2020
ANNUAL REPORT
CONNECTING THE
PHYSICAL AND
DIGITAL WORLDS
ABOUT TRIMBLE
Trimble is transforming the way the world works by
delivering products and services that connect the physical
and digital worlds. Core technologies in positioning,
modeling, connectivity and data analytics enable
customers to improve productivity, quality, safety and
sustainability. From purpose-built products to enterprise
lifecycle solutions, Trimble software, hardware and
services are transforming industries such as agriculture,
construction, geospatial and transportation.
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 January 1, 2021
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)
94-2802192
(I.R.S. Employer
Identification No.)
935 Stewart Drive, Sunnyvale, CA
(Address of principal executive offices)
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
Trading Symbol(s)
TRMB
Name of each exchange on which registered
NASDAQ Global Select Market
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted
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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
Large Accelerated Filer
Non-accelerated Filer
Emerging Growth Company ☐
☒ Accelerated Filer
☐ Smaller Reporting Company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 3, 2020, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $10.8
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.
Class
Common stock, $0.001 par value
Outstanding at February 24, 2021
250,974,620
shares
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DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of Trimble Inc. Proxy Statement relating to the annual meeting of stockholders to be held on May 12, 2021 (the
“Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.
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:
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impact of the COVID-19 pandemic, including upon global or local macroeconomic conditions, our results of
operations, and estimates or judgments;
seasonal fluctuations in our hardware revenue, sales to U.S. governmental agencies, and expectations that we will
experience less seasonality in the future;
changes in global macroeconomic conditions;
the portion of our revenue expected to come from sales to customers located in countries outside of the U.S.;
our plans to continue to invest in research and development to actively develop and introduce new products and to
deliver targeted solutions to the markets we serve;
a continued shift in revenue towards a more significant mix of software and recurring revenue, including subscription,
maintenance and support revenues, and services;
our belief that increases in recurring revenue, including from our software and subscription solutions, will provide us
with enhanced business visibility over time;
our belief that our cash and cash equivalents, together with borrowings under the commitments for our credit facilities
and senior notes, will be sufficient to meet our anticipated operating cash needs, debt service, and planned capital
expenditures for at least the next twelve months;
any anticipated benefits to us from our acquisitions and our ability to successfully integrate the acquired businesses;
fluctuations in interest rates and foreign currency exchange rates;
our belief that our gross unrecognized tax benefits will not materially change in the next twelve months; and
our growth strategy, including our focus on historically underserved large markets, the relative importance of organic
growth versus strategic acquisitions, and the reasons that we acquire businesses.
The forward-looking statements regarding future events and the future results of Trimble Inc. (“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, Trimble's current tax structure, including where Trimble's assets are deemed to reside for tax purposes, and
the beliefs and assumptions of Trimble management. Discussions containing such forward-looking statements may be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” below. 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, including
but 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, but assume no duty to update these statements to reflect subsequent 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.
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TRIMBLE INC.
2020 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Business
Item 1
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Item 3
Item 4 Mine Safety Disclosures
Properties
Legal Proceedings
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
Signatures
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Item 1.
Business
PART I
Trimble Inc. (“Trimble” or “the Company” or “we” or “our” or “us”) is a leading provider of technology solutions that enable
professionals and field mobile workers to improve or transform their work processes. Our comprehensive work process
solutions are used across a range of industries including architecture, building construction, civil engineering, geospatial, survey
and mapping, agriculture, natural resources, utilities, transportation, and government. Our representative customers include
construction owners, contractors, engineering and construction firms, surveying companies, farmers and agricultural
companies, energy and utility companies, trucking companies, and state, federal, and municipal governments.
We transform the way the world works by delivering products and services that connect the physical and digital worlds. Core
technologies used in positioning, modeling, connectivity, and data analytics enable customers to improve productivity, quality,
safety, and sustainability. 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.
Our representative products include equipment that automates and enables increased precision within large industrial equipment
such as tractors and bulldozers; integrated systems that track and manage 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.
We focus on integrating our 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” that is at the center of our
“Connected Construction” solutions, which provides real-time, connected, and cohesive information environments for the
design, build, and operational phases of construction projects. In agriculture, we continue to develop “Connected Farm”
solutions to optimize operations across the agriculture workflow. In long haul trucking, our “Connected Supply Chain”
solutions provide transportation companies with tools to enhance fuel efficiency, safety, and transparency through connected
vehicles and fleets across the enterprise.
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 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 three-dimensional (“3D”) modeling, analysis and design solutions, design and data
preparation software, BIM software, enterprise resource planning and project management solutions, cloud-based collaboration
solutions, applications for advanced surveying, data collection and analysis, farm productivity solutions, fleet management
solutions for transportation, 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 perpetual or term licenses 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, and
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.
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.
Our global operations include major development, manufacturing, or logistics operations in the United States, the Netherlands,
India, China, Germany, the United Kingdom, Finland, Canada, and New Zealand. Products are sold in more than 150
countries, through dealers, representatives, joint ventures, and other channels throughout the world, as well as direct sales to
end-users.
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Business Strategy
Our growth strategy is centered on multiple elements:
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Executing on our Connect & Scale 2025 strategy – We continue to focus on executing our Connect & Scale 2025
strategy. This strategy contains two elements. The first element, Connect, aims to connect more customer workflows,
industry lifecycles, and solution offerings, so that we can continue to transform the way our customers work. This
includes integrating more of our customers’ data through cloud offerings, and making more of our solutions available
over time on a cloud basis and subscription basis. The second element, Scale, aims to invest in the people, processes,
and technologies that are necessary for us to continue to grow our business efficiently and effectively for many years
into the future.
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 industries that operate in demanding environments with technology adoption in the early phases relative to other
industries. With the emergence of mobile and cloud computing capabilities, the increasing technological know-how of
end users, and compelling return on investment, we believe many of our markets are attractive 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 research and development (“R&D”) and acquisitions. We currently have
over 1,000 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 that have a requirement for the
integration of multiple technologies into complete vertical solutions.
Increasing focus on software and services - Software and services targeted for the needs of vertical end markets are
increasingly important elements of our solutions and are core to our growth strategy. We generally have an open
application programming interface philosophy and open vendor environment, which leads to increased adoption of our
software and analytics offerings. These software and services solutions integrate and optimize additional workflows
for our customers, thereby improving their work productivity, and in the case of subscription, maintenance, and
support services, also provide us with enhanced business visibility over time. Professional services constitute an
additional customer offering 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 distribution channels in over 85 countries, and sales are supported by our own offices
located in over 40 countries around the world.
Optimized go-to-market strategies to best access our markets - We utilize vertically focused go-to-market strategies
that leverage domain expertise to best serve the needs of individual markets both domestically and abroad. These go-
to-market capabilities include independent dealers, joint ventures, original equipment manufacturers (“OEM”), and
distribution alliances with key partners, such as CNH Global, Caterpillar, and Nikon, as well as direct sales to end-
users, which 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, and 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.
Our 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 subscription growth is driving increased recurring revenue and is 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.
Business Segments and Markets
Our segments are distinguished by the markets they serve. Each segment consists of businesses that are responsible for product
development, marketing, sales, strategy, and financial performance. We report our financial performance, including revenue
and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and
Transportation. For further financial information about our segments, see Note 5 to the Consolidated Financial Statements.
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Buildings and Infrastructure
The Buildings and Infrastructure segment primarily serves customers working in architecture, engineering, construction, and
operations and maintenance. Within this segment, our most substantial product portfolios are focused on building construction
and civil engineering and construction.
Building Construction. Our building construction portfolio of solutions for the residential, commercial, and industrial building
industry spans the entire life cycle of a building and is used by construction owners, 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 program management solutions for
construction owners, software for 3D conceptual design and modeling, BIM software that is used in design, engineering, and
construction, enterprise resource planning and project management and project collaboration for general contractors, advanced
integrated site layout and measurement systems, cost estimating, scheduling, and project controls solutions for contractors. The
suite also includes applications for sub-contractors and construction trades such as steel, concrete and mechanical, electrical and
plumbing, project coordination, and capital program planning and management. In addition, our Trimble Connect collaboration
platform streamlines customer workflows and enables interoperability between Trimble’s and other providers' solutions. 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, enhanced quality control,
and sustainability. During 2020, we announced advances in several of our software packages and solutions, including: (i) the
launch of PreDesign, a service that enables architects and designers to test design strategies and understand how a site’s climate
and environment will impact design proposals, and (ii) the announcement of new integrations for Microsoft 365 and BIMcollab
with the Trimble® Connect cloud-based collaboration platform.
Civil Engineering and Construction. Before dirt is ever moved in civil construction, feasibility, design, and scheduling are
critical steps to site construction. We provide the civil engineering and construction 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, marine construction, 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 civil construction industry.
The civil construction market portfolio 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
solutions include the ability to track and control equipment, perform remote machine diagnostics, and reduce re-work. By
leveraging our technology, contractors gain greater insight into their operations helping them to lower costs and improve
productivity, worker safety, and asset utilization.
We maintain a joint venture with Caterpillar, Caterpillar-Trimble Control Technologies (“CTCT”), to develop the next
generation of advanced electronic guidance and control products for earth-moving 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 we focus on the aftermarket with products for mixed fleets of earth-moving machines from Caterpillar
and other equipment manufacturers to allow improved management of construction sites and projects.
During 2020, we announced a number of developments, including: (i) the launch of the Trimble® Platform as a Service, an
offering that gives contractors the ability to purchase select civil construction hardware and software solutions and continually
upgrade those solutions with the latest innovations from Trimble and (ii) the release of WorksOS, which integrates design data
from the office with machine control data from Trimble to deliver real-time progress and productivity updates for the entire
jobsite.
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We sell and distribute our products in the Building and Infrastructure segment through both a direct sales force and global
networks of independent dealers with expertise and customer relationships in the respective markets, including the network of
SITECH Technology Dealers, which serves the civil construction industry. BuildingPoint is an initiative to form a global
network of specialized distribution partners to serve the needs of the building construction industry by supporting customers in
the adoption of our Buildings solutions. We also sell many of our software solutions through our own direct salesforce.
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. As we extend our software and services offerings to
cover the full set of construction life cycle management solutions used by construction owners, designers, and
construction companies, we increasingly compete with large established companies that offer similar systems across all
industries. We compete principally on the basis of innovation, differentiated products, domain expertise, service, quality, and
geographic reach.
Geospatial
The Geospatial segment primarily serves customers working in surveying, engineering, and government. Within this segment
our most substantial product portfolios are focused on surveying and geospatial, and geographic information systems (“GIS”).
Surveying and Geospatial. Through our surveying product portfolio, professional surveyors and engineers provide services to
the construction, engineering, mining, oil and gas, energy and utilities, government, and land management sectors. Our survey
solutions replace less productive conventional methods of surveying, mapping, 2D or 3D modeling, measurement, reporting,
and analysis. Our suite of solutions includes 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 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, and optical or laser
measurement. 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 that enables better decision making.
Geographic Information Systems. Our GIS product line collects authoritative field data and integrates 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.
During 2020, we announced the release of a new GNSS receiver, the Trimble R12i, which incorporates Inertial Measurement
Unit (IMU)-based tilt compensation, which enables points to be measured or staked out while the survey rod is tilted,
empowering land surveyors to focus on the job at hand and complete work faster and more accurately.
We sell and distribute our products in the Geospatial segment primarily through a global network of independent dealers and
business partners. Major competitors in this segment are typically survey instrument companies that provide software driven,
3D measurement and imaging solutions. We compete principally on the basis of innovation, differentiated products, domain
expertise, service, quality, and geographic reach.
Resources and Utilities
The Resources and Utilities segment primarily serves customers working in agriculture, forestry, and utilities. Within this
segment, our most substantial product portfolio addresses the agriculture market.
Our precision agriculture products and services consist of guidance and positioning systems, including autonomous steering
systems, automated and variable-rate application and technology systems, and information management solutions that enable
farmers and their partners to improve crop performance, profitability, and environmental quality. Our precision agriculture
solutions can assist farmers throughout every step of their farming process, beginning with land preparation and continuing
through the planting, nutrient, 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
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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 and aligning drainage systems to better manage water flow in fields.
Software solutions that use data to enhance farm productivity are an increasing focus in our agriculture business. Our
agricultural software is used by farmers to help integrate all of the information on the farm, and is also used by advisors,
suppliers, and purchasers to share information to help improve efficiencies. Our agricultural software enables farmers to make
more informed decisions leading to higher yields, better quality crops, increased profitability, and reduced environmental
impact.
For many of our end market applications and customer needs, the positional accuracy that can be derived from GNSS satellite
signals alone is insufficient. In these applications, higher levels of positional accuracy are required. For these situations, we
provide an augmentation service that improves the positional accuracy that is available to the customer, thereby enabling higher
levels of precision and automation in work processes that are conducted in the field. This service is provided by Trimble
Positioning Services and is available in a variety of formats and accuracy levels, depending on the relevant application's
specific needs. Trimble Positioning Services serves customers in a variety of end markets, including agriculture, construction,
geospatial, and other markets, with a majority of its customers being in agriculture.
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. Our 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. Our distributors are committed to providing reliable, responsive,
and dedicated in-field 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 to help farmers and advisors gain a better
understanding of how to use the technology in a way that best meets their needs.
Competitors in the agricultural market are vertically integrated farm equipment and implement companies, agricultural
instrumentation companies, and companies that provide agricultural software and services. We compete principally on the
basis of robust performance, ease of use, domain expertise, customer support, price, interoperability, interconnectedness, and
the completeness of our solutions.
Transportation
Our transportation solutions provide capabilities for the long-haul trucking and freight shipper markets to create a connected
supply chain and integrate all forms of transportation, drivers, back office management, shippers and freight. We provide
enterprise and mobility solutions focused on business intelligence and data analytics, safety and regulatory compliance,
navigation and routing, freight brokerage, supply chain visibility and final mile, and transportation management and fleet
maintenance. Within this segment, our most substantial product portfolio addresses the truckload freight market.
In the transportation market, we offer a suite of solutions marketed primarily under the Trimble brand. Together, this range of
products provides comprehensive fleet and transportation management systems, analytics, routing, mapping, reporting, and
predictive modeling solutions to enable the transportation industry to achieve greater overall operational efficiency, fleet
performance, and profitability while ensuring regulatory compliance. In addition to cloud-hosted solutions, we also integrate
our applications and services directly into the customer’s IT infrastructure.
The mobility solutions encompass route management, safety and compliance, end-to-end vehicle management, video
intelligence, and supply chain communications. The transportation management system 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 enterprise transportation management system automates business processes spanning the entire surface
transportation life cycle for shippers, carriers and intermediaries, delivering visibility, control, and decision support for the
intricate relationships and complex processes involved in the movement of freight. Our products also provide truck routing,
mileage, and mapping solutions, as well as a voice guided turn-by-turn navigation solution.
The Transportation segment generally sells directly to end-users and OEMs. Sales cycles tend to be long, often involving field
trials followed by an extensive decision-making process. Competitors in this segment are typically companies that provide fleet
mobility services, transportation management software, and digital freight matching. We compete principally on the basis of
interoperability, domain expertise, customer support and service, price, innovative product offerings, quality, and the
completeness of our solutions.
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Seasonality of Business
Construction equipment revenue, within our Buildings and Infrastructure segment, historically has been higher in early spring.
Our agricultural equipment revenue, within our Resources and Utilities segment, has 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 businesses across segments and the increased
impact of software and subscription revenue, we are experiencing less seasonality. Changes in global macroeconomic
conditions could also impact the level of seasonality we experience.
Manufacturing
We outsource the manufacturing of many of our hardware products to our key contract manufacturing partners that include Flex
Ltd., 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 Flex Ltd. 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.
Our primary design, manufacturing, and distribution sites in Dayton, Ohio; Sunnyvale, California; Danderyd, Sweden;
Eindhoven, Netherlands; Auckland, New Zealand, and Shanghai, China are registered to ISO9001:2015 covering the design,
production, distribution, and servicing of our products.
Research and Development and Patents, Licenses, and Intellectual Property
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 investments in the positioning, communication, and information technologies that underlie our products and will
likely provide competitive advantages. Our investments enable us to push the state-of-the-art in key technology areas and to
connect other leading technologies to solve customer problems in new and unique ways.
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.
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
1,000 unique issued and enforceable patents covering key technology areas, including precision GNSS, optical and inertial
positioning solutions, artificial intelligence and machine learning, IoT, cloud computing, laser scanning, 3D modeling, point
cloud processing, augmented reality, and many others. We generally prefer to own the intellectual property used in our
products, either directly or through subsidiaries. Occasionally we license technology from third parties. We are not dependent
on any one patent or license. We also own numerous trademarks and service marks that contribute to the identity and
recognition of Trimble and its global products and services.
Human Capital
Trimble’s culture reflects our guiding principles at work and is fundamental to sustaining our success. A company’s culture
describes how people behave in the work environment and is closely tied to leadership. At Trimble, people inspire purpose and
vision, engage to draw out the best from each other, and strive to achieve meaningful results. This mindset shapes how we treat
one another and how we serve our customers, colleagues, and stockholders. These attributes serve as a common foundation
across the global organization and also adapt locally to diverse geographic and operational business models. Commitment to
these behaviors unites Trimble employees.
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In the technology space, intellectual property and know-how derived from employees fosters innovation and serves as a
competitive advantage. To continue producing the innovative technologies for which we are known, it is crucial that we
continue to attract, engage, and retain top talent. We strive to make Trimble a diverse, equitable, inclusive, and safe workplace
and provide opportunities for our employees to grow and develop in their careers, supported by competitive compensation,
benefits, and health and wellness programs, and by programs that build connections between our employees and their
communities.
At the end of fiscal 2020, we employed 11,402 full-time and part-time employees, the overwhelming majority of which were
full-time employees. Approximately 49%, 30%, 17%, and 4% of employees reside in North America, Europe, Asia-Pacific,
and the rest of world, respectively. Our employees are working in over 200 locations in over 40 countries. Collectively, we
speak more than 45 different languages. We believe our diversity makes us stronger and better able to solve complex problems
for our customers.
Diversity and Inclusion
We value diversity in our workforce, including various cultures, backgrounds, ages, gender, race and ethnicities, nationality,
sexual orientation, religion, people with different abilities, parents and caregivers, and many other characteristics, knowing that
it drives our best thinking. Our focus on diversity starts at the top. Four out of our eleven board members are female or
ethnically diverse, placing us in a select group of companies. In fiscal 2020, we named a Vice President of Diversity, Equity,
and Inclusion. In quarterly business reviews, we review gender and U.S. ethnicity demographics and trends for every business
within Trimble, as well as initiatives that will lead toward future progress.
We have a number of employee networks that enhance our inclusive and diverse culture, including networks that support
women, caregivers, black professionals, veterans, and the LGBTQ+ community. We are focused on measuring and increasing
gender representation and diversity in high impact roles such as front-line management, engineering, product management, and
sales. We have provided increased access to diversity and inclusion educational resources, training, assessments, articles and
other employee forums to help us work together and more effectively across a variety of cultures globally.
We are committed to inspiring and attracting extraordinary and diverse talent. The hiring and retention of top talent is always a
strategic priority, and increasingly, a challenging one. In addition, our increasing focus on technologies, such as cloud and
autonomy, requires us to compete against leading companies in the technology sector. Colleges and universities remain an
important source of talented recruits. We aim to transform and re-invent the way Trimble attracts and hires employees to
increase diversity. Initiatives include modifications to our recruiting process to ensure inclusion of diverse candidates,
developing relationships with universities with higher underrepresentation, creating diverse talent pools, and increasing
networking and referrals with diverse professional organizations.
Compensation and Benefits
We believe people should be paid for the role they perform and their skills and experience, regardless of their gender, race, age
or other personal characteristics. To deliver on that commitment, we benchmark and set pay ranges based on market data and
consider factors such as an employee’s role, their experience, their performance, and the region in which they live. We also
regularly review our compensation practices to ensure our pay is fair and equitable. In addition to base salaries, certain roles
are eligible to participate in short-term and long-term incentive plans.
We also offer market competitive benefit programs (which vary by country/region), which include health and wellness benefits,
life insurance and disability benefits, flexible savings accounts, paid time off, parental and family leave, employee support
programs, retirement plans, an employee stock purchase plan, adoption and surrogacy education assistance, flexible work
schedules, tuition assistance, and on-site services such as health centers and fitness centers at some sites, among others.
Talent Development
We are committed to providing every employee with the opportunity to learn, grow, and excel in a respectful and collaborative
workplace. Part of our people development mission is to create a culture of continuous learning and curiosity. We believe that
abilities can be developed through dedication and hard work; brains and talent are just the starting point. We encourage
employees to nurture a love of continuous learning and a resilience that is essential for accomplishment.
We have a framework for people development that is employee-centric and evidence-based. Performance reviews include
frequent, casual conversations based upon employee survey data that drives engagement and retention. These surveys also
include questions oriented around the Company’s mission, vision, values, and purpose, work environment, career development,
and employee-manager relations. Our world-wide training portal, Learn.Trimble.com, provides a set of resources that is easy to
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access anytime and anywhere, with a range of focus areas from new employees to existing employee development to manager
development.
Building Connections
We believe that building connections between our employees, their families, and our communities creates a more meaningful,
fulfilling, and enjoyable workplace. Since our employees are passionate about a variety of causes, our company giving and
volunteering programs support and encourage employees by engaging with those causes. In our offices around the world, our
employee-led committees select local organizations to support, often in the form of grants and employee fundraising. We also
frequently collaborate with these organizations on volunteer activities for our employees.
Our Trimble Foundation aligns international philanthropic efforts by giving back to the communities where Trimble does
business and helping those in need. We do this by supporting two focus areas, natural disaster relief and female education and
empowerment, as well as by supporting the philanthropic efforts of our offices.
Health, Safety and Wellness
The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the
health, safety, and wellness of our employees. We provide our employees and their families with access to a variety of
innovative, flexible, and convenient health and wellness programs, including benefits that provide protection and security so
they can have peace of mind concerning events that may require time away from work or that impact their financial well-being;
that support their physical and mental health by providing tools and resources to help them improve or maintain their health
status and encourage engagement in healthy behaviors; and that offer choice where possible so they can customize their benefits
to meet their needs and the needs of their families.
In response to the COVID-19 pandemic, we implemented changes that we determined were in the best interest of our
employees, as well as the communities in which we operate, and which comply with government regulations. This includes
having the vast majority of our employees work from home, while implementing additional safety measures for employees
continuing critical on-site work.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these
reports are available free of charge on our 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 GAAP to non-GAAP reconciliations, are also 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: 303-635-8551
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Information about our Executive Officers
The names, ages and positions of our executive officers as of February 26, 2021 are as follows:
Name
Steve W. Berglund
Robert G. Painter
David G. Barnes
Ronald J. Bisio
Bryn A. Fosburgh
James A. Kirkland
James Langley
Darryl R. Matthews
Julie A. Shepard
Age
69
49
59
52
58
61
46
53
63
Position
Executive Chairman
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
Chief Accounting Officer
Steven W. Berglund—Steven Berglund was appointed executive chairman of Trimble’s board in January 2020, and previously
served as the 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 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 the Association of Equipment Manufacturers
(AEM), as well as chairman of AEM's construction sector board. He is also a member of the board of directors and audit
committee of Belden Inc., a global provider of end-to-end signal transmission solutions.
Robert G. Painter—Robert Painter was appointed Trimble’s president and chief executive officer in January 2020. From 2016
through 2019, he served as our chief financial officer, where he was responsible for Trimble’s worldwide finance operations. In
2015, Mr. Painter was appointed vice president of Trimble buildings businesses, a group focused on BIM-centric divisions that
span the design-build-operate continuum of the building life cycle. From 2011 to 2014, he served as general manager of our
joint venture with Hilti, which was created to foster collaborative development of product innovations for the building
construction industry. From 2009 to 2010, he served as general manager of our construction services division. Mr. Painter
joined Trimble in 2006 and assumed leadership of Trimble’s business development, leading all acquisition and corporate
strategy activities. Prior to joining Trimble, Mr. Painter served in a variety of management and finance positions at Cenveo,
Rapt Inc., Bain & Company, Whole Foods Market, 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.
David G. Barnes—David G. Barnes joined Trimble as chief financial officer in January 2020 with more than 35 years of
financial and strategic management experience, including treasury, tax, investor relations, and risk management. Prior to
Trimble, Mr. Barnes served as chief financial officer at MWH Global Inc., a global provider of engineering and construction
services, from January 2009 to May 2016. At MWH, he served on the board of directors and had responsibility for information
technology and procurement in addition to his financial role. Following the sale of MWH to Stantec Inc., Mr. Barnes assumed
operational responsibility for Stantec’s businesses outside North America from September 2017 to January 2019. He also
served as a leader on the committee overseeing the integration of MHW into Stantec from May 2016 to July 2017. Prior to
MWH, Mr. Barnes held financial leadership positions at Western Union, Coors, and YUM Brands. He began his career as a
strategy consultant at Bain & Company. In 1983, he received a Bachelor of Science in Applied Mathematics from Yale
University and his MBA in Finance and Marketing from the University of Chicago in 1987. Mr. Barnes also serves as a board
member and chair of the Audit Committee of CSG Systems International.
Ronald J. Bisio—In February 2019, Ronald Bisio was appointed senior vice president responsible for Trimble’s surveying and
geospatial businesses, where he had previously served as vice president since April 2015. Prior to this role, he served as
general manager for Trimble’s rail division from January 2011 until April 2015. He joined Trimble in 1996 and has held
several marketing, sales, and general management positions since then at Trimble. He earned a Master of Business
Administration degree from the University of Denver, a Master of Regional Planning degree from the University of
Massachusetts, and a Bachelor of Science degree in Cartography from Salem State University in Salem, Massachusetts.
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Bryn A. Fosburgh—Bryn Fosburgh currently serves as senior vice president responsible for Trimble’s construction businesses,
which includes Trimble’s civil engineering and construction, buildings, Viewpoint and e-Builder divisions, as well as Trimble’s
joint ventures with Caterpillar, Hilti, and Nikon. From 2016 to 2019, Mr. Fosburgh was our senior vice president responsible
for Trimble’s joint ventures, as well as U.S. Federal government strategy and accounts, OEM construction machine division,
and professional services groups. From 2014 to 2016, he served as senior vice president for Trimble's geospatial, civil
engineering and construction, and building divisions, and the Caterpillar and Hilti-related joint ventures. From 2010 to 2014,
Mr. Fosburgh was responsible for buildings and heavy civil construction divisions along with Caterpillar and Hilti joint
ventures. From 2009 to 2010, Mr. Fosburgh served as vice president for Trimble's construction division, transportation and
logistics, field service management, 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.
James A. Kirkland—James Kirkland currently serves as Trimble’s senior vice president, general counsel, and secretary. He
joined Trimble 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.
James Langley—James Langley currently serves as a senior vice president responsible for Trimble transportation businesses.
He was appointed to this role in September 2019 and before that served as Trimble’s general manager of Trimble transportation
enterprise since April 2019. Prior to that, Mr. Langley was with Dart Transit Company, a transportation and tractor fleet
company based in Eagan, Minnesota, where he served as president from December 2017 until March 2019, and chief operating
officer from January 2016 until March 2019. Before Dart, Mr Langley was with TMW Systems, one of Trimble’s
transportation businesses, as vice president and general manager of business intelligence and optimization from May 2011 until
December 2015. Mr. Langley has extensive experience in the transportation industry, having also held positions at US Xpress,
Transcard, and JB Hunt, where he worked in the areas of operations, IT, engineering and analytics. Mr. Langley holds a degree
from the University of Arkansas in transportation and logistics.
Darryl R. Matthews—Darryl Matthews currently serves as senior vice president responsible for Trimble’s natural resources
businesses, which includes agriculture, forestry, and global services 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.
Julie A. Shepard—Julie Shepard currently serves as Trimble’s chief accounting officer. She joined Trimble in December of
2006 as vice president of finance and was appointed chief accounting officer in May 2017. Prior to joining Trimble,
Ms. Shepard served as vice president of finance and corporate controller at Quantum Corporation. Ms. Shepard brings with her
over 30 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 SASB Alliance.
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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.
Risks related to our business
Our financial condition and results of operations have been and may continue to be adversely affected by the COVID-19
pandemic
Our overall performance depends upon domestic and worldwide economic and political conditions. The global spread of
COVID-19 has created volatility, uncertainty, and economic disruption. The pandemic has caused and may continue to cause a
slowdown in worldwide economic activity, decreased demand for products and services, and disruptions to global supply chains
and financial markets. These effects have resulted and may result in additional lost or delayed revenue to us and have disrupted
our business operations as we have transitioned to remote working environments, restricted employee travel, and significantly
limited access to, and imposed social distancing requirements within, our facilities including research and development
facilities.
Our dealer network, suppliers, and contract manufacturers have been similarly impacted by the COVID-19 pandemic. In the
event of continuing and significant disruptions, there is no guarantee that we would be able to find alternative sources of
distribution, supply, or manufacturing, which could delay our ability to market, source, manufacture, and ship our products.
These distribution and supply chain effects may have an adverse effect on our ability to meet customer demand and could result
in an increase in our costs of production and distribution.
The extent to which COVID-19 impacts our business, operations, and financial results will depend on numerous evolving
factors that we are not able to accurately predict, including:
•
•
•
•
•
•
•
the duration and scope of the pandemic, the availability of and timing for distributing vaccines and the efficacy of
vaccines, including with respect to new strains of the virus, and the continuing economic impacts of the pandemic;
governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic;
the effect on our customers and customer demand for and ability to pay for our products and services;
restrictions or disruptions to transportation, including reduced availability of ground or air transport;
disruption of the supply chain for our products;
our ability to comply with financial covenants, including maintaining required leverage ratios, which could result in
debt becoming due and payable prior to its stated maturity; and
changes in our effective tax rate due to effects of COVID-19 on our geographic mix of earnings.
In addition, the impact of COVID-19 on macroeconomic conditions may impact the proper functioning of financial and capital
markets, foreign currency exchange rates, commodity and energy prices, and interest rates. Even after the COVID-19 pandemic
has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has
occurred or may occur in the future. In regions that fail to fully contain COVID-19 or suffer a COVID-19 relapse, those
markets may not recover as quickly or at all, which could have a material adverse effect on our business, financial condition,
and results of operations.
We operate globally and are subject to significant risks in many jurisdictions
Global or regional conditions may harm our financial results. We have operations in many countries, and a significant portion
of our revenue is derived from countries outside of the United States. As a result, our operations, and our financial results,
including our ability to design, develop, or sell products, may be adversely affected by a number of factors outside of our
control, including:
•
•
•
•
•
•
•
•
•
global and local economic conditions;
the demand and cost of commodities, such as corn and oil;
the strength of the agricultural, engineering, and construction markets;
inadequate infrastructure and other disruptions, such as supply chain interruptions and large-scale outages or unreliable
provision of services from utilities, transportation, data hosting, or telecommunications providers;
government restrictions on our operations in any country, or restrictions on our ability to repatriate earnings from a
particular country;
differing employment practices and labor issues;
formal or informal imposition of new or revised export and/or import and doing-business regulations, including trade
sanctions, tariffs, and import or export licensing requirements, which could be changed without notice;
ineffective legal protection of our IP rights in certain countries;
uncertain economic and political conditions in countries where we do business;
15
•
•
•
local business and cultural factors that differ from our normal standards and practices;
differing regional responses and restrictions related to global pandemics, like the COVID-19 pandemic; and
uncertainty regarding social, political, immigration, and trade policies in the U.S. and abroad, including the impact of
the United Kingdom’s recent withdrawal from the European Union (“Brexit”).
There is inherent risk that political, diplomatic, or military events could result in trade disruptions, including tariffs, trade
embargoes, export restrictions, and other trade barriers. A significant trade disruption or the establishment or increase of any
trade barrier in any area where we do business could increase the cost of our products, which could adversely impact the margin
that we earn on sales, make our products more expensive for customers or create uncertainty around demand for certain types of
products, which could make our products less competitive and reduce customer demand. Given the change in U.S. presidential
administration and the current political climate, there is uncertainty about the trade policies, treaties, government regulations,
and tariffs that could apply to trade. In addition, if there is continuing 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. In addition, government or customer efforts, attitudes, laws or
policies may lead to non-U.S. customers favoring domestic suppliers that could compete with or replace our products, which
would also have an adverse effect on our business. Changes in economic conditions and political uncertainty surrounding
international trade also make it difficult to make financial forecasts. Any of these factors or any combination of these factors
could cause us to miss our financial projections and adversely affect our business, financial condition, and results of operations.
Engaging in international business inherently involves a number of other difficulties and risks.
Risks associated with engaging in international business include:
•
•
•
•
longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal
systems;
difficulties and costs of staffing and managing international operations;
differing local customer product preferences and requirements than our U.S. markets; and
difficulties protecting or procuring intellectual property rights.
These factors or any combination of these factors could adversely affect our business, financial condition, and results of
operations.
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
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 future growth 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:
• maintaining continuity in our senior management and key personnel;
•
•
•
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.
•
•
We have increasingly diversified the nature of our businesses both organically and by acquisition. As a result, an increasing
amount of our business involves business models that require managerial techniques and skill sets that are different from those
required to manage our historical core businesses.
Over the last few years, we have focused more on subscription models. As a result, we expect to derive an increasing portion of
our revenue in the future from subscriptions. The subscription models provide our customers the right to access certain of our
software in a hosted environment or use downloaded software for a specified subscription period. Market acceptance of such
offerings is affected by a variety of factors, including but not limited to security, reliability, performance, current license terms,
customer preference and industry adoption, social/community engagement, customer concerns with entrusting a third party to
store and manage their data, public concerns regarding privacy and the enactment of restrictive laws or regulations. We may be
unable to successfully support and host our subscription offerings in light of the foregoing risks and uncertainties.
16
These factors or a combination of these factors could have an adverse impact on our business, financial condition, and results of
operations.
Changes in our software and subscription businesses may adversely impact our operations and financial results
An increasing portion of our revenue is generated through software maintenance and subscription revenue, which includes SaaS
and new subscription services for integrated solutions. 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 three 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 an adverse impact on our future maintenance revenue growth. 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, our business, financial condition,
and results of operations could be adversely impacted.
We continually re-evaluate our software licensing programs and subscription programs, including specific license models,
delivery methods, and terms and conditions. Changes to our licensing programs and subscription programs, including the
introduction of new subscription services for integrated solutions that include hardware, 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, and could adversely affect our operating results and financial
condition. We may implement different licensing models that require us to recognize licensing fees over a longer period. Over
the last few years, we have increasingly offered additional products through a SaaS model. SaaS revenue is currently
recognized ratably over the subscription period. Any significant increase in the percentage of our business generated from 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 an adverse impact on our operating results in a quarterly period. Due to these complexities, we
may not be able to accurately forecast our revenue, which could cause us to miss our earnings estimates or revenue projections
and adversely impact 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, could adversely affect our ability to sell our products to
customers. Our relationships with substantial industry participants such as Caterpillar and CNH Global are complex and
multifaceted and are likely to evolve over time based upon the changing business needs and objectives of the parties. Evolution
of our respective business strategies and diversification of product portfolios may lead to increased competition with our
strategic allies, placing additional pressure on these relationships. Since these strategic relationships contribute to significant
ongoing business in certain of our important markets, changes in these relationships could adversely affect our sales. In
addition, 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 subscription services for integrated 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 subscription programs for integrated solutions
that include hardware, software maintenance, and other recurring services, may make it more difficult to introduce those
products to end-users and delay end-user adoption, which could result in lower revenue.
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, financial condition, and results of operations. 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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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 adversely impact our results of operations
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
adverse 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
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 that would adversely affect our results. If we divest
a business and the proceeds are less than the net book value at the time, we would have to write off the difference. In addition,
changes in the operating results or the valuation 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 business, financial condition, and results of operations.
We face substantial competition in our markets, which could decrease our revenue and growth rates or impair our financial
condition and results of operations
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 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 technology. In our software and subscription services businesses, we face competition from a group of large,
well-established companies, particularly in the areas of design, enterprise resource planning (ERP), collaboration and project
management solutions. 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.
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Risks related to our technology and products
Our products are highly technical and may contain undetected errors, product defects, security vulnerabilities, or software
errors
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 revenue 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.
Our internal and customer-facing systems, and systems of third parties we rely upon, may be subject to cybersecurity
breaches, disruptions, or delays
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. The recent discovery of wide-scale cybersecurity intrusions into U.S.
government and private company computer networks by alleged Russian state actors underscores the ongoing threat posed by
sophisticated and foreign state-sponsored attacks. Unauthorized access to our proprietary business information or customer
data may be obtained 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. Additionally, outside parties may attempt to fraudulently induce employees or users to disclose
sensitive or confidential information in order to gain access to data.
We have experienced security breaches in the past, and despite our efforts to maintain the security and integrity of our systems,
it is 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, they 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 long 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 or confidential information may be obtained through inadequate use of security controls
by customers, vendors, or business partners. Efforts to prevent hackers from disrupting our service or otherwise accessing our
systems are expensive to develop, implement, and maintain. Such efforts require ongoing monitoring and updating as
technologies change and efforts to overcome security measures become more sophisticated and may limit the functionality of,
or otherwise adversely impact our service offering and systems. 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. We also may be required to notify regulators about any actual or perceived personal data
breach (including the EU Lead Data Protection Authority) as well as the individuals who are affected by the incident within
strict time periods.
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
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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 SaaS solutions and other hosted services in which we store, retrieve,
communicate, and manage data that is critical to our customers’ business systems. Disruption of our systems that 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
adversely impact our business, financial condition, and results of operations.
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 platforms, technologies, or new industry standards that
impact our markets, our ability to retain or increase market share and results of operations could be adversely affected.
Some of our products rely on third party technologies including open source software, which could result in product
incompatibilities or harm availability of our products and services
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 an adverse effect on our business,
financial condition, and results of operations.
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,
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
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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. 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 business, financial
condition and results of operations.
We are dependent on limited source manufacturers and suppliers for certain of our products and critical components; a
disruption in our supply chain could adversely affect our revenue and results of operations
We are dependent upon a limited number of contract manufacturers for the manufacture, testing, and assembly of certain
products and specific suppliers for a number of our critical components. Our current reliance on a limited group of suppliers
and contract manufacturers involves risks, including a potential inability to obtain an adequate supply of required products or
components to meet customers’ delivery requirements, a risk that we may accumulate excess inventories if we inaccurately
forecast demand for our products, reduced control over pricing and delivery schedules, discontinuation of or increased prices
for certain components, and economic conditions that may adversely impact the viability of our suppliers and contract
manufacturers. Any disruption in our supply chain could reduce our revenue and adversely impact our financial results. Such a
disruption could occur as a result of any number of events, including, but not limited to, increases in wages that drive up prices
or labor stoppages, the imposition of regulations, quotas or embargoes on components, a scarcity of, or significant increase in
the price of, required electronic components for our products, trade restrictions, tariffs or duties, fluctuations in currency
exchange rates, transportation failures affecting the supply chain and shipment of materials and finished goods, third party
interference in the integrity of the products sourced through the supply chain, the unavailability of raw materials, severe
weather conditions, natural disasters, civil unrest, military conflicts, geopolitical developments, war or terrorism, and
disruptions in utility and other services. 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 results of operations.
We are dependent on the availability and unimpaired use of allocated bands within the radio frequency spectrum; 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 adverse impacts on our customers, both of which could reduce demand for our
products. For example, in 2020 the FCC approved a proposal by a private party to repurpose spectrum adjacent to the
authorized GNSS bands for terrestrial wireless operations throughout the United States. The company has opposed and
continues to oppose this proposal, along with a wide range of participants in commercial and governmental sectors that rely on
the use of GNSS in their critical activities. The FCC’s action is subject to further review as well as potential legislative action.
If the FCC’s action continues in effect and terrestrial operations are implemented in the affected spectrum, these operations
could create harmful interference to GNSS receivers in proximity to 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
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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, financial
condition, and results of operations.
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 operational satellites in orbit, some have been in operation for 15 years or more. 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, and infrequent
known events such as GPS week number rollover, may adversely affect our products and customers. We depend on public
access to open technical specifications in advance of system updates to mitigate these problems, which may not be available or
complete.
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 an adverse effect on our business, financial condition, and results of
operations.
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 and the European Galileo GNSS Systems. 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 that use GNSS signals from these systems. 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-U.S. GNSS signals are also 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
our products using the U.S. GPS system, which could harm our business, financial condition, and results of operations.
Regulatory risks
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 that 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,
and 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 that 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.
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
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regulations prohibit us from using. Our success depends, in part, on our ability to anticipate these risks and manage these
difficulties.
We are subject to evolving privacy laws in the United States and other jurisdictions that are subject to potentially differing
interpretations and which could adversely impact our business and require that we incur substantial costs
Existing privacy-related laws and regulations in the United States and other countries are evolving and are subject to potentially
differing interpretations, and various U.S. federal and state or other international legislative and regulatory bodies may expand
or enact laws regarding privacy and data security-related matters. For example, the EU-U.S. Privacy Shield, a basis for data
transfers from the EU to the U.S., was invalidated by the European Court of Justice, and we expect that the international
transfer of personal data will present ongoing compliance challenges and complicate our business transactions and operations.
Brexit, the United Kingdom's withdrawal from the European Union, could also lead to further legislative and regulatory
changes with regard to personal data transfers between the two territories. New privacy laws have come into effect in Brazil
and New Zealand in 2020, and revisions of privacy laws are currently pending in countries like Canada and China. Some
countries are considering or have passed legislation that requires local storage and processing of data, including geospatial data.
In addition, in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”), which took effect in January
2020 and has been amended by the California Privacy Rights Act (“the “CPRA”) passed via ballot initiative in November 2020
and will fully take effect in January 2023. The CCPA and CPRA, among other things, gives California residents expanded
rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed
information about how their personal information is used. Other states and the U.S. Congress have introduced data privacy
legislation that may impact our business. Data privacy legislation, amendments and revisions to existing data privacy
legislation, and other developments impacting data privacy and data protection may require us to modify our data processing
practices and policies, increase the complexity of providing our products and services, and cause us to incur substantial costs in
an effort to comply. Failure to comply may lead to significant fines and business interruption.
We are subject to the impact of governmental and other certifications processes and regulations, which could adversely
affect our products and our business
We market many products that are subject to governmental regulations and certifications before they can be sold. The
European Union increasingly regulates the use of our products on agriculture, construction, and other types of machinery. As
we develop and enhance features which support automated and autonomous operation of our products, we are increasingly
subject to functional safety regulation. CE certification is required for GNSS receivers and data communications products,
which must also conform to the European harmonized GNSS receiver requirements and the radio equipment directive to be sold
in the European community. In the future, U.S., European, or other governmental authorities may propose GPS receiver testing
and certification for compliance with published GPS signal interface or other specifications. 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 and other national authorities for
frequency-band usage. Compliance with evolving product regulations in our major markets could require that we redesign our
products, cease selling products in certain markets, and increase our costs of product development. An inability to obtain
required certifications in a timely manner could adversely affect our ability to bring our products to market and harm our
customer relationships. Failure to comply with evolving requirements could result in fines and limitations on sales of our
products.
Financial and tax risks
Our debt could adversely affect our cash flow and prevent us from fulfilling our financial obligations
At the end of fiscal 2020, our total debt was comprised primarily of senior notes of $1,300.0 million, and four uncommitted
revolving credit facilities totaling $255.8 million. When our senior notes mature, we will have to expend significant resources
to repay these senior notes or seek to refinance them. If we decide to refinance the senior notes, we may be required to do so on
different or less favorable terms or we may be unable to refinance the senior notes at all, both of which may adversely affect our
financial condition. Any downgrade by credit rating agencies could adversely affect our cost of borrowing, limit our access to
the capital markets, or result in more restrictive covenants in future debt agreements.
Our outstanding indebtedness could have other important consequences, such as:
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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;
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reducing our ability to make investments and acquisitions which support the growth of the company, or to repurchase
shares of our common stock; and
limiting our flexibility in planning for, or reacting to, changes and opportunities in, our industry, which may place us at
a competitive disadvantage.
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 portion of our outstanding debt has interest rates which float based on prevailing interest
rates and we may incur additional variable-rate debt in the future. Such rates tend to fluctuate based on general economic
conditions, general interest rates, Federal Reserve rates, and the supply of and demand for credit in the relevant interbanking
market. If interest rates increase, our interest expense will also increase as would the costs of refinancing existing indebtedness
or obtaining new debt.
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.
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. While we believe our tax positions are
consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be
contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for
income taxes. 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 2017 Tax Cuts and Jobs Act (the “Tax Act”)
and the Base Erosion and Profit Shifting (“BEPS”) project conducted by the Organization for Economic Co-operation
and Development (“OECD”); and
changes in generally accepted accounting principles.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied,
and governmental tax authorities are increasingly scrutinizing the tax positions of companies. On December 22, 2017, the U.S.
government enacted the Tax Act, which made substantial changes to U.S. tax law. The ongoing implementation and
interpretation of the Tax Act, any additional forthcoming legislative or administrative guidance and accounting standards
related to the Tax Act could adversely affect our future effective tax rates. The implementation by us of new practices and
processes designed to comply with, and benefit from, the Tax Act and its rules and regulations could require us to make
substantial changes to our business practices, allocate additional resources, and increase our costs, which could adversely affect
our business, results of operations, and financial condition. In light of recent changes in U.S. tax laws and to align with our
international business operations, in the fourth quarter of 2019, we completed a non-U.S. intercompany transfer of our
intellectual property to a subsidiary in the Netherlands. This transfer and other changes we make to practices and processes
based upon changes in U.S. and other tax laws are subject to challenge, and an adverse outcome in any such challenge could
adversely affect our reported financial results.
Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international
trade are evolving as a result of the BEPS reporting requirements recommended by the G8, G20, and the OECD. The foreign
countries where we do business may change tax laws, regulations, and interpretations on a prospective or retroactive basis and
these potential changes could adversely affect our effective tax rates. As these and other tax laws and related regulations
change, our financial results could be materially impacted. Given the unpredictability of these possible changes and their
24
potential interdependency, it is very difficult to assess whether the overall effect of such potential tax changes would be
cumulatively positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results.
We are currently in various stages of multiple year examinations by state and foreign taxing authorities. If taxing authorities of
any jurisdiction were to successfully challenge a material tax position, we could become subject to higher taxes and our
earnings could be adversely affected.
We may be affected by fluctuations in currency exchange rates
We are potentially exposed to adverse as well as beneficial movements in currency exchange rates. Although the majority of
our sales are transacted in U.S. dollars, expenses may be paid in local currencies. An increase in the value of the dollar could
increase the real cost to our customers of our products in those markets outside the U.S. where we sell in dollars, and a
weakened dollar could increase the cost of local operating expenses, procurement of raw materials from sources outside the
United States, and overseas capital expenditures. We also conduct certain investing and financing activities in local currencies.
Our foreign exchange forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements;
therefore, changes in exchange rates could harm our financial condition and results of operations.
Risks related to ownership of our stock
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 2020, our stock price
ranged from $21.32 to $66.77. We believe that a variety of factors could cause the price of our common stock to fluctuate,
perhaps substantially, including:
•
•
•
•
•
•
•
•
•
•
•
general conditions in the worldwide economy;
quarterly fluctuations in our actual or anticipated operating results and order levels;
announcements and reports of developments related to our business, our major customers and partners, and the
industries in which we compete, or the industries in which our customers compete;
security breaches;
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;
developments in our relationships with our partners, customers, and suppliers;
the imposition of tariffs or other trade barriers;
political, economic, or social uncertainty;
global pandemics, like the COVID-19 pandemic; 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 could adversely affect the market price of our common stock.
Our annual and quarterly performance may fluctuate, which could adversely 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 revenue;
fluctuations in foreign currency exchange rates;
the cost and availability of components;
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 taxes, trade, or spending, including the Tax Act;
regional responses and restrictions related to global pandemics, like the COVID-19 pandemic; and
other risks, including those described below.
Seasonal variations in demand for our products may also affect our quarterly results. Construction equipment revenue has
historically been the highest in early spring. Our agricultural equipment revenue has 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
25
hemisphere. If we do not accurately forecast seasonal demand, we may be left with unsold inventory or have a shortage of
inventory, which could adversely impact our results of operations.
Due in part to the buying patterns of our customers, a portion of our hardware 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. These patterns 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.
General risk factors
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 financial
condition, and results of operations.
Catastrophic events or geopolitical conditions could disrupt our operations
Acts of war, acts of terrorism or civil unrest, natural disasters and other catastrophic events, especially any events that impact
our larger markets or GNSS signals or systems, could have a material adverse impact on our business. 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 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, these interruptions could
have a material adverse effect on our business, financial condition, and results of operations.
Future public health crises and epidemics could impact our international operations and sales
Our results of operations could be adversely affected to the extent that future pandemics, similar to COVID-19 or any other
epidemic, harm any significant market where we do business. Contagious disease epidemics or global pandemics could also
significantly impact our international supply chain and result in component and product shortages and general disruptions to the
economy. Such outbreaks could also result in mass quarantines, business closures, and significantly impact our suppliers,
customers, and commercial partners in affected areas, which may materially and adversely affect our business, financial
condition, and results of operations.
Item 1B.
Unresolved Staff Comments
None.
Item 2.
Properties
Our corporate headquarters is located in Sunnyvale, California where we lease approximately 139 thousand square feet. We
also currently own approximately 316 thousand square feet in Dayton, Ohio and 250 thousand square feet in Westminster,
Colorado. These facilities are used by all reporting segments. For financial information regarding leases, see Note 7 to the
Consolidated Financial Statements.
We believe that our existing facilities are adequate to support current and near-term operations.
Item 3.
Legal Proceedings
From time to time, we are involved in litigation arising in the ordinary course of our business. There are no 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.
26
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Company Stock Performance
Our common stock trades on NASDAQ under the symbol “TRMB.” The following graph compares the cumulative five-year
total return provided stockholders on our common stock relative to the cumulative total returns of the NASDAQ Composite
Index and the S&P 500 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 December 31, 2015, and its relative performance is
tracked through December 31, 2020.
27
Stock Repurchase Program
The following table provides information relating to our purchase of equity securities for the fourth quarter of fiscal 2020:
Total Number
of Shares
Purchased
Average
Price Paid
per Share
Total Number of
Shares
Purchased as Part
of
Publicly
Announced
Program
Maximum
Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under
the
Program
October 3, 2020 – November 6, 2020
November 7, 2020 – December 4, 2020
December 5, 2020 – January 1, 2021
Total
41,818 $
4,700 $
21,666 $
68,184
47.83
61.77
61.97
41,818 $
4,700 $
21,666 $
68,184
92,361,073
92,070,742
90,728,167
In November 2017, our Board of Directors approved a stock repurchase program (“2017 Stock Repurchase Program”),
authorizing us to repurchase up to $600.0 million of our common stock. The 2017 Stock Repurchase Program does not have an
expiration date. The timing and amount of repurchase transactions is determined by our management based on the 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 2020, we repurchased approximately 1.9 million shares of common stock in open market purchases under the
2017 Stock Repurchase Program, at an average price of $43.40 per share, for a total of $81.6 million. At the end of fiscal 2020,
the 2017 Stock Repurchase Program had remaining authorized funds of $90.7 million.
As of February 24, 2021, there were approximately 536 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.
Item 6.
Selected Financial Data
Not applicable. Financial information related to fiscal 2017 and 2016 may be found in Part II, Item 6. Selected Financial Data
in our fiscal 2019 Form 10-K filed with the SEC on February 28, 2020. Please refer to the consolidated financial statements
included herein in Part II-Item 8 Financial Statements and Supplementary Data for fiscal year 2020, 2019 and 2018
information.
28
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.” This section of this
Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of
2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in
“Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K, as amended, for the fiscal year ended January 3, 2020.
EXECUTIVE LEVEL OVERVIEW
We are a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform
their work processes. Our comprehensive work process solutions are used across a range of industries including architecture,
building construction, civil engineering, geospatial, survey and mapping, agriculture, natural resources, utilities, transportation,
and government. Our representative customers include construction owners, contractors, engineering and construction firms,
surveying companies, farmers and agricultural companies, energy and utility companies, trucking companies, and state, federal,
and municipal governments. Further information on our business is presented in Part I, Item 1, “Business”.
Our growth strategy is centered on multiple elements:
•
•
•
•
•
•
•
Executing on our Connect and Scale 2025 strategy;
Focus on attractive markets with significant growth and profitability potential;
Domain knowledge and technological innovation that benefit a diverse customer base;
Increasing focus on software and services;
Geographic expansion with localization strategy;
Optimized go-to-market strategies to best access our markets; and
Strategic acquisitions
Our focus on these growth drivers has led over time to growth in revenue and profitability and an increasingly diversified
business model. We continue to experience a shift in revenue towards a more significant mix of software, recurring revenue,
and services, which represented 58% of total revenue for fiscal 2020, and is leading to improved visibility in our businesses.
Additionally, our success in driving annualized recurring revenue (“ARR”)(1) growth of 9% year-over-year for fiscal 2020 has
positively impacted our revenue mix and growth over time. As our solutions have expanded, our go-to-market model has also
evolved with a balanced mix between direct, distribution, and OEM customers as well as an increasing number of enterprise
level customer relationships.
(1) See Supplemental Disclosure of Annualized Recurring Revenue and Non-GAAP Financial Measures for definition.
COVID-19 UPDATE
In early March 2020, the World Health Organization characterized COVID-19 as a pandemic. As the COVID-19 pandemic
unfolded globally, we implemented protocols to safeguard our employees, customers, suppliers, third-party business partners
and communities, and ensure business continuity.
The extent to which the COVID-19 pandemic impacts our business operations in future periods will depend on multiple
uncertain factors outside of our control, such as its continued and future overall impact on the global economy and in the
industries where we operate. We experienced an overall revenue decline in fiscal 2020, due to economic disruptions related to
COVID-19 that began in the last weeks of March, primarily in hardware and professional services for the first two quarters.
Overall revenue increased in the third and fourth quarters. Despite the revenue shortfall, operating income increased due to
improved mix of higher margin sales and reduced spending due to cost containment measures as well as natural reductions in
spending resulting from COVID-19 restrictions.
As the COVID-19 pandemic is continually evolving, we are uncertain of its ultimate duration, and the nature and extent of its
impact on our business, financial condition, and results of operations. To the extent that regions where we do business or
source our products experience additional closures or restrictions on business activity, our results of operations could be
harmed.
See “1A. Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.
29
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles
(“GAAP”) 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 1 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
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the
consideration that we expect to receive in exchange for those products or services. Revenue is recognized net of allowance for
returns and any taxes collected from customers. We enter into contracts that can include various combinations of products and
services, which are generally capable of being distinct and accounted for as separate performance obligations; however,
determining whether products or services are considered distinct performance obligations that should be accounted for
separately versus together may sometimes require significant judgment.
Judgment is required to determine stand-alone selling price (“SSP”) for each distinct performance obligation. We use a range
of amounts to estimate SSP when products and services are sold separately and determine whether there is a discount to be
allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, we
determine SSP using information that may include market conditions and other observable inputs.
Income Taxes
We are a U.S. based multinational company operating in multiple U.S. and foreign jurisdictions. 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.
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 we believe
it is more likely than not such assets will not be realized.
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.
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. Identifiable intangible assets are comprised of distribution channels and distribution rights, patents, licenses,
technology, acquired backlog, trademarks, and in-process research and development.
We evaluate goodwill on an annual basis or more frequently if indicators of potential impairment exist. We utilize either a
qualitative assessment or a quantitative test to assess the likelihood of an impairment. In performing the qualitative assessment,
we consider macroeconomic conditions, industry and market considerations, overall financial performance, and other relevant
events and factors that may impact the reporting units. When we perform a quantitative test, the estimation of the fair value of a
reporting unit involves the use of certain estimates and assumptions including expected future operating performance using
risk-adjusted discount rates.
30
We amortize identifiable intangible assets over their estimated useful lives on a straight-line basis. Changes in circumstances
such as technological advances, changes to business models, or changes in the capital strategy could result in a revised useful
life. If the useful life of an asset is revised, the net book value of the estimated residual value is amortized over its revised
remaining useful life. Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that
the carrying amount of those assets may not be recoverable based on their future cash flows. The estimated future cash flows
are primarily based upon assumptions about expected future operating performance.
RESULTS OF OPERATIONS
Overview
The following table shows revenue by category, gross margin and gross margin as a percentage of revenue, operating income
and operating income as a percentage of revenue, and diluted earnings per share for the periods indicated:
Fiscal Years
(In millions)
Revenue:
Product
Service
Subscription
Total revenue
Gross margin
Gross margin %
Operating income
Operating income as a % of revenue
Diluted earnings per share
Non-GAAP revenue (1)
Non-GAAP operating income (1)
Non-GAAP operating income as a % of Non-GAAP Revenue (1)
Non-GAAP diluted earnings per share (1)
Annualized Recurring Revenue (“ARR”) (1)
2020
2019
2018
$
$
$
$
$
$
1,828.0
644.8
674.9
3,147.7
1,754.9
55.8 %
419.8
13.3 %
1.55
3,152.0
719.6
22.8 %
2.23
1,295.8
$
$
$
$
$
$
1,934.8
686.2
643.3
3,264.3
1,780.9
54.6 %
375.9
11.5 %
2.03
3,271.3
674.0
20.6 %
1.99
1,193.2
$
$
$
$
$
$
1,999.9
588.7
519.8
3,108.4
1,681.0
54.1 %
320.7
10.3 %
1.12
3,132.0
642.7
20.5 %
1.94
1,106.7
(1) See Supplemental Disclosure of Annualized Recurring Revenue and Non-GAAP Financial Measures for definitions.
Basis of Presentation
We have a 52-53 week fiscal year, ending on the Friday nearest to December 31, which for fiscal 2020 was January 1, 2021.
Fiscal 2020 and 2018 were both 52-week years. Fiscal 2019 was a 53-week year.
31
Fiscal Year 2020 Compared with Fiscal Year 2019
Revenue
In fiscal 2020, total revenue decreased by $116.6 million or 4%. Overall revenue decreased due to weakness in Transportation,
and to a lesser extent, Buildings and Infrastructure and Geospatial, which were impacted in the first two quarters by COVID-19.
The decrease was partially offset by organic and acquisitions growth in Resources and Utilities, as well as recovery in Buildings
and Infrastructure and Geospatial in the third and fourth quarters. We consider acquisition growth to include acquisition
revenue that was not applicable in the prior corresponding periods.
By revenue category, overall product revenue decreased $106.8 million or 6%, service revenue decreased $41.4 million or 6%,
and subscription revenue increased $31.6 million or 5%. Product revenue decreased primarily due to weakness in our hardware
sales in Transportation, and to a lesser extent, Buildings and Infrastructure, partially offset by growth in Resources and Utilities.
Geospatial was relatively flat. The decrease in Geospatial hardware sales in the first two quarters was largely offset by
increased hardware sales in the third and fourth quarters. Service revenue decreased due to lower professional services
associated with customer installations. Subscription revenue increased primarily due to strong organic growth in Buildings and
Infrastructure, and to a lesser extent, acquisition revenue from Resources and Utilities, partially offset by weakness in
Transportation.
During fiscal 2020, sales to customers in North America represented 52%; Europe represented 29%; Asia Pacific represented
13%; and the rest of world represented 6% of our total revenue.
No single customer accounted for 10% or more of our total revenue in fiscal 2020 and 2019. No single customer accounted for
10% or more of our accounts receivable at the end of fiscal 2020 and 2019.
Gross Margin
Gross margin varies due to several factors including product mix, pricing, distribution channel, production volumes, new
product start-up costs, and foreign currency translations.
In fiscal 2020, gross margin decreased by $26.0 million or 1% primarily due to revenue declines as noted above, partially offset
by improved product mix. Gross margin as a percentage of total revenue was 55.8% in fiscal 2020 compared to 54.6% in fiscal
2019. This growth in gross margin percentage was driven by improved revenue mix, including increased higher margin
software and subscription sales in Buildings and Infrastructure and Resources and Utilities, as well as new product
introductions and less discounting in Geospatial, partially offset by product mix and pricing pressures in Transportation.
Operating Income
In fiscal 2020, operating income increased by $43.9 million or 12%. Operating income as a percentage of total revenue for
fiscal 2020 was 13.3% compared to 11.5% in fiscal 2019. Despite the revenue shortfall, operating income and operating
income as a percentage of total revenue increased due to strong results in Buildings and Infrastructure, Geospatial, and
Resources and Utilities including improved mix of higher margin sales, as well as operating expense reductions across all
segments, partially offset by weaker sales and gross margin compression in Transportation.
32
Research and Development, Sales and Marketing, and General and Administrative Expenses
The following table shows research and development (“R&D”), sales and marketing (“S&M”), and general and administrative
(“G&A”) expense along with these expenses as a percentage of revenue for the periods indicated:
Fiscal Years
(In millions)
Research and development
Percentage of revenue
Sales and marketing
Percentage of revenue
General and administrative
Percentage of revenue
Total
2020
2019
2018
$
$
475.9
15.1 %
467.0
14.8 %
300.9
9.6 %
469.7
14.4 %
504.2
15.4 %
330.6
10.1 %
$
446.1
14.4 %
479.8
15.4 %
349.8
11.3 %
$
1,243.8
$
1,304.5
$
1,275.7
Fiscal Year 2020 Compared with Fiscal Year 2019
In fiscal 2020, overall, R&D, S&M, and G&A expenses decreased by $60.7 million or 5%.
R&D expense increased by $6.2 million or 1%. The increase in R&D expense was primarily due to higher compensation
expense, including incentive compensation, and increased R&D expenses from acquired businesses not included in the prior
corresponding period, partially offset by lower consulting and outside services and travel reductions.
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.
S&M expense decreased by $37.2 million or 7%. The decrease in S&M expenses was primarily due to travel reductions, lower
advertising costs, and lower compensation expense, partially offset by higher S&M expenses from acquired businesses not
included in the prior corresponding period.
G&A expense decreased by $29.7 million or 9%. The decrease in G&A expense was primarily due to lower compensation
expense, lower tax and legal costs, and travel reductions, partially offset by increased G&A expenses from acquired businesses
not included in the prior corresponding period.
Amortization of Purchased Intangible Assets
The following table shows amortization of purchased intangible assets for the periods indicated:
Fiscal Years
(In millions)
Cost of sales
Operating expenses
Total
2020
2019
2018
$
$
92.3 $
65.5
157.8 $
94.1 $
73.7
167.8 $
103.2
76.4
179.6
In fiscal 2020, total amortization of purchased intangibles decreased $10.0 million or 6% primarily due to the expiration of
prior year acquisitions' amortization.
Non-operating expense, net
The following table shows non-operating expense, net for the periods indicated:
Fiscal Years
(In millions)
Interest expense, net
Income from equity method investments, net
Other income, net
Total non-operating expense, net
2020
2019
2018
$
$
(77.6) $
39.4
13.4
(24.8) $
(82.4) $
35.8
15.5
(31.1) $
(73.2)
28.7
1.8
(42.7)
33
In fiscal 2020, total non-operating expense, net decreased by $6.3 million or 20% primarily due to lower interest costs and
increased joint venture profitability, partially offset by unfavorable impacts from foreign currency exchange included in Other
income, net.
Income Tax Provision
The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), enacted on March 27, 2020, provides tax relief to
individuals and businesses in light of the impacts of COVID-19. It did not result in material adjustments to our income tax
provision or to our net deferred tax assets as of the end of the fourth quarter of fiscal 2020.
In December 2020, due to a change in the Netherlands tax law, the statutory tax rate was increased from 21.7% to 25.0%,
effective January 1, 2021. As a result, we recorded a one-time tax benefit of $64.0 million due to the revaluation of the
Netherlands deferred tax assets.
In December 2019, to align with our international business operations, we completed a non-U.S. intercompany transfer of our
intellectual property to a subsidiary in the Netherlands. The transaction resulted in deferred tax assets in the Netherlands and
global intangible low-taxed income (“GILTI”) deferred tax liabilities in the U.S., recorded at the applicable statutory tax rates,
resulting in a one-time income tax benefit of approximately $206.3 million in the fourth quarter of fiscal 2019.
Our effective income tax rates for fiscal 2020 and 2019 were 1.1% and -49.2%, respectively. The effective income tax rates in
fiscal 2020 increased compared to 2019 primarily due to the one-time tax benefit from the non-U.S. intercompany transfer of
intellectual property in the fourth quarter of fiscal 2019.
Results by Segment
We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings
and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
Our Chief Executive Officer and Chief Operating Decision Maker views and evaluates operations based on the results of our
reportable operating segments under our management reporting system. These results are not necessarily in conformance with
U.S. GAAP. For additional discussion of our segments, see Note 5 of the Notes to the Consolidated Financial Statements.
34
The following table shows a breakdown of revenue and operating income by segment for the periods indicated:
Fiscal Years
(In millions)
Buildings and Infrastructure
Segment revenue
Segment revenue as a percent of total revenue
Segment operating income
Segment operating income as a percent of segment revenue
Geospatial
Segment revenue
Segment revenue as a percent of total revenue
Segment operating income
Segment operating income as a percent of segment revenue
Resources and Utilities
Segment revenue
Segment revenue as a percent of total revenue
Segment operating income
Segment operating income as a percent of segment revenue
Transportation
Segment revenue
Segment revenue as a percent of total revenue
Segment operating income
Segment operating income as a percent of segment revenue
2020
2019
2018
$
$
$
$
$
$
$
$
1,231.0
39 %
338.1
27.5 %
650.5
21 %
184.4
28.3 %
630.0
20 %
221.0
35.1 %
640.5
20 %
50.1
7.8 %
$
$
$
$
$
$
$
$
1,258.2
38 %
319.9
25.4 %
649.4
20 %
132.2
20.4 %
571.4
18 %
169.1
29.6 %
792.3
24 %
125.9
15.9 %
$
$
$
$
$
$
$
$
1,087.7
35 %
256.7
23.6 %
723.1
23 %
166.4
23.0 %
568.1
18 %
168.2
29.6 %
753.1
24 %
143.3
19.0 %
The following table shows a reconciliation of our consolidated segment operating income to our consolidated income before
income taxes for the periods indicated:
Fiscal Years
(In millions)
Consolidated segment operating income
Unallocated corporate expense
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
Consolidated operating income
Total non-operating expense, net
Consolidated income before taxes
Fiscal Year 2020 Compared with Fiscal Year 2019
Buildings and Infrastructure
2020
2019
2018
$
$
793.6 $
(74.0)
(4.3)
5.5
(157.8)
—
(21.4)
(90.4)
(28.2)
(3.2)
419.8
(24.8)
395.0 $
747.1 $
(73.1)
(7.0)
6.3
(167.8)
—
(20.5)
(81.2)
(27.9)
—
375.9
(31.1)
344.8 $
734.6
(91.9)
(23.6)
4.7
(179.6)
(0.2)
(38.9)
(75.7)
(8.7)
—
320.7
(42.7)
278.0
Buildings and Infrastructure revenue decreased by $27.2 million or 2%, and segment operating income increased by $18.2
million or 6%. Revenue decreased primarily due to a decline in civil engineering and construction hardware sales in the first
two quarters of fiscal 2020 and lower revenue from professional services due to the economic impacts of COVID-19, partially
offset by higher software maintenance and subscription revenue. Hardware sales recovered in the third and fourth quarters due
to improved market conditions including pent up demand and government stimulus programs. Segment operating income and
35
operating income as a percentage of segment revenue increased due to gross margin improvements from higher mix of software
maintenance and subscription revenue as well as cost reductions.
Geospatial
Geospatial revenue increased by $1.1 million or less than 1%, and segment operating income increased by $52.2 million or
39%. Revenue was relatively flat for the year; while survey sales recovered in the third and fourth quarters due to improved
market conditions, including pent up demand, government stimulus programs, and new product introductions, there was a
decline in the first two quarters due to the economic impacts of COVID-19. Segment operating income and operating income
as a percentage of segment revenue increased primarily due to gross margin improvements resulting from new higher margin
product introductions and less discounting as well as cost reductions.
Resources and Utilities
Resources and Utilities revenue increased by $58.6 million or 10%, and segment operating income increased by $51.9 million
or 31%. Revenue increased due to strength in agriculture reseller and OEM channels resulting from improved market
conditions, including stabilization of commodity prices, government stimulus programs, and weather conditions. Acquisition
revenue, primarily Cityworks, also contributed to growth. Segment operating income and operating income as a percentage of
segment revenue increased due to revenue expansion and gross margin improvements resulting from higher margin software
maintenance and subscription sales, as well as cost reductions.
Transportation
Transportation revenue decreased by $151.8 million or 19%, and segment operating income decreased by $75.8 million or 60%.
Revenue decreased primarily due to reduced hardware upgrades and subscriber declines, attributable in part to challenges with
the electronic logging device transition in the trucking industry, as well as the economic impacts of COVID-19. Conversion of
customers from perpetual software to subscription products also reduced revenue. Segment operating income and operating
income as a percentage of segment revenue decreased primarily due to the revenue declines, discrete inventory charges, and
higher operating expense due to the Kuebix acquisition, partially offset by cost reductions.
OFF-BALANCE SHEET ARRANGEMENTS
Other than 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.
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 may agree to hold the other party harmless against
losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made
against certain parties. These agreements may limit the time within which an indemnification claim can be made and the
amount of the claim. In 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 entered into indemnification agreements with our officers and directors, and our bylaws contain similar
indemnification obligations to our agents.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically,
payments made by us under these agreements were not material and no liabilities have been recorded for these obligations on
the Consolidated Balance Sheets at the end of fiscal 2020 and 2019.
36
LIQUIDITY AND CAPITAL RESOURCES
At the End of Fiscal Year
(In millions)
Cash and cash equivalents
As a percentage of total assets
Principal balance of outstanding debt
Fiscal Years
(In millions)
Cash provided by operating activities
Cash used in investing activities
Cash provided by (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
2020
2019
2018
$
$
$
$
237.7
3.5 %
1,555.9
2020
672.0
(231.8)
(400.3)
8.6
48.5
$
$
$
$
189.2
2.8 %
1,854.0
2019
585.0
(275.3)
(292.6)
(0.4)
16.7
$
$
$
$
172.5
3.0 %
1,981.9
2018
486.7
(1,649.6)
989.4
(12.5)
(186.0)
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 and cash
equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance
provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial
institutions considered to be of reputable credit and to present little credit risk. We believe that our cash and cash equivalents,
and borrowings, as described below under the heading “Debt”, along with cash provided by operations, will be sufficient to
meet our anticipated operating cash needs, debt service, stock repurchases under our 2017 Stock Repurchase Program, and
planned capital expenditures.
Operating Activities
Cash provided by operating activities was $672.0 million for fiscal 2020, compared to $585.0 million for fiscal 2019. The
increase of $87.0 million was primarily driven by an increase in net income, net of non-cash items, and favorable working
capital changes, including positive accounts receivable impact, due to improved sales linearity and higher accrued
compensation, partially offset by deferred revenue and accrued liabilities changes.
Investing Activities
Cash used in investing activities was $231.8 million for fiscal 2020, compared to $275.3 million for fiscal 2019. The decrease
of $43.5 million was primarily due to decreased spending for business acquisitions, and to a lessor extent, reduced spending on
property and equipment. The current year included Kuebix acquisition compared to the prior year, which included the
Cityworks acquisition.
Financing Activities
Cash used in financing activities was $400.3 million for fiscal 2020, compared to $292.6 million during fiscal 2019. The
increase of $107.7 million was primarily driven by the increase in debt repayments, net of proceeds, partially offset by a
decrease in the repurchase of common stock.
Debt
During fiscal 2020, we repaid $312.2 million of debt, including the full repayment of our term loan, net of borrowings. Each of
our debt agreements requires us to maintain compliance with certain debt covenants, all of which we were in compliance with at
the end of fiscal 2020. Refer to Note 6 in the Notes to Consolidated Financial Statements for additional information regarding
our debt.
37
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations at the end of fiscal 2020:
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 (3)
Other purchase obligations and commitments (4)
Income taxes payable (5)
Total
$
$
1,555.9 $
326.6
210.5
241.1
69.1
2,403.2 $
255.8 $
63.1
50.9
200.6
7.3
577.7 $
300.1 $
115.0
61.4
40.1
20.9
537.5 $
400.0 $
76.2
35.9
0.4
40.9
553.4 $
600.0
72.3
62.3
—
—
734.6
(1)
(2)
(3)
(4)
(5)
Amount represents principal payments over the life of our debt obligations. Refer to Note 6 in the Notes to
Consolidated Financial Statements for additional information regarding our debt.
Amount represents the expected interest payments relating to our debt, calculated using rates in effect at the end of
fiscal 2020. Refer to Note 6 in the Notes to Consolidated Financial Statements for additional information regarding our
debt.
Operating leases represent undiscounted lease payments and include short-term leases and leases that were signed, but
have not yet commenced at the end of fiscal 2020. Refer to Note 7 in the Notes to Consolidated Financial Statements
for additional information regarding our leases.
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.
Income taxes payable represents a one-time transition tax liability related to known amounts of cash taxes payable in
future years as a result of the Tax Act.
Excluded from the table above are unrecognized tax benefits of $55.4 million included in Other non-current liabilities,
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. Refer to Note 12 in the Notes to Consolidated Financial Statements for additional information
regarding our taxes.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The impact of recent accounting pronouncements is disclosed in Note 1 of our accompanying Notes to the Consolidated
Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on
Form 10-K.
38
SUPPLEMENTAL DISCLOSURE OF ANNUALIZED RECURRING REVENUE AND NON-GAAP FINANCIAL
MEASURES
To supplement our consolidated financial information, we believe that the following information is helpful to an overall
understanding of our past financial performance and prospects for the future. 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 and detailed
explanations to the adjustments to comparable GAAP measures are below.
(In millions, except per share data)
REVENUE:
GAAP revenue:
Acquired deferred revenue adjustment
Non-GAAP revenue:
GROSS MARGIN:
GAAP gross margin:
Acquired deferred revenue adjustment
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges
COVID-19 expenses
Non-GAAP gross margin:
OPERATING EXPENSES:
GAAP operating expenses:
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
Non-GAAP operating expenses:
OPERATING INCOME:
GAAP operating income:
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
Non-GAAP operating income:
NON-OPERATING INCOME (EXPENSE), NET:
GAAP non-operating income (expense), net:
Acquisition / divestiture items
Deferred compensation
Debt issuance costs
Non-GAAP non-operating expense, net:
2020
Fiscal Years
2019
2018
Dollar
Amount
% of
Revenue
Dollar
Amount
% of
Revenue
Dollar
Amount
% of
Revenue
$ 3,147.7
4.3
$ 3,152.0
$ 1,754.9
4.3
92.3
—
1.7
7.2
0.8
0.4
$ 3,264.3
7.0
$ 3,271.3
$ 3,108.4
23.6
$ 3,132.0
55.8 % $ 1,780.9
7.0
94.1
—
54.6 % $ 1,681.0
23.6
103.2
0.2
54.1 %
—
5.9
1.1
—
2.0
4.5
0.5
—
$ 1,861.6
59.1 % $ 1,889.0
57.7 % $ 1,815.0
58.0 %
$ 1,335.1
42.4 % $ 1,405.0
43.0 % $ 1,360.3
43.8 %
5.5
(65.5)
(19.7)
(83.2)
(27.4)
(2.8)
6.3
(73.7)
(20.5)
(75.3)
(26.8)
—
4.7
(76.4)
(36.9)
(71.2)
(8.2)
—
$ 1,142.0
36.2 % $ 1,215.0
37.1 % $ 1,172.3
37.4 %
$ 419.8
13.3 % $ 375.9
11.5 % $ 320.7
10.3 %
4.3
(5.5)
157.8
—
21.4
90.4
28.2
3.2
7.0
(6.3)
167.8
—
20.5
81.2
27.9
—
23.6
(4.7)
179.6
0.2
38.9
75.7
8.7
—
$ 719.6
22.8 % $ 674.0
20.6 % $ 642.7
20.5 %
$
$
(24.8)
(12.2)
(7.5)
—
(44.5)
$
$
(31.1)
(12.1)
(6.3)
—
(49.5)
$
$
(42.7)
(0.3)
1.2
6.7
(35.1)
(A)
(A)
(C)
(D)
(E)
(F)
(G)
(H)
(B)
(C)
(E)
(F)
(G)
(H)
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(E)
(F)
(I)
39
GAAP and
Non-GAAP
Tax Rate
% (N)
GAAP and
Non-GAAP
Tax Rate
% (N)
GAAP and
Non-GAAP
Tax Rate
% (N)
$
4.4
1.1 % $ (169.7)
(49.2) % $
(5.3)
(1.9) %
INCOME TAX PROVISION (BENEFIT):
GAAP income tax (benefit) provision:
Non-GAAP items tax effected
Difference in GAAP and Non-GAAP tax rate
Tax reform impacts
IP restructuring and tax law change impacts
Non-GAAP income tax provision:
NET INCOME:
GAAP net income attributable to Trimble Inc.:
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
Debt issuance costs
(J)
(K)
(L)
(M)
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
48.5
(4.9)
—
64.0
$
$ 112.0
$ 389.9
4.3
(5.5)
157.8
—
9.2
82.9
28.2
3.2
—
Non-GAAP tax adjustments
(J) - (M)
(107.6)
Non-GAAP net income attributable to Trimble Inc.:
$ 562.4
DILUTED NET INCOME PER SHARE:
GAAP diluted net income per share attributable to Trimble
Inc.:
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
$
1.55
0.02
(0.02)
0.62
—
0.04
0.33
0.11
0.01
Debt issuance costs
Non-GAAP tax adjustments
(I)
(J) - (M)
—
(0.43)
29.6
55.6
19.1
80.3
—
206.3
16.6 % $ 121.8
21.3
—
19.5 % $ 115.4
19.0 %
$ 514.3
7.0
$ 282.8
23.6
(6.3)
167.8
—
8.4
74.9
27.9
—
—
(291.5)
$ 502.5
$
2.03
0.03
(0.02)
0.66
—
0.03
0.30
0.11
—
—
(1.15)
(4.7)
179.6
0.2
38.6
76.9
8.7
—
6.7
(120.7)
$ 491.7
$
1.12
0.09
(0.02)
0.71
—
0.15
0.30
0.04
—
0.03
(0.48)
Non-GAAP diluted net income per share attributable to
Trimble Inc.:
ADJUSTED EBITDA:
OPERATING INCOME:
$
2.23
$
1.99
$
1.94
GAAP net income attributable to Trimble Inc.:
$ 389.9
$ 514.3
$ 282.8
Non-operating income (expense), net, income tax provision
(benefit), and net gain attributable to noncontrolling
interests
GAAP operating income:
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
Non-GAAP operating income:
Depreciation expense
Income from equity method investments, net
Adjusted EBITDA:
29.9
419.8
4.3
(5.5)
157.8
—
21.4
90.4
28.2
3.2
$ 719.6
39.7
39.4
$ 798.7
40
(138.4)
375.9
7.0
(6.3)
167.8
—
20.5
81.2
27.9
—
$ 674.0
39.4
35.8
$ 749.2
37.9
320.7
23.6
(4.7)
179.6
0.2
38.9
75.7
8.7
—
$ 642.7
35.6
28.7
$ 707.0
Annualized Recurring Revenue Explanation
In addition to providing non-GAAP financial measures, we disclose ARR to provide investors with supplementary indicators of
the value of our current recurring revenue contracts.
ARR represents the estimated annualized value of recurring revenue, including subscription, maintenance and software revenue,
and term license contracts for the quarter. ARR is calculated by adding the portion of the contract value of all of our term
licenses attributable to the current quarter to our non-GAAP recurring revenue for the current quarter and dividing that sum by
the number of days in the quarter and then multiplying that quotient by 365. ARR should be viewed independently of revenue
and deferred revenue, as it is a performance measure and is not intended to be combined with or to replace either of those items.
Non-GAAP Explanations
Non-GAAP revenue
We believe this measure helps investors understand the performance of our business, as non-GAAP revenue excludes the
effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Management believes
that excluding fair value purchase accounting adjustments more closely correlates with the ordinary and ongoing course of the
acquired company’s operations and facilitates analysis of revenue growth and trends.
Non-GAAP gross margin
We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix,
pricing decisions, and manufacturing costs influence our business. Non-GAAP gross margin excludes the effects of certain
acquired deferred revenue, amortization of purchased intangible assets, amortization of acquisition related inventory step-up,
acquisition/divestiture items, stock-based compensation, deferred compensation, restructuring charges, and COVID-19
expenses. We believe that these adjustments offer investors additional information that may be useful to view trends in our
gross margin performance.
Non-GAAP operating expenses
We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP
operating expenses exclude the effects of certain acquired capitalized commissions that were eliminated in purchase accounting,
amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation,
restructuring charges, executive transition costs, and COVID-19 expenses. We believe that these adjustments offer investors
supplemental information to facilitate comparison of our operating expenses to our prior results and trends.
Non-GAAP operating income
We believe our investors benefit by understanding our non-GAAP operating income trends, which are driven by revenue, gross
margin, and spending. Non-GAAP operating income excludes the effects of purchase accounting adjustments to certain
acquired deferred revenue and acquired capitalized commissions, amortization of purchased intangible assets, amortization of
acquisition related inventory step-up, acquisition/divestiture items, stock-based compensation, deferred compensation,
restructuring charges, executive transition costs, and COVID-19 expenses. We believe that these adjustments offer a
supplemental means for our investors to evaluate current operating performance compared to prior results and trends.
Non-GAAP non-operating expense, net
We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating expense, net,
excludes acquisition/divestiture items, deferred compensation, and debt issuance costs. We believe that these exclusions
provide investors with a supplemental view of our ongoing financial results.
Non-GAAP income tax provision
We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP
presentation and a difference in the GAAP and non-GAAP tax rates. The non-GAAP tax rate excludes charges and benefits
such as net deferred tax impacts results from the non-U.S. intercompany transfer of intellectual property, tax law changes, net
deferred tax impacts resulting from the U.S. 2017 Tax Act, and significant one-time reserve releases upon statute of limitations
expirations. We believe our non-GAAP tax rate facilitates a comparison of our period-to-period results, excluding the above
items which can introduce volatility to our tax rate.
41
Non-GAAP net income
This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our
non-GAAP tax rate. Non-GAAP net income excludes the effects of purchase accounting adjustments to certain acquired
deferred revenue and acquired capitalized commissions, amortization of purchased intangible assets, amortization of acquisition
related inventory step-up, acquisition/divestiture items, stock-based compensation, restructuring charges, executive transition
costs, COVID-19 expenses, debt issuance costs, and non-GAAP tax adjustments. We believe our investors benefit from
understanding these adjustments and from an alternative view of our net income performance as compared to prior periods and
trends.
Non-GAAP diluted net income per share
We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation
as a way of measuring non-GAAP operating performance by ownership in the company. Non-GAAP diluted net income per
share excludes the effects of purchase accounting adjustments to certain acquired deferred revenue and acquired capitalized
commissions, amortization of purchased intangible assets, amortization of acquisition related inventory step-up, acquisition/
divestiture items, stock-based compensation, restructuring charges, executive transition costs, COVID-19 expenses, debt
issuance costs, and non-GAAP tax adjustments. We believe that these adjustments offer investors a useful view of our diluted
net income per share as compared to prior periods and trends.
Adjusted EBITDA
Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business. We
believe it is useful because it facilitates company-to-company operating performance comparisons by removing potential
differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes,
depreciation and amortization expenses. We define Adjusted EBITDA as non-GAAP operating income plus depreciation
expense and income from equity method investments, net. Other companies define Adjusted EBITDA differently and so our
measure may not be directly comparable to similarly titled measures. Our investors should consider the limitations of using
Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance.
Adjusted EBITDA is not intended to purport to be an alternative to net income or operating income as a measure of operating
performance or to cash flow from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended
to be a measure of cash flow available for our discretionary expenditures, as this measure does not consider certain cash
requirements, such as restructuring charges, executive transition costs, acquisition and divestiture items, interest payments, tax
payments and other debt service requirements.
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 the effects of purchase accounting adjustments to certain
acquired deferred revenue and acquired capitalized commissions, amortization of purchased intangible assets, amortization of
acquisition related inventory step-up, acquisition/divestiture items, stock-based compensation, deferred compensation,
restructuring charges, executive transition costs, COVID-19 expenses, debt issuance costs, and non-GAAP tax adjustments.
(A)
(B)
Acquired deferred revenue adjustment. Purchase accounting generally requires us to write-down acquired deferred
revenue to fair value. Our GAAP revenue includes the fair value impact from purchase accounting for post-contract
support and subscriptions contracts assumed in connection with our acquisitions. The non-GAAP adjustment to our
revenue is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a
measure of the ongoing performance of our business and facilitates analysis of revenue growth and business trends.
Amortization of acquired capitalized commissions. Purchase accounting generally requires us to eliminate capitalized
sales commissions balances as of the acquisition date. Our GAAP sales and marketing expenses generally do not reflect
the amortization of these capitalized sales commissions balances. The non-GAAP adjustment to increase our sales and
marketing expenses is intended to reflect the full amount of amortization related to such balances as though the acquired
companies operated independently in the periods presented. We believe this adjustment to sales and marketing expenses
is useful to investors as a measure of the ongoing performance of our business.
(C)
Amortization of purchased intangible assets. Included in our GAAP presentation of cost of sales and operating expenses
is amortization of purchased intangible assets. We believe that by excluding the amortization of purchased intangible
42
(D)
(E)
(F)
(G)
assets, which primarily represents technology and/or customer relationships already developed, this provides an
alternative way for investors to compare our operations pre-acquisition to those post-acquisition and to those of our
competitors that have pursued internal growth strategies. However, we note that companies that grow internally will
incur costs to develop intangible assets that will be expensed in the period incurred, which may make a direct
comparison more difficult.
Amortization of acquisition-related inventory step-up. The purchase accounting entries associated with our business
acquisitions require us to record inventory at its fair value, which is sometimes greater than the previous book value of
the inventory. Included in our GAAP presentation, the increase in inventory value is amortized to cost of sales over the
period that the related product is sold. We exclude inventory step-up amortization from our non-GAAP measures
because it is a non-cash expense that we do not believe is indicative of our ongoing operating results.
Acquisition / divestiture items. Included in our GAAP presentation of cost of sales and operating expenses, acquisition
costs consist of external and incremental costs resulting directly from merger and acquisition and strategic investment
activities such as legal, due diligence, integration, and other closing costs including the acceleration of acquisition stock
options and adjustments to the fair value of earn-out liabilities. Included in our GAAP presentation of non-operating
expense, net, acquisition/divestiture items includes unusual acquisition, investment, and/or divestiture gains/losses.
Although we do numerous acquisitions, the costs that have been excluded from the non-GAAP measures are costs
specific to particular acquisitions. These are one-time costs that vary significantly in amount and timing and are not
indicative of our core operating performance.
Stock-based compensation / deferred compensation. Included in our GAAP presentation of cost of sales and operating
expenses are stock-based compensation consists of expenses for employee stock options and awards and purchase rights
under our employee stock purchase plan. Additionally included in our GAAP presentation of cost of sales and operating
expenses are income or expense associated with movement in our non-qualified deferred compensation plan liabilities.
Changes in non-qualified deferred compensation plan assets, included in non-operating expense, net, offset the income or
expense in the plan liabilities. We exclude them from our non-GAAP measures because some investors may view it as
not reflective of our core operating performance as they are a non-cash item.
Restructuring charges / executive transition costs. 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, and lease and building costs. Additionally, included in our
GAAP presentation of operating expenses are amounts paid to former Company executives under the terms of the
executive severance agreements. We exclude restructuring charges and executive transition costs 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 expenses in each of the periods presented. However, the amount incurred can vary significantly
based on whether a restructuring has occurred in the period and the timing of headcount reductions. Further, we believe
that excluding executive transition costs from our non-GAAP results is useful to investors because it allows for period-
over-period comparability.
(H) COVID-19 expenses. Included in our GAAP presentation of cost of sales and operating expenses, COVID-19 expenses
consist of costs incurred as a direct impact from the COVID-19 virus pandemic, such as cancellation fees of trade shows
due to public safety issues, additional costs for disinfecting facilities, and personal protective equipment. We exclude
COVID-19 expenses from our non-GAAP measures because we believe they are one-time costs that vary significantly in
amount and timing and are not indicative of our core operating performance.
(I)
Debt issuance costs. Included in our non-operating expense, net this amount represents incurred costs in connection with
a bridge facility we put in place for the Viewpoint acquisition, costs associated with the issuance of new credit facilities
and our senior notes issued in 2018 that were not capitalized as debt issuance costs, and a write-off of debt issuance costs
for terminated and/or modified credit facilities. We excluded the debt issuance cost write-off from our non-GAAP
measures. We believe that investors benefit from excluding this item from our non-operating income to facilitate an
evaluation of our non-operating income trends.
(J)
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. This amount excludes the GAAP tax rate impact resulting from the tax reform
43
impacts and non-U.S. intercompany transfer of intellectual property, which is separately disclosed in items (L) and (M).
We believe this information is useful to investors because it provides for consistent treatment of the excluded items in
this non-GAAP presentation.
(K) Difference in GAAP and Non-GAAP tax rate. This amount represents the difference between the GAAP and non-GAAP
tax rates applied to the non-GAAP operating income plus the non-GAAP non-operating expense, net. The GAAP tax
rate used for this calculation excludes the net deferred tax impacts resulting from the tax reform impacts and non-U.S.
intercompany transfer of intellectual property, which is separately disclosed in items (L) and (M). The non-GAAP tax
rate excludes charges and benefits such as net deferred tax impacts results from the non-U.S. intercompany transfer of
intellectual property, net deferred tax impacts resulting from the U.S. 2017 Tax Act, and significant one-time reserve
releases upon statute of limitations expirations. We believe that investors benefit from excluding this amount from our
non-GAAP income tax provision because it facilitates a comparison of the non-GAAP tax provision in the current and
prior periods.
(L)
Tax reform impacts. The provision primarily includes a one-time tax benefit from the policy election to establish
deferred taxes in relation to GILTI as created by the Tax Act. We excluded this item as it is a non-recurring expense.
We believe that investors benefit from excluding this item from our non-GAAP income tax provision because it allows
for period-over-period comparability.
(M)
IP restructuring and tax law change impacts. These amounts represent net deferred tax impacts resulting from a non-
U.S. intercompany transfer of intellectual property, consistent with tax law changes, including tax rates changes, and our
international business operations. We excluded this because it is not indicative of our core operating performance.
(N) GAAP and non-GAAP tax rate percentages. These percentages are defined as GAAP income tax provision as a
percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income
before taxes. We believe that investors benefit from a presentation of non-GAAP tax rate percentage as a way of
facilitating a comparison to non-GAAP tax rates in prior periods.
44
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 consisted primarily of 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 that 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 2018 Credit
Facility includes a five-year revolving loan facility with a maturity date of May 2023. We also have four unsecured,
uncommitted revolving credit facilities that are callable by the bank at any time. We may borrow funds under the 2018 Credit
Facility in U.S. Dollars, Euros or in certain other agreed currencies as described in Note 6 of Notes to the Consolidated
Financial Statements.
At the end of fiscal 2020, we had one £55.0 million, two $75.0 million, and one €100.0 million revolving credit facilities, which
are uncommitted. A hypothetical 1% increase in our borrowing rates at the end of fiscal 2020 could result in approximately
$2.6 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. In addition, volatile market
conditions arising from the COVID-19 pandemic could result in changes in exchange rates.
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 Euro. 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 2020, revenue and operating income were favorably impacted by foreign currency exchange rates by
$3.2 million and $4.3 million, respectively.
45
We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate
fluctuations on cash, debt, and certain trade and inter-company receivables and payables, primarily denominated in New
Zealand Dollars, Brazilian Real, Canadian Dollars, Norwegian Krone, and Euro. 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 2020 and 2019 are summarized
as follows:
(In millions)
Forward contracts:
Purchased
Sold
At the End of Fiscal 2020
At the End of Fiscal 2019
Nominal
Amount
Fair
Value
Nominal
Amount
Fair
Value
$
$
(99.4) $
52.0 $
0.9 $
(0.5) $
(84.3) $
159.2 $
0.3
(1.0)
46
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
48
49
50
51
52
53
77
47
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
Accounts receivable, net
Inventories
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Other purchased intangible assets, net
Deferred income tax assets
Other non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt
Accounts payable
Accrued compensation and benefits
Deferred revenue
Other current liabilities
Total current liabilities
Long-term debt
Deferred revenue, non-current
Deferred income tax liabilities
Income taxes payable
Operating lease liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies (Note 8)
Stockholders’ equity:
2020
2019
$
237.7 $
620.5
301.7
121.5
1,281.4
251.8
128.9
3,876.5
580.1
510.2
248.0
189.2
608.2
312.1
102.3
1,211.8
241.4
140.3
3,680.6
678.7
475.5
212.4
$
$
6,876.9 $
6,640.7
255.8 $
143.2
166.8
560.5
185.0
1,311.3
1,291.4
53.3
300.3
62.2
109.2
150.6
219.0
159.3
123.5
490.4
198.1
1,190.3
1,624.2
51.5
318.2
69.1
114.1
152.9
3,278.3
3,520.3
Preferred stock, $0.001 par value; 3.0 shares authorized; none issued and
outstanding
Common stock, $0.001 par value; 360.0 shares authorized; 250.8 and 249.9 shares
issued and outstanding at the end of fiscal 2020 and 2019, respectively
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive loss
Total Trimble Inc. stockholders’ equity
Noncontrolling interests
Total stockholders' equity
—
0.3
1,801.7
1,893.4
(98.5)
3,596.9
1.7
3,598.6
Total liabilities and stockholders’ equity
$
6,876.9 $
See accompanying Notes to the Consolidated Financial Statements.
—
0.2
1,692.8
1,602.8
(176.8)
3,119.0
1.4
3,120.4
6,640.7
48
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years
(In millions, except per share data)
Revenue:
Product
Service
Subscription
Total revenue
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 expense, net:
Interest expense, net
Income from equity method investments, net
Other income, net
Total non-operating expense, net
Income before taxes
Income tax provision (benefit)
Net income
Net gain attributable to noncontrolling interests
Net income attributable to Trimble Inc.
Earnings per share attributable to Trimble Inc.:
Basic
Diluted
Shares used in calculating earnings per share:
Basic
Diluted
2020
2019
2018
$
1,828.0 $
644.8
674.9
3,147.7
1,934.8 $
686.2
643.3
3,264.3
855.0
234.5
211.0
92.3
1,392.8
1,754.9
475.9
467.0
300.9
25.8
65.5
1,335.1
419.8
(77.6)
39.4
13.4
(24.8)
395.0
4.4
390.6
0.7
389.9 $
1.56 $
1.55 $
250.5
252.3
939.4
253.9
196.0
94.1
1,483.4
1,780.9
469.7
504.2
330.6
26.8
73.7
1,405.0
375.9
(82.4)
35.8
15.5
(31.1)
344.8
(169.7)
514.5
0.2
514.3 $
2.05 $
2.03 $
250.8
252.9
$
$
$
1,999.9
588.7
519.8
3,108.4
938.9
247.3
138.0
103.2
1,427.4
1,681.0
446.1
479.8
349.8
8.2
76.4
1,360.3
320.7
(73.2)
28.7
1.8
(42.7)
278.0
(5.3)
283.3
0.5
282.8
1.13
1.12
250.0
253.4
See accompanying Notes to the Consolidated Financial Statements.
49
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Years
(In millions)
Net income
2020
2019
2018
$
390.6 $
514.5 $
283.3
Foreign currency translation adjustments, net of tax $0.5 in 2020, and
$0.1 in 2019 and 2018, respectively
Net unrealized gain (loss), net of tax
Comprehensive income
77.1
1.2
468.9
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Trimble Inc.
0.7
468.2 $
$
10.3
(55.6)
(1.0)
523.8
0.2
523.6 $
0.9
228.6
0.5
228.1
See accompanying Notes to the Consolidated Financial Statements.
50
0.5
—
—
—
—
283.3
(54.7)
228.6
40.2
(90.0)
78.0
(0.1)
(0.1)
—
3.6
0.4 $ 2,674.8
0.2
—
—
—
—
0.8
514.5
9.3
523.8
29.1
(179.8)
72.5
—
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common stock
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Noncontrolling
Interest
Total
(In millions)
Balance at the end of fiscal 2017
248.9 $
0.2 $
1,461.1 $ 1,084.6 $
(131.4) $
2,414.5 $
— $ 2,414.5
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
—
—
4.4
(2.4)
—
—
—
—
—
0.1
—
—
—
—
—
—
282.8
—
67.5
(14.7)
78.0
—
—
(27.4)
(75.3)
—
—
3.6
—
282.8
(54.7)
—
—
—
—
—
(54.7)
228.1
40.2
(90.0)
78.0
—
3.6
Balance at the end of fiscal 2018
Net income
Other comprehensive
income
Comprehensive income
Issuance of common stock
under employee plans, net of
tax withholdings
Stock repurchases
Stock-based compensation
Noncontrolling interest
investments
Balance at the end of fiscal 2019
Net income
Other comprehensive
income
Comprehensive income
Issuance of common stock
under employee plans, net of
tax withholdings
Stock repurchases
Stock-based compensation
Noncontrolling interest
investments
250.9 $
0.3 $
1,591.9 $ 1,268.3 $
(186.1) $
2,674.4 $
—
—
3.7
(4.7)
—
—
—
—
—
(0.1)
—
—
—
—
514.3
—
59.8
(30.7)
(30.6)
(149.1)
72.5
(0.8)
—
—
—
9.3
—
—
—
—
514.3
9.3
523.6
29.1
(179.8)
72.5
(0.8)
249.9 $
0.2 $
1,692.8 $ 1,602.8 $
(176.8) $
3,119.0 $
1.4 $ 3,120.4
389.9
—
—
—
—
78.3
2.8
(1.9)
—
—
0.1
—
—
—
40.6
(13.0)
81.3
—
(30.7)
(68.6)
—
—
—
—
—
—
389.9
78.3
468.2
10.0
(81.6)
81.3
—
0.7
—
—
—
—
390.6
78.3
468.9
10.0
(81.6)
81.3
(0.4)
(0.4)
Balance at the end of fiscal 2020
250.8 $
0.3 $
1,801.7 $ 1,893.4 $
(98.5) $
3,596.9 $
1.7 $ 3,598.6
See accompanying Notes to the Consolidated Financial Statements.
51
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 credit losses
Deferred income taxes
Non-cash restructuring expense
Stock-based compensation
(Income) loss from equity method investments, net of dividends
Provision for excess and obsolete inventories
Other, net
(Increase) decrease in assets:
Accounts receivable, net
Inventories
Other current and non-current assets
Increase (decrease) in liabilities:
Accounts payable
Accrued compensation and benefits
Deferred revenue
Other current and non-current liabilities
Net cash provided by operating activities
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired
Purchases of property and equipment
Purchases of short-term investments
Proceeds from maturities of short-term investments
Proceeds from sales of short-term investments
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Issuance of common stock, net of tax withholdings
Repurchase of common stock
Proceeds from debt and revolving credit lines
Payments on debt and revolving credit lines
Other, net
Net cash provided by (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
Supplemental cash flow disclosure:
Cash paid for income taxes, net
Cash paid for interest
2020
2019
2018
$
390.6 $
514.5 $
283.3
39.7
157.8
7.1
(52.9)
11.4
83.0
(21.0)
16.2
16.5
(14.0)
(5.0)
2.5
(15.7)
34.9
65.7
(44.8)
672.0
(201.9)
(56.8)
—
—
—
26.9
(231.8)
39.4
167.8
6.5
(220.2)
2.1
75.0
(7.8)
7.3
(10.4)
(96.0)
(21.3)
11.0
14.5
(46.4)
148.2
0.8
585.0
(220.8)
(69.0)
—
—
—
14.5
(275.3)
10.0
(81.6)
1,173.8
(1,486.0)
(16.5)
(400.3)
8.6
48.5
189.2
237.7 $
29.1
(179.8)
1,195.4
(1,322.9)
(14.4)
(292.6)
(0.4)
16.7
172.5
189.2 $
35.6
179.6
3.4
(47.6)
0.5
76.9
1.9
7.2
10.2
(51.0)
(45.0)
(17.6)
(2.0)
18.6
76.3
(43.6)
486.7
(1,763.5)
(67.6)
(24.0)
6.2
196.8
2.5
(1,649.6)
40.2
(93.0)
2,976.4
(1,925.1)
(9.1)
989.4
(12.5)
(186.0)
358.5
172.5
59.0 $
71.8 $
63.1 $
79.2 $
62.3
69.3
$
$
$
See accompanying Notes to the Consolidated Financial Statements.
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES
Trimble Inc., (“we” or “our” or “us”) is incorporated in the State of Delaware since October 2016.
We are a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform
their work processes. We focus on transforming the way the world works by delivering products and services that connect the
physical and digital worlds. We generate revenue primarily through the sale of our hardware, software, maintenance and
support, professional services, and subscriptions.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Estimates and assumptions are used for revenue recognition, including determining the nature and timing of satisfaction of
performance obligations and determining standalone selling price (“SSP”) of performance obligations, provision for credit
losses, sales returns reserve, inventory valuation, warranty costs, investments, acquired intangibles, goodwill and intangibles
impairments, other long-lived asset impairments, stock-based compensation, and income taxes. We base our estimates on
historical experience and various other assumptions we believe to be reasonable and inputs into our estimates consider the
economic implications of COVID-19. Actual results that we experience may differ materially from our estimates.
Basis of Presentation
We use a 52-53 week fiscal year ending on the Friday nearest to December 31. Fiscal 2020 and 2018 were both 52-week years
ending on January 1, 2021 and December 28, 2018, respectively. Fiscal 2019 was a 53-week year ended on January 3, 2020.
Unless otherwise stated, all dates refer to our fiscal year and fiscal periods.
These Consolidated Financial Statements include our results of our consolidated subsidiaries. Intercompany accounts and
transactions have been eliminated. Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of
the net assets and results of operations of our consolidated subsidiaries.
We present revenue and cost of sales separately for products, services, and subscriptions. Product revenue includes hardware
and software licenses; service revenue includes maintenance and support for hardware and software products and professional
services; subscription revenue includes software as a service (“SaaS”), data, and hosting services.
Reportable Segments
We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings
and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
Our Chief Executive Officer and Chief Operating Decision Maker views and evaluates operations based on the results of our
reportable operating segments under our management reporting system. These results are not necessarily in conformance with
U.S. GAAP.
Revenue Recognition
Significant Judgments
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the
consideration we expect to receive in exchange for those products or services. Revenue is recognized net of allowance for
returns and any taxes collected from customers. We enter into contracts that may include various combinations of products and
services, which are generally capable of being distinct and accounted for as separate performance obligations; however,
determining whether products or services are considered distinct performance obligations that should be accounted for
separately versus together may sometimes require significant judgment.
Judgment is required to determine SSP for each distinct performance obligation. We use a range of amounts to estimate SSP
when products and services are sold separately, and determine whether there is a discount to be allocated based on the relative
SSP of the various products and services. In instances where SSP is not directly observable, we determine SSP using
information that may include market conditions and other observable inputs.
53
Nature of Goods and Services
We generate revenue primarily from products, services, and subscriptions; each of which is a distinct performance obligation.
Descriptions are as follows:
Product
Hardware is recognized when the control of the product transfers to the customer, which is generally when the product
is shipped. We recognize shipping fees reimbursed by customers as revenue and the cost for shipping as an expense in
Cost of sales when control over products has transferred to the customer.
Software including perpetual and term licenses is recognized upon delivery and commencement of license term. In
general, our contracts do not provide for customer specific acceptances.
Services
Hardware maintenance and support, commonly called extended warranty, entitles the customer to receive replacement
parts and repair services. Extended warranty is separately priced and is recognized on a straight-line basis over the
extended service period, which begins after the standard warranty period, ranging from one to two years depending on
the product line.
Software maintenance and support entitles the customer to receive software product upgrades and enhancements on a
when and if available basis and technical support. Software maintenance is recognized on a straight-line basis
commencing upon product delivery over the post-contract support term, which ranges from one to three years, with
one year being most common.
Professional services include installation, training, configuration, project management, system integrations,
customization, data migration/conversion, and other implementation services. The majority of professional services
are not complex, can be provided by other vendors, and are readily available and billed on a time-and-material basis.
Revenue for distinct professional services is recognized over time, based on work performed.
In some contracts, products and professional services may be combined into a single performance obligation. This
generally arises when products or subscriptions are sold with significant customization, modification, or integration
services. Revenue for the combined performance is recognized over time as the work progresses because of the
continuous transfer of control to the customer.
Subscription
SaaS may be sold with devices used to collect, generate, and transmit data. SaaS is distinct from the related devices.
In addition, we may host the software that the customer has separately licensed. Hosting services are distinct from the
underlying software.
Subscription terms generally range from month-to-month to three years. Subscription revenue is recognized monthly
over the subscription term, commencing from activation.
Deferred Costs to Obtain Customer Contracts
Our incremental cost of obtaining contracts, which consists of sales commissions related to customer contracts that include
maintenance or subscription revenue, are deferred if the contractual term is greater than a year or if renewals are expected, and
the renewal commission is not commensurate with the initial commission. These commission costs are deferred and amortized
over the benefit period, which is either the contract term or the shorter of customer or product life that ranges from three to
seven years. We have elected the practical expedient to exclude contracts with an amortization period of a year or less from this
deferral requirement.
Remaining Performance Obligations
Remaining performance obligations represent contracted revenue for which goods or services have not been delivered. The
contracted revenue, which will be recognized in future periods, includes both invoiced amounts in deferred revenue as well as
amounts that are not yet invoiced.
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, net of tax, recorded 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.
54
Derivative Financial Instruments
We enter into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations on cash
and certain trade and intercompany receivables and payables, primarily denominated in New Zealand Dollars, Brazil Real,
Canadian Dollars, Norwegian Krone, and Euro. 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 reporting period and
generally range from one to two months in original maturity. We occasionally enter into foreign currency forward contracts to
hedge the purchase price of some of our larger business acquisitions. We do not enter into foreign currency forward contracts
for trading purposes. As of the fiscal years ended 2020 and 2019, there were no derivative financial instruments outstanding
that were accounted for as hedges.
Concentrations of Risk
Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount
of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with
financial institutions of reputable credit and therefore bear minimal credit risk.
We are also exposed to credit risk in our trade receivables, which are derived from sales to end-user customers in diversified
industries as well as various resellers. We perform ongoing credit evaluations of our customers’ financial conditions and limit
the amount of credit extended, when deemed necessary, but generally do not require collateral.
In addition, we rely on a limited number of suppliers for a number of our critical components.
Accounts Receivable, Net
Accounts receivable, net, includes billed and unbilled amounts due from customers. Unbilled receivables include revenue
recognized that exceeds the amount billed to the customer, provided the billing is not contingent upon future performance, and
we have the unconditional right to future payment with only the passage of time required. Both billed and unbilled amounts
due are stated at their net estimated realizable value. The unbilled receivables were $138.7 million and $129.5 million at the
end of fiscal 2020 and 2019, respectively.
55
We maintain an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. Each
reporting period, we evaluate the collectability of our trade accounts receivable based on a number of factors such as age of the
accounts receivable balances, credit quality, historical experience, and current and future economic conditions that may affect a
customer’s ability to pay. Changes in our allowance for credit losses at the end of fiscal 2020, 2019 and 2018 were as follows:
Fiscal Years
(In millions)
Balance at beginning of period
Acquired allowances
Provision for credit losses
Write-offs, net of recoveries
Balance at end of period
Inventories
2020
2019
2018
$
$
5.9 $
—
7.1
(6.0)
7.0 $
4.6 $
0.2
6.5
(5.4)
5.9 $
3.6
1.6
3.4
(4.0)
4.6
Inventories are stated at the lower of cost or 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 that impact inventory
purchasing forecasts, technological changes, product life cycle and development plans, component cost trends, product pricing,
physical deterioration, and quality issues. If our estimate used to reserve for excess and obsolete inventory differs from what is
expected, we may be required to recognize additional reserves, which would negatively impact our 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 range from four to six years for machinery and equipment, five to ten years for furniture and fixtures, two
to five years for computer equipment and software, thirty-nine years for buildings, and the life of the lease for leasehold
improvements. We capitalize eligible costs to acquire or develop certain 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 $39.7 million, $39.4 million
and $35.6 million in fiscal 2020, 2019 and 2018, respectively.
Leases
We determine if an arrangement is a lease at inception. Operating leases with lease terms greater than one year are included in
Operating lease right-of-use (“ROU”) assets, in both Other current liabilities, and Operating lease liabilities in our Consolidated
Balance Sheets.
ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to
make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. Present value is determined by using our incremental
borrowing rate based on the estimated rate of interest for collateralized borrowings over a similar term of the lease payments at
commencement date. The operating lease ROU asset includes adjustments made for uneven rents, lease incentives, and lease
impairments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Lease agreements that include both lease and non-lease components are accounted for as part of the overall lease arrangement.
56
Business Combinations
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, with any excess purchase price recognized as goodwill.
When determining the fair values of assets acquired, liabilities assumed, and non-controlling interests in the acquiree, we make
significant estimates and assumptions, especially with respect to intangible assets. Critical estimates when valuing intangible
assets include expected future cash flows based on 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 we believe 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 technology, patents, licenses, customer
contracts, acquired backlog, trademarks, and in-process research and development. Identifiable intangible assets are amortized
over the period of estimated benefit using the straight-line method and have estimated useful lives ranging from three years to
ten years with a weighted average useful life of approximately seven years. We write off fully amortized intangible assets when
those assets are no longer used. Goodwill is not subject to amortization, but is subject to, at a minimum, an annual assessment
for impairment.
Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets
We evaluate goodwill on an annual basis or more frequently if indicators of potential impairment exist. We utilize either a
qualitative or quantitative approach to assess the likelihood of impairment as of the first day of the fourth quarter. When
performing the qualitative assessment, we consider macroeconomic conditions, industry and market considerations, overall
financial performance, and other relevant events and factors that may impact the reporting units. When performing the
quantitative assessment, we compare the reporting unit’s carrying amount, including goodwill, to the reporting unit's fair value.
When we perform a quantitative test, the estimation of the fair value of a reporting unit involves the use of certain estimates and
assumptions including expected future operating performance using risk-adjusted discount rates. Actual future results may
differ from those estimates. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized.
Identifiable intangible assets and long-lived assets with finite lives are amortized over their estimated useful lives on a straight-
line basis. Changes in circumstances such as technological advances, changes to business models, or changes in the capital
strategy could result in a revised useful life. If the useful life of an asset is revised, the net book value of the estimated residual
value is amortized over its revised remaining useful life. Intangible assets and long-lived assets are evaluated for impairment
according to their asset groups whenever events or changes in circumstances indicate that the carrying amount of those assets
may not be recoverable based on their future cash flows. The estimated future cash flows are primarily based upon assumptions
about expected future operating performance. Assets held for disposal are measured at fair value less selling costs, and assets
that are no longer in use are written off entirely at their cease-use dates.
Stock-Based Compensation
Stock compensation expense is based on the measurement date fair value of the awards, net of expected forfeitures. Expense is
generally recognized on a straight-line basis over the requisite service period of the stock awards. The estimate of the forfeiture
rate is based on historical experience.
Warranty
We accrue for warranty costs as part of our cost of sales based on associated material product costs, technical support labor
costs, and costs incurred by third parties performing work on our behalf. Our expected future cost is primarily estimated based
upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the
equipment. When products sold include warranty provisions, they are covered by a warranty for periods ranging from one year
to two years.
Accrued warranty expenses of $13.8 million and $16.3 million are included in Other current liabilities in the Consolidated
Balance Sheets at the end of fiscal 2020 and 2019, respectively.
57
Guarantees, Including Indirect Guarantees of Indebtedness of Others
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 may agree to hold the other party harmless against
losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made
against certain parties. These agreements may limit the time within which an indemnification claim can be made and the
amount of the claim. In 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 entered into indemnification agreements with our officers and directors, and our bylaws contain similar
indemnification obligations to our agents.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically,
payments made under these agreements were not material, and no liabilities have been recorded for these obligations in the
Consolidated Balance Sheets at the end of fiscal 2020 and 2019.
Advertising and Promotional Costs
We expense all advertising and promotional costs as incurred. Advertising and promotional expense was approximately $28.6
million, $42.7 million, and $42.7 million, in fiscal 2020, 2019, and 2018, respectively.
Research and Development Costs
Research and development costs are charged to expense as incurred. Costs of software developed for external sale subsequent
to reaching technical feasibility were not significant and were expensed as incurred. We received third-party funding of
approximately $16.3 million, $16.5 million, and $19.5 million in fiscal 2020, 2019, and 2018, respectively. We offset research
and development expense with any unconditional third-party funding earned and retain the rights to any technology developed
under such arrangements.
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,
restricted stock units (“RSUs”), and shares to be purchased under our Employee Stock Purchase Plan (“ESPP”) are included in
diluted earnings per share unless they are anti-dilutive.
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. Our valuation allowance is primarily attributable to foreign net operating losses
and state research and development credit carryforwards.
Relative to uncertain tax positions, we only recognize 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. 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. 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. Our practice is to recognize interest and/or
penalties related to income tax matters in income tax expense.
We are subject to income taxes in the U.S. and numerous other countries and are subject to routine corporate income tax audits
in many of these jurisdictions. We generally believe that positions taken on our 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, our income tax provision includes amounts intended to satisfy assessments that may result from these
challenges. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously
included in our income tax provision and, therefore, could have a material impact on our income tax provision, net income, and
cash flows.
58
Recent Accounting Pronouncements
Fiscal 2020 Adoption
Financial Instruments - Credit Losses
In June 2016, the FASB issued a new standard that requires credit losses on financial assets measured at amortized cost basis to
be presented based on the net amount expected to be collected. Application of this standard replaces the incurred loss
impairment methodology with a methodology that reflects all expected credit losses. Additionally, credit losses on available-
for-sale debt securities are recorded through an allowance for credit losses limited to the amount by which fair value is below
amortized cost.
We adopted the new standard at the beginning of fiscal 2020 by applying a modified retrospective method without restating
comparative periods. The adoption did not have a material impact on our Consolidated Financial Statements.
Intangibles - Goodwill and Other
In January 2017, the FASB issued new guidance that simplifies the accounting for goodwill impairment by requiring
impairment charges to be based on the first step in the current 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.
We adopted the new standard on a prospective basis at the beginning of fiscal 2020. The adoption did not have a material
impact on our Consolidated Financial Statements.
Intangibles - Internal-Use Software
In August 2018, the FASB issued new guidance that clarifies the accounting for implementation costs incurred in a cloud
computing arrangement that is a service contract. This guidance aligns the accounting for capitalizing implementation costs
incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or
obtain internal-use software.
We adopted the guidance on a prospective basis for all implementation costs incurred after the beginning of fiscal 2020. The
adoption of the new guidance did not have a material impact on our Consolidated Financial Statements.
Future Adoption
Income Taxes - Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued amendments to the accounting for Income Taxes to reduce complexity by removing
certain exceptions and implementing targeted simplifications. The new standard is effective for us beginning in fiscal 2021.
Early adoption is permitted. We do not expect the adoption to have a material impact on our Consolidated Financial
Statements.
59
NOTE 2: EARNINGS PER SHARE
Basic earnings per share is computed by dividing Net income attributable to Trimble Inc. by the weighted-average number of
shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing Net income
attributable to Trimble Inc. 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 potentially dilutive securities
had been issued. Potentially dilutive securities include outstanding stock options, RSUs, contingently issuable shares, and
shares to be purchased under our ESPP.
The following table shows the computation of basic and diluted earnings per share:
Fiscal Years
(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
2020
2019
2018
$
389.9 $
514.3 $
282.8
250.5
1.8
252.3
1.56 $
1.55 $
250.8
2.1
252.9
2.05 $
2.03 $
250.0
3.4
253.4
1.13
1.12
$
$
For fiscal 2020, 2019, and 2018, 0.5 million, 0.1 million, and 0.7 million, respectively, of shares were excluded from the
calculation of diluted earnings per share because their effect would have been antidilutive.
NOTE 3: BUSINESS COMBINATIONS
During fiscal 2020, 2019, and 2018, we 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 2020, we acquired three businesses, with total purchase consideration of $205.1 million. The acquisitions were
not significant individually or in the aggregate. The largest acquisition was Kuebix, a transportation management system
provider. In the aggregate, the businesses acquired contributed less than 1% of our total revenue during fiscal 2020.
During fiscal 2019, we acquired four businesses, with total purchase consideration of $247.0 million. The acquisitions were not
significant individually or in the aggregate. The largest acquisition was Cityworks, a company that provides enterprise asset
management (EAM) software for utilities and local government. In the aggregate, the businesses acquired contributed less than
1% of our total revenue during fiscal 2019.
During fiscal 2018, we acquired six businesses, with total purchase consideration of $1.8 billion, including e-Builder and
Viewpoint, having cash transactions valued at $485.5 million and $1,212.1 million, respectively. In the aggregate, the
businesses acquired contributed approximately 5% of our total revenue during fiscal 2018.
We determined the total consideration paid for each of our acquisitions as well as the fair value of the assets acquired and
liabilities assumed as of the date of each acquisition. 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. For the acquisitions in fiscal 2020, the preliminary fair values of net
tangible assets and intangible assets acquired were based on preliminary valuations and estimates, and assumptions are subject
to change within the measurement period (up to one year from the acquisition date).
Acquisition costs of $21.4 million, $20.5 million, and $38.9 million in fiscal 2020, 2019, and 2018, respectively, were expensed
as incurred and are included in Cost of sales and General and administrative expenses in our Consolidated Statements of
Income.
60
The following table summarizes the business combinations completed during the periods indicated:
Fiscal Years
(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
2020
2019
2018
$
205.1 $
247.0 $
1,782.9
(1.6)
56.7
0.7
149.3 $
6.7
104.6
(3.4)
139.1 $
5.0
568.3
(89.2)
1,298.8
$
The following table presents details of total intangible assets. As of the end of fiscal 2020, $338.3 million of fully amortized
intangible assets were written off. Amounts reported at the end of fiscal 2019 have been adjusted to conform to the current
presentation.
At the End of Fiscal 2020
At the End of Fiscal 2019
Weighted-
Average
Useful Lives
(in years)
6
5
8
7
(In millions)
Developed product
technology
Trade names and
trademarks
Customer
relationships
Distribution rights
and other
intellectual
properties
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
$
1,118.2 $
(811.1) $
307.1 $
1,191.9 $
(848.6) $
343.3
58.3
(51.9)
6.4
73.1
(58.1)
15.0
681.1
(419.3)
261.8
750.8
(446.6)
304.2
45.8
(41.0)
4.8
68.7
(52.5)
16.2
$
1,903.4 $
(1,323.3) $
580.1 $
2,084.5 $
(1,405.8) $
678.7
The estimated future amortization expense of intangible assets at the end of fiscal 2020 is as follows (in millions):
2021
2022
2023
2024
2025
Thereafter
Total
Goodwill
$
$
139.8
119.9
106.4
82.9
46.1
85.0
580.1
The changes in the carrying amount of goodwill by segment were as follows:
(In millions)
At the end of fiscal 2019
Additions due to acquisitions
Purchase price and foreign currency translation
adjustments
At the end of fiscal 2020
Buildings and
Infrastructure
Geospatial
Resources and
Utilities
Transportation
Total
$
1,973.0 $
401.5 $
445.4 $
860.7 $ 3,680.6
1.3
23.1
—
14.2
0.4
8.0
147.6
149.3
1.3
46.6
$
1,997.4 $
415.7 $
453.8 $
1,009.6 $ 3,876.5
61
NOTE 4: CERTAIN BALANCE SHEET COMPONENTS
The components of inventory, net were as follows:
At the End of Fiscal Year
(In millions)
Inventories:
Raw materials
Work-in-process
Finished goods
Total inventories
2020
2019
$
$
95.6 $
16.0
190.1
301.7 $
95.8
13.2
203.1
312.1
Finished goods includes $11.7 million and $5.6 million at the end of fiscal 2020 and 2019, respectively, for costs of sales that
have been deferred in connection with deferred revenue arrangements.
The components of property and equipment, net were as follows:
At the End of Fiscal Year
(In millions)
Property and equipment, net:
Land, building, furniture, and leasehold improvements
Machinery and equipment
Software and licenses
Construction in progress
Less: accumulated depreciation
Total property and equipment, net
The components of other non-current liabilities were as follows:
At the End of Fiscal Year
(In millions)
Other non-current liabilities:
Unrecognized tax benefits
Deferred compensation
Pension
Other
Total other non-current liabilities
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
2020
2019
253.3 $
178.7
148.9
17.2
598.1
(346.3)
251.8
211.0
165.3
143.0
38.3
557.6
(316.2)
241.4
2020
2019
55.4 $
42.0
21.9
31.3
150.6 $
66.4
36.2
20.2
30.1
152.9
$
$
$
2020
2019
$
$
(96.0) $
(2.5)
(98.5) $
(173.1)
(3.7)
(176.8)
62
NOTE 5: REPORTING SEGMENT AND GEOGRAPHIC INFORMATION
We determined our operating segments based on how our Chief Operating Decision Maker ("CODM") views and evaluates
operations. Various factors, including market separation and customer-specific applications, go-to-market channels, and
products and services, were considered in determining these operating segments. Our CODM regularly reviews our segment
operating results to make decisions about resources to be allocated to each segment and assess performance. In each of our
segments, we sell many individual products. For this reason, it is impracticable to segregate and identify revenue for each of
the individual products or group of products we sell.
Our reportable segments are described below:
•
•
•
•
Buildings and Infrastructure: This segment primarily serves customers working in architecture, engineering,
construction, and operations and maintenance.
Geospatial: This segment primarily serves customers working in surveying, engineering, and government.
Resources and Utilities: This segment primarily serves customers working in agriculture, forestry, and utilities.
Transportation: This segment primarily serves customers working in long haul trucking and freight shipper markets.
The following Reporting Segment tables reflect the results of our reportable operating segments under our management
reporting system. These results are not necessarily in conformity with U.S. GAAP. This is consistent with the way the CODM
evaluates each of the segment's performance and allocates resources.
63
(In millions)
Fiscal 2020
Revenue
Acquired deferred revenue adjustment
Segment revenue
Operating income
Acquired deferred revenue adjustment
Amortization of acquired capitalized
commissions
Segment operating income
Depreciation expense
Fiscal 2019
Revenue
Acquired deferred revenue adjustment
Segment revenue
Operating income
Acquired deferred revenue adjustment
Amortization of acquired capitalized
commissions
Segment operating income
Depreciation expense
Fiscal 2018
Revenue
Acquired deferred revenue adjustment
Segment revenue
Operating income
Acquired deferred revenue adjustment
Amortization of acquired capitalized
commissions
Segment operating income
Depreciation expense
Reporting Segments
Buildings and
Infrastructure
Geospatial
Resources
and Utilities
Transportation
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,230.7 $
650.5 $
627.3 $
639.2 $ 3,147.7
0.3
1,231.0 $
—
650.5 $
2.7
630.0 $
1.3
4.3
640.5 $ 3,152.0
343.0 $
184.4 $
218.4 $
49.0 $
794.8
0.3
(5.2)
—
—
2.7
1.3
4.3
(0.1)
(0.2)
(5.5)
338.1 $
184.4 $
221.0 $
50.1 $
793.6
8.1 $
6.2 $
5.6 $
4.1 $
24.0
1,254.2 $
649.4 $
568.4 $
792.3 $ 3,264.3
4.0
—
3.0
—
7.0
1,258.2 $
649.4 $
571.4 $
792.3 $ 3,271.3
322.1 $
132.2 $
166.2 $
125.9 $
746.4
4.0
(6.2)
—
—
3.0
(0.1)
—
—
7.0
(6.3)
319.9 $
132.2 $
169.1 $
125.9 $
747.1
8.1 $
6.3 $
4.4 $
4.4 $
23.2
1,065.5 $
22.2
723.1 $
—
567.1 $
1.0
752.7 $ 3,108.4
23.6
0.4
1,087.7 $
723.1 $
568.1 $
753.1 $ 3,132.0
239.0 $
22.2
166.4 $
—
167.4 $
1.0
142.9 $
0.4
715.7
23.6
(4.5)
256.7 $
—
166.4 $
(0.2)
168.2 $
—
143.3 $
(4.7)
734.6
6.4 $
6.0 $
4.2 $
4.5 $
21.1
64
(In millions)
As of Fiscal Year End 2020
Accounts receivable, net
Inventories
Goodwill
As of Fiscal Year End 2019
Accounts receivable, net
Inventories
Goodwill
As of Fiscal Year End 2018
Accounts receivable, net
Inventories
Goodwill
Buildings and
Infrastructure
Geospatial
Resources
and Utilities
Transportation
Total
Reporting Segments
$
260.1 $
59.1
117.5 $
120.1
91.2 $
49.0
151.7 $
73.5
620.5
301.7
1,997.4
415.7
453.8
1,009.6
3,876.5
$
232.0 $
115.5 $
93.3 $
167.4 $
608.2
67.1
1,973.0
125.0
401.5
45.5
445.4
74.5
860.7
312.1
3,680.6
$
177.5 $
118.7 $
83.8 $
132.6 $
70.3
1,970.2
133.5
403.1
46.2
305.7
48.0
861.0
512.6
298.0
3,540.0
A reconciliation of our consolidated segment operating income to consolidated income before income taxes was as follows:
Fiscal Years
(In millions)
Consolidated segment operating income
Unallocated corporate expense
Acquired deferred revenue adjustment
Amortization of acquired capitalized commissions
Amortization of purchased intangible assets
Amortization of acquisition-related inventory step-up
Acquisition / divestiture items
Stock-based compensation / deferred compensation
Restructuring charges / executive transition costs
COVID-19 expenses
Consolidated operating income
Total non-operating expense, net
Consolidated income before taxes
2020
2019
2018
$
793.6 $
747.1 $
(74.0)
(4.3)
5.5
(157.8)
—
(21.4)
(90.4)
(28.2)
(3.2)
419.8
(24.8)
395.0 $
(73.1)
(7.0)
6.3
(167.8)
—
(20.5)
(81.2)
(27.9)
—
375.9
(31.1)
344.8 $
$
734.6
(91.9)
(23.6)
4.7
(179.6)
(0.2)
(38.9)
(75.7)
(8.7)
—
320.7
(42.7)
278.0
(1) Unallocated corporate expense includes general corporate expense.
65
On a total Company basis, the disaggregation of revenue by geography is summarized in the tables below. Revenue is defined
as revenue from external customers attributed to countries based on the location of the customer and excludes the effects of
certain acquired deferred revenue that was written down to fair value in purchase accounting, consistent with the Reporting
Segment tables above.
(In millions)
Fiscal 2020
North America
Europe
Asia Pacific
Rest of World
Total segment revenue
Fiscal 2019
North America
Europe
Asia Pacific
Rest of World
Reporting Segments
Buildings and
Infrastructure
Geospatial
Resources
and Utilities
Transportation
Total
$
703.4 $
249.9 $
191.4 $
502.5 $
1,647.2
337.1
165.7
24.8
1,231.0 $
$
222.3
138.2
40.1
284.3
64.5
89.8
650.5 $
630.0 $
78.4
34.9
922.1
403.3
24.7
640.5 $
179.4
3,152.0
$
722.7 $
263.0 $
173.3 $
636.3 $
1,795.3
338.7
165.3
31.5
217.5
122.7
46.2
273.6
47.4
77.1
90.4
39.7
25.9
920.2
375.1
180.7
Total segment revenue
$
1,258.2 $
649.4 $
571.4 $
792.3 $
3,271.3
Fiscal 2018
North America
Europe
Asia Pacific
Rest of World
$
595.0 $
290.6 $
175.0 $
609.4 $
1,670.0
312.1
152.7
27.9
211.2
171.7
49.6
260.0
46.4
86.7
90.2
47.5
6.0
873.5
418.3
170.2
Total segment revenue
$
1,087.7 $
723.1 $
568.1 $
753.1 $
3,132.0
Total revenue in the United States as included in the Consolidated Statements of Income was $1,502.3 million,
$1,641.0 million, and $1,518.1 million in fiscal 2020, 2019, and 2018, respectively. No single customer or country other than
the United States accounted for 10% or more of our total revenue in fiscal 2020, 2019 and 2018. No single customer accounted
for 10% or more of our accounts receivable at the end of fiscal 2020 and 2019.
Property and equipment, net by geographic area were as follows:
At the End of Fiscal Year
(In millions)
Property and equipment, net:
United States
Europe
Asia Pacific and Rest of World
Total property and equipment, net
2020
2019
$
$
200.3 $
41.0
10.5
251.8 $
192.7
38.6
10.1
241.4
66
NOTE 6: DEBT
Debt consisted of the following:
At the End of Fiscal Year
(In millions, except percentages)
Senior Notes:
2023 Senior Notes, 4.15%, due June 2023
June 2018
2028 Senior Notes, 4.90%, due June 2028
2024 Senior Notes, 4.75%, due December 2024 November 2014
June 2018
Credit Facilities:
2018 Credit Facility, floating rate:
Term Loan, due July 2022
Revolving Credit Facility, due May 2023
May 2018
May 2018
Uncommitted facilities, floating rate
Promissory notes and other debt
Unamortized discount and issuance costs
Total debt
Less: Short-term debt
Long-term debt
Date of Issuance
Effective interest rate
for fiscal 2020
2020
2019
4.36%
5.04%
4.95%
—
—
1.16%
$
300.0 $
600.0
400.0
—
—
255.8
0.1
(8.7)
1,547.2
255.8
300.0
600.0
400.0
225.0
110.0
218.7
0.3
(10.8)
1,843.2
219.0
$
1,291.4 $
1,624.2
Each of our debt agreements requires us to maintain compliance with certain debt covenants, all of which we complied with at
the end of fiscal 2020.
Debt Maturities:
At the end of fiscal 2020, our debt maturities based on outstanding principal were as follows (in millions):
Year Payable
2021
2022
2023
2024
2025
Thereafter
Total
Senior Notes:
$
255.8
—
300.1
400.0
—
600.0
$
1,555.9
All series of senior notes in the above table bear interest that is payable semi-annually in June and December of each year. For
the 2023 and 2028 senior notes, the interest rate is subject to adjustment from time to time if Moody’s or S&P (or, if applicable,
a substitute rating agency) downgrades (or subsequently upgrades) its rating assigned to the notes.
Senior Notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness. We may
redeem the notes of each series of senior notes at our option in whole or in part at any time. Such indenture also 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, each subject to certain exceptions.
67
2018 Credit Facility:
At the end of fiscal 2020, we had access to a $1.25 billion unsecured revolving credit facility maturing in May 2023, which may
be used for working capital and general corporate purposes, including permitted acquisitions. As part of the credit facility, we
may request an additional term loan facility up to $500.0 million prior to the maturity of the credit facility and subject to
approval. There were no amounts outstanding under the revolving credit facility at the end of fiscal 2020.
Uncommitted Facilities:
On February 24, 2020, we entered into a line of credit to borrow an amount up to £55.0 million. At the end of fiscal 2020, we
had one £55.0 million, two $75.0 million, and one €100.0 million revolving credit facilities, which are uncommitted (the
"Uncommitted Facilities"). Generally, these uncommitted facilities may be redeemed upon demand. Borrowings under
uncommitted facilities are classified as short-term debt in our Consolidated Balance Sheet.
Promissory Notes and Other Debt
At the end of fiscal 2020 and 2019, we had promissory notes and other notes payable totaling approximately $0.1 million and
$0.3 million, classified as long-term debt and short-term debt in our Consolidated Balance Sheet, respectively.
NOTE 7: LEASES
We have operating leases primarily for certain of our major facilities, including corporate offices, research and development
facilities, and manufacturing facilities. Lease terms range from 1 to 10 years, and certain leases include options to extend the
lease for up to 6 years. We consider options to extend the lease in determining the lease term.
Operating lease expense consisted of:
At the End of Fiscal Year
(In millions)
Operating lease expense
Short-term lease expense and other
Total lease expense
2020
2019
$
$
38.1 $
15.7
53.8 $
Supplemental cash flow information related to leases was as follows:
At the End of Fiscal Year
2020
2019
(In millions)
Cash paid for liabilities included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)
Right-of-use assets obtained in exchange for Operating lease liabilities:
$
$
37.0 $
29.4 $
(1) Excludes cash payments for short-term leases, which are not capitalized.
Supplemental balance sheet information related to leases was as follows:
38.3
18.4
56.7
37.9
53.2
At the End of Fiscal Year
(In millions)
Operating lease right-of-use assets
Other current liabilities
Operating lease liabilities
Total operating lease liabilities
Weighted-average discount rate
Weighted-average remaining lease term
$
$
$
2020
2019
128.9
33.8
109.2
143.0
$
$
$
3.86 %
6 years
140.3
28.9
114.1
143.0
4.23 %
6 years
68
At the end of fiscal 2020, the maturities of lease liabilities were as follows (in millions):
Year Payable
2021
2022
2023
2024
Thereafter
Total lease payments
Less: imputed interest
Total
$
$
$
37.6
31.9
24.3
18.7
46.4
158.9
15.9
143.0
We signed operating leases for real estate of approximately $40.0 million that have not yet commenced at the end of fiscal
2020, and as such, have not been recognized on our Consolidated Balance Sheets. These operating leases are expected to
commence in 2021 with lease terms ranging from 1 to 13 years.
NOTE 8: COMMITMENTS AND CONTINGENCIES
At the end of fiscal 2020, we had unconditional purchase obligations of approximately $241.1 million. These unconditional
purchase obligations primarily represent open non-cancelable purchase orders for material purchases with our vendors.
Litigation
From time to time, we are involved in litigation arising in the ordinary course of our business. There are no 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.
NOTE 9: FAIR VALUE MEASUREMENTS
We determine 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. Hierarchical levels 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.
69
Fair Value on a Recurring Basis
The fair value of assets and liabilities measured and recorded at fair value on a recurring basis at the end of the period indicated
were as follows:
At the End of Fiscal Year
(In millions)
Assets
Deferred compensation plan assets (1)
Derivative assets (2)
Total assets measured at fair value
Liabilities
Deferred compensation plan liabilities (1)
Derivative liabilities (2)
2020
2019
Level I
Level II
Level III
Total
Level I
Level II
Level III
Total
$ 41.9 $ — $ — $ 41.9 $ 36.2 $ — $ — $ 36.2
—
$ 41.9 $
0.9
0.3
0.9 $ — $ 42.8 $ 36.2 $ 0.3 $ — $ 36.5
—
0.9
0.3
—
—
$ 41.9 $ — $ — $ 41.9 $ 36.2 $ — $ — $ 36.2
—
0.5
—
0.5
—
1.0
—
1.0
Contingent consideration liabilities (3)
Total liabilities measured at fair value
—
$ 41.9 $
12.3
19.9
—
0.5 $ 12.3 $ 54.7 $ 36.2 $ 1.0 $ 19.9 $ 57.1
19.9
—
12.3
—
(1) We have 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 on our Consolidated Balance Sheets, respectively.
(2) Derivative assets and liabilities primarily represent forward currency exchange 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 our Consolidated Balance
Sheets, respectively.
(3) Contingent consideration liabilities represent arrangements to pay the former owners of certain companies that we
acquired. The fair values are estimated using scenario-based methods or option pricing methods based upon estimated
future revenues, gross margins, or other milestones. At the end of fiscal 2020, we have $12.3 million included in Other
current liabilities on our Consolidated Balance Sheet. The undiscounted maximum payment under the arrangements is
$18.3 million at the end of fiscal 2020.
Additional Fair Value Information
The total estimated fair value of all outstanding financial instruments that are not recorded at fair value on a recurring basis
(debt) was approximately $1.8 billion and $1.9 billion at the end of fiscal 2020 and 2019, respectively, consistent with the
carrying values.
The fair value of our senior 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 we would have had to pay on the issuance of notes with a similar maturity and
by 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 we would currently have to pay to extinguish any of this debt.
NOTE 10: DEFERRED COSTS TO OBTAIN CUSTOMER CONTRACTS
Deferred cost to obtain customer contracts of $51.3 million and $45.4 million is included in Other non-current assets in the
Consolidated Balance Sheets at the end of fiscal 2020 and 2019, respectively.
Amortization expense related to deferred costs to obtain customer contracts was $22.8 million, $22.3 million, and $23.6
million, for fiscal 2020, 2019 and 2018, respectively. This expense was included in Sales and marketing expense in our
Consolidated Statements of Income. There were no impairment losses related to the deferred costs for the periods presented.
70
NOTE 11: DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS
Deferred Revenue
Changes in our deferred revenue during fiscal 2020 and 2019 were as follows:
Fiscal Years
(In millions)
Beginning balance of the period
Revenue recognized
Net deferred revenue activity
Ending balance of the period
Remaining Performance Obligations
2020
2019
$
$
541.9 $
(476.9)
548.8
613.8 $
387.2
(341.3)
496.0
541.9
As of the end of fiscal 2020, approximately $1.3 billion of revenue is expected to be recognized from remaining performance
obligations for which goods or services have not been delivered, primarily subscription, software, maintenance and support, and
to a lesser extent, hardware and professional services. We expect to recognize $1.0 billion or 73% of our remaining
performance obligations as revenue during the next 12 months. We expect to recognize the remaining $0.3 billion or 27% of
our remaining performance obligations as revenue thereafter.
71
NOTE 12: INCOME TAXES
Income before taxes and the provision (benefit) for taxes consisted of the following:
Fiscal Years
(In millions)
Income before taxes:
United States
Foreign
Total
Provision (benefit) for taxes:
U.S. Federal:
Current
Deferred
U.S. State:
Current
Deferred
Foreign:
Current
Deferred
2020
2019
2018
$
$
$
24.7
370.3
395.0
43.0
301.8
344.8
$
25.4
252.6
278.0
$
(5.8)
$
(3.8)
$
(16.3)
(22.1)
0.8
7.1
7.9
62.2
(43.6)
18.6
4.4
252.3
248.5
5.1
(0.7)
4.4
49.2
(471.8)
(422.6)
$
(169.7)
$
(19.7)
(25.8)
(45.5)
5.0
(3.6)
1.4
57.0
(18.2)
38.8
(5.3)
Income tax provision (benefit)
Effective tax rate
$
1.1 %
(49.2) %
(1.9) %
The difference between the tax provision (benefit) at the statutory federal income tax rate and the tax provision (benefit) as a
percentage of income before taxes ("effective tax rate") was as follows:
Fiscal Years
2020
2019
2018
Statutory federal income tax rate
Increase (reduction) in tax rate resulting from:
Foreign income taxed at different rates
Change in valuation allowance
U.S. State income taxes
Stock-based compensation
Excess tax benefit related to stock-based compensation
Effect of U.S. tax law change
Other U.S. taxes on foreign operations
U.S. Federal research and development credits
Tax reserve releases
Intellectual property restructuring and tax law changes
Other
Effective tax rate
21.0 %
21.0 %
21.0 %
1.7 %
2.0 %
0.5 %
1.5 %
(1.5) %
— %
(1.0) %
(2.3) %
(4.8) %
(16.2) %
0.2 %
1.1 %
(7.3) %
— %
1.5 %
1.2 %
(2.4) %
— %
1.3 %
(2.8) %
(4.9) %
(59.8) %
3.0 %
(49.2) %
(6.7) %
— %
1.0 %
1.1 %
(3.2) %
(7.6) %
1.6 %
(3.7) %
(8.7) %
— %
3.3 %
(1.9) %
72
The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), enacted on March 27, 2020, provides tax relief to
individuals and businesses in light of the impacts of COVID-19. It did not result in material adjustments to our income tax
provision or to our net deferred tax assets as of the end of the fourth quarter of fiscal 2020.
In December 2020, due to a change in the Netherlands tax law, the statutory tax rate was increased from 21.7% to 25.0%,
effective January 1, 2021. As a result, we recorded a one-time tax benefit of $64.0 million due to the revaluation of the
Netherlands deferred tax assets.
In December 2019, to align with our international business operations, we completed a non-U.S. intercompany transfer of our
intellectual property to a subsidiary in the Netherlands. The transaction resulted in deferred tax assets in the Netherlands and
GILTI deferred tax liabilities in the U.S., recorded at the applicable statutory tax rates, resulting in a one-time income tax
benefit of approximately $206.3 million in the fourth quarter of fiscal 2019.
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 deferred tax assets
and liabilities were as follows:
At the End of Fiscal Year
(In millions)
Deferred tax liabilities:
Global intangible low-taxed income
Purchased intangibles
Operating lease right-of-use assets
Other
Total deferred tax liabilities
Deferred tax assets:
Depreciation and amortization
Operating lease liabilities
U.S. tax credit carryforwards
Expenses not currently deductible
Foreign net operating loss carryforwards
Stock-based compensation
U.S. net operating loss carryforwards
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets
Total net deferred tax assets
Reported as:
Non-current deferred income tax assets
Non-current deferred income tax liabilities
Net deferred tax assets
2020
2019
219.7 $
138.1
32.3
11.3
401.4
497.1
35.0
32.8
32.3
16.8
10.6
7.4
20.6
652.6
(41.3)
611.3
209.9 $
233.7
158.7
35.3
12.8
440.5
471.5
36.0
34.2
28.0
16.2
13.3
9.8
14.1
623.1
(25.3)
597.8
157.3
510.2 $
(300.3)
209.9 $
475.5
(318.2)
157.3
$
$
$
$
At the end of fiscal 2020, we have U.S. federal and foreign net operating loss carryforwards, or NOLs, of approximately $16.7
million and $83.4 million, respectively. The U.S. federal NOLs will begin to expire in 2026. There is generally no expiration
for the foreign NOLs. Utilization of our U.S. federal and state NOLs is subject to annual limitations in accordance with the
applicable tax code. We have determined that it is more likely than not that we will not realize a portion of the foreign NOLs
and, accordingly, a valuation allowance has been established for such amount.
We have U.S. federal and California research and development credit carryforwards of approximately $11.8 million and $33.1
million, respectively. The U.S. federal tax credit carryforwards will expire beginning 2040. The California research tax credits
73
have an indefinite carryforward period. We believe that it is more likely than not that we will not realize a significant portion of
the California research and development credit carryforwards and, accordingly, a valuation allowance has been established for
such amount.
As a result of the Tax Act, we can repatriate foreign earnings back to the U.S. when needed with minimal U.S. income tax
consequences, other than the transition tax and GILTI tax. We reinvested a large portion of our undistributed foreign earnings
in acquisitions and other investments and intend to bring back a portion of foreign cash that was subject to the transition tax and
GILTI. During fiscal 2020, we repatriated $272.7 million of our foreign earnings to the U.S.
The total amount of the unrecognized tax benefits at the end of fiscal 2020 was $64.1 million. A reconciliation of gross
unrecognized tax benefit was as follows:
Fiscal Years
(In millions)
2020
2019
2018
Beginning balance
Increase related to current year tax positions
(Decrease) increase related to prior years' tax positions
Settlement with taxing authorities
Lapse of statute of limitations
Ending balance
$
$
71.6 $
8.0
(0.4)
(0.5)
(14.6)
64.1 $
69.1 $
12.6
3.8
(5.7)
(8.2)
71.6 $
82.4
10.0
4.5
(8.9)
(18.9)
69.1
Total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $47.8 million and $59.5 million at
the end of fiscal 2020 and 2019, respectively.
We and our subsidiaries are subject to U.S. federal, state, and foreign income taxes. Our tax years are substantially closed for
all U.S. federal and state income taxes for audit purposes through 2014. Non-U.S. income tax matters have been concluded for
years through 2007. We are currently in various stages of multiple year examinations state, and foreign (multiple jurisdictions)
taxing authorities. While we generally believe it is more likely than not that our tax positions will be sustained, it is reasonably
possible that future obligations related to these matters could arise. We believe that our reserves are adequate to cover any
potential assessments that may result from the examinations and negotiations.
Although timing of the resolution and/or closure of audits is not certain, we do not believe that our gross unrecognized tax
benefits would materially change in the next twelve months.
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Our liability for
unrecognized tax benefits including interest and penalties was recorded in Other non-current liabilities on our Consolidated
Balance Sheets. At the end of fiscal 2020 and 2019, we accrued $9.6 million and $11.5 million, respectively, for interest and
penalties.
NOTE 13: EMPLOYEE STOCK BENEFIT PLANS
Amended and Restated 2002 Stock Plan
On November 20, 2020, our stockholders approved an amendment to the 2002 Stock Plan to increase the number of shares of
common stock available for issuance by 18.0 million shares. As such, our Amended and Restated 2002 Stock Plan provides for
the granting of incentive and non-statutory stock options and RSUs for up to 92.6 million shares. At the end of fiscal 2020, the
remaining number of shares available for grant under the 2002 stock plan was 21.1 million.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in our Consolidated
Statements of Income for the periods indicated:
Fiscal Years
(In millions)
Restricted stock units
Stock options
ESPP
Total stock-based compensation expense
2020
2019
2018
$
$
73.2 $
1.5
8.3
83.0 $
67.3 $
0.6
7.1
75.0 $
68.9
1.5
6.5
76.9
74
Stock-based compensation expense was allocated as follows:
Fiscal Years
(In millions)
Cost of sales
Research and development
Sales and marketing
General and administrative
Total stock-based compensation expense
2020
2019
2018
$
$
6.7 $
22.1
16.2
38.0
83.0 $
5.6 $
16.7
13.0
39.7
75.0 $
4.5
15.0
10.0
47.4
76.9
At the end of fiscal 2020, total unamortized stock-based compensation expense was $164.5 million, with a weighted-average
recognition period of 2.4 years.
Restricted Stock Units
We grant RSUs containing only service conditions and RSUs containing a combination of service, performance, and/or market
conditions (“PSUs”). RSUs containing only service conditions typically vest ratably over a three to four year service period.
PSUs are granted to executive officers and other senior employees and vest after a two to three year service period.
The fair value at the grant date is determined by (1) the closing price of our common stock for awards containing only service
or both service and performance conditions, or (2) the Monte Carlo valuation model for awards containing both service and
market conditions.
For PSUs granted prior to and during fiscal 2020, the number of shares received at vesting will range from 0% to 200%
of the target grant amount based on either (1) market conditions, (2) performance conditions, or (3) both. Market conditions
consider our relative total stockholder return (“TSR”) of our common stock as compared to the TSR of the constituents of either
the S&P 500 or S&P 400 over the vesting period. Performance conditions consider the achievement of our financial results
over the vesting period.
(In millions, except for per share data)
Outstanding at the beginning of year
Granted (2)
Shares vested, net (2)
Canceled and forfeited
Outstanding at the end of year
2020 Restricted Stock Units Outstanding
Number of Units (1)
Weighted Average
Grant-Date Fair Value
per Share
5.7 $
1.9
(1.8)
(0.4)
5.4 $
39.62
42.50
38.94
41.55
44.25
(1) Includes 0.2 million PSUs granted, 0.5 million PSUs vested, and 1.3 million PSUs outstanding at the end of the year.
(2) Excludes approximately 0.2 million PSUs related to achievement above target levels at the vesting date.
The weighted-average grant date fair value of all RSUs granted during fiscal 2020, 2019, and 2018 was $42.50, $41.38, and
$37.43 per share, respectively. The fair value of all RSUs vested during fiscal 2020, 2019, and 2018 was $78.0 million, $75.7
million, and $73.9 million, respectively.
75
Stock options
Employee stock options generally vest after three years, or after five years for certain executive awards, with expiration seven
to ten years from the date of grant. The fair value at the grant date is determined by (1) the Black-Scholes valuation model for
options with only service conditions, or (2) the Monte Carlo valuation model for certain executive options containing both
service and market conditions. The following table summarizes information about stock options outstanding at the end of fiscal
2020:
Outstanding at the beginning of year
Options granted
Options exercised
Cancelled and forfeited
Outstanding at the end of year
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)
1.1 $
0.2
(0.7)
—
0.6
0.2 $
29.96
41.58
29.01
28.08
35.42
27.88
5.1 $
1.2 $
18.6
9.0
The total intrinsic value of options exercised during fiscal 2020, 2019, and 2018 was $11.5 million, $16.4 million, and $30.0
million, respectively.
The weighted-average grant date fair value per share of stock options granted during fiscal 2020, 2019 and 2018 was $14.30,
$12.92, and $10.62, respectively. The fair value of all stock options vested during fiscal 2020, 2019, and 2018 was $0.2
million, $0.2 million, and $1.9 million, respectively.
Employee Stock Purchase Plan
We have an ESPP under which the stockholders have approved an aggregate of 39.0 million shares of common stock for
issuance to eligible employees. The fair value at the grant date is based on the Black-Scholes valuation model. 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 six months. Rights to purchase shares are
granted during the first and third quarter of each fiscal year. The ESPP terminates on March 15, 2027. In fiscal 2020, 2019,
and 2018, 0.8 million shares were issued, in each fiscal year respectively, representing $26.9 million, $25.7 million, and $24.0
million in cash received for the issuance of stock under the ESPP. At the end of fiscal 2020, the number of shares reserved for
future purchases was 6.6 million.
NOTE 14: COMMON STOCK REPURCHASE
In November 2017, our Board of Directors approved a stock repurchase program (“2017 Stock Repurchase Program”),
authorizing us to repurchase up to $600.0 million of our common stock. The 2017 Stock Repurchase Program does not have an
expiration date.
Under the stock repurchase program, we 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 our management based on our 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 2020, the 2017 Stock Repurchase Program had remaining authorized funds of $90.7 million.
During fiscal 2020, 2019, and 2018, we repurchased approximately 1.9 million, 4.7 million, and 2.4 million shares of common
stock in open market purchases, at an average price of $43.40, $38.51, and $37.23 per share, for a total of $81.6 million,
$179.8 million, and $90.0 million, respectively, under the 2017 Stock Repurchase Program.
Stock repurchases are reflected as a decrease to common stock based on par value and additional-paid-in-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 2020
repurchases, retained earnings was reduced by $68.6 million in fiscal 2020. Common stock repurchases under the program
were recorded based upon the trade date for accounting purposes.
76
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Trimble Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Trimble Inc. (the Company) as of January 1, 2021 and
January 3, 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for
each of the three years in the period ended January 1, 2021, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at January 1, 2021 and January 3, 2020, and the results of its operations and its cash flows for each of
the three years in the period ended January 1, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 1, 2021, 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 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
77
Description of the Matter
Revenue Recognition - Identification of Performance Obligations
As described in Note 1 to the consolidated financial statements, the Company enters into
contracts that can include various combinations of products and services, which are generally
capable of being distinct and accounted for as separate performance obligations. In some
contracts, products and professional services may be combined into a single performance
obligation when products or subscriptions are sold with significant customization, modification,
or integration services. Determining whether products or services are considered distinct
performance obligations that should be recognized separately or combined into a single
performance obligation may sometimes require significant judgment.
Auditing the Company's determination of distinct performance obligations was complex due to
the effort involved in assessing whether the various product and service offerings promised
within each contract are separate performance obligations or should be combined into a single
performance obligation.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
the Company's internal controls over the evaluation of the relevant terms of its contracts, and the
appropriate identification of distinct performance obligations. This included testing relevant
controls over the information systems that are important to the initiation, recording, and billing
of revenue transactions.
Our audit procedures included evaluating management’s revenue recognition policy which
included the application of management’s judgment in the identification of performance
obligations. Among other procedures to evaluate management’s identification and determination
of the distinct performance obligations, we read executed contracts for a sample of sales
transactions
the
appropriateness of management’s application of the Company’s accounting policy. We
evaluated the accuracy of the Company’s contract summary documentation, specifically related
to the identification and determination of distinct performance obligations, and the related
revenue recognition. Finally, we assessed the appropriateness of the related disclosures in the
consolidated financial statements.
the customer agreement and evaluated
to understand
terms
the
in
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1986.
San Jose, California
February 26, 2021
78
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Trimble Inc.
Opinion on Internal Control over Financial Reporting
We have audited Trimble Inc.’s internal control over financial reporting as of January 1, 2021, 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). In our opinion, Trimble Inc. (the Company) maintained, in all material respects,
effective internal control over financial reporting as of January 1, 2021, 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 2020 consolidated financial statements of the Company and
constituted less than 1% of tangible assets and net assets as of January 1, 2021, and less than 1% of revenues and net income for
the year then ended. Our audit of internal control over financial reporting of the Company 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)
(PCAOB), the consolidated balance sheets of the Company as of January 1, 2021 and January 3, 2020, the related consolidated
statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period
ended January 1, 2021, and the related notes and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’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 are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control over Financial Reporting
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.
/s/ Ernst & Young LLP
San Jose, California
February 26, 2021
79
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
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), 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 CEO and CFO have concluded that, as of the end of such period, our disclosure controls
and procedures are effective.
Inherent Limitations on Effectiveness of Controls
Our 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
Our 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.
Our management, including the CEO and CFO, conducted an evaluation of the effectiveness of our 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). We have excluded from our evaluation the internal control over financial
reporting of all current year acquisitions, which are included in the January 1, 2021 consolidated financial statements and
constituted less than 1% of tangible assets and net assets, respectively, as of January 1, 2021, and less than 1% of revenue and
net income, respectively, for the year then ended. Based on the results of this evaluation, our management concluded that our
internal control over financial reporting was effective at the end of fiscal 2020.
The effectiveness of our internal control over financial reporting at the end of fiscal 2020 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 2020, there were no changes in our internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
80
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
Our Business Ethics and Conduct Policy applies to, among others, our Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer, and other finance organization employees. We make available our Business Ethics and Conduct Policy
free of charge through our website at www.trimble.com under the heading “Corporate Governance - Governance Documents”
on the Investor Relations page.
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, or Chief Accounting Officer we will disclose the nature of such amendment or waiver on our 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.
81
Item 15. Exhibits and Financial Statement Schedules.
(a) (1) Financial Statements
PART IV
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
(2) Financial Statement Schedules
Page in this
Annual Report
on Form 10-K
48
49
50
51
52
53
77
All financial statement schedules have been omitted, since the required information is not applicable or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated
financial statements and accompanying notes included in this Form 10-K.
(b) Exhibits
We have filed, or incorporated into the Report by reference, the exhibits listed on the accompanying Index to Exhibits
immediately preceding the signature page of this Form 10-K.
Item 16. Form 10-K Summary.
None.
82
INDEX TO EXHIBITS
Exh. No.
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3(A)
4.3(B)
4.3(C)
4.3(D)
Description of Exhibit
Agreement and Plan of Merger dated September 30, 2016 between Trimble Inc. and
Trimble Navigation Limited
Stock Purchase Agreement dated as of February 2, 2018 by and among Trimble Inc.,
e‑Builder, Inc. and the stockholders of e-Builder named therein
Agreement and Plan of Merger dated April 23, 2018, regarding the acquisition of
Viewpoint, Inc.
Certificate of Incorporation of Trimble Inc.
Amended and Restated By-Laws of Trimble Inc. (effective October 1, 2020)
Form of Common Stock Certificate of Trimble Inc.
Description of Securities of Trimble Inc.
Indenture, dated as of October 30, 2014, between the Company and U.S. Bank National
Association
Filed herewith or
incorporated by reference to:
Exhibit 2.1 to Form 8-K filed
October 3, 2016
Exhibit 2.1 to Form 8-K filed
February 2, 2018
Exhibit 2.1 to Form 8-K filed
April 24, 2018
Exhibit 3.1 to Form 8-K filed
October 3, 2016
Exhibit 3.1 to Form 8-K filed
September 30, 2020
Exhibit 4.1 to Form 8-K filed
October 3, 2016
Exhibit 4.2 to Form 10-K filed
February 28, 2020
Exhibit 4.2 to 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)
Exhibit 4.1 to 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
Exhibit 4.2 to Form 8-K filed
October 3, 2016
Third Supplemental Indenture, dated June 15, 2018, between Trimble Inc. and U.S. Bank
National Association (which includes Form of 4.150% Senior Note due 2023 and Form of
4.900% Senior Note due 2028)
Exhibit 4.1 to Form 8-K filed
June 15, 2018
10.1(A)
Lease dated May 11, 2005 between Carr America Realty Operating Partnership, L.P. and
the Company
Exhibit 10.17 to Form 10-K filed
March 10, 2006
10.1(B)
First Amendment to Lease between Carr NP Properties, LLC and the Company
Exhibit 10.23 to Form 10-K filed
March 1, 2011
Second Amendment to Lease between the Company and Wilson Oakmead West, LLC
(successor in interest to Carr NP Properties, LLC)
Exhibit 10.6 to Form 10-Q filed
August 8, 2017
Credit Agreement dated as of May 15, 2018 by and among Trimble Inc., the borrowing
subsidiaries party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A.
Exhibit 10.1 to Form 8-K filed
May 16, 2018
Extension and Amendment Agreement, dated May 4, 2020, amending Credit Agreement
dated May 15, 2018, by and among Trimble Inc., the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent.
Form of Indemnification Agreement between the Company and its officers and directors
10.1(C)
10.2(A)
10.2(B)
10.3+
10.4+
Board of Directors Compensation Policy as amended August 24, 2020
10.5+
Incentive Compensation Recoupment Policy
10.6+
Deferred Compensation Plan, as amended August 26, 2020
10.7+
Age and Service Equity Vesting Program
10.8(A)+
Employee Stock Purchase Plan, as amended March 13, 2017
10.8(B)+
Employee Stock Purchase Plan - Form of global subscription agreement
10.9(A)+
2002 Stock Plan, as amended January 1, 2019
10.9(B)+
2002 Stock Plan - Form of stock option agreement (U.S. directors)
10.9(C)+
2002 Stock Plan - Form of stock option agreement (non-U.S. directors)
83
Exhibit 10.1 to Form 8-K filed
May 6, 2020
Exhibit 10.1 to Form 8-K
filed November 15, 2017
Exhibit 10.1 to Form 10-Q filed
November 6, 2020
Exhibit 99.1 to Form 8-K filed
May 8, 2017
Exhibit 10.2 to Form 10-Q filed
November 6, 2020
Exhibit 10.3 to Form 10-Q filed
August 8, 2017
Appendix B of Form DEF 14A
filed March 23, 2017
Exhibit 10.5 to Form 10-Q filed
November 10, 2015
Exhibit 10.1 to Form 10-Q filed
May 7, 2019
Exhibit 10.2 to Form 10-Q filed
November 7, 2014
Exhibit 10.3 to Form 10-Q filed
November 7, 2014
10.9(D)+
2002 Stock Plan - Form of global stock option agreement (officers)
10.9(E)+
2002 Stock Plan - Form of global restricted stock unit award agreement
10.9(F)+
2002 Stock Plan - Form of global performance restricted stock unit award agreement
10.9(G)+
2002 Stock Plan - Form of global restricted stock unit award agreement (officers)
Exhibit 10.1 to Form 10-Q filed
November 10, 2015
Exhibit 10.2 to Form 10-Q filed
November 10, 2015
Exhibit 10.6 to Form 10-Q filed
November 10, 2015
Exhibit 10.30 to Form 10-K filed
February 24, 2017
2002 Stock Plan - Form of global performance stock unit award agreement (Operating
Income/Revenue)
Exhibit 10.4 to Form 10-Q filed
August 8, 2017
2002 Stock Plan - Form of global performance stock unit award agreement (Total
Stockholder Return)
10.9(J)+
2002 Stock Plan - Form of global performance stock unit award agreement (officers)
10.9(K)+
2002 Stock Plan - Performance stock option agreement between the Company and Rob
Painter issued January 4, 2020
Exhibit 10.9(K) to Form 10-K
filed February 28, 2020
10.9(L)+
2002 Stock Plan - Form of performance stock unit award agreement (officers, TSR-based)
10.10+
Annual Management Incentive Plan Description
Exhibit 10.5 to Form 10-Q filed
August 8, 2017
Exhibit 10.1 to Form 10-Q filed
August 2, 2019
Exhibit 10.2 to Form 10-Q filed
August 7, 2020
Exhibit 10.1 to Form 10-Q filed
May 8, 2017
Exhibit 10.1 to Form 10-Q filed
August 8, 2017
Form of Change in Control Severance Agreement between the Company and certain
Company officers, together with a schedule identifying material differences in the
agreements entered into with specific officers
Form of Executive Severance Agreement between the Company and certain Company
officers, together with a schedule identifying material differences in the agreements entered
into with specific officers
Exhibit 10.2 to Form 10-Q filed
August 8, 2017
Change in Control Severance Agreement between the Company and Steven W. Berglund
dated February 20, 2019
Exhibit 10.1 to Form 10-K filed
February 22, 2019
Executive Severance Agreement between the Company and Steven W. Berglund dated
February 20, 2019
Exhibit 10.2 to Form 10-K filed
February 22, 2019
Change in Control Severance Agreement between the Company and Robert G. Painter
dated January 4, 2020
Executive Severance Agreement between the Company and Robert G. Painter dated
January 4, 2020
Severance Agreement between the Company and Michael D. Bank dated October 16, 2020 Filed herewith
Filed herewith
Filed herewith
Subsidiaries of the Company
Consent of Independent Registered Public Accounting Firm
Power of Attorney (included on signature page herein)
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following financial statements from this Annual Report on Form 10-K, formatted in
Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii)
Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of
Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to
Consolidated Financial Statements, tagged as blocks of text and including detailed tags
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
10.9(H)+
10.9(I)+
10.11+
10.12+
10.13+
10.14+
10.15+
10.16+
10.17+
21.1
23.1
24.1
31.1
31.2
32.1
32.2
101++
104++
The cover page from this Annual Report on Form 10-K, formatted in Inline XBRL
+
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.
84
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 26, 2021
TRIMBLE INC.
/S/ ROBERT G. PAINTER
Robert G. Painter,
President and Chief Executive Officer
85
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears below constitutes and appoints Robert G. Painter
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/ ROBERT G. PAINTER
Robert G. Painter
President, Chief Executive Officer, Director
February 26, 2021
/s/ DAVID G. BARNES
David G. Barnes
Chief Financial Officer
(Principal Financial Officer)
/s/ JULIE A. SHEPARD
Julie A. Shepard
Chief Accounting Officer
(Principal Accounting Officer)
/s/ STEVEN W. BERGLUND
Steven W. Berglund
/s/ JAMES C. DALTON
James C. Dalton
/s/ BORJE EKHOLM
Börje Ekholm
/s/ KAIGHAM (KEN) GABRIEL
Kaigham (Ken) Gabriel
/s/ MERIT E. JANOW
Merit E. Janow
/s/ MEAGHAN LLOYD
Meaghan Lloyd
/s/ SANDRA MACQUILLAN
Sandra MacQuillan
/s/ RON S. NERSESIAN
Ron S. Nersesian
/s/ MARK S. PEEK
Mark S. Peek
/s/ JOHAN WIBERGH
Johan Wibergh
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
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BOARD OF
DIRECTORS
Steven W. Berglund
Executive Chairman
Robert G. Painter
President and
Chief Executive Officer
James C. Dalton
Retired, US Army Corps of Engineers
Börje Ekholm
President and Chief Executive Officer,
Ericsson
Dr. Kaigham Gabriel
Chief Operating Officer,
Wellcome Leap
Merit E. Janow
Dean and Professor of Practice,
School of International and Public Affairs,
Columbia University
Meaghan Lloyd
Partner,
Gehry Partners, LLP
Sandra MacQuillan
Executive Vice President and
Chief Supply Chain Officer,
Mondelez International, Inc.
Ron S. Nersesian
Chairman, President, and
Chief Executive Officer,
Keysight Technologies
Mark S. Peek
Executive Vice President, Managing
Director and Co-Head,
Workday Ventures
Johan Wiberg
Group Chief Technology Officer,
Vodafone
MANAGEMENT
INFORMATION
EXECUTIVE MANAGEMENT
Robert G. Painter
President and
Chief Executive Officer
David G. Barnes
Senior Vice President
and Chief Financial
Officer
BUSINESS OPERATIONS
Ronald J. Bisio
Senior Vice President
Cyndee Hoagland
Senior Vice President
Patricia Boothe
Senior Vice President
James Langley
Senior Vice President
Bryn A. Fosburgh
Senior Vice President
Darryl R. Matthews
Senior Vice President
Jaime Nielsen
Senior Vice President
Chief People Officer
Mark Schwartz
Senior Vice President
Chief Digital Officer
Julie A. Shepard
Vice President
Finance and Chief
Accounting Officer
STAFF OPERATIONS
Thomas Fansler
Senior Vice President
Chief Technology &
Data Officer
James A. Kirkland
Senior Vice President
General Counsel
Leah K. Lambertson
Senior Vice President
Operations and
Head of Sustainability
Michael Lesyna
Senior Vice President
Strategy and
Corporate Development
The Company's annual report on Form 10-K, as filed with the Securities Exchange Commission, accompanies this
annual report to stockholders and is also available on the Investor Relations section of the Company’s website at:
www.trimble.com.
©2021, Trimble Inc. All rights reserved. Trimble, and 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.
CORPORATE HEADQUARTERS
935 Stewart Drive
Sunnyvale, California 94085
+1 (408) 481-8000
www.trimble.com
Trimble's common stock is traded on
Nasdaq under the symbol TRMB.
INDEPENDENT AUDITOR
LOCATIONS
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
investor_relations@trimble.com
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