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| TRMB > SEC Filings for TRMB > Form 10-Q on 11-May-2009 | All Recent SEC Filings |
11-May-2009
Quarterly Report
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U. S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to product returns, doubtful accounts, inventories, investments, intangible assets, income taxes, warranty obligations, restructuring costs, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the amount and timing of revenue and expense and the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes to our significant accounting polices during the three months ended April 3, 2009 from those disclosed in our 2008 Form 10-K.
Recent Accounting Pronouncements
Updates to recent accounting standards as disclosed in our Annual Report on Form 10-K for the fiscal year ended January 2, 2009 are as follows:
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which clarifies the definition of fair value, establishes a framework for measuring fair value within GAAP, and expands the disclosures regarding fair value measurements. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 deferring the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. We adopted SFAS No. 157 in its first quarter of fiscal 2008, except for those items specifically deferred under FSP No. SFAS 157-2, which were adopted in the first quarter of fiscal 2009. The adoption did not have a material impact on our financial position condition, results of operations, or cash flows.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations". SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree, and recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. SFAS No. 141(R) also sets forth the disclosures required to be made in the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, we adopted this standard in the first quarter of fiscal 2009. We expect SFAS No. 141(R) will have an impact on our financial position, results of operations, or cash flows, but the nature and magnitude of the specific effects will depend largely upon the nature and size of our business combinations. However, SFAS No. 141(R) did not have a material impact in the first quarter of fiscal 2009.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51". SFAS 160 changed the accounting and reporting for minority interests, which were recharacterized as noncontrolling interests (NCI) and classified as a component of equity. This new consolidation method significantly changed the accounting for transactions with minority interest holders. SFAS 160 required retroactive adoption of the presentation and disclosure requirements for previously existing minority interests. All other requirements of SFAS 160 are applied prospectively. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and, as such, we adopted this standard in the first quarter of fiscal 2009. The adoption of SFAS 160 did not have a material impact on our financial position, results of operations, or cash flows.
In March 2008, the FASB issued SFAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133", which requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged, as such, we adopted this standard in the first quarter of fiscal 2009. The adoption of SFAS 161 did not have a material impact on our financial position, results of operations, or cash flows.
EXECUTIVE LEVEL OVERVIEW
Trimble's focus is on combining positioning technology with wireless communication and application capabilities to create system-level solutions that enhance productivity and accuracy for our customers. The majority of our markets are end-user markets, including engineering and construction firms, governmental organizations, public safety workers, farmers and companies who must manage fleets of mobile workers and assets. In our Advanced Devices segment, we also provide components to original equipment manufacturers to incorporate into their products. In the end user markets, we provide a system that includes a hardware platform that may contain software and customer support. Some examples of our solutions include products that automate and simplify the process of surveying land, products that automate the utilization of equipment such as tractors and bulldozers, products that enable a company to manage its mobile workforce and assets, and products that allow municipalities to manage their fixed assets. In addition, we also provide software applications on a stand-alone basis. For example, we provide software for project management on construction sites.
Solutions targeted at the end-user make up a significant majority of our revenue. To create compelling products, we must attain an understanding of the end users' needs and work flow, and how location-based technology can enable that end user to work faster, more efficiently, and more accurately. We use this knowledge to create highly innovative products that change the way work is done by the end-user. With the exception of our Mobile Solutions and Advanced Devices segments, our products are generally sold through a dealer channel, and it is crucial that we maintain a proficient global, third-party distribution channel.
We continued to execute our strategy with a series of actions that can be summarized in four categories.
Reinforcing our position in existing markets
* We believe these markets provide us with additional, substantial potential for substituting our technology for traditional methods. We are continuing to develop new products and to strengthen our distribution channels in order to expand our market opportunity. In our Field Solutions Segment, we introduced a Variable Rate Application Option for our EZ Guidance 500 Systems, new AgGPS Autopilot platform kits for tractors, combines and sprayers, as well as the new Ag 162/262 Receivers that feature the Trimble proprietary Transcend Positioning Technology. We also enhanced our Utility Center Software and the Trident-3D data capture and analyst software for mobile mapping applications. In our Engineering and Construction segment, we introduced a new portfolio of Robotic Total Stations (RTS555, RTS655, and RTS633) for construction layout applications, the new Nomad 800X series of rugged handhelds, the HV301G Green Beam Laser, as well as the Spectra Precision Laser LL1100 and LR20. Further enhancements to the TrimbleŽ GCS900 Grade Control System, the Construction Manager software, and the Real Time Kinematic (RTK) engine GPS firmware were also made available. In our Mobile Solutions segment, we announced that Windstream Corporation and DirectSat USA are rolling out the Trimble GeoManager solution. All of these products strengthened our competitive position and created new value for the user.
Extending our position in existing markets through new product categories
* We are utilizing the strength of the Trimble brand in our markets to expand our revenue by bringing new products to existing users. In our Field Solutions segment, we introduced the Ag FmX Display with Dual Integrated GNSS Receivers for Precision Agriculture Applications. In our Engineering and Construction segment, we launched the Trimble Tablet - a rugged fully connected handheld computer, the Trimble Access software - a new field and office solution for surveyors, and the Trimble Assistant - a subscription service that allows Trimble dealers to take control of internet enabled Trimble device for trouble shooting or training. We also introduced the Trimble PCS400 Paving Control System, an automatic screed control system that can improve the accuracy and productivity of asphalt paving applications. We also expanded the Trimble VRS Now service to Illinois and Iowa, as well as launched the VRS I-Scope service in Europe. These services help simplify project scheduling and asset management by enabling subscribers to track and manage their assets in real-time without the need for base station hardware and incremental GNSS investment. Two new GPS receivers designed specifically for marine construction applications (Trimble SPS361 and SPS461) were also introduced. These are some examples of new products brought to existing markets.
Bringing existing technology to new markets
* We continue to reinforce our position in existing markets and position ourselves in newer markets that will serve as important sources of future growth. Our efforts are focused in Africa, China, India, the Middle-East and Russia. We announced a GPS software technology licensing agreement with Marvell, a leader in the development of storage, communications and consumer silicon. The licensing agreement will enable Marvell to provide customers with comprehensive GPS solutions based on innovative architectures that are tailored for high performance and low overall system power consumption.
Entering new market segments
* During the first quarter of fiscal 2009, we acquired QuickPen International based in Englewood, Colorado. QuickPen is a leading provider of Building Information Modeling (BIM) software for the heating, ventilation and air conditioning (HVAC), mechanical construction and plumbing industries.
RECENT BUSINESS DEVELOPMENTS
The following companies and joint ventures were acquired or formed during twelve months ended April 3, 2009 and are combined in our results of operations since the date of acquisition or formation:
QuickPen
On March 12, 2009, we acquired privately-held QuickPen International based in Englewood, Colorado. QuickPen is a leading provider of Building Information Modeling (BIM) software for the heating, ventilation and air conditioning (HVAC), mechanical construction and plumbing industries. QuickPen's performance is reported under our Engineering and Construction business segment.
Rawson Control Systems
On December 3, 2008, we acquired the assets of privately-held Rawson Control Systems based in Oelwein, Iowa. Rawson manufactures hydraulic and electronic controls for the agriculture equipment industry, including variable rate planter drives and controllers, variable rate fertilizer controllers, mechanical remote electric control valves and speed reducers. Rawson Control Systems' performance is reported under our Field Solutions business segment.
FastMap and GeoSite
On November 28, 2008, we acquired the FastMap and GeoSite software assets from Korec, a privately-held Trimble distributor serving the United Kingdom and Ireland. FastMap and GeoSite performance is reported under our Engineering and Construction and Field Solutions business segments, respectively.
Callidus Precision Systems
On November 28, 2008, we acquired the assets of privately-held Callidus Precision Systems GmbH of Halle, Germany. Callidus is a provider of 3D laser scanning solutions for the industrial market. Callidus's performance is reported under our Engineering and Construction business segment.
TopoSys
On November 13, 2008, we acquired TopoSys GmbH of Biberach an der Riss, Germany. TopoSys is a leading provider of aerial data collection systems comprised of LiDAR and metric cameras. TopoSys' performance is reported under our Engineering and Construction business segment.
TruCount
On October 30, 2008, we acquired the assets of privately-held TruCount, Inc., of Ames, Iowa. TruCount is a leading manufacturer of air and electric clutches that automate individual planter row shut-off. TruCount's performance is reported under our Field Solutions business segment.
RolleiMetric
On October 20, 2008, we acquired the assets of RolleiMetric from Rollei GmbH of Braunschweig, Germany. RolleiMetric is a leading provider of metric camera systems for aerial imaging and terrestrial close range photogrammetry. RolleiMetric's performance is reported under our Engineering and Construction business segment.
VirtualSite Solutions
On October 3, 2008, VirtualSite Solutions (VSS), a joint venture we formed with Caterpillar, began operations. We contributed $7.8 million in exchange for a 65% ownership and Caterpillar contributed $4.2 million for a 35% ownership in VSS. VSS develops software for fleet management and connected worksite solutions for both Caterpillar and us, and in turn, sells software subscription services to Caterpillar and us, which we both sell through our respective distribution channels. For financial reporting purposes, VSS assets and liabilities are consolidated with ours, as are its results of operations, which are reported under our Engineering and Construction business segment. Caterpillar's 35% interest is included in our Condensed Consolidated Financial Statements as noncontrolling interests.
SECO
On July 29, 2008, we acquired privately-held SECO Manufacturing Company of Redding, California. SECO is a leading manufacturer of accessories for the geomatics, surveying, mapping, and construction industries. SECO's performance is reported under our Engineering and Construction business segment.
Seasonality of Business
* Our individual segment revenue may be affected by seasonal buying patterns. Typically, the second fiscal quarter has been the strongest quarter for the Company driven by the construction buying season.
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