4)
31.0
$
(1.7)
108.2
(0.2)
108.4
See accompanying Notes to the Consolidated Financial Statements.
54
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common stock
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Total
Stockholders’
Equity
Noncontrolling
Interest
Total
258.7
$
0.3
$
1,105.7
$ 1,081.7
$
29.0
$
2,216.7
$
13.1
$ 2,229.8
(105.7)
214.1
(1.8)
(83.0)
214.1
(105.7)
108.4
56.1
(97.8)
44.1
—
14.1
(0.2)
213.9
(105.7)
108.2
56.1
(97.8)
44.1
(1.1)
(1.1)
14.1
3.7
(3.2)
—
—
57.9
(14.8)
44.1
—
14.1
(In millions, except par values)
Balance at the end of fiscal 2013
Net income
Other comprehensive
loss
Comprehensive income
Issuance of common stock
under employee plans, net of
tax withholdings
Stock repurchases
Stock-based compensation
Noncontrolling interest
investments
Tax benefit from stock option
exercises
Balance at the end of fiscal 2014
259.2
$
0.3
$
1,207.0
$ 1,211.0
$
(76.7) $
2,341.6
$
11.8
$ 2,353.4
Net income
Other comprehensive
loss
Comprehensive income
Issuance of common stock
under employee plans, net of
tax withholdings
Stock repurchases
Stock-based compensation
Noncontrolling interest
investments
Tax benefit from stock option
exercises
2.7
(11.2)
—
—
121.1
(3.6)
(180.3)
33.3
(54.1)
50.9
—
0.9
(90.1)
121.1
(90.1)
31.0
29.7
(234.4)
50.9
—
0.9
Balance at the end of fiscal 2015
250.7
$
0.3
$
1,238.0
$ 1,148.2
$
(166.8) $
2,219.7
$
Net income
Other comprehensive
loss
Comprehensive income
Issuance of common stock
under employee plans, net of
tax withholdings
Stock repurchases
Stock-based compensation
Noncontrolling interest
investments
Tax benefit from stock option
exercises
(53.1)
132.4
(8.8)
(94.7)
132.4
(53.1)
79.3
67.9
(119.5)
53.2
0.8
4.4
5.5
(4.9)
—
—
76.7
(24.8)
53.2
0.8
4.4
(0.4)
120.7
(90.1)
30.6
29.7
(234.4)
50.9
(10.5)
(10.5)
0.9
0.9
$ 2,220.6
(0.2)
132.2
(53.1)
79.1
67.9
(119.5)
53.2
—
4.4
(0.8)
Balance at the end of fiscal 2016
251.3
$
0.3
$
1,348.3
$ 1,177.1
$
(219.9) $
2,305.8
$
(0.1) $ 2,305.7
See accompanying Notes to the Consolidated Financial Statements.
55
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years
(In millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation expense
Amortization expense
Provision for doubtful accounts
Deferred income taxes
Stock-based compensation
Income from equity method investments
Gain on an equity sale
Divestiture (gain) loss, net
Excess tax benefit for stock-based compensation
Provision for excess and obsolete inventories
Other non-cash items
Add decrease (increase) in assets:
Accounts receivable
Other receivables
Inventories
Other current and non-current assets
Add increase (decrease) in liabilities:
Accounts payable
Accrued compensation and benefits
Deferred revenue
Accrued warranty expense
Accrued liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired
Acquisitions of property and equipment
Acquisitions of intangible assets
Purchases of equity method investments
Purchases of short-term investments
Proceeds from maturities of short-term investments
Net proceeds from sales of businesses
Dividends received from equity method investments
Other
Net cash used in investing activities
Cash flows from financing activities:
Issuance of common stock, net of tax withholdings
Repurchase and retirement of common stock
Excess tax benefit for stock-based compensation
Proceeds from debt and revolving credit lines
Payments on debt and revolving credit lines
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of fiscal year
Cash and cash equivalents, end of fiscal year
$
See accompanying Notes to the Consolidated Financial Statements.
56
2016
2015
2014
$
132.2
$
120.7
$
213.9
37.0
150.8
3.0
0.4
52.6
(17.6)
—
(3.5)
(6.5)
15.8
3.3
1.2
1.4
24.0
(1.2)
10.9
0.6
26.1
(1.1)
(22.3)
407.1
(38.8)
(26.0)
(0.3)
(1.5)
(113.3)
2.4
14.4
17.6
1.1
(144.4)
67.5
(119.5)
6.5
355.0
(465.3)
(155.8)
(6.8)
100.1
116.0
216.1
$
36.7
162.4
1.9
0.9
50.1
(17.9)
—
(3.9)
(2.1)
12.3
10.0
0.3
8.5
(2.9)
(7.6)
(6.4)
(0.1)
28.1
(2.0)
(34.1)
354.9
(156.3)
(43.9)
(0.1)
(5.5)
—
—
12.1
20.0
1.3
(172.4)
29.7
(234.4)
2.1
555.0
(555.2)
(202.8)
(11.7)
(32.0)
148.0
116.0
$
33.1
158.5
3.8
(1.7)
43.4
(12.4)
(15.1)
2.9
(14.1)
4.8
4.7
(10.9)
(2.3)
(31.8)
(7.1)
(7.2)
0.5
45.9
3.1
(4.9)
407.1
(307.9)
(47.3)
(7.6)
(10.9)
—
—
—
32.2
(2.5)
(344.0)
56.1
(97.8)
14.1
876.2
(900.1)
(51.5)
(10.8)
0.8
147.2
148.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF BUSINESS
The Company began operations in 1978 and was originally incorporated in California as Trimble Navigation Limited in 1981. On
October 1, 2016, Trimble Navigation Limited changed its name to Trimble Inc. ("Trimble" or the "Company") and changed its
state of incorporation from the State of California to the State of Delaware (the “Reincorporation”). Other than the change in
corporate domicile, the reincorporation did not result in any change in the business, physical location, management, assets, liabilities
or total stockholders' equity of the Company, nor did it result in any change in location of the Company's employees, including
the Company's management. Additionally, the reincorporation did not alter any stockholders' percentage ownership interest or
number of shares owned in the Company. The Reincorporation was previously approved by the Company’s stockholders at its
2016 annual meeting of stockholders.
Trimble is a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform
their work processes. Trimble's solutions are used across a range of industries including agriculture, architecture, civil engineering,
survey and land administration, construction, geospatial, government, natural resources, transportation and utilities. Representative
Trimble customers include engineering and construction firms, surveying companies, farmers and agricultural companies,
enterprise firms with large-scale fleets, energy, mining and utility companies, and state, federal and municipal governments.
Trimble focuses on integrating broad technological and application capabilities to create system-level solutions that transform
how work is done within the industries the Company serves. Products are sold based on return on investment and provide benefits
such as lower operational costs, higher productivity, improved quality, enhanced safety and regulatory compliance, and reduced
environmental impact. Representative products include equipment that automates large industrial equipment such as tractors and
bulldozers; integrated systems that track fleets of vehicles and workers and provide real-time information and powerful analytics
to the back-office; data collection systems that enable the management of large amounts of geo-referenced information; software
solutions that connect all aspects of a construction site or a farm; and building information modeling (BIM) software that is used
throughout the design, build, and operation of buildings.
NOTE 2: ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates
are used for allowances for doubtful accounts, sales returns reserve, allowances for inventory valuation, warranty costs, investments,
goodwill impairment, intangibles impairment, purchased intangibles, stock-based compensation, and income taxes among others.
Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these
estimates are based on management’s best knowledge of current events and actions that may impact the company in the future,
actual results may differ materially from management’s estimates.
Basis of Presentation
The Company has a 52-53 week fiscal year, ending on the Friday nearest to December 31. Fiscal 2016, 2015 and 2014 were all
52-week years, and ended on December 30, 2016, January 1, 2016 and January 2, 2015, respectively. Unless otherwise stated,
all dates refer to the Company’s fiscal year.
These Consolidated Financial Statements include the results of the Company and its consolidated subsidiaries. Inter-company
accounts and transactions have been eliminated. Noncontrolling interests represent the noncontrolling stockholders’ proportionate
share of the net assets and results of operations of the Company’s consolidated subsidiaries.
The Company has presented revenue and cost of sales separately for products, service and subscriptions. Product revenue includes
hardware, software licenses, parts and accessories; service revenue includes maintenance and support for hardware and software
products, training and professional services; subscription revenue includes software as a service (SaaS).
Reclassification
As a result of the Reincorporation, the Company reports common stock at its par value and additional paid-in capital separately.
The Company has elected to present this change in disclosure retrospectively, and accordingly, to conform to current year
presentation, the Company reclassified $1.24 billion, $1.21 billion and $1.11 billion from common stock to additional paid-in
capital at the end of fiscal 2015, 2014 and 2013, respectively, on the Company's Consolidated Balance Sheets and Consolidated
Statements of Stockholders' Equity.
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Foreign Currency Translation
Assets and liabilities of non-U.S. subsidiaries that operate in local currencies are translated to U.S. dollars at exchange rates in
effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated
other comprehensive income, net of tax in accumulated other comprehensive loss within the stockholders’ equity section of the
Consolidated Balance Sheets. Income and expense accounts are translated at average monthly exchange rates during the year.
Derivative Financial Instruments
The Company enters into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations
on cash, certain trade and inter-company receivables and payables, primarily denominated in Australian, Canadian, Singapore and
New Zealand Dollars, Japanese Yen, Chinese Yuan, Indian Rupee, Brazilian Real, South African Rand, Swedish Krona, Swiss
Franc, Euro and British pound. These contracts reduce the exposure to fluctuations in exchange rate movements as the gains and
losses associated with foreign currency balances are generally offset with the gains and losses on the forward contracts. These
instruments are marked to market through earnings every period and generally range from one to two months in original maturity.
The Company occasionally enters into foreign exchange forward contracts to hedge the purchase price of some of its larger business
acquisitions. The Company does not enter into foreign exchange forward contracts for trading purposes. As of the fiscal years
ended 2016 and 2015, there were no derivative financial instruments outstanding that were accounted for as hedges.
Cash, Cash Equivalents and Short-Term Investments
The Company's cash equivalents and short-term investments consisted primarily of treasury bills, debt securities and commercial
paper, interest and non-interest bearing bank deposits as well as bank time deposits. The Company classifies all investments that
are considered readily convertible to known amounts of cash and have stated maturities of three months or less from the date of
purchase as cash equivalents and those with stated maturities of greater than three months as short-term investments based on the
nature of the investments and their availability for use in current operations. The Company has classified and accounted for such
investments in cash equivalents and short-term investments as available-for-sale securities. The carrying amount of cash and cash
equivalents approximates fair value because of the short maturity of those instruments.
The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such
designation at each balance sheet date. These investments are carried at fair value, and any unrealized gains and losses, net of
taxes, are reported in Accumulated other comprehensive loss, except for unrealized losses determined to be other-than-temporary,
which would be recorded within Other income, net. The Company has not recorded any such impairment charge in the fiscal year
2016. Realized gains or losses on the sale of marketable securities are determined on a specific identification method, and such
gains and losses are recorded as a component of Other income, net.
Concentrations of Risk
The Company is subject to concentrations of credit risk primarily from cash and cash equivalents, short-term investments and
accounts receivable. The Company's cash equivalents and short-term investments consisted primarily of treasury bills, debt
securities and commercial paper, interest and non-interest bearing bank deposits as well as bank time deposits. The main objective
of these instruments is safety of principal and liquidity while maximizing return, without significantly increasing risk. Deposits
held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon
demand and are maintained with financial institutions of reputable credit and therefore bear minimal credit risk.
The Company's investment policy requires the portfolio to include only securities with high credit quality and a weighted average
maturity not to exceed 6 months, with the main objective of preserving capital and maintaining liquidity. The Company maintains
an investment portfolio of various holdings, types, and maturities.
The Company is also exposed to credit risk in the Company’s trade receivables, which are derived from sales to end-user customers
in diversified industries as well as various resellers. The Company performs ongoing credit evaluations of its customers’ financial
condition and limits the amount of credit extended when deemed necessary but generally does not require collateral.
With Flextronics Corporation International as an exclusive manufacturing partner for many of its products, the Company is
dependent upon a sole supplier for the manufacture of these products. In addition, the Company relies on sole suppliers for a
number of its critical components.
Allowance for Doubtful Accounts
The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to
make required payments. The allowance for doubtful accounts was 5.0 million at the end of fiscal 2016 and 2015, respectively.
The sales return reserve was $3.6 million and $5.1 million at the end of fiscal 2016 and 2015, respectively.
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The Company evaluates the ongoing collectibility of its trade accounts receivable based on a number of factors such as age of the
accounts receivable balances, credit quality, historical experience, and current economic conditions that may affect a customer’s
ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to
the Company, a specific allowance for bad debts is estimated and recorded which reduces the recognized receivable to the estimated
amount that the Company believes will ultimately be collected. In addition to specific customer identification of potential bad
debts, bad debt charges are recorded based on the Company’s recent past loss history and an overall assessment of past due trade
accounts receivable amounts outstanding.
Inventories
Inventories are stated at the lower of cost or market, which approximates net realizable value. Adjustments are also made to reduce
the cost of inventory for estimated excess or obsolete balances. Factors influencing these adjustments include declines in demand
which impact inventory purchasing forecasts, technological changes, product life cycle and development plans, component cost
trends, product pricing, physical deterioration and quality issues. If the Company's estimates used to reserve for excess and obsolete
inventory are different from what it expected, the Company may be required to recognize additional reserves, which would
negatively impact its gross margin.
Property and Equipment, Net
Property and equipment, net is stated at cost less accumulated depreciation. Depreciation of property and equipment is computed
using the straight-line method over the shorter of the estimated useful lives or the lease terms when applicable. Useful lives
generally include a range from four to six years for machinery and equipment, five to seven years for furniture and fixtures, two
to five years for computer equipment and software, 39 years for buildings, and the life of the lease for leasehold improvements.
The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary
project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated
useful lives of the assets, which range generally from two to five years. The costs of repairs and maintenance are expensed when
incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the
useful life of an asset are capitalized. Depreciation expense was $37.0 million in fiscal 2016, $36.7 million in fiscal 2015 and
$33.1 million in fiscal 2014.
Business Combinations
The Company allocates the fair value of purchase consideration to the assets acquired, liabilities assumed, and non-controlling
interests in the acquiree based on their fair values at the acquisition date. The excess of the fair value of purchase consideration
over the fair value of these assets acquired, liabilities assumed and non-controlling interests in the acquiree is recorded as goodwill.
When determining the fair values of assets acquired, liabilities assumed, and non-controlling interests in the acquiree, management
makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible
assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins,
customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Fair value
estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability.
Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one
year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.
Goodwill and Purchased Intangible Assets
Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible
assets acquired in a business combination. Intangible assets acquired individually, with a group of other assets, or in a business
combination are recorded at fair value. Identifiable intangible assets are comprised of distribution channels and distribution rights,
patents, licenses, technology, acquired backlog, trademarks and in-process research and development. Identifiable intangible assets
are being amortized over the period of estimated benefit using the straight-line method, reflecting the pattern of economic benefits
associated with these assets, and have estimated useful lives ranging from one month to twelve years with a weighted average
useful life of 6.2 years. Goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment,
applying a fair-value based test.
Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets
The Company evaluates goodwill, at a minimum, on an annual basis and whenever events and changes in circumstances suggest
that the carrying amount may not be recoverable. The Company performs its annual goodwill impairment testing in the fourth
fiscal quarter of each year based on the values on the first day of that quarter. For the Company's annual goodwill impairment test
in the fourth quarter of fiscal 2016 goodwill was reviewed for impairment utilizing a quantitative two-step process. In the first
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step of this test, goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount,
including goodwill, to the fair value of the reporting unit. The fair values of the reporting units are estimated using a discounted
cash flow approach. If the carrying amount of the reporting unit exceeds its fair value, a second step is performed to measure the
amount of impairment loss, if any. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a
reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying
value of the reporting unit’s goodwill, the difference is recognized as an impairment loss. When the Company performs a quantitative
assessment of goodwill impairment, the determination of fair value of a reporting unit involves the use of significant estimates
and assumptions. The discounted cash flows are based upon, among other things, assumptions about expected future operating
performance using risk-adjusted discount rates. Actual future results may differ from those estimates. As of the first day of the
fourth quarter of fiscal 2016, the fair value for our reporting units ranged from 180% to approximately 1,068% of carrying amounts,
therefore goodwill was not impaired and no further testing was required. For certain earlier stage reporting units, due to the smaller
magnitude of the carrying value and fair value of each respective reporting unit, the margins by which the fair value exceeded the
carrying value on an absolute dollar basis were relatively small.
Depreciation and amortization of the Company’s intangible assets and other long-lived assets is provided using the straight-line
method over their estimated useful lives, reflecting the pattern of economic benefits associated with these assets. Changes in
circumstances such as technological advances, changes to the Company’s business model, or changes in the capital strategy could
result in the actual useful lives differing from initial estimates. In cases where the Company determines that the useful life of an
asset should be revised, the Company will depreciate the net book value in excess of the estimated residual value over its revised
remaining useful life. These assets are evaluated for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things,
assumptions about expected future operating performance and these estimates may differ from actual future cash flows. The assets
evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent
of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest)
is less than the carrying value of the assets, the assets will be written down to the estimated fair value.
Warranty
The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, technical support
labor costs, and costs incurred by third parties performing work on the Company’s behalf. The Company’s expected future cost
is primarily estimated based upon historical trends in the volume of product returns within the warranty period and the cost to
repair or replace the equipment. When products sold include warranty provisions, they are covered by a warranty for periods
ranging generally from 1 year to 2 years.
While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating
the quality of component suppliers, its warranty obligation is affected by product failure rates, material usage, and service delivery
costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ
from the estimates, revisions to the estimated warranty accrual and related costs may be required.
Changes in the Company’s product warranty liability during the fiscal years ended 2016 and 2015 are as follows:
At the End of Fiscal Year
(In millions)
Beginning balance
Acquired warranties
Accruals for warranties issued
Changes in estimates
Warranty settlements (in cash or in kind)
Ending Balance
2016
2015
$
$
18.5
(0.2)
18.3
0.3
(19.7)
17.2
$
$
20.6
0.1
16.6
4.8
(23.6)
18.5
Guarantees, Including Indirect Guarantees of Indebtedness of Others
In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers,
lessors, and parties to other transactions with the Company. For example, the Company has agreed to hold the other party harmless
against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims
made by certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount
of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the
Company’s bylaws contain similar indemnification obligations to the Company’s agents.
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It is not possible to determine the maximum potential exposure under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments
made by the Company under these agreements have not been material and no liabilities have been recorded on the Consolidated
Balance Sheets at the end of fiscal 2016 and 2015.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or
realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable,
and collectibility is reasonably assured. In instances where final acceptance of the product is specified by the customer or is
uncertain, revenue is deferred until all acceptance criteria have been met.
Contracts and/or customer purchase orders are used to determine the existence of an arrangement. Shipping documents and customer
acceptance, when applicable, are used to verify delivery. The Company assesses whether the fee is fixed or determinable based
on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company
assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analyses, as
well as the customer’s payment history.
Revenue for orders is not recognized until the product is shipped and title has transferred to the buyer. The Company bears all
costs and risks of loss or damage to the goods up to that point. The Company’s shipment terms for U.S. orders and international
orders fulfilled from the Company’s European distribution center typically provide that title passes to the buyer upon delivery of
the goods to the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, delivery is
deemed to occur when the carrier takes the goods into its charge from the place determined by the Company. Other shipment terms
may provide that title passes to the buyer upon delivery of the goods to the buyer. Shipping and handling costs are included in
Cost of sales.
Revenue from sales to distributors and dealers is recognized upon shipment, assuming all other criteria for revenue recognition
have been met. Distributors and dealers do not have a right of return.
Revenue from purchased extended warranty and post contract support (PCS) agreements is deferred and recognized ratably over
the term of the warranty or support period. Revenue from the Company's subscription services related to its hardware and software
applications is recognized ratably over the term of the subscription service period beginning on the date that service is made
available to the customer, assuming all revenue recognition criteria have been met.
The Company presents revenue net of sales taxes and any similar assessments.
The Company’s software arrangements generally consist of a perpetual license fee and PCS. The Company generally has established
vendor-specific objective evidence (VSOE) of fair value for the Company’s PCS contracts based on the renewal rate. The remaining
value of the software arrangement is allocated to the license fee using the residual method. License revenue is primarily recognized
when the software has been delivered and fair value has been established for all remaining undelivered elements. In cases where
VSOE of fair value for PCS is not established, revenue is recognized ratably over the PCS period after all software deliverables
have been made and the only the undelivered element is PCS.
For services performed on a fixed-fee basis, revenue is recognized using the proportional performance method, with performance
measured based on hours of work performed. For contracts that involve significant customization and implementation or consulting
services that are essential to the functionality of the software, the license and services revenues are recognized using the percentage-
of-completion method or, if we are unable to reliably estimate the costs to complete the services, we use the completed-contract
method of accounting. A contract is considered complete when all significant costs have been incurred or when acceptance from
the customer has been received.
Some of the Company’s subscription product offerings include hardware, subscription services and extended warranty. Under
these hosted arrangements, the customer typically does not have the contractual right to take possession of the software at any
time during the hosting period without incurring a significant penalty and it is not feasible for the customer to run the software
either on its own hardware or on a third-party’s hardware.
The Company’s multiple deliverable product offerings include hardware with embedded firmware, extended warranty, software,
PCS and subscription services, which are considered separate units of accounting. For certain of the Company’s products, software
and non-software components function together to deliver the tangible product’s essential functionality.
In evaluating the revenue recognition for the Company's hardware or subscription agreements which contain multiple deliverables,
the Company determined that in certain instances the Company was not able to establish VSOE for some or all deliverables in an
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arrangement as the Company infrequently sold each element on a standalone basis, did not price products within a narrow range,
or had a limited sales history. When VSOE cannot be established, the Company attempts to establish the selling price of each
element based on relevant third-party evidence (TPE). TPE is determined based on competitor prices for similar deliverables when
sold separately. The Company’s offerings may contain a significant level of proprietary technology, customization or differentiation
such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable
to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company typically
is not able to establish the selling price of an element based on TPE.
When the Company is unable to establish selling price using VSOE or TPE, the Company uses its best estimate of selling price
(BESP) in the Company’s allocation of arrangement consideration. The objective of BESP is to determine the price at which the
Company would transact a sale if the product or service were sold on a stand-alone basis. BESP is generally used for offerings
that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for
a product or service by considering multiple factors including, but not limited to, pricing practices, market conditions, competitive
landscape, internal costs, geographies and gross margin. The determination of BESP is made through consultation with and formal
approval by the Company’s management, taking into consideration the Company’s go-to-market strategy.
Advertising and Promotional Costs
The Company expenses all advertising and promotional costs as incurred. Advertising and promotional expense was approximately
$37.2 million, $32.3 million, and $39.0 million, in fiscal 2016, 2015 and 2014, respectively.
Research and Development Costs
Research and development costs are charged to expense as incurred. Cost of software developed for external sale subsequent to
reaching technical feasibility were not significant and were expensed as incurred. The Company received third party funding of
approximately $13.0 million, $12.5 million, and $13.5 million in fiscal 2016, 2015 and 2014, respectively. The Company offsets
research and development expense with any third party funding earned. The Company retains the rights to any technology
developed under such arrangements.
Stock-Based Compensation
The Company has employee stock benefit plans, which are described more fully in “Note 13: Employee Stock Benefit Plans.”
Stock compensation expense recognized in the Consolidated Statements of Income is based on the fair value of the portion of
share-based payment awards that is expected to vest during the period and is net of estimated forfeitures. The Company attributes
the value of stock options to expense using the straight-line single option method. The grant date fair value for options is estimated
using the binomial valuation model. The fair value of rights to purchase shares under the Employee Stock Purchase Plan is estimated
using the Black-Scholes option-pricing model. The fair value of restricted stock units (RSUs) and performance-based restricted
stock units (PSUs) are valued as of the grant date using the fair value of Trimble’s common stock and the total expense associated
with the performance-based awards is based upon the expected achievement of the underlying performance goals and may be
adjusted in future periods based upon changes in expectations and actual achievement. The fair value for restricted stock units
with market-based vesting conditions is valued as of the grant date using a Monte Carlo simulation. The Company estimates
forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.
The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only
for those awards that are expected to vest.
Income Taxes
Income taxes are accounted for under the liability method whereby deferred tax assets or liability account balances are calculated
at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect
taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than
not such assets will not be realized. The Company’s valuation allowance is primarily attributable to foreign net operating losses
and state research and development credit carryforwards. Management believes that it is more likely than not that the Company
will not realize certain of these deferred tax assets, and, accordingly, a valuation allowance has been provided for such amounts.
Valuation allowance adjustments associated with an acquisition after the measurement period are recorded through income tax
expense.
Relative to uncertain tax positions, the Company only recognizes a tax benefit if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating our
tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes.
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Determining whether an uncertain tax position is effectively settled requires judgment. Changes in recognition or measurement
of the Company's uncertain tax positions would result in the recognition of a tax benefit or an additional charge to the tax provision.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
The Company is subject to income taxes in the U.S. and numerous other countries, and is subject to routine corporate income tax
audits in many of these jurisdictions. The Company generally believes that positions taken on its tax returns are more likely than
not to be sustained upon audit, but tax authorities in some circumstance have, and may in the future, successfully challenge these
positions. Accordingly, the Company’s income tax provision includes amounts intended to satisfy assessments that may result
from these challenges. Determining the income tax provision for these potential assessments and recording the related effects
requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different
from the amounts previously included in the Company’s income tax provision and, therefore, could have a material impact on its
income tax provision, net income and cash flows. The Company’s accrual for uncertain tax positions includes uncertainties
concerning the tax treatment of our international operations, including the allocation of income among different jurisdictions,
intercompany transactions and related interest. See Note 11 to the Consolidated Financial Statements for additional information.
Computation of Earnings Per Share
The number of shares used in the calculation of basic earnings per share represents the weighted average common shares outstanding
during the period and excludes any potentially dilutive securities. The dilutive effects of outstanding stock options, shares to be
purchased under the Company’s employee stock purchase plan and restricted stock units are included in diluted earnings per share.
Recent Accounting Pronouncements
Fiscal 2016 Adoption
In February 2015, the FASB issued amendments to the consolidation guidance. The amendments under the new guidance modify
the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest
entities and eliminate the presumption that a general partner should consolidate a limited partnership. The Company adopted the
amendments beginning in the first quarter of fiscal 2016. The adoption did not have a material impact on the Company's consolidated
financial statements.
In September 2015, the FASB issued new guidance related to business combinations. The new guidance requires that any
adjustments to provisional amounts in a business combination be recorded in the period such adjustments are determined, rather
than retrospectively adjusting previously reported amounts. The Company adopted the amendments beginning in the first quarter
of fiscal 2016. The adoption did not have a material impact on the Company's consolidated financial statements.
Fiscal 2017 Adoption
In July 2015, the FASB issued amendments to simplify the measurement of inventory. Under the amendments, inventory will be
measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated.
The guidance defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably
predictable costs of completion, disposal, and transportation”. The amendments are effective for the Company beginning in fiscal
2017 and will not have a material impact on the Company's consolidated financial statements.
In March 2016, the FASB issued amendments to its guidance on the accounting for derivatives and hedging. The new guidance
clarifies the requirements for assessing whether contingent call or put options that can accelerate the payment of principal on debt
instruments are clearly and closely related to their debt hosts. The amendments are effective for the Company beginning in fiscal
2017 and will not have a material impact on the Company's consolidated financial statements.
In March 2016, the FASB issued new guidance related to equity investments and joint ventures. This standard eliminates the
requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its
historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the
point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income will
be recognized through earnings. The amendments are effective for the Company beginning in fiscal 2017 and will not have a
material impact on the Company's consolidated financial statements.
In March 2016, the FASB issued final guidance that changes certain aspects of the accounting for share-based payments awards,
including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the
statement of cash flows. The Company will adopt this guidance beginning in the first quarter of fiscal 2017. The adoption will not
have a material impact on the Company's financial statements.
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In October 2016, the FASB issued amendments to its guidance on the accounting for related parties, which amends the consolidation
guidance issued in February 2015 regarding the treatment of indirect interests held through related parties that are under common
control. The amendments are effective for the Company beginning in fiscal 2017 and will not have a material impact on the
Company's consolidated financial statements.
Future Adoption
In May 2014, the FASB issued a comprehensive new revenue recognition standard that replaces the current revenue recognition
guidance under U.S. GAAP. The new standard requires companies to recognize revenue in a way that depicts the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The Company expects to adopt this accounting standard update in the first quarter of fiscal
2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the
standard. The new standard may impact the timing and amounts of revenue recognized. The Company is still evaluating which
adoption method it will apply and is continuing to assess the impact that the updated standard will have on its consolidated financial
statements and related disclosures.
In January 2016, the FASB issued final guidance that will require entities to measure equity investments that do not result in
consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income
unless the investments qualify for the new practicability exception. The amendments are effective for the Company beginning in
fiscal 2018, although early adoption is permitted and should be applied by means of a cumulative-effect adjustment to the balance
sheet as of the beginning of the fiscal year of adoption, with certain exceptions. The Company is currently evaluating the effect
of the updated standard on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued new guidance that requires a lessee to recognize assets and liabilities arising from leases on
the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally,
companies are permitted to make an accounting policy election to not recognize lease assets and liabilities for leases with a term
of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present
value of the lease payments. This new guidance is effective for the Company beginning in fiscal 2019, although early adoption is
permitted. The Company is currently evaluating the effect of this guidance on its consolidated financial statements and related
disclosures.
In June 2016, the FASB issued new guidance that requires credit losses on financial assets measured at amortized cost basis to be
presented based on the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-
sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below
amortized cost. The new standard is effective for the Company beginning in fiscal 2020. Early adoption for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2018 is permitted. The Company is currently evaluating the effect
of the updated standard on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued new guidance related to statement of cash flows. This guidance amended the existing accounting
standards for the statement of cash flows and provided guidance on certain classification issues related to the statement of cash
flows. The new standard is effective for the Company beginning in fiscal 2019 and early adoption is permitted. The amendments
should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments
may be applied prospectively as of the earliest date practicable. The Company is currently evaluating the timing and the impact
of these amendments on its statement of cash flows, which will likely include a reclassification of payments for business
combinations from cash flows from investing activities, to cash flows from operating and financing activities.
In October 2016, the FASB issued new guidance related to income taxes. This standard requires the recognition of the income tax
consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The guidance will be effective
for the Company in its first quarter of fiscal 2018. The Company is currently evaluating the effect of the updated standard on its
consolidated financial statements and related disclosures.
In January 2017, the FASB issued new guidance to that simplifies the accounting for goodwill impairment by requiring impairment
charges to be based on the first step in today’s two-step impairment test. The impairment test is performed by comparing the fair
value of a reporting unit with its carrying amount and an impairment charge would be recognized for the amount by which the
carrying amount exceeds the reporting unit’s fair value. The new standard is to be applied on a prospective basis and is effective
for the Company beginning in fiscal 2020 and early adoption is permitted. The Company is currently evaluating the effect of the
updated standard on its consolidated financial statements and related disclosures.
64
In February 2017, the FASB issued new guidance clarifying the scope and application of existing guidance related to the sale or
transfer of nonfinancial assets to noncustomers, including partial sales. The amendments are effective at the same time as the new
revenue recognition guidance, which the Company expects to adopt in the first quarter of fiscal 2018. The Company is currently
evaluating the effect of the updated standard on its consolidated financial statements and related disclosures.
NOTE 3: EARNINGS PER SHARE
Basic earnings per share is computed by dividing Net income by the weighted-average number of shares of common stock
outstanding during the period. Diluted earnings per share is computed by dividing Net income by the weighted-average number
of shares of common stock outstanding during the period increased to include the number of additional shares of common stock
that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include
outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and restricted stock units.
The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock
method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a
greater dilutive effect from potentially dilutive securities.
The following table shows the computation of basic and diluted earnings per share:
Fiscal Years
2016
2015
2014
(in millions, except per share data)
Numerator:
Net income attributable to Trimble Inc.
Denominator:
Weighted average number of common shares used in basic earnings per
share
Effect of dilutive securities
Weighted average number of common shares and dilutive potential
common shares used in diluted earnings per share
Basic earnings per share
Diluted earnings per share
$
$
$
132.4
$
121.1
$
214.1
250.5
3.4
253.9
0.53
0.52
$
$
255.8
2.7
258.5
0.47
0.47
$
$
260.1
4.4
264.5
0.82
0.81
For fiscal 2016, 2015 and 2014 the Company excluded 4.3 million shares, 6.1 million shares and 1.4 million shares of outstanding
stock options, respectively, from the calculation of diluted earnings per share because their effect would have been antidilutive.
NOTE 4: BUSINESS COMBINATIONS
During fiscal 2016, 2015 and 2014 the Company acquired multiple businesses, all with cash consideration. The Consolidated
Statements of Income include the operating results of the businesses from the dates of acquisition.
During fiscal 2016, the Company acquired four businesses, all with cash consideration, all in its Engineering and Construction
segment. The purchase prices ranged from less than $0.3 million to $14.0 million. The acquisitions were not significant individually
or in the aggregate. The largest acquisition was of a company that manages content and software solutions enable Mechanical,
Electrical and Plumbing (MEP) contractors and engineers to produce intelligent and constructible models, based in Rocklin,
California. In the aggregate, the businesses acquired during fiscal 2016 contributed less than one percent to the Company's total
revenue during fiscal 2016.
During fiscal 2015, the Company acquired thirteen businesses, all with cash consideration, in its Engineering and Construction,
Field Solutions and Mobile Solutions segments. The acquisitions were not significant individually or in the aggregate. The
purchase prices ranged from less than $2.0 million to $30.0 million. The largest acquisition was a Norwegian company specializing
in BIM software for infrastructure design software solutions across the European region. In the aggregate, the businesses acquired
during fiscal 2015 collectively contributed less than one percent to the Company's total revenue during fiscal 2015.
During fiscal 2014, the Company acquired thirteen businesses across its Engineering and Construction, Field Solutions, and Mobile
Solutions segments. The purchase prices ranged from less than $0.6 million to $83.1 million. The largest acquisition was of a
company that provides software solutions to MEP industry and a software provider for real estate and facility management, based
in London within the Engineering and Construction segment. In the aggregate, the businesses acquired during fiscal 2014
collectively contributed less than one percent to the Company's total revenue during fiscal 2014.
65
The Company determined the total consideration paid for each of its acquisitions as well as the fair value of the assets acquired
and liabilities assumed as of the date of each acquisition. For certain acquisitions completed in fiscal 2016, the fair value of the
assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information,
primarily related to adjustments for the true up of acquired net working capital in accordance with certain purchase agreements,
and estimated values of certain net tangible assets and liabilities including tax balances, pending the completion of final studies
and analyses. If there are adjustments made for these items the fair value of intangible assets and goodwill could be impacted.
Thus the provisional measurements of fair value set forth below are subject to change. Such changes could be significant. The
Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one-
year from the acquisition date.
The fair value of identifiable assets acquired and liabilities assumed were determined under the acquisition method of accounting
for business combinations. The excess of purchase consideration over the fair value of net tangible and identifiable intangible
assets acquired was recorded as goodwill. The fair value of intangible assets acquired is generally determined based on a discounted
cash flow analysis. Acquisition costs of $6.9 million, $12.0 million and $13.4 million in fiscal 2016, 2015 and 2014, respectively,
were expensed as incurred, along with the changes in fair value of the contingent consideration liabilities, and are included in
General and administrative expenses in the Consolidated Statements of Income.
The following table summarizes the Company’s business combinations completed during fiscal 2016, 2015 and 2014:
(In millions)
Fair value of total purchase consideration
Less fair value of net assets acquired:
Net tangible assets acquired
Identified intangible assets
Deferred taxes
Goodwill
Intangible Assets
Fiscal 2016
Fiscal 2015
Fiscal 2014
27.6
$
176.2
$
331.8
(1.9)
13.6
(1.3)
17.2
$
8.0
83.3
(13.6)
98.5
$
41.2
155.8
(46.8)
181.6
$
$
The following table presents details of the Company’s total intangible assets:
(In millions)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
At the End of Fiscal 2016
At the End of Fiscal 2015
Developed product technology
$
794.8
$
(620.6) $
174.2
$
802.1
$
(536.0) $
Trade names and trademarks
Customer relationships
Distribution rights and other
intellectual properties
50.9
438.7
64.3
(42.9)
(294.1)
(57.8)
8.0
144.6
6.5
52.8
448.1
78.6
(39.8)
(258.0)
(60.7)
$
1,348.7
$
(1,015.4) $
333.3
$
1,381.6
$
(894.5) $
266.1
13.0
190.1
17.9
487.1
The weighted-average amortization period is six years for developed product technology, five years for trade names and trademarks,
seven years for customer relationships, and eight years for distribution rights and other intellectual properties.
The estimated future amortization expense of intangible assets at the end of fiscal 2016 is as follows (in millions):
2017
2018
2019
2020
2021
Thereafter
Total
$
$
126.1
98.7
59.4
32.1
11.5
5.5
333.3
66
Goodwill
The changes in the carrying amount of goodwill for fiscal 2016 are as follows (in millions):
At the end of fiscal 2015
Additions due to acquisitions and current year
acquisitions' purchase price adjustments
Purchase price adjustments - prior years' acquisitions
Foreign currency translation adjustments
Divestitures
At the end of fiscal 2016
Engineering
and
Construction
1,140.1
$
Field
Solutions
125.7
$
Mobile
Solutions
Advanced
Devices
$
822.9
$
17.7
$
18.6
—
(35.1)
(1.2)
1,122.4
$
—
0.2
(1.1)
—
124.8
$
—
0.1
(3.9)
(6.6)
812.5
$
—
—
0.2
—
17.9
$
$
Total
2,106.4
18.6
0.3
(39.9)
(7.8)
2,077.6
The Company sold the Omega Group assets, Advanced Public Safety (APS) business, and Gatewing business in fiscal 2016. Both
Omega Group and APS businesses provided software solutions for public safety agencies and were part of the Company’s Mobile
Solutions segment. Gatewing provided lightweight unmanned aerial vehicles for photogrammetry and rapid terrain mapping
applications and was part of the Company's Engineering and Construction segment.
NOTE 5: CERTAIN BALANCE SHEET COMPONENTS
The following tables provide details of selected balance sheet items:
At the End of Fiscal Year
(In millions)
Inventories:
Raw materials
Work-in-process
Finished goods
Total inventories
2016
2015
$
$
77.9
6.8
134.1
218.8
$
$
107.5
5.9
147.7
261.1
Finished goods includes $14.4 million at the end of fiscal year 2016 and $14.6 million at the end of fiscal year 2015 for costs of
sales that have been deferred in connection with deferred revenue arrangements.
At the End of Fiscal Year
(In millions)
Property and equipment, net:
Machinery and equipment
Software and licenses
Furniture and fixtures
Leasehold improvements
Construction in progress
Buildings
Land
Less accumulated depreciation
Total
2016
2015
$
$
113.3
119.4
26.3
32.1
10.8
47.9
8.3
358.1
(213.9)
144.2
$
$
115.8
112.1
26.8
30.4
13.5
48.1
8.2
354.9
(195.7)
159.2
67
At the End of Fiscal Year
(In millions)
Other non-current liabilities:
Deferred compensation
Pension
Deferred rent
Unrecognized tax benefits
Other
Total
2016
2015
$
$
22.6
13.1
3.3
65.3
9.5
113.8
$
$
21.1
13.5
3.0
53.1
15.8
106.5
NOTE 6: REPORTING SEGMENT AND GEOGRAPHIC INFORMATION
To achieve distribution, marketing, production, and technology advantages, the Company manages its operations in the following
four segments:
• Engineering and Construction: This segment primarily serves customers working in architecture, engineering,
construction, geospatial and government. Within this segment our most substantial product portfolios are focused
on civil engineering and construction, building construction, and geospatial.
•
Field Solutions: This segment provides solutions for the farming, government and consumer markets, with its
products focused on agriculture and geographic information systems (GIS).
• Mobile Solutions: This segment provides solutions that enable end-users to monitor and manage their mobile work,
mobile workers and mobile assets in the areas of transportation and logistics and field services management.
• Advanced Devices - The various operations that comprise this segment are aggregated on the basis that these
operations do not exceed 10% of the Company's total revenue, operating income or assets. This segment is comprised
of the Embedded Technologies, Timing, Applanix, Military and Advanced Systems and ThingMagic businesses.
The Company’s CODM, its Chief Executive Officer, evaluates each of its segment’s performance and allocates resources based
on segment operating income before income taxes and some corporate allocations. The Company and each of its segments employ
consistent accounting policies. In each of its segments the Company sells many individual products. For this reason it is
impracticable to segregate and identify revenue for each of the individual products or group of products. Stock-based compensation
is shown in the aggregate within unallocated corporate expense and is not reflected in the segment results, which is consistent
with the way the CODM evaluates each of the segment's performance and allocates resources.
The following tables present revenue, operating income, depreciation expense and identifiable assets for the four segments.
Operating income is revenue less cost of sales and operating expense, excluding general corporate expense, acquisition/divestiture
costs, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, restructuring charges,
stock-based compensation, litigation reserves and executive transition costs. The identifiable assets that the CODM views by
segment are accounts receivable, inventories and goodwill.
68
Fiscal Years
(In millions)
Engineering and Construction
Revenue
Operating income
Depreciation expense
Field Solutions
Revenue
Operating income
Depreciation expense
Mobile Solutions
Revenue
Operating income
Depreciation expense
Advanced Devices
Revenue
Operating income
Depreciation expense
Total
Revenue
Operating income
Depreciation expense
At the End of Fiscal Year
(Dollars in millions)
Engineering and Construction
Accounts receivable
Inventories
Goodwill
Field Solutions
Accounts receivable
Inventories
Goodwill
Mobile Solutions
Accounts receivable
Inventories
Goodwill
Advanced Devices
Accounts receivable
Inventories
Goodwill
Total
Accounts receivable
Inventories
Goodwill
2016
2015
2014
$
$
$
$
$
1,313.6
230.5
13.6
354.3
105.2
1.3
559.7
88.9
5.5
134.6
51.4
0.6
2,362.2
476.0
21.0
$
$
$
$
$
1,283.3
218.8
14.1
355.3
108.6
1.2
520.3
85.6
5.4
131.5
46.9
0.6
2,290.4
459.9
21.3
1,348.1
284.1
13.4
422.1
137.8
0.9
486.8
78.0
5.3
138.5
44.3
0.6
2,395.5
544.2
20.2
2016
2015
2014
$
$
$
$
$
202.9
140.8
1,122.4
59.7
32.7
124.8
69.2
31.6
812.5
23.0
13.7
17.9
354.8
218.8
2,077.6
$
$
$
$
$
215.9
178.0
1,140.1
57.1
36.0
125.7
69.6
30.4
822.9
19.3
16.7
17.7
361.9
261.1
2,106.4
227.7
185.2
1,170.6
51.6
51.0
96.0
62.9
26.1
796.0
19.8
15.8
23.2
362.0
278.1
2,085.8
$
$
$
$
$
$
$
$
$
$
A reconciliation of the Company’s consolidated segment operating income to consolidated income before income taxes is as
follows:
69
Fiscal Years
(In millions)
Consolidated segment operating income
Unallocated corporate expense (1)
Restructuring charges (2)
Stock-based compensation
Amortization of purchased intangible assets
Consolidated operating income
Non-operating income (expense), net
Consolidated income before taxes
2016
2015
2014
$
$
476.0
(78.3)
(13.3)
(52.6)
(150.8)
181.0
(4.3)
176.7
$
$
459.9
(80.2)
(12.8)
(50.1)
(162.4)
154.4
(2.6)
151.8
$
$
544.2
(79.4)
(2.1)
(43.4)
(158.5)
260.8
5.2
266.0
(1) Unallocated corporate expense includes general corporate expense, amortization of acquisition-related inventory step-up,
acquisition/divestiture costs, litigation expenses and executive transition costs.
(2) Restructuring charges primarily consist of severance and benefits, resulting from employee headcount reductions in connection
with the Company's restructuring programs related to decisions to streamline processes and reduce the cost structure. As of the
end of fiscal 2016, the Company's restructuring liability was $2.5 million, which is expected to be settled in fiscal 2017.
Restructuring liabilities are reported within Other current liabilities on the Consolidated Balance Sheets.
The geographic distribution of Trimble’s revenue and long-lived assets is summarized in the tables below. Other non-US geographies
include Canada, and countries in South and Central America, the Middle East, and Africa. Revenue is defined as revenue from
external customers.
Fiscal Years
(In millions)
Revenue (1):
United States
Europe
Asia Pacific
Other non-US countries
Total consolidated revenue
2016
2015
2014
$
$
1,156.0
574.9
352.6
278.7
2,362.2
$
$
1,142.1
557.2
321.1
270.0
2,290.4
$
$
1,147.7
581.7
345.6
320.5
2,395.5
(1) Revenue is attributed to countries based on the location of the customer.
No single customer or country other than the United States accounted for 10% or more of Trimble’s total revenue in fiscal years
2016, 2015 and 2014. No single customer accounted for 10% or more of Trimble's accounts receivable as of fiscal years ended
2016 and 2015.
Property and equipment, net by geographic area was as follows:
2016
2015
$
$
120.4
15.3
8.5
144.2
$
$
130.4
18.9
9.9
159.2
At the End of Fiscal Year
(In millions)
Property and equipment, net:
United States
Europe
Asia Pacific and other non-US countries
Total property and equipment, net
NOTE 7: DEBT
Debt consisted of the following:
70
At the End of Fiscal Year
(Dollars in millions)
Notes:
Principal amount
Unamortized discount on Notes
Debt issuance costs
Credit Facilities:
2014 Credit facility
Uncommitted facilities
Promissory notes and other debt
Total debt
Less: Short-term debt
Long-term debt
Notes
2016
2015
$
$
$
400.0
(2.5)
(2.4)
94.0
130.0
0.8
619.9
130.3
489.6
$
400.0
(2.8)
(2.7)
216.0
118.0
1.2
729.7
118.3
611.4
On October 30, 2014, the Company filed a shelf registration statement with the Securities and Exchange Commission (“SEC”)
for the issuance of senior debt securities. On November 24, 2014, the Company issued $400.0 million of Senior Notes (“Notes”)
under the shelf registration statement. Net proceeds from the offering were $396.9 million after deducting the 0.795% discount
on the public offering price. The Company recognized $3.0 million of debt issuance costs associated with the issuance of the
Notes, including an underwriting discount of $2.6 million, which is classified as an offset to the Notes on the Consolidated Balance
Sheets. The discount and debt issuance costs are being amortized to interest expense using the effective interest rate method over
the term of the Notes. The Notes mature on December 1, 2024 and accrue interest at a rate of 4.75% per annum, payable semiannually
in arrears in cash on December 1 and June 1 of each year, beginning on June 1, 2015. The Notes are classified as long-term in
the Consolidated Balance Sheet.
Prior to September 1, 2024, Trimble may redeem the Notes at its option at any time, in whole or in part, at a redemption price
equal to the greater of (i) 100% of the aggregate principal amount of the Notes to be redeemed and (ii) the sum of the present
values of the remaining scheduled payments of interest and principal, calculated on a semiannual basis using a discount rate equal
to the U.S. Treasury rate plus 40 basis points. After September 1, 2024, Trimble may redeem the Notes at its option at any time,
in whole or in part, at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed, plus
accrued and unpaid interest thereon. In addition, in the event of a change of control, as defined in the prospectus filed with the
SEC, each holder of the Notes will have the right to require Trimble to purchase for cash all or a portion of such holder’s Notes
at a purchase price equal to 101% of the principal amount of the Notes, plus any accrued and unpaid interest.
In connection with the closing of the Notes offering, Trimble entered into an Indenture with U.S. Bank National Association, as
trustee. The Indenture contains covenants limiting Trimble’s ability to create certain liens, enter into sale and lease-back transactions,
and consolidate or merge with or into, or convey, transfer or lease all or substantially all of Trimble’s properties and assets to,
another person, each subject to certain exceptions. The Notes contain no financial covenants.
Credit Facilities
2014 Credit Facility
On November 24, 2014, the Company entered into a new five-year credit agreement with a group of lenders (the “2014 Credit
Facility”). The 2014 Credit Facility provides for an unsecured revolving loan facility of $1.0 billion. Subject to the terms of the
2014 Credit Facility, the revolving loan facility may be increased and/or term loan facilities may be established in an amount up
to $500.0 million. The outstanding balance of $94.0 million and $216.0 million is classified as long-term in the Consolidated
Balance Sheet as of fiscal years ended 2016 and 2015, respectively.
The 2014 Credit Facility replaced the Company's previous 2012 Credit Facility comprised of a five-year revolving loan facility
of $700.0 million and a five-year $700.0 million term loan facility. Upon entering into the 2014 Credit Facility, the Company
borrowed $307.0 million under the revolving loan facility. The Company used the proceeds from the revolving loan facility and
the issuance of the Notes to pay off the then $638.8 million outstanding term loan balance under the 2012 Credit Facility. The
Company also wrote off a portion of the unamortized debt issuance costs related to the 2012 Credit Facility totaling $2.7 million,
which is classified as a non-operating expense in the Company’s fiscal 2014 Consolidated Statement of Income. In addition, the
Company recognized $1.6 million of debt issuance costs associated with the 2014 Credit Facility. The remaining unamortized
debt issuance costs associated with the 2012 Credit Facility and the new debt issuance costs associated with the 2014 Credit Facility
71
are classified as current and non-current assets on the Consolidated Balance Sheets and being amortized to interest expense using
the effective interest rate method over the term of the 2014 Credit Facility.
The funds available under the 2014 Credit Facility may be used for working capital and general corporate purposes including
stock repurchases and the financing of certain acquisitions. Under the 2014 Credit Facility, the Company may borrow, repay and
reborrow funds under the revolving loan facility until its maturity on November 24, 2019, at which time the revolving facility will
terminate, and all outstanding loans, together with all accrued and unpaid interest, must be repaid. Amounts not borrowed under
the revolving facility will be subject to a commitment fee, to be paid in arrears on the last day of each fiscal quarter, ranging
from 0.10% to 0.30% per annum depending on either the Company's credit rating at such time or the Company's leverage ratio
as of the most recently ended fiscal quarter, whichever results in more favorable pricing to the Company.
The Company may borrow funds under the 2014 Credit Facility in U.S. Dollars, Euros or in certain other agreed currencies, and
borrowings will bear interest, at the Company’s option, at either: (i) a floating per annum base rate determined by reference to the
highest of: (a) the administrative agent’s prime rate; (b) 0.50% per annum above the federal funds effective rate; and (c) reserve-
adjusted LIBOR for an interest period of one month plus 1.00%, plus a margin of between 0.00% and 0.75%, or (ii) a reserve-
adjusted fixed per annum rate based on LIBOR or EURIBOR, depending on the currency borrowed, plus a margin of between
1.00% and 1.75%. The applicable margin in each case is determined based on either Trimble’s credit rating at such time or Trimble’s
leverage ratio as of its most recently ended fiscal quarter, whichever results in more favorable pricing to Trimble. Interest is payable
on the last day of each fiscal quarter with respect to borrowings bearing interest at the base rate, or on the last day of an interest
period, but at least every three months, with respect to borrowings bearing interest at LIBOR or EURIBOR rate.
The 2014 Credit Facility contains various customary representations and warranties by the Company, which include customary
use of materiality, material adverse effect and knowledge qualifiers. The 2014 Credit Facility also contains customary affirmative
and negative covenants including, among other requirements, negative covenants that restrict the Company's ability to create liens
and enter into sale and leaseback transactions, and that restrict its subsidiaries’ ability to incur indebtedness. Further, the 2014
Credit Facility contains financial covenants that require the maintenance of minimum interest coverage and maximum leverage
ratios. Specifically, the Company must maintain as of the end of each fiscal quarter a ratio of (a) EBITDA (as defined in the 2014
Credit Facility) to (b) interest expense for the most recently ended period of four fiscal quarters of not less than 3.50 to 1.00. The
Company must also maintain, at the end of each fiscal quarter, a ratio of (x) total indebtedness (as defined in the 2014 Credit
Facility) to (y) EBITDA (as defined in the 2014 Credit Facility) for the most recently ended period of four fiscal quarters of not
greater than 3.00 to 1.00; provided, that on the completion of a material acquisition, the Company may increase the ratio by 0.50 for
the fiscal quarter during which such acquisition occurred and each of the three subsequent fiscal quarters. The Company was in
compliance with these covenants at the end of fiscal 2016.
The 2014 Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach
of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency
events, material judgments and events constituting a change of control. Upon the occurrence and during the continuance of an
event of default, interest on the obligations will accrue at an increased rate in the case of an event of default arising from the
nonpayment of principal and the lenders may accelerate the Company's obligations under the 2014 Credit Facility, except that
acceleration will be automatic in the case of bankruptcy and insolvency events of default.
In February 2016, the Company entered into an amendment to the 2014 Credit Facility to facilitate the Company's reincorporation
from California to Delaware and to effect other non-financial terms. In August 2016, the Company entered into a second amendment
to revise a definition used in determining when a change of control of the Company may occur.
The interest rate on the long-term debt outstanding under the 2014 Credit Facility was 1.80% and 1.46% at the end of fiscal 2016
and 2015, respectively.
Uncommitted Facilities
The Company also has two $75 million revolving credit facilities which are uncommitted (the "Uncommitted Facilities"). The
Uncommitted Facilities may be called by the lenders at any time, have no covenants and no specified expiration date. The interest
rate on the Uncommitted Facilities is 1.00% plus either LIBOR or the bank’s cost of funds or as otherwise agreed upon by the
bank and the Company. The $130.0 million outstanding at the end of 2016 and the $118.0 million outstanding at the end of 2015
under the Uncommitted Facilities are classified as short-term in the Consolidated Balance Sheet. The weighted average interest
rate on the Uncommitted Facilities was 1.65% at the end of fiscal 2016 and 1.37% at the end of fiscal 2015.
Promissory Notes and Other Debt
72
At the end of fiscal 2016 and 2015, the Company had promissory notes and other notes payable totaling approximately $0.8 million
and $1.2 million, respectively, of which $0.5 million and $0.9 million, respectively, was classified as long-term in the Consolidated
Balance Sheet.
Debt Maturities
At the end of fiscal 2016, the Company's debt maturities based on outstanding principal were as follows (in millions):
Year Payable
2017
2018
2019
2020
2021
Thereafter
Total
$
$
$
130.3
0.2
0.2
94.1
—
400.0
624.8
NOTE 8: COMMITMENTS AND CONTINGENCIES
Operating Leases and Other Commitments
The Company’s principal facilities in the United States are leased under various cancelable and non-cancelable operating leases
that expire at various dates through 2025. For tenant improvement allowances and rent holidays, Trimble records a deferred rent
liability on the Consolidated Balance Sheets and amortizes the deferred rent over the terms of the leases as reductions to rent
expense on the Consolidated Statements of Income.
The estimated future minimum payments required under the Company’s operating lease commitments at the end of fiscal 2016
were as follows (in millions):
2017
2018
2019
2020
2021
Thereafter
Total
$
$
30.4
23.6
17.2
12.6
8.9
23.2
115.9
Net rent expense under operating leases was $34.4 million in fiscal 2016, $34.0 million in fiscal 2015, and $34.1 million in fiscal
2014.
At the end of fiscal 2016, the Company had unconditional purchase obligations of approximately $146.2 million. These
unconditional purchase obligations primarily represent open non-cancelable purchase orders for material purchases with the
Company’s vendors. Purchase obligations exclude agreements that are cancelable without penalty.
Additionally, the Company has certain acquisitions include additional earn-out cash payments based on estimated future revenues,
gross margins or other milestones. At the end of fiscal 2016, the Company had $4.5 million included in Other current liabilities
and Other non-current liabilities related to these earn-outs, representing the fair value of the contingent consideration.
Litigation
On September 2, 2011, Recreational Data Services, LLC filed a lawsuit in the Superior Court for the State of Alaska in Anchorage
against Trimble Navigation Limited, Cabela’s Incorporated, AT&T Mobility and Alascom, Inc., alleging breach of contract, breach
of fiduciary duty, interference with contract, promissory estoppel, fraud, and negligent misrepresentation. The case was tried in
front of a jury in Alaska beginning on September 9, 2014. On September 26, 2014, the jury returned a verdict in favor of the
plaintiff and awarded the plaintiff damages of $51.3 million. On January 29, 2015, the court granted our Motion for Judgment
notwithstanding the Verdict, and on March 18, 2015, the Court awarded the Company a portion of its incurred attorneys’ fees and
73
costs, and entered Final Judgment in the Company’s favor in the amount of $0.6 million. The Final Judgment also provides that
the plaintiff take nothing on its claims. On April 17, 2015, the plaintiff filed a Notice of Appeal to the Alaska Supreme Court. The
parties have completed all appellate briefing, and oral arguments were heard before the Alaska Supreme Court on February 24,
2016. A decision by the Alaska Supreme Court has not been made. Although an unfavorable outcome on appeal could have an
adverse effect on the Company, the Company believes the claims in the lawsuit are without merit.
From time to time, the Company is also involved in litigation arising out of the ordinary course of our business. There are no other
material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its
subsidiaries is a party or of which any of the Company's or its subsidiaries' property is subject.
NOTE 9. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company did not have any investment in available-for-sale securities as of the end of fiscal 2015. The following table
summarizes the Company’s available-for-sale securities as of the end of fiscal 2016:
At the end of Fiscal 2016
(Dollars in millions)
Available-for-sale securities:
U.S. Treasury securities
Municipal debt securities
Corporate debt securities
Time deposit
Commercial paper
$
Total available-for-sale securities $
Reported as:
Cash and cash equivalents
Short-term investments
Total
$
$
11.7
10.0
31.7
2.4
77.5
133.3
22.2
111.1
133.3
The Company recognized $0.3 million realized gains on its available-for-sale securities during fiscal 2016, and the gross unrealized
gains or losses as of the end of fiscal 2016 were de minimis.
The following table presents the contractual maturities of the Company's available-for-sale investments as of the end of fiscal
2016.
At the end of Fiscal 2016
(Dollars in millions)
Due in less than 1 year
$
Due in 1 to 5 years
Due in 5-10 years
Due after 10 years
Total
$
106.9
16.4
2.0
8.0
133.3
The Company’s available-for-sale securities are liquid and may be sold in the future to fund future operating needs. As a result,
the Company recorded all of its available-for-sale securities, not classified as cash equivalents, in Short-term investments as of
the end of fiscal 2016, regardless of the contractual maturity date of the securities.
74
NOTE 10: FAIR VALUE MEASUREMENTS
The Company determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants at the measurement date. Where available, fair value is based on observable market prices or parameters. Where
observable prices or inputs are not available, valuation models are applied. Hierarchical levels, defined by the guidance on fair
value measurements are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets
and liabilities, and are as follows:
Level I—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities.
Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability.
These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.
Level III—Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset
or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in
the inputs to the model.
Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level
of significant input to the valuations.
Fair Values as of Fiscal Year End 2016
Fair Values as of Fiscal Year End 2015
Level I
Level II
Level III
Total
Level I
Level II
Level III
Total
$ — $
$ — $
(In millions)
Assets
Available-for-sale securities:
U.S. Treasury securities (1)
Municipal debt securities (1)
Corporate debt securities (1)
Time deposit (1)
Commercial paper (1)
Total available-for-sale securities
Deferred compensation plan assets (2)
Derivative assets (3)
Contingent consideration assets (4)
Total assets measured at fair value
Liabilities
Deferred compensation plan liabilities (2)
Derivative liabilities (3)
Contingent consideration liabilities (5)
$
$
11.7
10.0
31.7
2.4
77.5
133.3
—
0.2
—
—
—
—
—
22.6
—
—
—
—
Total liabilities measured at fair value
$
22.6
$
—
—
—
—
—
—
7.0
7.0
11.7
10.0
31.7
2.4
77.5
133.3
22.6
0.2
7.0
$ — $ — $ — $ —
—
—
—
—
21.1
—
—
—
—
—
—
—
2.9
—
21.1
$ 2.9
$
—
—
—
—
—
—
7.0
7.0
—
—
—
—
21.1
2.9
7.0
$ 31.0
21.1
$ — $ — $ 21.1
$
$
0.1
—
0.1
$
—
4.5
4.5
0.1
4.5
—
—
2.1
—
$
27.2
$
21.1
$ 2.1
$
—
6.6
6.6
2.1
6.6
$ 29.8
22.6
$ 133.5
$
$ 163.1
22.6
$ — $ — $
22.6
(1) The Company’s available-for sale securities are valued using readily available pricing sources for comparable instruments,
or model-driven valuations using significant inputs derived from or corroborated by observable market data, including
yield curves and credit ratings.
(2) The Company maintains a self-directed, non-qualified deferred compensation plan for certain executives and other highly
compensated employees. The plan assets and liabilities are invested in actively traded mutual funds and individual stocks
valued using observable quoted prices in active markets. Deferred compensation plan assets and liabilities are included in
Other non-current assets and Other non-current liabilities, respectively, on the Company's Consolidated Balance Sheets.
(3) Derivative assets and liabilities primarily represent forward currency exchange contracts. The Company typically enters
into these contracts to minimize the short-term impact of foreign currency exchange rates on certain trade and inter-
company receivables and payables. Derivative assets and liabilities are included in Other current assets and Other current
liabilities on the Company's Consolidated Balance Sheets.
75
(4) Contingent consideration assets represent arrangements for buyers to pay the Company for certain businesses that it has
divested. The fair value is determined based on the Company's expectations of future receipts. The minimum amount to
be received under these arrangements is $3.5 million. Contingent consideration assets are included in Other receivables
and Other non-current assets on the Company's Consolidated Balance Sheets.
(5) Contingent consideration liabilities represent arrangements to pay the former owners of certain companies that Trimble
acquired. The undiscounted maximum payment under the arrangements is $17.5 million at the end of fiscal 2016, based
on estimated future revenues, gross margins or other milestones. Contingent consideration liabilities are included in Other
current liabilities and Other non-current liabilities on the Company's Consolidated Balance Sheets.
Additional Fair Value Information
The following table provides additional fair value information relating to the Company’s financial instruments outstanding:
At the End of Fiscal Year
(In millions)
Liabilities:
Notes
2014 Credit facility
Uncommitted facilities
Promissory notes and other debt
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
2016
2015
$
$
$
400.0
94.0
130.0
0.8
$
410.6
94.0
130.0
0.8
$
400.0
216.0
118.0
1.2
399.9
216.0
118.0
1.2
The fair value of the Notes was determined based on observable market prices in less active markets and is categorized accordingly
as Level II in the fair value hierarchy. The fair value of the bank borrowings and promissory notes has been calculated using an
estimate of the interest rate the Company would have had to pay on the issuance of notes with a similar maturity and discounting
the cash flows at that rate, and is categorized as Level II in the fair value hierarchy. The fair values do not give an indication of
the amount that the Company would currently have to pay to extinguish any of this debt.
76
NOTE 11: INCOME TAXES
Income before taxes and the provision for taxes consisted of the following:
Fiscal Years
(In millions)
Income before taxes:
United States
Foreign
Total
Provision for taxes:
US Federal:
Current
Deferred
US State:
Current
Deferred
Foreign:
Current
Deferred
Income tax provision
Effective tax rate
2016
2015
2014
$
$
$
$
68.4
108.3
176.7
34.0
(14.3)
19.7
3.5
0.6
4.1
28.8
(8.1)
20.7
44.5
25%
$
$
$
$
$
$
55.6
96.2
151.8
47.5
(23.0)
24.5
5.7
(2.8)
2.9
25.4
(21.7)
3.7
$
31.1
$
99.3
166.7
266.0
45.7
(11.7)
34.0
7.7
(0.9)
6.8
25.3
(14.0)
11.3
52.1
20%
20%
The difference between the tax provision at the statutory federal income tax rate and the tax provision as a percentage of income
before taxes (effective tax rate) was as follows:
Fiscal Years
Statutory federal income tax rate
Increase (reduction) in tax rate resulting from:
Foreign income taxed at lower rates
US State income taxes
US Federal research and development credits
Stock-based compensation
Foreign audit reserve release
Divestiture
Valuation allowance release - foreign
Other
Effective tax rate
2016
2015
2014
35 %
(10)%
2 %
(3)%
3 %
— %
(5)%
— %
3 %
25 %
35 %
(11)%
1 %
(3)%
1 %
(2)%
— %
(3)%
2 %
20 %
35 %
(18)%
2 %
(1)%
1 %
— %
— %
— %
1 %
20 %
The effective tax rate in fiscal 2016 increased compared to 2015 primarily due to the closing of a foreign audit and valuation
allowance release in 2015, increase in nondeductible expense, and a change in the geographic mix of pretax income, partially
offset by a tax benefit from a divestiture of a non-strategic business.
The effective tax rate in fiscal 2015 remained consistent with 2014. However, certain specific items affecting the effective tax rate
did change. These included a change in geographic mix of pretax income, which was partially offset by tax benefits resulting
from the closing of a foreign tax audit, valuation allowance releases and an increase in federal research and development credit.
77
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred
tax assets and liabilities are as follows:
At the End of Fiscal Year
(In millions)
Deferred tax liabilities:
Purchased intangibles
Depreciation and amortization
US residual tax on foreign earnings
Total deferred tax liabilities
Deferred tax assets:
Inventory valuation differences
Expenses not currently deductible
US federal tax credit carryforwards
Deferred revenue
US state tax credit carryforwards
Accrued warranty
US federal net operating loss carryforwards
Foreign net operating loss carryforwards
Stock-based compensation
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets
Total net deferred tax liabilities
Reported as:
Non-current deferred income tax assets
Non-current deferred income tax liabilities
Net deferred tax liabilities
2016
2015
$
$
$
$
91.9
11.7
11.3
114.9
12.9
27.7
0.3
6.9
15.1
3.1
3.8
31.2
31.9
4.1
137.0
(30.6)
106.4
(8.5) $
30.3
(38.8)
(8.5) $
122.6
11.0
12.2
145.8
11.5
26.2
0.6
6.6
16.4
3.4
5.5
41.7
29.6
9.0
150.5
(34.9)
115.6
(30.2)
21.5
(51.7)
(30.2)
In the fourth quarter of 2015, the Company adopted new accounting guidance for balance sheet classification of deferred taxes,
which requires that all deferred income tax assets and liabilities be classified as non-current in the balance sheet. The guidance
was adopted on a prospective basis and, therefore, prior periods were not retrospectively adjusted.
At the end of fiscal 2016, the Company has federal and foreign net operating loss carryforwards, or NOLs, of approximately $13.6
million and $147.6 million, respectively. The federal NOLs expire beginning year 2021. There is, generally, no expiration for
the foreign NOLs. Utilization of the Company’s federal and state NOLs is subject to annual limitations in accordance with the
applicable tax code. The Company has determined that it is more likely than not that the Company will not realize a portion of
the foreign NOLs and, accordingly, a valuation allowance has been established for such amount.
The Company has Federal and California research and development credit carryforwards of approximately $0.3 million and $17.1
million, respectively. The federal tax credit carryforwards will expire beginning 2030. The California research tax credits have
indefinite carryforward period. The Company believes that it is more likely than not that the Company will not realize a portion
of the California research and development credit carryforwards and, accordingly, a valuation allowance has been established for
such amount.
At the end of fiscal 2016, the Company’s foreign subsidiaries had approximately $869.7 million of accumulated undistributed
earnings that are intended to be indefinitely reinvested outside the U.S. and, accordingly, no provision for U.S. federal and state
income taxes have been provided thereon. If such earnings were to be distributed in the form of dividends or otherwise, the
Company would have to recognize additional tax liability of approximately $258.5 million.
78
The total amount of the unrecognized tax benefits at the end of fiscal 2016 was $72.9 million. A reconciliation of gross unrecognized
tax benefit is as follows:
At the End of Fiscal Year
(In millions)
Beginning gross balance
Increase related to prior years' tax positions
Increase related to current year tax positions
Lapse of statute of limitations
Settlement with taxing authorities
Ending gross balance
2016
2015
2014
$
$
59.0
$
51.4
$
7.5
9.9
(1.4)
(2.1)
72.9
$
6.0
6.2
(1.5)
(3.1)
59.0
$
44.1
0.8
7.5
(1.0)
—
51.4
The Company's total unrecognized tax benefits that, if recognized, would affect its effective tax rate were $60.5 million and $52.7
million at the end of fiscal 2016 and 2015, respectively.
The Company and its subsidiaries are subject to U.S. federal, state, and foreign income taxes. The Company has substantially
concluded all U.S. federal income tax audits for years through 2009. State income tax matters have been concluded for years
through 2009 and non-U.S. income tax matters have been concluded for years through 2005. The Company is currently in various
stages of multiple year examinations by federal, state, and foreign (multiple jurisdictions) taxing authorities. While the Company
generally believes it is more likely than not that its tax positions will be sustained, it is reasonably possible that future obligations
related to these matters could arise. The Company believes that its reserves are adequate to cover any potential assessments that
may result from the examinations and negotiations.
In the first quarter of fiscal 2015, the Company received a Notice of Proposed Adjustment from the IRS for the fiscal years 2010
and 2011. The proposed adjustments primarily relate to the valuations of intercompany transfers of acquired intellectual property.
The assessments of tax and penalties for the years in question total $67.0 million. The Company does not agree with the IRS
position and has filed a protest with the IRS Appeals Office in April 2015. The IRS appeals process commenced in March 2016.
Although the Company continues to believe in the merits of its positions, during the fourth quarter of fiscal 2016, the Company
submitted a written proposal to the IRS to settle certain aspects of the assessments constituting $15.8 million of the total $67.0
million assessment. The Company intends to vigorously contest the IRS position on the remaining items, and believes that its
reserves are adequate to cover any potential assessments.
Although timing of the resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its
gross unrecognized tax benefits could decrease (whether by payment, release or a combination of both) in the next 12 months by
up to $6.2 million primarily related to the IRS partial settlement discussed above.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company’s
liability for unrecognized tax benefits including interest and penalties was recorded in Other non-current liabilities in the
accompanying Consolidated Balance Sheets. At the end of fiscal 2016 and 2015, the Company had accrued $9.3 million and $6.7
million, respectively, for payment of interest and penalties.
NOTE 12: ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss, net of related tax were as follows:
At the End of Fiscal Year
(In millions)
Accumulated foreign currency translation adjustments
Net unrealized actuarial losses
Total accumulated other comprehensive loss
2016
2015
$
$
(216.8) $
(3.1)
(219.9) $
(163.4)
(3.4)
(166.8)
79
NOTE 13: EMPLOYEE STOCK BENEFIT PLANS
The Company’s stock benefit plans include the employee stock purchase plan and stock plans adopted in 2002, 1993, 1992, 1990,
as well as one stock plan assumed through an acquisition in 2007. Other than the employee stock purchase plan and the 2002 and
1992 stock plans described below, the other plans have no shares available for future grant.
Plans
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an aggregate of 39.1 million shares of Common
Stock have been approved for issuance to eligible employees as approved by the stockholders to date. The plan permits eligible
employees to purchase Common Stock through payroll deductions at 85% of the lower of the fair market value of the Common
Stock at the beginning or at the end of each offering period, which is generally six months. Rights to purchase shares are granted
during the first and third quarter of each fiscal year. The Purchase Plan terminates on September 30, 2018. In fiscal 2016, 2015
and 2014, 1.1 million, 1.0 million, and 0.7 million shares were issued, respectively, representing $19.1 million, $18.1 million and
$16.4 million in cash received for the issuance of stock under the Purchase Plan. At the end of fiscal 2016, the number of shares
reserved for future purchases by eligible employees was 9.8 million.
2002 Stock Plan
Trimble’s 2002 Stock Plan (“2002 Plan”), provides for the granting of incentive and non-statutory stock options and restricted
stock units ("RSUs") for up to 62.6 million shares plus any shares currently reserved but unissued to employees, consultants, and
directors of Trimble. Both incentive and non-statutory stock options may be granted at exercise prices that are not less than 100%
of the fair market value of Common Stock on the date of grant. Employee stock options under the 2002 plan generally vest over
four years with biennial, annual, or monthly vesting, and expire seven years from the date of grant. RSUs are converted into shares
of Trimble common stock upon vesting on a one-for-one basis, except those with market-based or performance-based vesting
conditions, in which the number of shares that may be greater. RSUs granted to employees generally vest over four years. RSUs
granted to non-employee directors generally vest after one year. Grants of RSUs reduce the plan reserves by the number of shares
to be issued multiplied by 1.69 and any forfeitures of these awards due to their not vesting would increase the plan reserve by the
same measure.
1992 Employee Stock Bonus Plan
At the end of fiscal 2016, there were no options outstanding to purchase shares under the 1992 Employee Stock Bonus Plan
(“Bonus Plan”) and 1,606 shares were available for future grant under the Bonus Plan.
Stock Option and Restricted Stock Unit Activity
The following table summarizes the Company’s stock option and restricted stock unit activity during fiscal 2016:
(In millions, except for per share data)
Outstanding at the beginning of year
Granted
Option exercised
Shares released, net
Cancelled and Forfeited
Outstanding at the end of year
Stock Options Outstanding
Restricted Stock Units Outstanding
Options
Weighted average
exercise price
Restricted
Stock Units
Weighted Average
Grant-Date Fair Value
11.6
$
— $
(3.7) $
— $
(0.3) $
7.6
$
22.15
19.28
16.47
—
27.05
24.60
4.3
2.1
$
$
— $
(1.2) $
(0.5) $
4.7
$
26.98
26.13
—
27.86
26.43
26.40
During fiscal year 2016, the Company granted 0.7 million market-based and performance-based restricted stock units. As of fiscal
year end 2016, the Company has 1.1 million market-based and performance-based restricted stock units outstanding and none had
vested as of fiscal 2016 year end.
As of the end of fiscal 2016, the number of shares available for grant under the 2002 stock plan was 7.7 million.
80
The following table summarizes information about stock options outstanding as of fiscal 2016 year end:
Vested and expected to vest
Options exercisable
Number
Of Shares
(in millions)
Weighted-
Average
Exercise Price
per Share
Weighted-
Average
Remaining
Contractual Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
7.6
6.6
$
$
24.59
24.15
2.70
2.47
$
$
44.8
41.3
The intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise
price and the fair value of the Company’s common stock as of the end of fiscal 2016. The total intrinsic value of options exercised
during fiscal 2016, 2015 and 2014 was $36.0 million, $13.9 million, and $61.3 million, respectively, and is calculated based on
the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.
The following table summarizes information about restricted stock units outstanding as of fiscal 2016:
Number
Of Shares
Underlying
Restricted Stock
Units
(in millions)
Weighted-
Average
Remaining
Vesting Period
(in years)
Aggregate
Fair Value
(in millions)
Vested and expected to vest
5.5
1.64
$
164.7
The fair value of restricted stock units vested and expected to vest as of fiscal 2016 is calculated based on the fair value of the
Company’s common stock as of the end of fiscal 2016.
Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense included in the Consolidated Statements of Income.
Fiscal Years
(In millions)
Cost of sales
Research and development
Sales and marketing
General and administrative
Total operating expenses
Total stock-based compensation expense
Fair Value of Share Purchase Rights
2016
2015
2014
$
$
3.8
9.1
8.3
31.4
48.8
52.6
$
$
3.9
8.7
9.1
28.4
46.2
50.1
$
$
3.2
6.8
7.6
25.8
40.2
43.4
The fair value of the share purchase rights granted under the Purchase Plan are valued using the Black-Scholes option pricing
model with the following weighted-average assumptions:
Fiscal Years
Expected life of purchase
Expected stock price volatility
Risk free interest rate
Expected dividend yield
2016
0.5 years
36.9%
0.41%
—
2015
0.5 years
31.3%
0.08%
—
2014
0.5 years
30.5%
0.07%
—
Expected Life of Purchase—The Company’s expected life of the purchase is based on the term of the offering period
of the purchase plan.
Expected Stock Price Volatility—The Company’s computation of expected volatility is based on implied volatilities
from traded options on the Company’s stock. The Company used implied volatility because it is representative of future stock
price trends during the purchase period.
Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the
time of grant for the expected term of the purchase period.
81
Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of
dividend payouts.
The weighted average grant-date fair value per share of stock purchase rights granted under the Employee Stock Purchase Plan
during fiscal years 2016, 2015 and 2014 was $6.51, $5.24 and $8.32 per share, respectively.
Fair value of Stock Options
The fair value of stock compensation is valued as of the grant date using a binomial valuation model. The binomial model takes
into account variables such as volatility, dividend yield rate, and risk free interest rate. In addition, the binomial model incorporates
actual option-pricing behavior and changes in volatility over the option’s contractual term. For options granted during fiscal 2016,
2015 and 2014, the following weighted-average assumptions were used:
Fiscal Years
Expected life of options
Expected stock price volatility
Risk free interest rate
Expected dividend yield
2016
4.0 years
38%
1.49%
—
2015
3.9 years
36%
1.26%
—
2014
4.0 years
35%
1.29%
—
Expected Life of Options—The Company’s expected life represents the period that the Company’s stock options are
expected to be outstanding and was determined based on historical experience of similar stock options with consideration for the
contractual terms of the stock options, vesting schedules and expectations of future employee behavior.
Expected Stock Price Volatility—The Company’s computation of expected volatility is based on a combination of
implied volatilities from traded options on the Company’s stock and historical volatility, commensurate with the expected life of
the stock options.
Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the
time of grant for the expected life of the option.
Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of
dividend payouts.
The weighted average grant-date fair value per share of stock options granted during fiscal years 2016, 2015 and 2014 was $6.03,
$7.36, and $9.07, respectively. The fair value of all stock options vested during fiscal years 2016, 2015 and 2014 was $14.6
million, $18.3 million and $20.5 million, respectively.
Fair value of Restricted Stock Units and Performance-Based Restricted Stock Units
The fair value of RSUs and PSUs are valued as of the grant date using the fair value of Trimble’s common stock. RSUs are service-
based awards and vest over time based on continued employment. PSUs vest upon the achievement of specified performance
goals, as well as continued employment, and the expense recognized is based upon the expected achievement of such goals. The
weighted average grant-date fair value per share of RSUs granted during fiscal years 2016, 2015 and 2014 was $26.13, $23.22,
and $30.18 per share, respectively. The fair value of all restricted stock units vested during fiscal years 2016, 2015 and 2014 was
$33.6 million, $16.3 million and $3.9 million, respectively.
Fair Value of Market-Based Restricted Stock Units
Restricted stock units with market-based vesting conditions vest based on the achievement of the Company’s relative total
stockholder return (TSR) of its common stock as compared to the TSR of the constituents of the S&P 500 at the start of the
performance period. The fair value of restricted stock units with market-based vesting conditions is valued as of the grant date
using a Monte Carlo simulation, using the following weighted-average assumptions:
Fiscal Years
Expected life of Market-Based Restricted Stock Units
Expected stock price volatility
Risk free interest rate
Expected dividend yield
2016
3.1 years
33.8%
0.9%
—
2015
2.6 years
30.9%
0.9%
—
The weighted average grant-date fair value of the restricted stock units with market-based vesting conditions granted during
fiscal 2016 and 2015 was $27.09 and $31.60 per share, respectively.
82
Unrecognized Stock-Based Compensation
At the end of fiscal 2016, total unamortized stock-based compensation expense was $88.9 million, with a weighted-average
recognition period of 2.4 years.
NOTE 14: COMMON STOCK REPURCHASE
In August 2014, the Company's Board of Directors approved a stock repurchase program (2014 Stock Repurchase Program),
authorizing the Company to repurchase up to $300.0 million of Trimble’s common stock, replacing a stock repurchase program
which had been in place since 2011. In August 2015, the Company’s Board of Directors approved a stock repurchase program
(2015 Stock Repurchase Program), authorizing the Company to repurchase up to $400.0 million of Trimble’s common stock,
replacing the 2014 Stock Repurchase Program. In September 2015, the Company entered into an accelerated share repurchase
agreement, or ASR, with an investment bank for $75.0 million.
Under the share repurchase program, the Company may repurchase shares from time to time in open market transactions, privately
negotiated transactions, accelerated share buyback programs, tender offers, or by other means. The timing and amount of repurchase
transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal
requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. At
the end of fiscal 2016, the 2015 Stock Repurchase Program had remaining authorized funds of $130.4 million.
During fiscal 2016, the Company repurchased approximately 4.9 million shares of common stock in open market purchases under
2015 Stock Repurchase Programs, at an average price of $24.39 per share, for a total of $119.5 million.
During fiscal 2015, the Company repurchased approximately 7.5 million shares of common stock in open market purchases, at
an average price of $21.29 per share, for a total of $159.4 million. This total includes $75.1 million and $84.3 million of open
market purchases completed under the 2015 and 2014 Stock Repurchase Programs, respectively. The ASR was completed in
December 2015 and resulted in the aggregate repurchase of approximately 3.7 million shares of common stock with a volume
weighted average price of $20.11 per share.
During fiscal 2014, under the provisions of both the 2014 and 2011 Stock Repurchase Programs, the Company repurchased
approximately 3.2 million shares of common stock in open market purchases at an average price of $30.22 per share, for a total
of $97.8 million.
Stock repurchases are reflected as a decrease to common stock based on par value and additional-paid-capital based on the average
book value per share for all outstanding shares calculated at the time of each individual repurchase transaction. The excess of the
purchase price over this average for each repurchase was charged to retained earnings. As a result of the 2016 repurchases, retained
earnings was reduced by $94.7 million in fiscal 2016. Common stock repurchases under the program were recorded based upon
the trade date for accounting purposes.
NOTE 15: STATEMENT OF CASH FLOW DATA
Fiscal Years
(In millions)
Supplemental disclosure of cash flow information:
Interest paid
Income taxes paid
2016
2015
2014
$
$
27.3
57.4
$
$
26.5
54.0
$
$
15.6
66.1
NOTE 16: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Trimble has a 52-53 week fiscal year, ending on the Friday nearest to December 31. Both fiscal 2016 and 2015 were a 52-week
year.
83
Fiscal Period
(in millions, except per share data)
Revenue
Gross margin
Net income attributable to Trimble Inc.
Basic net income per share
Diluted net income per share
Fiscal Period
(in millions, except per share data)
Revenue
Gross margin
Net income attributable to Trimble Inc.
Basic net income per share
Diluted net income per share
First
Quarter
2016
Second
Quarter
2016
Third
Quarter
2016
Fourth
Quarter
2016
$
$
$
$
583.0
300.6
19.8
0.08
0.08
First
Quarter
2015
582.6
307.2
34.1
0.13
0.13
609.6
315.6
35.7
0.14
0.14
Second
Quarter
2015
585.8
303.9
25.9
0.10
0.10
$
$
$
$
584.1
309.0
39.2
0.16
0.15
Third
Quarter
2015
562.3
298.0
37.1
0.15
0.14
585.5
312.8
37.7
0.15
0.15
Fourth
Quarter
2015
559.7
293.1
24.0
0.10
0.09
84
The Board of Directors and Stockholders of Trimble Inc.
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheets of Trimble Inc. as of December 30, 2016 and January 1, 2016,
and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the
three years in the period ended December 30, 2016. Our audits also included the financial statement schedule listed in the Index
at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Trimble Inc. at December 30, 2016 and January 1, 2016, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 30, 2016, in conformity with U.S. generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Trimble Inc.’s internal control over financial reporting as of December 30, 2016, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
and our report dated February 24, 2017, expressed an unqualified opinion thereon.
San Jose, California
February 24, 2017
/s/ Ernst & Young LLP
85
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Trimble Inc.
We have audited Trimble Inc.'s internal control over financial reporting as of December 30, 2016, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). Trimble Inc.'s management is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Trimble Inc. maintained, in all material respects, effective internal control over financial reporting as of December
30, 2016, based on the COSO criteria.
As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management's assessment
of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of all current
year acquisitions, which are included in the 2016 consolidated financial statements of Trimble Inc. and constituted less than 1%
of total assets and net assets as of December 30, 2016, and less than 1% of revenues and net income for the year then ended. Our
audit of internal control over financial reporting of Trimble Inc. also did not include an evaluation of the internal control over
financial reporting of all current year acquisitions.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Trimble Inc. as of December 30, 2016 and January 1, 2016, and the related consolidated statements
of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December
30, 2016 of Trimble Inc. and our report dated February 24, 2017 expressed an unqualified opinion thereon.
San Jose, California
February 24, 2017
/s/ Ernst & Young LLP
86
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on
such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures are effective.
Inherent Limitations on Effectiveness of Controls
The Company’s management, including the CEO and CFO, does not expect that our internal control over financial reporting will
prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.
(b) Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles.
The Company’s management, including the CEO and CFO, conducted an evaluation of the effectiveness of its internal control
over financial reporting based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework). The Company has excluded from its evaluation the internal control
over financial reporting of all current year acquisitions, which are included in the December 30, 2016 consolidated financial
statements and constituted less than 1% of total assets and net assets as of December 30, 2016, and less than 1% of consolidated
revenue and net income for the year then ended. Based on the results of this evaluation, the Company’s management concluded
that its internal control over financial reporting was effective at the end of fiscal 2016.
The effectiveness of our internal control over financial reporting at the end of fiscal 2016 has been audited by Ernst & Young LLP,
an independent registered public accounting firm, as stated in their report which is included elsewhere herein.
Changes in Internal Control over Financial Reporting
During the fourth quarter of fiscal 2016, there were no changes in the Company’s internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
None.
87
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item, insofar as it relates to Trimble’s directors, will be contained under the captions “Election
of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement and is incorporated herein
by reference. The information required by this item relating to executive officers is set forth above in Item 1 Business Overview
under the caption “Executive Officers.”
The information required by this item insofar as it relates to the nominating and audit committees will be contained in the Proxy
Statement under the caption “Board Meetings and Committees; Director Independence.”
Code of Ethics
The Company’s Business Ethics and Conduct Policy applies to, among others, the Company’s Chief Executive Officer, Chief
Financial Officer, Principal Accounting Officer and other finance organization employees. The Business Ethics and Conduct Policy
is available on the Company’s website at www.trimble.com under the heading “Corporate Governance - Governance Documents”
on the Investor Relations page of our website. A copy will be provided, without charge, to any stockholder who requests one by
written request addressed to General Counsel, Trimble Inc., 935 Stewart Drive, Sunnyvale, CA 94085.
If any substantive amendments to the Business Ethics and Conduct Policy are made or any waivers are granted, including any
implicit waiver, from a provision of the Business Ethics and Conduct Policy, to its Chief Executive Officer, Chief Financial Officer,
Vice President of Finance, or Corporate Controller, the Company will disclose the nature of such amendment or waiver on the
Company’s website at www.trimble.com or in a report on Form 8-K.
Item 11. Executive Compensation
The information required by this item will be contained in the Proxy Statement under the captions “Executive Compensation” and
“Non-Employee Director Compensation” and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be contained in the Proxy Statement under the caption “Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be contained in the Proxy Statement under the caption “Certain Relationships and
Related Person Transactions” and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be contained in the Proxy Statement under the caption “Principal Accounting Fees and
Services” and is incorporated herein by reference.
PART IV
88
Item 15. Exhibits and Financial Statement Schedules.
(a) (1) Financial Statements
The following consolidated financial statements required by this item are included in Part II Item 8 hereof under the caption
“Financial Statements and Supplementary Data.”
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
(1) Financial Statement Schedules
The following financial statement schedule is filed as part of this report:
Schedule II—Valuation and Qualifying Accounts
Page in this
Annual Report
on Form 10-K
52
53
54
55
56
57
85
Page in this
Annual Report
on Form 10-K
95
All other schedules have been omitted as they are either not required or not applicable, or the required information is included
in the consolidated financial statements or the notes thereto.
(b) Exhibits
We have filed, or incorporated into the Report by reference, the exhibits listed on the accompanying Index to Exhibits
immediately following the signature page of this Form 10-K.
Item 16. Form 10-K Summary.
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
By:
February 24, 2017
TRIMBLE INC.
/S/ STEVEN W. BERGLUND
Steven W. Berglund,
President and Chief Executive Officer
89
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears below constitutes and appoints Steven W. Berglund
as his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on
Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Capacity in which Signed
/s/ STEVEN W. BERGLUND
Steven W. Berglund
President, Chief Executive Officer,
Director
February 24, 2017
/s/ ROBERT G. PAINTER
Robert G. Painter
/s/ JULIE A. SHEPARD
Julie A. Shepard
/s/ MERIT E. JANOW
Merit E. Janow
/s/ MEAGHAN LLOYD
Meaghan Lloyd
/s/ ULF J. JOHANSSON
Ulf J. Johansson
/s/ RON S. NERSESIAN
Ron S. Nersesian
/s/ MARK S. PEEK
Mark S. Peek
/s/ NICKOLAS W. VANDE STEEG
Nickolas W. Vande Steeg
/s/ BÖRJE EKHOLM
Börje Ekholm
/s/ KAIGHAM (KEN) GABRIEL
Kaigham (Ken) Gabriel
Chief Financial Officer (Principal
Financial Officer)
February 24, 2017
Chief Accounting Officer (Principal
Accounting Officer)
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
Director
Director
Director
Director
Director
Director
Director
Director
90
INDEX TO EXHIBITS
Exhibit
Number
2.1
3.1
3.2
4.1
4.2
4.3
4.4
Agreement and Plan of Merger, dated September 30, 2016, between Trimble Inc. and Trimble Navigation Limited
(Incorporated by reference to exhibit number 2.1 to the Company's Current Report on Form 8-K, filed on October 3,
2016)
Certificate of Incorporation of Trimble Inc. (Incorporated by reference to exhibit number 3.1 to the Company’s Current
Report on Form 8-K, filed on October 3, 2016)
By-Laws of Trimble Inc. (Incorporated by reference to exhibit number 3.2 to the Company’s Current Report on Form 8-
K, filed on October 3, 2016)
Form of Common Stock Certificate of Trimble Inc. (Incorporated by reference to exhibit number 4.1 to the Company’s
Current Report on Form 8-K, filed on October 3March 25, 2016)
Indenture, dated as of October 30, 2014, between the Company and U.S. Bank National Association (Incorporated by
reference to exhibit number 4.2 to the Company’s Registration Statement on Form S-3, filed October 30, 2014)
First Supplemental Indenture, dated November 24, 2014, between the Company and U.S. Bank National Association
(which includes Form of 4.750% Senior Note due 2024) (Incorporated by reference to exhibit number 4.1 to the Company’s
Current Report on Form 8-K, filed November 24, 2014)
Second Supplemental Indenture, dated October 1, 2016, between Trimble Inc., Trimble Navigation Limited and U.S.
Bank National Association (Incorporated by reference to exhibit number 4.2 to the Company’s Current Report on Form
8-K, filed October 3, 2016)
10.1+ Employment Agreement between the Company and Steven W. Berglund dated March 17, 1999 (Incorporated by reference
to exhibit number 10.67 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 1999)
10.2+ Amendment to Employment Agreement between the Company and Steven W. Berglund dated December 19, 2008
(Incorporated by reference to exhibit number 10.14 to the Company’s Annual Report on Form 10-K for the year ended
January 2, 2009)
10.3+ Form of Indemnification Agreement between the Company and its officers and directors (Incorporated by reference to
exhibit number 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 30, 2005)
10.4+ Amended and Restated form of Change in Control severance agreement between the Company and certain Company
officers (Incorporated by reference to exhibit number 10.13 to the Company's Annual Report on Form 10-K for the year
ended January 2, 2009)
10.5+ Trimble Navigation Limited Annual Management Incentive Plan Description (Incorporated by reference to exhibit number
10.1 to the Company’s Current Report on Form 8-K, filed on May 3, 2010)
10.6
10.7
Letter of assignment between the Company and Christopher Gibson dated June 11, 2008 (Incorporated by reference to
exhibit number 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010)
Amendment to the letter of assignment between the Company and Christopher Gibson dated December 20, 2009
(Incorporated by reference to exhibit number 10.25 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2010)
10.8+ Offer letter between the Company and François Delépine dated November 1, 2013 (Incorporated by reference to exhibit
number 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2014)
10.9+ Board of Directors Compensation Policy (effective as of May 7, 2015) (Incorporated by reference to exhibit number 10.1
to the Company’s Current Report on Form 8-K filed on May 11, 2015)
91
10.10+ Trimble Navigation Limited Deferred Compensation Plan effective December 30, 2004, as amended and restated
(Incorporated by reference to exhibit number 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.11 Lease dated May 11, 2005 between Carr America Realty Operating Partnership, L.P. and the Company (Incorporated by
reference to exhibit number 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 30, 2005)
10.12 First Amendment to Lease between Carr NP Properties, LLC and the Company (Incorporated by reference to exhibit
number 10.23 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010)
10.13** Master Manufacturing Services Agreement by and between the Company and Flextronics Corporation (formerly Solectron
Corporation) dated March 12, 2004, as amended January 19, 2005, October 25, 2005 and June 20, 2007 (Incorporated
by reference to exhibit number 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2009)
10.14** Consigned Excess Inventory Addendum to the Master Manufacturing Services Agreement by and between the Company
and Flextronics Corporation (formerly Solectron Corporation) dated July 6, 2009 (Incorporated by reference to exhibit
number 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 2, 2009)
10.15 Five-Year Credit Agreement, dated as of November 24, 2014, among the Company, the subsidiary borrowers from time
to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative
Agent (Incorporated by reference to exhibit number 10.1 to the Company’s Current Report on Form 8-K, filed November
24, 2014)
10.16 First Amendment dated February 26, 2016 to the Five-Year Credit Agreement dated November 24, 2014 among the
Company, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to exhibit number 10.1 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended April 1, 2016)
10.17 Second Amendment dated as of August 9, 2016 to the Five-Year Credit Agreement dated November 24, 2014 among the
Company, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to exhibit number 10.1 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2016)
10.18+ @Road, Inc. 2000 Stock Option Plan, as amended May 16, 2000 (Incorporated by reference to exhibit number 10.19 to
the Company’s Annual Report on Form 10-K for the year ended December 29, 2006)
10.19+ Trimble Navigation Limited Australian Addendum to the Amended and Restated Employee Stock Purchase Plan
(Incorporated by reference to exhibit number 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended July 3, 2009)
10.20+ Australian Addendum to the Trimble Navigation Limited Amended and Restated 2002 Stock Plan (Incorporated by
reference to exhibit number 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2009)
10.21+ Trimble Navigation Limited Amended and Restated 2002 Stock Plan (Incorporated by reference to exhibit number 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter ended July 4, 2014)
10.22+ Trimble Navigation Limited Amended and Restated Employee Stock Purchase Plan (Incorporated by reference to exhibit
number 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 2015)
10.23 Form of officer stock option agreement under the Company’s Amended and Restated 2002 Stock Plan (Incorporated by
reference to exhibit number 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 3,
2014)
10.24 Form of U.S. director stock option agreement under the Company’s Amended and Restated 2002 Stock Plan (Incorporated
by reference to exhibit number 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 3,
2014)
92
10.25 Form of non-U.S. director stock option agreement under the Company’s Amended and Restated 2002 Stock Plan
(Incorporated by reference to exhibit number 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 3, 2014)
10.26 Form of global stock option agreement (officers) under the Company’s Amended and Restated 2002 Stock Plan.
(Incorporated by reference to exhibit number 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.27 Form of global restricted stock unit award agreement under the Company’s Amended and Restated 2002 Stock Plan
(Incorporated by reference to exhibit number 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.28 Form of U.S. director restricted stock unit award agreement under the Company’s Amended and Restated 2002 Stock
Plan (Incorporated by reference to exhibit number 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.29 Form of non-U.S. director restricted stock unit award agreement under the Company’s Amended and Restated 2002 Stock
Plan (Incorporated by reference to exhibit number 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.30 Form of global subscription agreement under the Company’s Amended and Restated Employee Stock Purchase Plan
(Incorporated by reference to exhibit number 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended October 2, 2015)
10.31 Form of global performance restricted stock unit award agreement under the Company’s Amended and Restated 2002
Stock Plan (Incorporated by reference to exhibit number 10.6 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended October 2, 2015 )
10.32 Form of global restricted stock unit award agreement (officers) under the Company’s Amended and Restated 2002 Stock
Plan (Incorporated by reference to exhibit number 10.30 to the Company's Annual Report on Form 10-K for the year
ended January 1, 2016)
10.33+ Offer letter between the Company and Robert G. Painter dated January 29, 2016 (Incorporated by reference to exhibit
number 10.1 to the Company’s Current Report on Form 8-K, filed February 1, 2016)
10.34+ Settlement Agreement and Release by and between Francois Delepine and the Company dated as of March 14, 2016
(Incorporated by reference to exhibit number 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended April 1, 2016)
10.35+ Letter agreement for consulting services by and between Francois Delepine and the Company dated as of March 14, 2016
(Incorporated by reference to exhibit number 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended April 1, 2016)
10.36 Form of Global Performance Stock Unit Award Agreement (Total Shareholder Return) under the Company's Amended
and Restated 2002 Stock Plan (Incorporated by reference to exhibit number 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended July 1, 2016)
10.37 Form of Global Performance Stock Unit Award Agreement (Operating Income/Revenue) under the Company's Amended
and Restated 2002 Stock Plan (Incorporated by reference to exhibit number 10.2 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended July 1, 2016)
21.1
Subsidiaries of the Company (filed herewith)
23.1
Consent of Independent Registered Public Accounting Firm (filed herewith)
24.1
Power of Attorney (included on signature page herein)
31.1
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
93
31.2
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS ++
XBRL Instance Document
101.SCH ++
XBRL Taxonomy Extension Schema Document
101.CAL ++
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF ++
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB ++
XBRL Taxonomy Extension Label Linkbase Document
101.PRE ++
XBRL Taxonomy Extension Presentation Linkbase Document
Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and
otherwise are not subject to liability.
+
++
Indicates management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual
Report on Form 10-K.
Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting
obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any
anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply
with the submission requirements and promptly amends the interactive data files after becoming aware that the
interactive data files fails to comply with the submission requirements.
**
Portions of this document have been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment under Rule 24b-2.
94
SCHEDULE II
TRIMBLE INC.
VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Fiscal Years
Allowance for doubtful accounts:
Balance at beginning of period
Acquired allowance
Bad debt expense
Write-offs, net of recoveries
Balance at end of period
2016
2015
2014
$
$
5.0
0.3
3.0
(3.3)
5.0
$
$
7.8
0.6
1.9
(5.3)
5.0
$
$
6.3
2.6
3.8
(4.9)
7.8
95
SUBSIDIARIES OF THE COMPANY
EXHIBIT 21.1
Name of Subsidiary or Affiliate
Jurisdiction of Incorporation
Trimble Planning Solutions Pty Ltd
Manhattan Asia Pacific Pty Ltd
Information Alignment Pty Limited
Trimble Navigation Australia Pty Ltd
Civil & Structural Computing Pty Ltd
Trimble Australia Solutions Pty Ltd
LSI Robway PTY Limited
Spatial Dimension Australia Pty Ltd
Sefaira Pty Ltd
Beena Vision Asia – Pacific Pty Ltd.
Plancal GmbH Austria
AllTerra Österreich GmbH
Trimble NV
ICS Benelux N.V.
Acunia International N.V.
Trimble Leuven NV
Wevada N.V.
Trimble Brasil Solucoes Ltda
Gehry Technologies Consultoria E Software Ltda
Spatial Dimension Sistemas do Brasil Ltda
0807381 B.C. Ltd.
Load Systems International Inc.
Applanix Corporation
Cengea Solutions Corporation
Geo- 3D Inc.
Trimble Canada Development Ltd
PeopleNet Communications Canada Corp
Trimble Canada Corporation
Trimble Exchangeco Limited
Trimble Holdings Company
VS Visual Statements Inc.
GeoTrac Systems Inc.
Maddocks Systems Inc.
Spatial Dimension Canada ULC
Trimble Chile Comercial Limitada
Trimble Navigation Chile Limitada
Trimble Loadrite Chile SPA
Trimble Electronics Products (Shanghai) Co. Ltd
Trimble Communication and Navigation Technology
(Xi’An) Co., Ltd.
Tianpan Information Science & Technology Co. Ltd.
Tianpan Century Co. Ltd.
Trimble Leading Electronic Technology (Shanghai) Co. Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Austria
Austria
Belgium
Belgium
Belgium
Belgium
Belgium
Brazil
Brazil
Brazil
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Chile
Chile
Chile
China
China
China
China
China
Name of Subsidiary or Affiliate
Jurisdiction of Incorporation
Zhongtie Trimble Digital Engineering and Construction
Limited Company
GT (Beijing) Co., Ltd
Eleven Technology (SIP) Co., Ltd
Trimble DBO Information Technology (Shanghai) Co. Ltd.
Trimble Solutions Aarhus A/S
PocketMobile Denmark ASP
Trimble Middle East WLL
Fifth Element Oy
Trimble Finland Oy
Trimble Solutions Oy
Trimble Solutions France Sarl
Mensi S.A
Punch Telematix France S.A.S
Trimble France S.A.S
Trimble Nantes S.A.S
Trimble Lyon SARL
ALK Technologies SARL
Magnav France Holdco S.A.S
Manhattan Software France SARL
GT France S.A.S.
Solid S.A.S
Axio-Net GmbH
Trimble Germany GmbH
Trimble Kaiserslautern GmbH
Trimble Jena GmbH
Trimble TerraSat GmbH
HHK Datebtechnik GmbH
Sigma Handels GmbH
Trimble Solutions Germany GmbH
Trimble Railway GmbH
AllTerra Deutschland GmbH
Punch Telematix Deutschland GmbH
Linear Project GmbH
Sigma GmbH
GT Asia Limited
Trimble Hungary Kft
Trimble EM3 Teleservices PVT. Ltd
Trimble Navigation India Pvt Limited
Trimble Mobility Solutions India Limited
Building Data Private Limited
Trimble Information Technologies India Pvt. Ltd.
Trimble Solutions India Pvt Ltd
Spime India Technologies Pvt. Ltd.
CSC World (India) Private Limited
China
China
China
China
Denmark
Denmark
Egypt
Finland
Finland
Finland
France
France
France
France
France
France
France
France
France
France
France
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Hong Kong
Hungary
India
India
India
India
India
India
India
India
Name of Subsidiary or Affiliate
Jurisdiction of Incorporation
Lakefield e Technologies Ltd
Lakefield e Technologies Group Ltd
Lime Daross Limited
Trimble Railway Ltd
Spektra S.r.L.
Spektra Agri Srl
Trimble Italia SRL
Trimble Japan KK
Trimble Solutions Japan KK
Trimble Solutions Korea Co., Ltd
Trimble Solutions Malaysia Sdn. Bhd.
Geo de SECO S de RL de CV
Gehry Technologies Americas Services S de RL de CV
Gehry Technologies Americas S de RL de CV
KWW Beheer B.V.
Trimble B.V.
Logic Way B.V.
Punch Telematix Nederland B.V
TNL Technology Holdings CV
Trimble Europe B.V
Trimble Loadrite Europe B.V.
Trimble International BV
Gehry Technologies Netherlands BV Inc.
Trimble Loadrite Holdings Limited
Trimble Navigation New Zealand Ltd
Loadrite North America Ltd
Loadrite Limited
Trimble Loadrite Auckland Limited
Manhattan Asia Pacific NZ Limited
Trimble New Zealand Solutions
Trimble Norway AS
Trimble Solutions Sandvika AS
PocketMobile Norge AS
Trimble Poland Sp. z.o.o.
Trimble RUS LLC
Rusnavgeoset LLC
Load Systems UK Limited
Trimble Navigation Singapore PTE Limited
Trimble Solutions SEA Pte. Ltd.
Trimble Navigation Technology South Africa (Pty) Ltd
Trimble South Africa Distribution Holdings Pty Ltd.
Sitech Southern Africa (Pty) Ltd
Spatial Dimension (Pty) Ltd
Spatial Dimension South Africa Pty Ltd
Geotronics Southern Europe S.L
Punch Telematix Iberica S.L
Trimble International Holdings S.L
Trimble Navigation Iberica S.L
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Italy
Japan
Japan
Korea
Malaysia
Mexico
Mexico
Mexico
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Norway
Norway
Norway
Poland
Russia
Russia
Scotland
Singapore
Singapore
South Africa
South Africa
South Africa
South Africa
South Africa
Spain
Spain
Spain
Spain
Name of Subsidiary or Affiliate
Jurisdiction of Incorporation
ViaNova Systems Spain S.L.
Trimble Solutions Sweden AB
Trimble A.B
Trimble Sweden A.B
ViaNova Geosuite AB
Trimble Solutions Gothenburg AB
PocketMobile Communications AB
Plancal Holding AG
Trimble Lizenz Switzerland GmbH
Trimble Switzerland GmbH
Trimble Holding GmbH
Trimble Thailand Co Ltd
Load Systems International FZE
GT Middle East Limited
Gehry Technologies Middle East LLC
Amtech Power Software Ltd
Lake e Technologies Limited (UK)
Trimble Solutions UK Ltd
Trimble MRM Ltd
Trimble UK Limited
StruCAD 2011
ALK Technology Limited
Cobco 867 Limited
CSC (World) Limited
CSC (Holdings) Ltd.
Computer Services Consultants (UK) Ltd.
Civil & Structural Computing (International) Ltd.
Civil & Structural Computing (Middle East) Ltd.
Manhattan Datacraft Ltd
Manhattan Software Group Ltd
Atrium Software Ltd
MSG Public Service Limited
De Facto 1731 Limited
De Facto 1732 Limited
Amtech Group Limited
TSI Stamford Limited
Trade Service Information Limited
TSI Powerdata Limited
Amtech Trustees Limited
Estimation Limited
Bdata Limited
Quickpen Limited
Wix McLelland Limited
ViaNova Systems Company Limited
Sefaira Limited
Sefaira UK Limited
Loadrite Western Inc.
Trimble IP Limited Corporation
Spain
Sweden
Sweden
Sweden
Sweden
Sweden
Sweden
Switzerland
Switzerland
Switzerland
Switzerland
Thailand
UAE
UAE
UAE
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
USA-AZ
USA-CA
Name of Subsidiary or Affiliate
Jurisdiction of Incorporation
Trimble IP General Corporation
SECO Manufacturing Company Inc
Trimble Export Limited
Trimble Military and Advanced Systems Inc.
Spime Inc.
Trade Service Company LLC
Office Products Update Services LLC
Fidelity Comtech, Inc.
Trimble Navigation Foundation
PeopleNet Holdings Corporation
PNET Holding Corp.
Trimble Solutions USA Inc.
VirtualSite Solutions LLC
Lake e Technologies Inc.
Trade Service Holdings Inc.
Iron Solutions, Inc.
Gehry Technologies, Inc.
Mining Information Systems, Inc.
Sefaira Inc.
Trucker Tech Inc.
ALK Technologies, Inc.
Beena Vision Systems, Inc.
Beena Vision Technologies, Inc.
Beena Vision Services, Inc.
TMW Systems Inc.
Loadrite Inc.
Telog Instruments, Inc.
Technical Sales International, Inc.
Building Data, LLC
Process Automation Company, LLC
PeopleNet Communications Corporation
Beartooth Mapping Inc
Applanix LLC
Ashtech LLC
Dynamic Survey Solutions, Inc.
Geoline Inc
USA-CA
USA-CA
USA-CA
USA-CA
USA-CA
USA-CA
USA-CA
USA-CO
USA-DE
USA-DE
USA-DE
USA -DE
USA-DE
USA-DE
USA -DE
USA-DE
USA-DE
USA-DE
USA-DE
USA-DE
USA-FL
USA-GA
USA-GA
USA-GA
USA-OH
USA-NC
USA-NY
USA-NV
USA-NV
USA-NV
USA-MN
USA-MT
USA-TX
USA-TX
USA-VT
USA-WA
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 Nos. 33-78502 and 333-04670) of Trimble Inc., pertaining to the 1990 Director Stock
Option Plan,
(2) Registration Statement (Form S-8 No. 33-45604) pertaining to the "Position Us for Progress" 1992 Employee Stock
Bonus Plan of Trimble Inc.,
(3) Registration Statement (Form S-8 Nos. 33-39647, 33-57522, 33-78502, 33-91858, 333-04670, 333-53703, 333-84949,
333-38264, 333-65758, and 333-28429) pertaining to the 1993 Stock Option Plan of Trimble Inc.,
(4) Registration Statement (Form S-8 Nos. 333-97979, 333-118212, 333-138551, 333-161295, and 333-183229) pertaining
to the Amended and Restated 2002 Stock Plan of Trimble Inc.,
(5) Registration Statement (Form S-8 Nos. 333-53703, 333-84949, 333-38264, 333-97979, 333-118212, 333-161295,
333-138551, 333-183229, 33-37384, and 33-62078) pertaining to the Amended and Restated, Employee Stock Purchase
Plan of Trimble Inc.,
(6) Registration Statement (Form S-8 Nos. 33-45167, 33-46719, 33-50944, 33-84362 and 333-208275) pertaining to the
Savings and Retirement Plan of Trimble Inc., and
(7) Registration Statement (Form S-3 No. 333-199716) of Trimble Inc.;
of our reports dated February 24, 2017, with respect to the consolidated financial statements and schedules and the effectiveness
of internal control over financial reporting of Trimble Inc. included in its Annual Report (Form 10-K) for the year ended December
30, 2016, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
February 24, 2017
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
EXHIBIT 31.1
I, Steven W. Berglund, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Trimble Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date:
February 24, 2017
/s/ Steven W. Berglund
Steven W. Berglund
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
EXHIBIT 31.2
I, Robert G. Painter, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Trimble Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date:
February 24, 2017
/s/ Robert G. Painter
Robert G. Painter
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Trimble Inc. (the “Company”) for the period ended December 30, 2016
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Steven W. Berglund, as Chief Executive
Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, to the best of his knowledge, that:
•
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Steven W. Berglund
Steven W. Berglund
Chief Executive Officer
February 24, 2017
EXHIBIT 32.2
CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Trimble Inc. (the “Company”) for the period ended December 30, 2016
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert G. Painter, as Chief Financial
Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, to the best of his knowledge, that:
•
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Robert G. Painter
Robert G. Painter
Chief Financial Officer
February 24, 2017
Management Information
Executive Management
Board of Directors
Steven W. Berglund
President and
Chief Executive Officer
Robert G. Painter
Senior Vice President
Chief Financial Officer
Business Operations
Bryn A. Fosburgh
Senior Vice President
Christopher W. Gibson
Senior Vice President
Jürgen Kleim
Senior Vice President
Darryl R. Matthews
Senior Vice President
Sachin J. Sankpal
Senior Vice President
James M. Veneziano
Senior Vice President
Staff Operations
Douglas R. Brent
Senior Vice President
Technology Innovation
James A. Kirkland
Senior Vice President
General Counsel
Leah K. Lambertson
Senior Vice President
Operations and
Chief Information Officer
Michael Lesyna
Senior Vice President
Strategy and
Corporate Development
Mike Bank
Vice President
Ron Bisio
Vice President
Roz D. Buick, PhD
Vice President
Brian McLaughlin
Vice President
David Wangler
Vice President
E. Michael Scarpa
Senior Vice President
Chief Human
Resources Officer
Prakash Iyer
Vice President
Software Architecture
and Strategy
Julie A. Shepard
Vice President
Finance and
Chief Accounting Officer
Ulf J. Johansson, Ph.D
Chairman
Business Consultant and Director,
Telefon AB LM Ericsson
Nickolas W. Vande Steeg
Vice Chairman
Chairman, Bedrock Creek
Director, Azusa Pacific University -
University College
Director, Gardner Denver Inc.
Director, Wabtec Corporation
Director, Pacific Design
Technologies
Steven W. Berglund
President and
Chief Executive Officer
Ronald S. Nersesian
President and
Chief Executive Officer,
Keysight Technologies
Merit E. Janow
Dean, School of International
and Public Affairs,
and Professor of Practice
Columbia University
Mark S. Peek
Co-President,
Workday
Dr. Kaigham J. Gabriel
President and
Chief Executive Officer,
Draper
Börje Ekholm
President and
Chief Executive Officer,
Ericsson
Meaghan Lloyd
Partner,
Gehry Partners, LLP
Corporate Headquarters
Trimble Investor Information
Trimble Inc.
935 Stewart Drive
Sunnyvale, California 94085
+1 (408) 481-8000
www.trimble.com
Traded: The NASDAQ Stock Exchange
Symbol: TRMB
Locations
Shareholder Information
Australia
India
Russia
Austria
Belgium
Brazil
Canada
Chile
China
Denmark
Finland
France
Indonesia
Saudi Arabia
Ireland
Italy
Japan
Korea
Lithuania
Malaysia
Mexico
Singapore
South Africa
Spain
Sweden
Switzerland
Thailand
United Arab Emirates
Netherlands
United Kingdom
Independent Auditor
Ernst & Young LLP
San Jose, California
Transfer Agent & Registrar
American Stock
Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
+1 (800) 937-5449
www.amstock.com
info@amstock.com
Investor Relations Contact
+1 (408) 481-7838
Germany
New Zealand
United States of America
investor_relations@trimble.com
Ghana
Hong Kong
Hungary
Norway
Poland
Qatar
The company’s annual report on Form 10-K, as filed with the Securities Exchange Commission, accompanies this annual report to
shareholders and is also available on the Investor Relations section of the Company’s website at www.trimble.com.
© 2017, Trimble Inc. All rights reserved. Trimble, the Globe and Triangle Logo, are trademarks of Trimble Inc. and/or its affiliates, registered in the
United States Patent and Trademark Office and/or in other countries. All other trademarks are the property of their respective owners.