TRIMBLE INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and
estimates during the first two quarters of 2022. For a complete discussion of
our critical accounting policies and estimates, refer to “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
section of the 2021 Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

For a summary of recent accounting pronouncements applicable to our Condensed
Consolidated Financial Statements, refer to Note 1 “Overview and Accounting
Policies” of this Form 10-Q.

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.

Our growth strategy is centered on multiple elements:


•Executing on our Connect and Scale strategy;
•Increasing focus on software and services;
•Focus on attractive markets with significant growth and profitability
potential;
•Domain knowledge and technological innovation that benefit a diverse customer
base;
•Geographic expansion with localization strategy;
•Optimized go-to-market strategies to best access our markets;
•Strategic acquisitions;
•Venture fund investments; and
•Sustainability.

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 toward a more significant mix of recurring revenue contracts,
as demonstrated by our success in driving annualized recurring revenue ("ARR")
of $1,512.5 million, which represents growth of 12% year-over-year at the end of
the second quarter of 2022. Excluding the impact of foreign currency,
acquisitions, and divestitures, ARR organic growth was 15%. This shift has
positively impacted our revenue mix and growth over time and is leading to
improved visibility in our businesses. Our software, maintenance, subscriptions,
and services represented 56% of total revenue for the first two quarters of
2022. 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.

For a full definition of ARR as used in this discussion and analysis, refer to
the “Supplemental Disclosure of Non-GAAP Financial Measures and Annualized
Recurring Revenue” later in this Item 2.

Impact of Recent Events on Our Business

Inflation, Supply Chain, Foreign Currency Fluctuations, and Russia’s Invasion of
Ukraine


In the first two quarters of 2022, we continued to experience inflationary cost
increases in certain components of our hardware products due to supply chain
disruptions resulting from parts and labor shortages and an increase in
worldwide demand for components. Over the past year, we have continued to
increase customer pricing to offset inflationary pressures. Due to extended
component lead times, we have made binding commitments over a longer horizon for
certain components. This may impact our working capital in the short term;
however, we expect supply chain conditions to normalize over time.

Our year-to-date results were negatively impacted by foreign currency
fluctuations due to strengthening of the U.S. dollar. In the second quarter and
first two quarters of 2022, unfavorable revenue impacts from foreign currency
exchange rates were $28.5 million and $47.8 million.
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In the first quarter of 2022, we stopped selling to Russia and Belarus customers
and wrote off uncollected customer receivables and inventory located in these
countries. In the second quarter of 2022, we terminated business operations in
Russia and Belarus. To date, asset impairments and severance costs were not
material to our consolidated financial statements. Total revenue associated with
Russia and Belarus customers, either sold directly or indirectly through
resellers or OEMs, was less than 2% of our total Company revenue for 2021.

Business Divestitures


In the second quarter of 2022, we completed the sale of the Time and Frequency,
LOADRITE, Spectra Precision Tools, and SECO accessories businesses to
Precisional LLC, an affiliate of The Jordan Company. Prior to the sale, the
operating results were previously reported in our Buildings and Infrastructure
and Geospatial segments. For additional discussion of this divestiture, refer to
Note 4 "Divestitures" of this Form 10-Q.

Additionally, we completed the sale of Beena Vision to Wabtec Corporation in the
second quarter of 2022, which was part of the Transportation segment. The
proceeds were immaterial.


Both of these divestitures are in line with our strategy to focus on core areas
of our long-term growth and strategic product roadmap. For 2021, the revenue and
operating income for these businesses was approximately $185.0 million and $37.0
million.

For the second quarter of 2022, as compared to 2021, divestitures reduced
revenue and operating income by $37.9 million and $10.8 million.

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, diluted earnings per share, and annualized recurring revenue
compared for the periods indicated:

                                                           Second Quarter of                                                       First Two Quarters of
                                                                          Dollar                                                                    Dollar
                                      2022               2021             Change           % Change             2022               2021             Change           % Change
(In millions, except per share
amounts)
Revenue:
Product                           $   564.5$   594.9$  (30.4)            (5)%           $ 1,186.1$ 1,134.3$   51.8              5%
Service                               158.0              162.1              (4.1)            (3)%               319.1              324.4              (5.3)            (2)%
Subscription                          218.7              188.2              30.5              16%               429.7              373.0              56.7              15%
Total revenue                     $   941.2$   945.2$   (4.0)             -%            $ 1,934.9$ 1,831.7$  103.2              6%

Gross margin                      $   537.5$   525.4$   12.1              2%            $ 1,087.1$ 1,018.7$   68.4              7%
Gross margin as a % of revenue         57.1  %            55.6  %                                                56.2  %            55.6  %
Operating income                  $   134.9$   144.8$   (9.9)            (7)%           $   291.8$   285.7$    6.1              2%

Operating income as a % of
revenue                                14.3  %            15.3  %                                                15.1  %            15.6  %

Diluted earnings per share        $    0.67$    0.55$   0.12              22%           $    1.11$    1.00$   0.11              11%

Non-GAAP revenue (1)              $   941.2$   945.3$   (4.1)             -%            $ 1,934.9$ 1,832.0$  102.9              6%

Non-GAAP operating income (1) $ 210.7$ 228.6$ (17.9)

            (8)%           $   443.8$   437.8$    6.0              1%
Non-GAAP operating income as a %
of Non-GAAP Revenue(1)                 22.4  %            24.2  %                                                22.9  %            23.9  %
Non-GAAP diluted earnings per
share (1)                         $    0.64$    0.72$  (0.08)            (11)%          $    1.38$    1.38          $      -              NM

Annualized Recurring Revenue
("ARR") (1)                       $ 1,512.5$ 1,348.9$  163.6              12%               N/A                N/A                    N/A           N/A

(1) Refer to “Supplemental Disclosure of Non-GAAP Financial Measures and
Annualized Recurring Revenue” of this Form 10-Q for definitions.

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Second Quarter and First Two Quarters of 2022 as Compared to 2021

Revenue


                                                                    Second Quarter of                     First Two Quarters of
Change versus the corresponding period in 2021                             2022                                   2022
                                                                         % Change                               % Change
(In millions)
Change in total revenue                                                               -  %                                    6  %
Acquisitions                                                                          1  %                                    1  %
Divestitures                                                                         (4) %                                   (3) %
Foreign currency exchange                                                            (3) %                                   (3) %
Organic growth                                                                        6  %                                   10  %

For this table and similar tables below, percentages may not sum due to
rounding.


Excluding acquisitions, divestitures, and unfavorable foreign currency, revenue
for the second quarter and first two quarters was up due to organic growth in
hardware, software, and subscription sales in Building and Infrastructure and
Resources and Utilities. Geospatial organic revenue was slightly down for the
second quarter and was impacted by supply chain constraints and unusually strong
sales in the prior year, including new product introductions. For the first two
quarters, Geospatial organic revenue, particularly software sales, was up, which
contributed to overall growth.

By revenue category, product revenue decreased for the second quarter primarily
due to divestitures, which were hardware centric, partially offset by hardware
sales in Buildings and Infrastructure and Resources and Utilities. Product
revenue increased for the first two quarters primarily due to hardware and
software growth in Buildings and Infrastructure, Resources and Utilities, and
Geospatial, partially offset by divestitures of $35.0 million. Service revenue
was relatively flat. Subscription revenue increased for the second quarter and
first two quarters primarily due to strong growth in Buildings and
Infrastructure and, to a lesser extent, in Resources and Utilities, Geospatial,
and Transportation. All revenue categories were impacted by unfavorable foreign
currency.

Gross Margin

Gross margin increased for the second quarter and first two quarters primarily
due to organic revenue growth in Buildings and Infrastructure and Resources and
Utilities, partially offset by divestitures and unfavorable foreign currency.
Gross margin as a percentage of revenue increased for the second quarter and
first two quarters due to an increased mix of software and subscription sales
across all segments, slightly offset by supply chain cost impacts in Resources
and Utilities, which lessened in the second quarter due to customer price
increases.

Operating Income


Operating income decreased for the second quarter due to divestitures and
unfavorable foreign currency, partially offset by organic revenue and gross
margin expansion. Operating expense was higher due to investments related to our
Connect and Scale strategy, including increased headcount and consulting, as
well as sales, marketing, and travel costs as COVID-related lockdowns subsided.
Operating income increased for the first two quarters primarily due to revenue
and gross margin expansion, partially offset by divestitures and unfavorable
foreign currency.

Operating income as a percentage of revenue decreased for the second quarter and
first two quarters primarily due to increased operating expense, partially
offset by increased gross margin as a percentage of revenue.

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Research and Development, Sales and Marketing, and General and Administrative
Expense

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:

                                                           Second Quarter of                                                   First Two Quarters of
                                                                        Dollar                                                                Dollar
                                       2022             2021            Change           % Change            2022             2021            Change           % Change
(In millions)
Research and development            $ 140.1$ 138.3$    1.8              1%            $ 280.4$ 267.7$   12.7              5%
Percentage of revenue                  14.9  %          14.6  %                                              14.5  %          14.6  %
Sales and marketing                 $ 138.9$ 125.2$   13.7              11%           $ 270.8$ 247.6$   23.2              9%
Percentage of revenue                  14.8  %          13.2  %                                              14.0  %          13.5  %
General and administrative          $ 106.9$  99.6$    7.3              7%            $ 208.4$ 185.0$   23.4              13%
Percentage of revenue                  11.4  %          10.5  %                                              10.8  %          10.1  %
Total                               $ 385.9$ 363.1$   22.8              6%            $ 759.6$ 700.3$   59.3              8%


R&D expense increased for the second quarter and first two quarters primarily
due to higher compensation expense, partially offset by favorable foreign
currency, favorable deferred compensation fluctuations, and divestitures. We
believe that the development and introduction of new solutions are critical to
our future success, and we expect to continue the active development of new
products.

S&M expense increased for the second quarter and first two quarters primarily
due to higher compensation expense, including commissions, and, to a lesser
extent, higher travel and marketing costs, partially offset by favorable foreign
currency and divestitures.

G&A expense increased for the second quarter and first two quarters primarily
due to higher compensation and consulting costs related to our Connect and Scale
strategy and charitable donations to the Trimble Foundation, partially offset by
lower stock-based compensation, favorable deferred compensation fluctuations,
and divestitures. In addition, the first two quarters of 2022 was impacted by
higher bad debt expense associated with Russia and Belarus customers in the
first quarter of 2022.

Amortization of Purchased Intangible Assets

                                                        Second Quarter of                                                 First Two Quarters of
                                                                    Dollar                                                               Dollar
                                    2022            2021            Change           % Change            2022            2021            Change           % Change
(In millions)
Cost of sales                     $ 21.0$ 22.0$   (1.0)            (5)%           $  43.5$ 44.1$   (0.6)            (1)%
Operating expenses                  11.3            13.0              (1.7)            (13)%             23.4            26.7              (3.3)            (12)%
Total amortization expense of
purchased intangibles             $ 32.3$ 35.0$   (2.7)            (8)%           $  66.9$ 70.8$   (3.9)

(6)%


Total amortization expense of
purchased intangibles as a
percentage of revenue                  3  %            4  %                                                 3  %            4  %

Total amortization expense of purchased intangibles decreased for the second
quarter and first two quarters due to the expiration of prior quarters’
acquisition amortization.

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Non-operating Income, Net

The components of non-operating income, net, were as follows:

                                                         Second Quarter of                                                    First Two Quarters of
                                                                      Dollar                                                                  Dollar
                                      2022            2021            Change           % Change             2022              2021            Change           % Change
(In millions)
Divestitures gain, net             $ 106.0$ 20.4$   85.6             420%           $   97.1$ 22.4$   74.7             333%
Interest expense, net                (15.3)          (16.6)              1.3             (8)%              (31.3)            (33.5)              2.2             (7)%

Income from equity method
investments, net                       5.8            10.0              (4.2)            (42)%              15.5              21.8              (6.3)            (29)%
Other income (expense), net           (9.8)            3.8             (13.6)           (358)%             (13.0)              3.4             (16.4)           (482)%

Total non-operating income, net $ 86.7$ 17.6$ 69.1

             393%           $   68.3$ 14.1$   54.2             384%


Non-operating income, net increased for the second quarter and first two
quarters primarily due to the net gain from the sale of five businesses in the
second quarter, slightly offset by fluctuations in deferred compensation plan
assets included in Other income (expense), net, and lower joint-venture
profitability.

Income Tax Provision


For the second quarter, our effective income tax rate was 24.2%, as compared to
14.5% in the prior year. For the first two quarters, our effective income tax
rate was 22.7%, as compared to 15.4% in the prior year. The increases were
primarily associated with current quarter divestiture gains and a prior year
rate decrease due to a one-time tax benefit from a foreign deferred tax asset.

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 (chief operating decision maker) views and evaluates
operations based on the results of our reportable operating segments under our
management reporting system. For additional discussion of our segments, refer to
Note 6 "Segment Information" of this Form 10-Q.

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The following table is a summary of revenue and operating income by segment
compared for the periods indicated:

                                                             Second Quarter of                                                   First Two Quarters of
                                                                          Dollar                                                                Dollar
                                         2022             2021            Change           % Change            2022             2021            Change           % Change
(In millions)
Buildings and Infrastructure
Segment revenue                       $ 382.6$ 364.8$   17.8              5%            $ 780.2$ 707.9$   72.3              10%
Segment revenue as a % of total
revenue                                    41  %            39  %                                                40  %            39  %
Segment operating income              $ 101.4$ 104.1              (2.7)            (3)%           $ 222.1$ 200.5              21.6              11%
Segment operating income as a % of
segment revenue                          26.5  %          28.5  %                                              28.5  %          28.3  %

Geospatial

Segment revenue                       $ 193.7$ 219.7             (26.0)            (12)%          $ 401.2$ 401.4              (0.2)             -%
Segment revenue as a % of total
revenue                                    20  %            23  %                                                21  %            22  %
Segment operating income              $  57.8$  66.1              (8.3)            (13)%          $ 115.7$ 114.8               0.9              1%
Segment operating income as a % of
segment revenue                          29.8  %          30.1  %                                              28.8  %          28.6  %
Resources and Utilities
Segment revenue                       $ 214.8$ 197.5              17.3              9%            $ 444.7$ 402.7              42.0              10%
Segment revenue as a % of total
revenue                                    23  %            21  %                                                23  %            22  %
Segment operating income              $  73.0$  70.5               2.5              4%            $ 148.1$ 150.6              (2.5)            (2)%
Segment operating income as a % of
segment revenue                          34.0  %          35.7  %                                              33.3  %          37.4  %

Transportation

Segment revenue                       $ 150.1$ 163.3             (13.2)            (8)%           $ 308.8$ 320.0             (11.2)            (4)%
Segment revenue as a % of total
revenue                                    16  %            17  %                                                16  %            17  %
Segment operating income              $  11.8$  12.8              (1.0)            (8)%           $  21.0$  21.2              (0.2)            (1)%
Segment operating income as a % of
segment revenue                           7.9  %           7.8  %                                               6.8  %           6.6  %


The following table is a reconciliation of our consolidated segment operating
income to consolidated income before taxes:

                                                       Second Quarter of                     First Two Quarters of
                                                    2022                2021                2022                2021
(In millions)
Consolidated segment operating income           $    244.0$   253.5$     506.9$   487.1
Unallocated general corporate expenses               (33.3)             (24.9)               (63.1)             (49.3)
Purchase accounting adjustments                      (32.3)             (34.0)               (66.9)             (68.8)
Acquisition / divestiture items                       (7.3)              (6.6)               (11.2)             (10.1)
Stock-based compensation / deferred
compensation                                         (26.2)             (38.3)               (51.2)             (67.0)
Restructuring and other costs                        (10.0)              (4.9)               (22.7)              (6.2)

Consolidated operating income                        134.9              144.8                291.8              285.7
Total non-operating income, net                       86.7               17.6                 68.3               14.1
Consolidated income before taxes                $    221.6$   162.4$     360.1$   299.8









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Buildings and Infrastructure

                                                                    Second Quarter of                     First Two Quarters of
Change versus the corresponding period in 2021                             2022                                   2022
                                                                         % Change                               % Change
(In millions)
Change in segment revenue                                                             5  %                                   10  %
Acquisitions                                                                          1  %                                    2  %
Divestitures                                                                         (6) %                                   (4) %
Foreign currency exchange                                                            (3) %                                   (2) %
Organic growth                                                                       13  %                                   15  %


Excluding acquisitions, divestitures, and unfavorable foreign currency, organic
revenue increased for the second quarter and first two quarters primarily due to
strong demand for our civil construction hardware and related software licenses
resulting from relative strength in residential construction spend. The increase
was also due to higher term license and subscription revenue growth in our
software businesses, and to a lesser extent, price increases. The increase in
subscription revenue resulted from higher sales to new and existing customers as
well as conversions from perpetual software to recurring offerings.

Operating income decreased for the second quarter primarily due to divestitures
and unfavorable foreign currency, partially offset by revenue and gross margin
expansion. Additionally, operating expense was higher due to investments,
including our Connect and Scale strategy; sales; marketing; and travel costs.
Operating income increased for the first two quarters primarily due to revenue
and gross margin expansion, partially offset by divestitures and unfavorable
foreign currency. Operating income as a percentage of revenue decreased for the
second quarter primarily due to increased operating expense, partially offset by
gross margin expansion. Operating income as a percentage of revenue for the
first two quarters was relatively flat.

Geospatial


                                                                    Second Quarter of                     First Two Quarters of
Change versus the corresponding period in 2021                             2022                                   2022
                                                                         % Change                               % Change
(In millions)
Change in segment revenue                                                           (12) %                                    -  %

Divestitures                                                                         (4) %                                   (2) %
Foreign currency exchange                                                            (3) %                                   (3) %
Organic growth                                                                       (5) %                                    5  %


Excluding divestitures and unfavorable foreign currency, organic revenue
decreased for the second quarter due to supply chain constraints and unusually
strong sales in the prior year, including new product introductions. For the
first two quarters, Geospatial organic revenue, particularly software sales, was
up, which contributed to overall growth.

Operating income decreased for the second quarter primarily due to divestitures
and organic revenue declines and higher operating expense due to investments,
including our Connect and Scale strategy; marketing; and travel costs. Gross
margin expansion partially offset the decreases. Operating income for the first
two quarters was relatively flat. Operating income as a percentage of revenue
for the second quarter and first two quarters was relatively flat.

Resources and Utilities


                                                                    Second Quarter of                     First Two Quarters of
Change versus the corresponding period in 2021                             2022                                   2022
                                                                         % Change                               % Change
(In millions)
Change in segment revenue                                                             9  %                                   10  %

Divestitures                                                                         (1) %                                   (1) %
Foreign currency exchange                                                            (5) %                                   (4) %
Organic growth                                                                       15  %                                   16  %


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Excluding divestitures and unfavorable foreign currency, organic revenue
increased for the second quarter and first two quarters primarily due to
continued relative strength in agriculture, particularly in the OEM channel in
the second quarter. Despite higher farmer input costs, market fundamentals,
including favorable commodity prices, continued to support agriculture revenue
growth. To a lesser extent, revenue was favorably impacted by customer price
increases.

Operating income was relatively flat for the second quarter and first two
quarters. Divestitures and unfavorable foreign currency were largely offset by
revenue expansion. Operating expense was higher due to investments, including
our Connect and Scale strategy, as well as travel costs. Operating income as a
percentage of revenue decreased for the second quarter and first two quarters
primarily due to gross margin percentage decrease associated with increased
supply chain costs; the supply chain impacts lessened in the second quarter due
to customer pricing increases.

Transportation


                                                                    Second Quarter of                     First Two Quarters of
Change versus the corresponding period in 2021                             2022                                   2022
                                                                         % Change                               % Change
(In millions)
Change in segment revenue                                                            (8) %                                   (4) %

Divestitures                                                                         (2) %                                   (1) %
Foreign currency exchange                                                            (1) %                                   (1) %
Organic growth                                                                       (5) %                                   (1) %

Excluding divestitures and unfavorable foreign currency, organic revenue
decreased for the second quarter and first two quarters primarily driven by
lower mobility hardware sales to North American customers. Enterprise revenue
continued to experience term license and subscription revenue growth as the
business transitions from a perpetual software license model.


Operating income and operating income as a percentage of revenue was relatively
flat for the second quarter and first two quarters. Revenue declines were
largely offset by gross margin expansion, including targeted cost reductions. We
continued to maintain focus on new product introductions and transitions to
recurring revenue.


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LIQUIDITY AND CAPITAL RESOURCES


                                        Second Quarter of           Year 

End

As of                                         2022                    2021              Dollar Change             % Change
(In millions, except percentages)
Cash and cash equivalents              $          350.1          $     325.7          $         24.4                       7  %
As a percentage of total assets                     5.1  %               4.6  %
Principal balance of outstanding debt  $        1,300.0$   1,300.0          $            -                       -  %

                                                First Two Quarters of
                                              2022                    2021              Dollar Change             % Change
(In millions)
Net cash provided by operating
activities                             $          201.8          $     428.8$       (227.0)                    (53) %
Net cash provided by investing
activities                                        172.3                 42.9                   129.4                     302  %
Net cash used in financing activities            (335.3)              (223.1)                 (112.2)                     50  %
Effect of exchange rate changes on                (14.4)                

(1.9)

cash and cash equivalents                                                                      (12.5)                    658  %
Net increase in cash and cash
equivalents                            $           24.4          $     246.7


Operating Activities

The decrease in cash provided by operating activities was primarily driven by
higher inventory purchases and lower accounts payable associated with the timing
of inventory payments, higher tax payments, driven in part by a second quarter
payment associated with the Tax Cuts and Jobs Act of 2017, and lower accrued
compensation associated with bonus payouts in the first quarter, offset by
higher deferred revenue.

Investing Activities

The increase in cash provided by investing activities was primarily due to
higher proceeds from divestitures.

Financing Activities


The increase in cash used in financing activities was primarily driven by an
increase in common stock repurchases, partially offset by a decrease in debt
repayments, net of debt proceeds.

Cash and Cash Equivalents


We believe that our cash and cash equivalents and borrowings, along with cash
provided by operations will be sufficient in the foreseeable future to meet our
anticipated operating cash needs, expenditures related to our Connect and Scale
strategy, debt service, and any stock repurchases under the stock repurchase
program. In addition, in March 2022, we entered into a five-year, unsecured
revolving loan facility for borrowings up to $1.25 billion, which replaced the
2018 Credit Facility. The 2022 Credit Facility contains an option to increase
the borrowings up to $1.75 billion with lender approval. As of July 1, 2022, no
amounts were outstanding under the 2022 Credit Facility.

We anticipate refinancing some or all of our outstanding indebtedness at or
prior to its maturity, which could involve us accessing the capital markets.


A provision enacted in the Tax Cuts and Jobs Act of 2017 related to the
capitalization of research and development costs for tax purposes became
effective on January 1, 2022. If this provision is not deferred, our full year
2022 tax payments are expected to increase by an estimated $90 million. In the
second quarter, we made a partial payment of $40 million for this liability.

Our cash requirements have not otherwise materially changed since the 2021 Form
10-K.

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SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES AND ANNUALIZED RECURRING
REVENUE


To supplement our consolidated financial information, we included non-GAAP
financial measures, which are not meant to be considered in isolation or as a
substitute for comparable GAAP. We believe non-GAAP financial measures provide
useful information to investors and others in understanding our "core operating
performance", which excludes (i) the effect of non-cash items and certain
variable charges not expected to recur; and (ii) transactions that are not
meaningful in comparison to our past operating performance or not reflective of
ongoing financial results. Lastly, we believe that our core operating
performance offers a supplemental measure for period-to-period comparisons and
can be used to evaluate our historical and prospective financial performance, as
well as our performance relative to competitors. In addition to providing
non-GAAP financial measures, we disclose Annualized Recurring Revenue ("ARR") to
give the investors supplementary indicators of the value of our current
recurring revenue contracts.

ARR represents the estimated annualized value of recurring revenue, including
subscription, maintenance and support 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.

The non-GAAP financial measures, definitions, and explanations to the
adjustments to comparable GAAP measures are included below:

                                                                             Second Quarter of                                                First Two Quarters of
                                                                    2022                            2021                              2022                              2021
                                                           Dollar         % of              Dollar        % of               Dollar          % of               Dollar         % of
(In millions, except per share amounts)                    Amount       Revenue             Amount      Revenue              Amount        Revenue              Amount       Revenue
REVENUE:
GAAP revenue:                                            $  941.2$ 945.2$  1,934.9$ 1,831.7
Purchase accounting adjustments                  (A)            -                             0.1                                  -                               0.3
Non-GAAP revenue:                                        $  941.2$ 945.3$  1,934.9$ 1,832.0
GROSS MARGIN:
GAAP gross margin:                                       $  537.5           57.1  %       $ 525.4           55.6  %       $  1,087.1           56.2  %       $ 1,018.7           55.6  %
Purchase accounting adjustments                  (A)         21.0                            22.1                               43.5                    

44.4

Stock-based compensation / deferred
compensation                                     (C)          3.1                             2.6                                5.3                               4.6
Restructuring and other costs                    (D)            -                             0.2                                1.1                               0.2

Non-GAAP gross margin:                                   $  561.6           59.7  %       $ 550.3           58.2  %       $  1,137.0           58.8  %       $ 1,067.9           58.3  %
OPERATING EXPENSES:
GAAP operating expenses:                                 $  402.6           42.8  %       $ 380.6           40.3  %       $    795.3           41.1  %       $   733.0           40.0  %
Purchase accounting adjustments                  (A)        (11.3)                          (11.9)                             (23.4)                   

(24.4)

Acquisition / divestiture items                  (B)         (7.3)                           (6.6)                             (11.2)                   

(10.1)

Stock-based compensation / deferred
compensation                                     (C)        (23.1)                          (35.7)                             (45.9)                            (62.4)
Restructuring and other costs                    (D)        (10.0)                           (4.7)                             (21.6)                             (6.0)
Non-GAAP operating expenses:                             $  350.9           37.3  %       $ 321.7           34.0  %       $    693.2           35.8  %       $   630.1           34.4  %
OPERATING INCOME:
GAAP operating income:                                   $  134.9           14.3  %       $ 144.8           15.3  %       $    291.8           15.1  %       $   285.7           15.6  %
Purchase accounting adjustments                  (A)         32.3                            34.0                               66.9                    

68.8

Acquisition / divestiture items                  (B)          7.3                             6.6                               11.2                    

10.1

Stock-based compensation / deferred
compensation                                     (C)         26.2                            38.3                               51.2                              67.0
Restructuring and other costs                    (D)         10.0                             4.9                               22.7                               6.2

Non-GAAP operating income:                               $  210.7           22.4  %       $ 228.6           24.2  %       $    443.8           22.9  %       $   437.8           23.9  %
NON-OPERATING INCOME (EXPENSE), NET:
GAAP non-operating income, net:                          $   86.7$  17.6$     68.3$    14.1
Acquisition / divestiture items                  (B)       (106.3)                          (20.7)                             (97.4)                            (22.8)
Deferred compensation                            (C)          7.0                            (2.7)                              10.3                              (4.2)
Restructuring and other costs                    (D)            -                               -                                0.1                                 -
Non-GAAP non-operating expense, net:                     $  (12.6)$  (5.8)$    (18.7)$   (12.9)


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                                                                       GAAP and                          GAAP and                          GAAP and                          GAAP and
                                                                       Non-GAAP                          Non-GAAP                          Non-GAAP                          Non-GAAP
                                                                      Tax Rate %                        Tax Rate %                        Tax Rate %                        Tax Rate %
                                                                         (G)                               (G)                               (G)                               (G)
INCOME TAX PROVISION:
GAAP income tax provision:                              $  53.6             24.2  %       $  23.5             14.5  %       $  81.8             22.7  %       $  46.3             15.4  %
Non-GAAP items tax effected                     (E)        (5.7)                              8.8                              12.4                     

19.5

Difference in GAAP and Non-GAAP tax rate        (F)       (11.4)                              6.7                             (15.5)                    

8.2


Non-GAAP income tax provision:                          $  36.5             18.4  %       $  39.0             17.5  %       $  78.7             18.5  %       $  74.0             17.4  %
NET INCOME:
GAAP net income attributable to Trimble
Inc.:                                                   $ 168.0$ 138.9$ 278.3$ 253.4
Purchase accounting adjustments                 (A)        32.3                              34.0                              66.9                     

68.8

Acquisition / divestiture items                 (B)       (99.0)                            (14.1)                            (86.2)                    

(12.7)

Stock-based compensation / deferred
compensation                                    (C)        33.2                              35.6                              61.5                              62.8
Restructuring and other costs                   (D)        10.0                               4.9                              22.8                               6.2

Non-GAAP tax adjustments                     (E) - (F)     17.1                             (15.5)                              3.1                             (27.7)
Non-GAAP net income attributable to Trimble
Inc.:                                                   $ 161.6$ 183.8$ 346.4$ 350.8
DILUTED NET INCOME PER SHARE:
GAAP diluted net income per share
attributable to Trimble Inc.:                           $  0.67$  0.55$  1.11$  1.00
Purchase accounting adjustments                 (A)        0.13                              0.13                              0.27                     

0.27

Acquisition / divestiture items                 (B)       (0.39)                            (0.06)                            (0.34)                    

(0.05)

Stock-based compensation / deferred
compensation                                    (C)        0.13                              0.14                              0.24                              0.25
Restructuring and other costs                   (D)        0.04                              0.02                              0.09                              0.02

Non-GAAP tax adjustments                     (E) - (F)     0.06                             (0.06)                             0.01                             (0.11)
Non-GAAP diluted net income per share
attributable to Trimble Inc.:                           $  0.64$  0.72$  1.38$  1.38
ADJUSTED EBITDA:
GAAP net income attributable to Trimble
Inc.:                                                   $ 168.0$ 138.9$ 278.3$ 253.4
Non-operating income, net, income tax
provision, and net gain attributable to
noncontrolling interests                                  (33.1)                              5.9                              13.5                              32.3
GAAP operating income:                                    134.9                             144.8                             291.8                             285.7
Purchase accounting adjustments                 (A)        32.3                              34.0                              66.9                     

68.8

Acquisition / divestiture items                 (B)         7.3                               6.6                              11.2                     

10.1

Stock-based compensation / deferred
compensation                                    (C)        26.2                              38.3                              51.2                              67.0
Restructuring and other costs                   (D)        10.0                               4.9                              22.7                               6.2

Non-GAAP operating income:                                210.7                             228.6                             443.8                             437.8
Depreciation expense                                       11.0                              10.7                              21.5                              21.0

Income from equity method investments, net                  5.8                              10.0                              15.5                              21.8
Adjusted EBITDA                                         $ 227.5             24.2  %       $ 249.3             26.4  %       $ 480.8             24.8  %       $ 480.6             26.2  %


Non-GAAP Definitions

Non-GAAP revenue

We define Non-GAAP revenue as GAAP revenue, excluding the effects of purchase
accounting adjustments for acquisitions occurring prior to 2021. We believe this
measure helps investors understand the performance of our business including
acquisitions, as non-GAAP revenue excludes the effects of certain acquired
deferred revenue that was written down to fair value

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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 define Non-GAAP gross margin as GAAP gross margin, excluding the effects of
purchase accounting adjustments, stock-based compensation, deferred
compensation, and restructuring and other costs. 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 operating expenses


We define Non-GAAP operating expenses as GAAP operating expenses, excluding the
effects of purchase accounting adjustments, acquisition/divestiture items,
stock-based compensation, deferred compensation, and restructuring and other
costs. We believe this measure is important to investors evaluating our non-GAAP
spending in relation to revenue.

Non-GAAP operating income


We define Non-GAAP operating income as GAAP operating income, excluding the
effects of purchase accounting adjustments, acquisition/divestiture items,
stock-based compensation, deferred compensation, and restructuring and other
costs. We believe our investors benefit by understanding our non-GAAP operating
income trends, which are driven by revenue, gross margin, and spending.

Non-GAAP non-operating expense, net


We define Non-GAAP non-operating expenses, net as GAAP non-operating expenses,
net, excluding acquisition/divestiture items, deferred compensation, and
restructuring and other costs. We believe this measure helps investors evaluate
our non-operating expense trends.

Non-GAAP income tax provision


We define Non-GAAP income tax provision as GAAP income tax provision, excluding
charges and benefits such as net deferred tax impacts resulting from the
non-U.S. intercompany transfer of intellectual property, tax law changes, and
significant one-time reserve releases upon the statute of limitations
expirations. 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.

Non-GAAP net income


We define Non-GAAP net income as GAAP net income, excluding the effects of
purchase accounting adjustments, acquisition/divestiture items, stock-based
compensation, restructuring and other costs, and non-GAAP tax adjustments. 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 diluted net income per share


We define Non-GAAP diluted net income per share as GAAP diluted net income per
share, excluding the effects of purchase accounting adjustments,
acquisition/divestiture items, stock-based compensation, restructuring and other
costs, and non-GAAP tax adjustments. 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.

Adjusted EBITDA

We define Adjusted EBITDA as non-GAAP operating income plus depreciation expense
and income from equity method investments, net. Other companies may define
Adjusted EBITDA differently. Adjusted EBITDA is not intended to purport to be an
alternative to net income or operating income as a measure of operating
performance or cash flow from operating activities as a measure of liquidity.
Adjusted EBITDA is a performance measure that we believe offers a useful view of
the overall operations of our business because it facilitates 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.

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Explanations of Non-GAAP adjustments

(A).Purchase accounting adjustments. Purchase accounting adjustments consist of
the following:


i.Acquired deferred revenue adjustment. We adopted ASU 2021-08 in the fourth
quarter of 2021 for all acquisitions occurring in 2021 and going forward, which
requires the application of ASC 606, Revenue from Contracts with Customers, to
recognize and measure contract assets and contract liabilities on the
acquisition date. For acquisitions occurring prior to 2021, non-GAAP revenue
excludes the adjustment to our revenue as a result of measuring the contract
liability at fair value on the acquisition date.

ii.Amortization of acquired capitalized commissions. Purchase accounting
generally requires entities to eliminate capitalized sales commissions balances
as of the acquisition date. Non-GAAP operating expenses exclude the adjustments
that eliminate the capitalized sales commissions. For acquisitions occurring
prior to 2021, non-GAAP operating expenses exclude the adjustment of acquired
capitalized commissions amortization.

iii.Amortization of purchased intangible assets. Non-GAAP gross margin and
operating expenses exclude the amortization of purchased intangible assets,
which primarily represents technology and/or customer relationships already
developed.


(B).Acquisition / divestiture items. Non-GAAP gross margin and operating
expenses exclude acquisition costs consisting 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. Non-GAAP non-operating expense, net,
excludes unusual one-time acquisition/divestiture charges as well as divestiture
and strategic investment gains/losses. These are one-time costs that vary
significantly in amount and timing and are not indicative of our core operating
performance.

(C).Stock-based compensation / deferred compensation. Non-GAAP gross margin and
operating expenses exclude stock-based compensation and 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.

(D).Restructuring and other costs. Non-GAAP gross margin and operating expenses
exclude restructuring and other exit costs comprised of termination benefits
related to reductions in employee headcount, including executive severance
agreements, the closure or exit of facilities, and cancellation of certain
contracts. In addition, in 2022, other costs include a one-time charge for
Russia and Belarus customer receivables and inventory, as well as a one-time $20
million commitment to donate to Trimble Foundation to be paid over four
quarters.

(E).Non-GAAP items tax effected. This amount adjusts the provision for income
taxes to reflect the effect of the non-GAAP items (A) – (D) on non-GAAP net
income.


(F).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 non-GAAP tax
rate excludes charges and benefits such as net deferred tax impacts resulting
from a non-U.S. intercompany transfer of intellectual property and significant
one-time reserve releases upon statute of limitations expirations.

(G).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.

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