UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1999
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 0-18645
TRIMBLE NAVIGATION LIMITED
(Exact name of registrant as specified in its charter)
California 94-2802192
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
645 North Mary Avenue, Sunnyvale, California 94088
(Address of Principal Executive Offices) (Zip Code)
(408) 481-8000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of August 6, 1999, there were 22,518,600 shares of Common Stock (no par
value) outstanding.
1
<PAGE>
TRIMBLE NAVIGATION LIMITED
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
July 2, 1999 and January 1, 1999 3
Condensed Consolidated Statements of Operations -
Three and Six Months ended July 2, 1999 and, July 3, 1998 4
Condensed Consolidated Statements of Cash Flows -
Six Months ended July 2, 1999 and, July 3, 1998 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 27
SIGNATURES 28
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRIMBLE NAVIGATION LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
July 2, January 1,
1999 1999
-------------------------------------------------------------------------------
(In thousands) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $41,180 $ 40,865
Short term investments 23,643 16,269
Accounts and other receivable, net 38,953 33,431
Inventories 32,788 37,166
Other current assets 3,143 4,173
-------------- -------------
Total current assets 139,707 131,904
Net property and equipment 13,762 15,104
Intangible assets 1,231 1,320
Deferred income taxes 407 405
Other assets 7,469 7,546
--------------- ------------
Total assets $162,576 $156,279
=============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,388 $ 1,388
Accounts payable 13,255 13,000
Accrued compensation and benefits 7,201 4,696
Customer advances - 808
Accrued liabilities 10,968 15,474
Accrued liabilities related to disposal of
General Aviation 6,406 6,743
Accrued warranty expense 5,961 5,681
Income taxes payable 3,330 2,158
---------------- -----------
Total current liabilities 48,509 49,948
---------------- -----------
Noncurrent portion of long-term debt
and other liabilities 30,013 31,640
---------------- -----------
Total liabilities 78,522 81,588
--------------- ------------
Shareholders' equity:
Common stock 123,449 121,501
Common stock warrants 700 700
Accumulated deficit (39,048) (46,718)
Unrealized gain (loss) on short term
investments (33) 19
Foreign currency translation adjustment (1,014) (811)
--------------- ------------
Total shareholders' equity 84,054 74,691
--------------- ------------
Total liabilities and shareholders' equity $162,576 $156,279
=============== ============
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
TRIMBLE NAVIGATION LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
1999 1998 * 1999 1998 *
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Total revenue $ 70,839 $ 73,536 $ 139,609 $147,697
----------------- -------------- -------------- --------------
Operating expenses:
Cost of sales 33,228 37,277 66,431 73,112
Research and development 9,444 11,199 17,951 22,353
Sales and marketing 13,972 15,762 27,276 31,588
General and administrative 8,630 7,603 18,653 14,667
----------------- -------------- -------------- --------------
Total operating expenses 65,274 71,841 130,311 141,720
----------------- -------------- -------------- --------------
Operating income 5,565 1,695 9,298 5,977
----------------- -------------- -------------- --------------
Nonoperating income (expense):
Interest income 694 971 1,385 2,014
Interest and other expenses (835) (819) (1,652) (1,677)
Foreign exchange gain (loss) , net 54 245 (7) 280
----------------- -------------- -------------- --------------
(87) 397 (274) 617
----------------- -------------- -------------- --------------
Income before income taxes from
continuing operations 5,478 2,092 9,024 6,594
Income tax provision 822 200 1,354 700
----------------- -------------- -------------- --------------
Net income from continuing operations $ 4,656 $ 1,892 $ 7,670 $ 5,894
----------------- -------------- -------------- --------------
Discontinued operations:
Loss from operations - (1,637) - (3,724)
----------------- -------------- -------------- --------------
Net income $ 4,656 $ 255 $ 7,670 $ 2,170
================= ============== ============== ==============
Basic income per share from continuing operations $ 0.21 $ 0.08 0.34 0.26
Basic income (loss) per share from discontinued operations - (0.07) - (0.16)
----------------- -------------- -------------- --------------
Basic net income per share $ 0.21 $ 0.01 $ 0.34 $ 0.10
================= ============== ============== ==============
Shares used in calculating basic
income (loss) per share 22,319 22,693 22,290 22,737
================= ============== ============== ==============
Diluted income per share from continuing operations $ 0.20 $ 0.08 0.34 0.25
Diluted income (loss) per share from discontinued operations - (0.07) - (0.16)
----------------- -------------- -------------- --------------
Diluted net income per share $ 0.20 $ 0.01 $ 0.34 $ 0.09
================= ============== ============== ==============
Shares used in calculating diluted
income (loss) per share 22,769 23,300 22,437 23,458
================= ============== ============== ==============
<FN>
* Certain amounts in these periods have been restated for the discontinued operation (General Aviation) and subsequent to the
restatement, certain amounts in this period related to certain product lines have been reclassified to include amounts in
continuing operations that were previously included in discontinued operations. See Note 3 for further explanation.
</FN>
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
TRIMBLE NAVIGATION LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 2, July 3,
1999 1998 *
- --------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Net cash provided by operating activities of continuing operations $ 9,465 $ 5,686
Net cash used by operating activities of discontinued operations - $ (3,724)
------------- ----------------
Net cash provided by operating activities $ 9,465 $ 1,962
------------- ----------------
Cash flow from investing activities:
Purchase of short term investments (7,374) (62,268)
Maturities of short term investments 752 71,947
Sales of short term investments - -
Acquisition of property and equipment (3,105) (4,500)
Capitalized patent expenditures (523) (574)
------------- ----------------
Net cash provided (used) in investing activities of continuing operations (10,250) 4,605
Net cash used in investing activities of discontinued operations - (20)
------------- ----------------
Net cash provided (used) in investing activities (10,250) 4,585
------------- ----------------
Cash flow from financing activities:
Issuance of common stock 1,948 3,203
Repurchase of common stock - (8,754)
(Payment)/collections of notes receivable 484 (294)
(Payment)/proceeds from long-term debt and revolving
credit facilities (1,332) 2,527
------------- ----------------
Net cash provided (used) by financing activities of continuing operations 1,100 (3,318)
------------- ----------------
Net cash provided (used) by financing activities 1,100 (3,318)
------------- ----------------
Net increase in cash and cash equivalents 315 3,229
Cash and cash equivalents -- beginning of period 40,865 19,951
------------- ----------------
Cash and cash equivalents -- end of period $ 41,180 $ 23,180
============= ================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 751 $ 811
Income taxes, net of refunds $ 41 $ 983
<FN>
* Certain amounts in this period have been restated for the discontinued operation (General Aviation) and subsequent to the
restatement, certain amounts in this period related to certain product lines have been reclassified to include amounts in
continuing operations that were previously included in discontinued operations. See Note 3 for further explanation.
</FN>
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
TRIMBLE NAVIGATION LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Basis of Presentation:
The condensed consolidated financial statements for the three and six month
periods ended July 2, 1999, and July 3, 1998, which are presented in this
Quarterly Report on Form 10-Q are unaudited. The balance sheet at January 1,
1999, has been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, these statements include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair statement of the results for
the interim periods presented. The condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended January 1, 1999. The three and six month periods ending July 3, 1998
have been restated to reflect a subsequently retained portion of discontinued
operations. See Note 3.
The Company has a 52-53 week fiscal year which ends on the Friday nearest
to December 31, which for fiscal 1999 will be December 31, 1999.
The results of operations for the three and six month periods ended July 2,
1999 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999.
NOTE 2 - Inventories:
Inventories from continuing operations consist of the following:
July 2, January 1,
1999 1999
- ---------------------------------------------------------------------
(In thousands)
Raw materials $ 16,972 $ 22,480
Work-in-process 6,018 4,033
Finished goods 9,798 10,653
-------------- -------------------
$ 32,788 $ 37,166
-------------- -------------------
NOTE 3 - Discontinued Operations:
On October 2, 1998, the Company adopted a plan to discontinue its General
Aviation division. The Company currently anticipates that the division will be
disposed of by September 1999. Accordingly, the General Aviation division is
being reported as a discontinued operation for all periods presented in these
financial statements. Net assets of the discontinued operation at October 2,
1998 were written off and consisted primarily of inventory, property, plant and
equipment and intangible assets.
As of July 2, 1999, in connection with the discontinued operations, the
Company had incurred cumulative net expenses of $4.8 million consisting of
spending of $5.3 million for operating loss for the discontinued operation
through the estimated date of disposal including severance costs and receipt of
$543,000 related to the sale of particular inventory items and fixed assets. The
Company has a remaining provision of $6.4 million which includes $4.1 million
for the estimated operating losses through the estimated date of disposal
6
<PAGE>
including remaining severance costs and $2.3 million for facility and certain
other contractual costs.
On March 31, 1999 the Company made the decision to retain certain product
lines included within the General Aviation division which were part of the
previously planned discontinued operations. The basis of the decision was that
these products use common raw materials and labor which are necessary for the
Company's Air Transport products and, therefore, these particular product lines
could be retained without adding additional overhead from the overhead currently
required for the Air Transport products. The revenues and costs related to the
products retained have been included in the results of operations of continuing
operations in the periods presented.
The net revenues of the discontinued operation, which have been restated to
exclude the retained product lines, are not included in net revenues of
continuing operations in the accompanying statements of operations. The
operating results for the three and six months ended July 3, 1998 of the
discontinued operation are summarized as follows:
Three Months Ended Six Months Ended
July 3, July 3,
1998 1998
- --------------------------------------------------------------------------------
(In thousands)
Net revenues $ 2,314 $ 4,761
Loss before tax provision (1,637) (3,724)
Income tax provision - -
================ =================
Net loss $ (1,637) $ (3,724)
================ =================
Basic and diluted net loss per share $ (0.07) $ (0.16)
NOTE 4 - Restructuring Charge:
In fiscal 1998, the Company recorded restructuring charges totaling $10.3
million in operating expenses.
These charges were a result of the Company's reorganization activities,
through which the Company has downsized its operations, including reducing
headcount and facilities space usage and canceling its enterprise wide
information system project and certain research and development projects. The
impact of these decisions was that significant amounts of the Company's fixed
assets, prepaid expenses, and purchased technology have been impaired and
certain liabilities incurred. The Company wrote down the related assets to their
net realizable values and made provisions for the estimated liabilities.
7
<PAGE>
The activity in fiscal 1999 and 1998 related to the restructuring and the
amounts remaining at July 2, 1999 on the balance sheet are as follows (in
thousands):
Total
charged to Remaining in
expense in Amounts paid/ accrued liabilites
fiscal 1998 written off as of July 2, 1999
------------ -------------- -------------------
Employee termination benefits $ 2,864 $ (1,962) $ 902
Facility space reductions 1,061 (823) 238
ERP system abandonment 6,360 (5,589) 771
----------- ----------- ------------------
Subtotal $10,285 $ (8,374) $ 1,911
=========== =========== ===================
NOTE 5 - Segment Information:
The Company currently manages its industry segment within two Business
Units: the Precision Positioning Group (PPG) and the Mobile and Timing
Technologies (MTT) Group.
The accounting policies applied by each of the markets are the same as
those used by the Company in general.
The following table presents revenues, operating income (loss), and
identifiable assets by the Company's Business Units. The Company has no
inter-Business Unit sales or transfers. As presented, operating income (loss)
consists of net sales less operating expenses, excluding general corporate
expenses, interest income (expense), and income taxes. The identifiable assets
that the Chief Operating Decision Maker (CODM) views by industry market are
accounts receivable and inventory. The Company does not report depreciation and
amortization or capital expenditures by industry markets to the CODM.
8
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------- -----------------------------------------
Three Months Ended Six Months Ended
July 2, 1999 July 2, 1999
-------------------------------------- -----------------------------------------
(in thousands) (in thousands)
-------------------------------------- -----------------------------------------
PPG MTT Total PPG MTT Total
-------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
External net revenue $ 41,581 $ 29,258 $ 70,839 $ 84,147 $ 55,462 $ 139,609
Operating profit before corporate allocations 13,510 4,347 17,857 27,895 7,672 35,567
Corporate allocations (1) (6,165) (2,872) (9,037) (12,351) (5,363) (17,714)
-------------------------------------- -----------------------------------------
Operating profit from continuing operations $ 7,345 $ 1,475 $ 8,820 $ 15,544 $ 2,309 $ 17,853
Assets:
Accounts recievable (2) $ 26,848 $ 25,209 $ 52,057
Inventory 12,340 20,385 32,725
-------------------------------------- -----------------------------------------
Three Months Ended Six Months Ended
July 3, 1998 July 3, 1998
-------------------------------------- -----------------------------------------
(in thousands) (in thousands)
-------------------------------------- -----------------------------------------
PPG MTT Total PPG MTT Total
-------------------------------------- -----------------------------------------
External net revenue $ 43,659 $ 29,877 $ 73,536 $ 84,805 $ 62,892 $ 147,697
Operating profit before corporate allocations 7,969 1,551 9,520 14,116 5,865 19,981
Corporate allocations (1) (4,276) (2,033) (6,309) (8,123) (3,991) (12,114)
-------------------------------------- -----------------------------------------
Operating profit/(loss) from continuing operations $ 3,693 $ (482) $ 3,211 $ 5,993 $ 1,874 $ 7,867
-----------------------------------------
Tweleve Months Ended
January 1, 1999
-----------------------------------------
(in thousands)
-----------------------------------------
Assets: PPG MTT Total
-----------------------------------------
Accounts recievable (2) $ 32,197 $ 14,837 $ 47,034
Inventory 10,042 16,251 26,293
<FN>
(1) For the three and six months ended July 2, 1999, the Company determined the amount of corporate allocations charged to its
Business Units based on a percentage of the Business Units' monthly revenue, gross profit, and controllable spending
(research and development, marketing, and general and administrative). For the three and six months ended July 3, 1998,
the Company determined the amount of the corporate allocations charged to its Business Units based on a percentage of the
Business Units' monthly inventory balance and gross profit. Allocation percentages were determined at the beginning of
each of the respective fiscal years.
(2) As presented, the accounts receivable number excludes cash in advance and reserves, which are not, allocated between
Business Unit segments.
</FN>
</TABLE>
9
<PAGE>
Following are reconciliations corresponding to totals in the accompanying
consolidated financial statements (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
Revenues: 1999 1998 1999 1998
- --------------------------------------------------------------------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Total for reportable markets $ 70,839 $ 73,536 $ 139,609 $ 147,697
============== =============== ============= =================
Operating profit/(loss) from continuing operations:
- -------------------------------------------------------------
Total for reportable markets $ 8,820 $ 3,211 $17,853 $ 7,867
Unallocated corporate expenses (3,255) (1,516) (8,555) (1,890)
-------------- --------------- ------------- -----------------
Income before income taxes from continuing operations $ 5,565 $ 1,695 $ 9,298 $ 5,977
============== =============== ============= =================
Six Months Twelve Months
Ended Ended
July 2, January 1,
Assets: 1999 1999
- ------------------------------------------------------------- ------------- -----------------
Accounts receivable total for reportable markets $52,057 $ 47,034
Unallocated (1) (13,104) (13,603)
------------- -----------------
Total $38,953 $ 33,431
============= =================
Inventory total for reportable markets $32,725 $ 26,293
Common inventory (2) 63 10,873
============= =================
Net inventory $32,788 $ 37,166
============= =================
<FN>
(1) Includes cash in advance and reserves that are not allocated by segment.
(2) Consists of inventory that is common between the Business Unit segments. Parts can be used by either segment.
</FN>
</TABLE>
NOTE 6 - Comprehensive Income (Loss):
The components of comprehensive income, net of related tax for the three
and six months ended July 2, 1999 and July 3, 1998 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Net income $ 4,656 $ 255 $ 7,670 $ 2,170
Unrealized losses on securities (45) (17) (52) (12)
Foreign currency translation adjustments (90) (258) (203) (462)
----------- ------------ ------------ ---------------
Comprehensive income $ 4,521 $ (20) $ 7,415 $ 1,696
=========== ============ ============ ===============
</TABLE>
10
<PAGE>
The components of accumulated other comprehensive loss, net of related
taxes at July 2, 1999 and January 1, 1999 is as follows:
July 2, January 1,
1999 1999
- -------------------------------------------------------------------------
(In thousands)
Unrealized gains (loss) on securities $ (33) $ 19
Foreign currency translation adjustments (1,014) (811)
------------- --------------
Accumulated comprehensive loss $(1,047) $ (792)
============= ==============
NOTE 7 - New Accounting Standards:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, (SFAS 133) "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 will require the Company to record
all derivatives held on the balance sheet at fair value. Derivatives that are
not hedges must be adjusted to fair value through income. With respect to
derivatives which are hedges, then depending on the nature of the hedge, changes
in the fair value of derivatives either will be offset against the change in
fair value of the hedged assets, liabilities, or firm commitments through
earnings, or will be recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. In June of 1999 the
Financial Accounting Standards Board delayed the effective date of
implementation for one year; therefore, SFAS 133 is effective for fiscal years
beginning after June 15, 2000. The Company expects to adopt SFAS 133 as of the
beginning of its fiscal year 2001. The effect of adopting the Standard is
currently being evaluated, but is not expected to have a material adverse effect
on the Company's financial position or results of operations.
11
<PAGE>
NOTE 8 - Earnings Per Share:
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------ ------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Numerator:
Income from continuing operations available to common
shareholders used in basic and diluted income per share $ 4,656 $ 1,892 $ 7,670 $ 5,894
Loss from discontinued operations available to common
shareholders used in basic and diluted income per share $ - $ (1,637) $ - $ (3,724)
-------------- -------------- ------------- --------------
Income from operations available to common
shareholders used in basic and diluted income per share $ 4,656 $ 255 $ 7,670 $ 2,170
============== ============== ============= ==============
Denominator:
Weighted-average number of common
shares used in calculating basic income per share 22,319 22,693 22,290 22,737
Effect of dilutive securities:
Common stock options 413 448 147 551
Common stock warrants 37 159 - 170
-------------- -------------- ------------- --------------
Weighted-average number of common
shares and dilutive potential common shares
used in calculating diluted income per share 22,769 23,300 22,437 23,458
============== ============== ============= ==============
Basic income per share from continuing operations $ 0.21 $ 0.08 $ 0.34 $ 0.26
Basic loss per share from discontinued operations $ - $ (0.07) $ - $ (0.16)
-------------- -------------- ------------- --------------
Basic income per share $ 0.21 $ 0.01 $ 0.34 $ 0.10
============== ============== ============= ==============
Diluted income per share from continuing operations $ 0.20 $ 0.08 $ 0.34 $ 0.25
Diluted loss per share from discontinued operations $ - $ (0.07) $ - $ (0.16)
-------------- -------------- ------------- --------------
Diluted income per share $ 0.20 $ 0.01 $ 0.34 $ 0.09
============== ============== ============= ==============
</TABLE>
NOTE 9 - Contingencies:
Shareholder Litigation
On December 6, 1995, two shareholders filed a class action lawsuit against
the Company and certain directors and officers of the Company. Subsequent to
that date, additional lawsuits were filed by other shareholders. The lawsuits
were subsequently amended and consolidated into one complaint, which was filed
on April 5, 1996. The amended consolidated complaint sought to bring an action
as a class action consisting of all persons who purchased the Common Stock of
the Company during the period April 18, 1995, through December 5, 1995 (the
"Class Period"). The plaintiffs alleged that the defendants sought to induce the
members of the Class to purchase the Company's Common Stock during the Class
Period at artificially inflated prices. The plaintiffs seek recissory or
compensatory damages with interest thereon, as well as reasonable attorneys'
fees and extraordinary equitable and/or injunctive relief. The Company filed a
motion to dismiss, which was heard by the Court on August 16, 1996. The court
rejected the plaintiffs' lawsuit, but allowed thirty days to resubmit its
complaint. On September 24, 1996, the plaintiffs filed an amended complaint. On
April 28, 1997, the Court granted in part, and denied in part, the Company's
motion to dismiss. The Court further granted the plaintiffs leave to replead
12
<PAGE>
certain dismissed claims. On June 19, 1997, the plaintiffs filed a third amended
and consolidated complaint. The Company has answered the complaint by denying
all liability. On March 19, 1999, the parties executed a Memorandum of
Understanding with respect to settlement of the litigation. The parties have
negotiated a definitive stipulation of settlement and on September 20, 1999, a
court hearing will be held in order for the Court to decide whether or not to
approve the terms of the settlement. There can be no assurance that such
approval will be granted. If the litigation is settled as provided by the
current terms of the settlement, the outcome will not have a material adverse
effect on the Company's financial position or results of operations.
Other Litigation
On November 12, 1998, the Company brought suit in district court in San
Jose, California against Silicon RF Technology, Inc. (SiRF) for alleged patent
infringement of three Trimble patents. No action by the Court has taken place
yet.
On January 31, 1997, counsel for one Philip M. Clegg wrote to the Company
asserting that a license under Mr. Clegg's U.S. Patent No. 4,807,131, which was
issued February 21, 1989, would be required by the Company because of a joint
venture that the Company had previously entered into with Caterpillar
Corporation concerning the use of Trimble GPS products in combination with earth
moving equipment. To date, no infringement action has been initiated on behalf
of Mr. Clegg. The Company does not believe that there will be any adverse
consequences to the Company as a result of this inquiry.
Other Matters
Western Atlas, a Houston based supplier to the oil exploration business,
has accused the Company and other GPS manufacturers, suppliers and users of
infringing two U.S. Patents owned by it, namely U.S. Patent Nos. 5,014,066 and
5,619,212. Western Atlas contends that the foregoing patents cover certain
aspects of GPS receiver design. Lawsuits for infringement of these two patents
were filed in federal district court in Houston, Texas against Rockwell
International Corp., currently pending and Garmin International Inc. which has
been settled. Although Trimble has not been sued by Western Atlas on the
foregoing patents, the Company has instructed its counsel thoroughly to
investigate the infringement threat. At the present time, the Company does not
expect this threat to have adverse consequences on the Company's business.
NOTE 10 - Subsequent Event:
On August 10, 1999, the Company signed a Supply Agreement with Solectron
Corporation and Solectron Federal Systems, Inc. (collectively "Solectron"). The
Agreement is an exclusive arrangement between both parties for all manufacturing
being outsourced by Trimble for three years effective August 13, 1999. In
addition, the Company has signed an agreement to sell substantially all the
manufacturing assets, associated commitments, and manufacturing technology in
its Sunnyvale location to Solectron as of August 13, 1999 for cash of
approximately $28 million. The final purchase price for these assets will be
based on the value of the inventory, assets, and commitments on hand at close of
business on August 13, 1999. The valuation is expected to be finalized by the
end of the third quarter and the anticipated gain on the transaction will be
recognized over the exclusive life of the Supply Agreement.
13
<PAGE>
This report 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. Actual results could differ materially from those
indicated in the forward-looking statements as a result of the risk factors set
forth in this report. The Company has attempted to identify forward-looking
statements in this report by placing an asterisk (*) in the left-hand margin of
paragraphs containing those statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
Revenues
Revenues of continuing operations for the three and six months ended July
2, 1999 were $70,839,000 and $139,609,000 respectively, compared with
$73,536,000 and $147,697,000 in the corresponding 1998 periods. The table below
breaks out the Company's revenues by segment:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------------- --------------------------------------------
July 2, July 3, July 2, July 3,
1999 1998 Decrease 1999 1998 Decrease
- --------------------------------------------------------------------------- --------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Precision Positioning Group $ 41,581 $43,659 (5%) $ 84,147 $ 84,805 (1%)
Mobile and Timing Technologies 29,258 29,877 (2%) 55,462 62,892 (12%)
------------- ------------- ------------- ------------- -------------- -------------
Total $ 70,839 $73,536 (4%) $ 139,609 $ 147,697 (5%)
------------- ------------- ------------- ------------- -------------- -------------
</TABLE>
Precision Positioning Group
Precision Positioning Group revenues decreased for both the three and six
month periods ended July 2, 1999 as compared to the corresponding periods for
1998. The decrease for the three month period was partially due to a change in
distribution model from a dealer commission to a buy sell. The new model
discounts revenue, which is offset by lower sales commissions. In addition,
there was a reduction in the agriculture product lines due to reduced sales to a
U.S. OEM who has been impacted by a reduction in new equipment sales in the
agriculture sector, as well as a large shipment to the U.S. government for
precision land survey equipment in the second quarter of 1998 that was not
repeated in the second quarter of 1999. These decreases were only partially
offset by increases in the Mapping and GIS Systems product line.
The decrease for the six month period was primarily due to a change in
distribution model from a dealer commission to a buy sell. The new model
discounts revenue, which is offset by lower sales commissions. In addition,
there was a large shipment to the U.S. government for precision land survey
equipment in the second quarter of 1998 which was not repeated in the second
quarter of 1999. These decreases were only partially offset by increases in the
Mapping and GIS Systems and Mining, Construction and Agricultural product lines.
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<PAGE>
Mobile and Timing Technologies
Mobile and Timing Technologies revenues decreased for both the three and
six month periods ended July 2, 1999, as compared with the corresponding periods
in 1998 due primarily to lower shipments to the U.S. government under the CUGR
program during 1999 as compared to the same periods for 1998. In addition, the
Commercial Avionics product line had strong shipments of the Honeywell-Trimble
(HT9100) product to American Airlines during 1998 that have not been repeated in
1999. These decreases were not completely offset by increases in the remaining
Automotive, Timing, and Mobile Positioning product lines.
Revenues outside the U.S.
* Sales to unaffiliated customers from continuing operations in locations
outside the U.S. comprised approximately 49% and 47% of the Company's revenues
in the first six months of fiscal 1999 and 1998, respectively. During the first
six months of 1999, the Company has continued to experience strength in the
demand from U.S. and European markets, and had stronger than expected demand in
South and Central America. The Company anticipates that export revenues and
sales made by its subsidiaries in locations outside the U.S. will continue to
account for a significant portion of its revenues and, therefore, the Company is
subject to the risks inherent in these international sales, including unexpected
changes in regulatory requirements, exchange rates, governmental approvals,
tariffs or other barriers. Even though the U.S. government announced on March
29, 1996, that it would support and maintain the GPS system, as well as
eliminate the use of Selective Availability (S/A) (a method of degrading GPS
accuracy), customers in certain foreign markets may be reluctant to purchase
products based on GPS technology given the control of GPS by the U.S.
government. The Company's results of operations would be adversely affected if
the Company were unable to continue to generate significant sales in locations
outside the U.S.
Gross Margin
* Gross margin from continuing operations varies on a quarterly basis due
to a number of factors, including product mix, technology license fees, domestic
versus international sales, customer type, the effects of production volumes and
fixed manufacturing costs on unit product costs and new product start-up costs.
Gross margin as a percentage of total product revenues was 53% and 52% for the
three and six month periods ending July 2, 1999 as compared with 49% and 51% in
the corresponding 1998 periods. The increases in gross margin percentages
primarily reflect improved manufacturing cost control achieved through the
consolidation of the manufacturing organization resulting in improved
efficiencies and reduced inventory. Because of mix changes within and among the
Business Units, market pressures on unit selling prices, fluctuations in unit
manufacturing costs, and other factors, there is no assurance that current
margins will be sustained.
* The Company also expects that a higher percentage of its business in the
future will be conducted through alliances with larger strategic partners. As a
result of volume pricing and the assumption of certain operating costs in
connection with such partners, margins related to these revenues from strategic
alliances are likely to be lower than revenues from sales directly to end-users.
15
<PAGE>
Operating Expenses
The following table shows operating expenses from continuing operations for
the periods indicated and should be read in conjunction with the narrative
descriptions of those operating expenses below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------------------- -----------------------------------------------
July 2, July 3, Increase/ July 2, July 3, Increase/
1999 1998 (Decrease) 1999 1998 (Decrease)
- --------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Research and development $ 9,444 $11,199 (16)% $ 17,951 $22,353 (20)%
Sales and marketing 13,972 15,762 (11)% 27,276 31,588 (14)%
General and administrative 8,630 7,603 14 % 18,653 14,667 27 %
------------ -------------- ------------ -------------- -------------- -------------
Total $32,046 $34,564 (7)% $ 63,880 $68,608 (7)%
------------ -------------- ------------ -------------- -------------- -------------
</TABLE>
Research and Development
* Research and development expenses decreased in the three and six month
periods ended July 2, 1999, as compared with the corresponding period in fiscal
1998. The lower research and development expenses for the second quarter and
first half of fiscal 1999 as compared with the corresponding periods in fiscal
1998 are primarily due to the Company receiving increased funds from cost
reimbursement projects. Also there was a decrease in personnel, consultants,
electronic parts and other supplies expense as part of the Company's
restructuring plan that was implemented in the last half of 1998. The Company
plans to continue its aggressive development of future products.
* The Company expects that a significant portion of its future revenues and
operating income will continue to be derived from sales of newly introduced
products. Consequently, the Company's future success depends, in part, on its
ability to continue to advance product technology and to develop and manufacture
new competitive products with high gross profit margins. Development and
manufacturing schedules for technology products are difficult to predict, and
there can be no assurance that the Company will achieve timely initial customer
shipments of new products. The timely availability of these products in volume
and their acceptance by customers are important to the future success of the
Company.
Sales and Marketing
The decrease in sales and marketing expenses for the three and six month
periods ended July 2, 1999, as compared with the corresponding periods in fiscal
1998 is due primarily to decreases in personnel, travel, advertising, trade
shows, and commission expenses as part of the Company's restructuring plan which
was implemented in the last half of 1998.
* The Company's future growth will also depend upon the timely development
and continued viability of the Business Unit segments in which the Company
currently competes and upon the Company's ability to continue to identify and
penetrate new markets for its products. In addition, the Company has significant
competition in some markets, and the Company expects such competition to
intensify as the market for GPS applications receives greater acceptance.
Several of the Company's competitors are major corporations with substantially
greater financial, technical, marketing and manufacturing resources. Increased
competition is likely to result in reduced market share and in price reductions
of GPS-based products, which could adversely affect the Company's revenues and
profitability if the Company is unable to make corresponding changes to compete
effectively.
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<PAGE>
General and Administrative
The increase in general and administrative expenses for the three and six
months ended July 2, 1999, as compared with the corresponding periods for fiscal
1998, is primarily due to an increase in the allowance for doubtful accounts
related to customers in South America based on a slow down in the South American
economy for the first half of 1999. In addition, the Company had an increase in
expenditures associated with certain litigation matters during the second
quarter and first half of 1999. Also, the Company had an increase in salary
related expenses in connection with the hiring of a new CEO in March 1999; an
increase in equipment rental expenses; and an increase in building rent in the
second quarter and first half of 1999, as compared to the corresponding periods
for 1998.
Income Taxes
The Company's effective income tax rate from continuing operations for the
three and six months ended July 2, 1999 is 15% as compared with the effective
income tax rates from continuing operations of 10% and 11%, respectively, for
the corresponding periods in 1998. These rates are less than the federal
statutory rate of 35% primarily due to the utilization of net operating loss
carryforwards and the realization of previously reserved deferred tax assets.
Inflation
The effects of inflation on the Company's financial results have not been
significant to date.
Liquidity and Capital Resources
* At July 2, 1999, the Company had cash and cash equivalents of $41,180,000
and short-term investments of $23,643,000. The Company has relied primarily on
cash provided by operating and financing activities and net sales of short-term
investments to fund capital expenditures, the repurchase of the Company's common
stock (see further explanation below), and other investing activities.
Management believes that its cash, cash equivalents and short-term investment
balances, together with its existing credit line, will be sufficient to meet its
anticipated cash needs for at least the next twelve months.
For the six months ended July 2, 1999, net cash provided from operating
activities was $9,465,000 as compared to cash provided of $1,962,000 in the
corresponding period in 1998. Cash provided by operating activities in 1999
resulted from decreases in inventories and increases in accrued compensation and
benefits. Inventory from continuing operations as of July 2, 1999 decreased by
$4,378,000 from the 1998 year end levels primarily due to a focused effort by
the Company to reduce inventory by supply chain synchronization, reducing lead
and cycle times, simplifying product lines, and implementing tighter control
over its material forecasting process. The Company's ability to continue to
generate cash from operations will depend in a large part on revenues, the rate
of collections of accounts receivable and the successful management of the
Solectron manufacturing relationship.
* During the third quarter of fiscal 1999 as described in Note 10, the
Company expects to receive cash as part of an agreement with Solectron for the
outsourcing of the manufacturing operations located in Sunnyvale, California.
The anticipated inflow of cash in the third quarter of fiscal 1999 will be
employed by the Company to fund capital expenditures and for other investing
activities.
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<PAGE>
Cash provided by sales of common stock in 1999 represents the proceeds from
purchases made pursuant to the Company's stock option plan and employee stock
purchase plan and totaled $1,948,000 for the six months ended July 2, 1999.
* In August 1997, the Company entered into a three-year, $50,000,000
unsecured revolving credit facility with four banks (the "Credit Agreement").
This credit facility replaced the previous two-year $30,000,000 unsecured line
that expired in August 1997. The Credit Agreement enables the Company to borrow
up to $50,000,000, provided that certain financial and other covenants are met.
As of February 16, 1999, the Company, the Agent and the Lenders agreed to new
covenants for the life of the loan, which expires in August of 2000. The new
covenants have certain limitations which could limit the Company's available
credit. The Company does not currently anticipate that these limitations will
impact the available credit of the Company. The $50,000,000 revolving credit
facility was modified to include the Company's prior separate $5,000,000 line of
credit and to simplify the entire arrangement, as less than $150,000 was being
utilized under the separate facility as of January 1, 1999. The Credit Agreement
provides for payment of a commitment fee of 0.25% and borrowings to bear
interest at 1% over LIBOR if the total funded debt to EBITDA is less than or
equal to 1.00 times, 0.3% and borrowings to bear interest at 1.25% over LIBOR if
the ratio is greater than 1.00 times and less than or equal to 2.00 times, or
0.4% and borrowings to bear interest at 1.75% over LIBOR if the ratio is greater
than 2.00 times. In addition to borrowing at the specified LIBOR rate, the
Company has the right to borrow with interest at the higher of (i) one of the
bank's annual prime rate and (ii) the federal funds rate plus 0.5%. To date, the
Company has not made any borrowings under the $50,000,00 unsecured revolving
credit facility, but has issued certain letters of credit under the $5,000,000
line of credit which is now under the Credit Agreement. In addition, the Company
is restricted from paying dividends under the terms of the Credit Agreement.
In June 1994, the Company issued $30.0 million of subordinated promissory
notes bearing interest at an annual rate of 10%, with principal due on June 15,
2001. Interest payments are due monthly in arrears. The notes are subordinated
to the Company's senior debt, which is defined as all pre-existing indebtedness
for borrowed money and certain future indebtedness for borrowed money
(including, subject to certain restrictions, secured bank borrowings and
borrowed money for the acquisition of property and capital equipment) and trade
debt incurred in the ordinary course of business. If the Company prepays any
portion of the principal, it is required to pay additional amounts if U.S.
Treasury obligations of a similar maturity exceed a specified yield. Under the
agreement, the Company is also restricted from paying dividends.
The issuance of the subordinated promissory notes also included the
issuance of warrants entitling holders to purchase 400,000 shares of common
stock at a price of $10.95 per share at any time through June 15, 2001. The net
proceeds of the notes were $29,348,000. The notes are recorded as noncurrent
liabilities, net of appraised fair value attributed to the warrants. The value
of the warrants and the issuance costs are being amortized to interest expense,
using the interest rate method over the term of the subordinated promissory
notes. The effective annual interest rate on the notes is 11.5%. Under the terms
of the note, the Company is required to meet a minimum consolidated net worth
requirement. If the Company falls below the minimum consolidated net worth
requirement the Company could be in default of its loan covenants. Such events
could have a material adverse effect on the Company's operations and liquidity.
In 1998, the Company approved the repurchase of 1.6 million shares on the
open market under a discretionary program to offset the potential dilutive
effects to earnings (loss) per share from the issuance of additional stock
options. The Company intends to use existing cash, cash equivalents and
short-term investments to finance any such stock repurchases under this program.
During 1998, the Company purchased 1.08 million shares at a cost of $16.1
million. During the first six months of fiscal 1999, no shares have been
repurchased under the discretionary program.
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<PAGE>
The Company is continually evaluating potential external investments in
technologies related to its business and, to date, has made relatively small
strategic investments in a number of GPS related technology companies. There can
be no assurance that any such outside investments made to date nor any potential
future investments will be successful.
* The Company has evaluated the issues raised by the introduction of the
Single European Currency (Euro) for initial implementation as of January 1,
1999, and during the transition period through January 1, 2002. The Company does
not currently believe that the introduction of the Euro will have a material
effect on the Company's foreign exchange and hedging activities. The Company has
also assessed the potential impact the Euro conversion will have in regard to
its internal systems accommodating Euro-denominated transactions. The Company
will continue to evaluate the impact of the Euro introduction over time, based
on currently available information. The Company does not currently anticipate
any adverse impact of the Euro conversion on the Company.
Year 2000 and GPS Week Number Rollover Issues
Computers and software, as well as other equipment that relies on only two
digits to identify or represent a year may be unable to accurately process or
display certain information at or after the Year 2000. This is commonly referred
to as the "Year 2000 issue." The Year 2000 issue may materially affect Trimble's
vendors, suppliers, internal systems, products and customers. The Company
continues to address the Year 2000 issue to avoid what might otherwise be a
material and adverse effect on the Company's consolidated financial position,
results of operations, or cash flows.
During the third quarter of 1999 another date-related issue, known as the
"GPS Week Number Roll-Over" or "WNRO" issue, could also materially affect
various Trimble products. The WNRO issue is unrelated to the Year 2000 issue and
is unique to GPS technology. All GPS satellites, which are operated by the U.S.
government, broadcast time in the form of a "GPS week number" and a time offset
into each "GPS week." Week numbers range from 0 to 1023. Week 0 started on
January 6, 1980, and week 1023 will end on August 21, 1999, at which time the
week number broadcast by all U.S. GPS satellites will roll over, back to 0.
Among other potential effects, this rollover may cause GPS receivers and
software that process data obtained by GPS receivers to erroneously interpret
high-week-number, pre-WNRO data as post-dating later low-week-number, post-WNRO
data. This may cause satellite positions to be miscalculated and produce gross
position fix errors. Receivers that process and display calendar dates based on
"weeks since 1980" may generate date calculation errors. The Company continues
to address the WNRO issue to avoid what might otherwise be a material and
adverse effect on the Company's future consolidated financial position, results
of operations, or cash flows.
The Company continues to assess the potential impact of both the Year 2000
and WNRO issues on its vendors, suppliers, internal systems, products, and
customers-and has begun, and in many cases completed, corrective efforts in
these areas.
Year 2000 Remediation Plan
The Company's Board of Directors has adopted a comprehensive Year 2000
Remediation Plan, the goal of which is to minimize business disruptions and risk
exposure that might otherwise arise as a consequence of moving into the
twenty-first century. The plan focuses on achieving Year 2000 readiness across
the Company's entire supply chain, and is designed to deal with the most
critical systems first. Additionally, the Company's Year 2000 remediation plan
calls for the development of contingency plans to address potential problem
areas with internal systems, and with suppliers and other third parties. To
these ends, a Y2K Program Management Office has been established to manage and
19
<PAGE>
coordinate implementation of the plan on a companywide basis. It is expected
that assessment, remediation, and contingency planning activities will be
ongoing throughout 1999, with the objective of appropriately resolving all
material Year 2000 issues before the 21st century rollover.
Information Technology and Other Systems
The Company continues to assess the potential impact of the Year 2000 issue
on its internal systems, including information technology (IT) and non-IT
systems, and has begun corrective efforts in this area, as follows:
o The Company has upgraded its existing MRP/ERP information systems to a
Year 2000 compliant version as of the end of the second quarter. Final
testing of the upgraded systems for Year 2000 compliance will be completed
before the 21st century rollover. In addition ancillary critical systems
will be upgrade to be Year 2000 compliant during the second half of 1999.
o Assessment and remediation efforts in connection with the Company's other
IT and non-IT systems will be undertaken as part of the Company's general
Y2K Remediation Plan.
* The Company currently plans to complete renovation, testing and
implementation of critical systems, or successful execution of contingency
plans, during the second half of 1999. There can be no assurance, however, that
there will not be a delay in, or increased costs associated with, such
renovation, testing, implementation or execution, and the Company's inability to
successfully and timely complete these tasks could have a material adverse
effect on future results of operations or financial condition.
Products
To address and minimize the anticipated impact of both the Year 2000 issue
and the WNRO issue upon the Company's products, the Company continues to assess
the anticipated impact these issues may have on the performance of its products,
and resolve various of its current products' related performance problems. In
addition, the Company has adopted a formal Year 2000 and GPS Week Number
Rollover Policy to:
o Publish Year 2000 and WNRO related product performance information on the
Company's public web site;
o Respond to individual customer inquiries regarding the anticipated
performance of particular Company products;
o Furnish upgrades to customers whose Trimble products are upgradable; and
o Provide information regarding available product alternatives to customers
with noncompliant products.
Assessment of products, resolution of certain products' Year 2000 and WNRO
performance problems, and implementation of the Company's Year 2000 and GPS Week
Number Rollover Policy, are ongoing, and as to many Company products is
complete.
* The Company does not anticipate that the Year 2000 and WNRO issues will
have a material adverse effect on sales of its products. The Company has
incurred, and will continue to incur, through 1999 and thereafter, increased
expenses associated with Year 2000 and WNRO related product assessment,
resolution of certain products' Year 2000 and WNRO performance problems,
implementation of the Company's Year 2000 and GPS Week Number Rollover Policy,
and fulfillment of Year 2000 and WNRO related customer support and warranty
20
<PAGE>
obligations, in amounts that management believes has not had and will not have a
material adverse effect on the Company's historical or future results of
operations or financial condition.
Vendors and Suppliers
* For its successful operation, the Company materially relies on goods and
services purchased from certain vendors. If these vendors fail to adequately
address the Year 2000 issue such that their delivery of goods and services to
the Company is materially impaired, it could have a material adverse impact on
the Company's operations and financial results. The Company has sent a survey to
its principal vendors to assess the effect the Year 2000 issue will have on
their ability to supply their goods and services without material interruption,
and at this time the Company cannot determine or predict the outcome of this
effort. The Company intends to develop and execute contingency plans with
respect to vendors who will not be Year 2000 ready in a timely manner where such
lack of readiness is expected to have a material adverse impact on the Company's
operations. However, because the Company cannot be certain that its vendors will
be able to supply goods and services without material interruption, and because
the Company cannot be certain that execution of its contingency plans will be
capable of implementation or will result in a continuous and adequate supply of
such goods and services, the Company can give no assurance that these matters
will not have a material adverse effect on the Company's future consolidated
financial position, results of operations, or cash flows.
Customers
* The Company has material relationships with certain customers. If the
Company's customers fail to achieve an adequate state of Year 2000 readiness in
their own operations, or if their Year 2000 readiness efforts consume
significant resources, their ability to purchase the Company's products may be
impaired. This could adversely affect demand for the Company's products and,
therefore, the Company's future revenues. The Company plans to assess the effect
the Year 2000 issue will have on its principal customers, and at this time
cannot determine the impact it will have.
Related Costs to the Company
* The Company currently expects that the total cost of Year 2000
remediation efforts will not exceed approximately $1,000,000. The Company has
been and will be expensing these costs as incurred. The total cost estimate does
not include potential costs related to any customer or other claims or the cost
of internal software and hardware replaced in the normal course of business. The
total cost estimate is based on the current assessment of the projects, and is
subject to change as the projects progress.
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Overall Impact on the Company
* At the present time and subject to the cost estimates above, management
does not believe that the Year 2000 and WNRO matters discussed above will have a
material adverse impact on the Company's financial condition or overall trends
in results of operation. However, it is uncertain to what extent the Company may
be affected by such matters and, therefore, there can be no assurance that these
matters will not have a material adverse effect on the Company's future
consolidated financial position, results of operations, or cash flows.
Other Risk Factors
The Company's revenues have historically tended to fluctuate on a quarterly
basis due to the timing of shipments of products under contracts and the sale of
licensing rights. A significant portion of the Company's quarterly revenues
occurs from orders received and immediately shipped to customers in the last few
weeks and days of a quarter. If orders are not received, or if shipments were to
be delayed a few days at the end of a quarter, the operating results and
reported earnings per share for that quarter could be significantly impacted.
Future revenues are difficult to predict, and projections are based primarily on
historical models, which are not necessarily accurate representations of the
future.
The Company has a relatively fixed cost structure in the short term which
is determined by the business plans and strategies the Company intends to
implement in the two segments it addresses. Increases or decreases in revenues
have more than a proportional impact on net income or losses.
* During the third quarter of fiscal 1999 the Company will be transitioning
to outsourced manufacturing for its Sunnyvale location. The plans for this
transition are intended to be smooth with no disruption of customer service, but
no assurances can be given that the Company will not incur problems. If the
transition causes delays in the Company's ability to meet customers needs this
could have a material adverse effect on the Company's operating results.(See
Note 10 to the Condensed Consolidated Financial Statements - Subsequent Event.)
With the selection of an exclusive manufacturing partner the Company is
substantially dependent upon a sole supplier for the manufacture of its
precision positioning, timing, mobile communication, and automotive products. In
addition, the Company relies on sole suppliers for a number of its critical
Asics. The dependence upon these sole suppliers subjects the Company to risks
associated with an interruption of supply if the Company is not able to find
alternative sources on a timely basis. There can be no assurance that any delay,
disruptions, or quality problems resulting from the use of a sole supplier will
not have a material adverse effect on the Company's business and results of
operations.
The Company's stock price is subject to significant volatility. If revenues
and/or earnings fail to meet the expectations of the investment community, there
could be an immediate and significant impact on the trading price of the
Company's stock.
The value of the Company's products relies substantially on the Company's
technical innovation in fields in which there are many current patent filings.
The Company recognizes that as new patents are issued or are brought to the
Company's attention by the holders of such patents, it may be necessary for the
Company to withdraw products from the market, take a license from such patent
holders, or redesign its products. The Company does not believe any of its
products currently infringe patents or other proprietary rights of third
parties, but cannot be certain they do not do so. In addition, the legal costs
and engineering time required to safeguard intellectual property or to defend
22
<PAGE>
against litigation could become a significant expense of operations. Such events
could have a material adverse effect on the Company's revenues or profitability.
(See Note 9 to the Condensed Consolidated Financial Statements - Contingencies:
Other Litigation.)
The Company is continuously evaluating alliances and external investments
in technologies related to its business, and has already entered into alliances
and made relatively small strategic investments in a number of GPS related
technology companies. Acquisitions of companies, divisions of companies, or
products and alliances and strategic investments entail numerous risks,
including (i) the potential inability to successfully integrate acquired
operations and products or to realize anticipated synergies, economies of scale,
or other value; (ii) diversion of management's attention; (iii) loss of key
employees of acquired operations; and (iv) inability to recover strategic
investments in development stage entities. Any such problems could have a
material adverse effect on the Company's business, financial condition, and
results of operations. No assurances can be given that the Company will not
incur problems from current or future alliances, acquisitions, or investments.
Furthermore, there can be no assurance that the Company will realize value from
any such alliances, acquisitions, or investments.
* The ability of the Company to maintain its competitive technological
position will depend, in a large part, on its ability to attract, motivate and
retain highly qualified development and managerial personnel. Competition for
qualified employees in the Company's industry and location is intense, and there
can be no assurance that the Company will be able to attract, motivate and
retain enough qualified employees necessary for the future continued development
of the Company's business and products.
The Company has certain products that are subject to governmental and
similar certifications before they can be sold. For example, FAA certification
is required for all aviation products. Also, the Company's products that use
integrated radio communication technology require an end-user to obtain
licensing from the Federal Communications Commission (FCC) for frequency-band
usage. During the fourth quarter of 1998, the FCC temporarily suspended the
issuance of licenses for certain of the Company's Real-time Kinematic products
because of interference with certain other users of similar radio frequencies.
An inability or delay in obtaining such certifications or FCC's delays could
have an adverse effect on the Company's operating results.
The Company's GPS technology is dependent on the use of radio frequency
spectrum. The assignment of spectrum is controlled by an international
organization known as, the International Telecommunications Union (ITU). Any ITU
reallocation of radio frequency spectrum, including frequency band segmentation
or sharing of spectrum, may materially and adversely affect the utility and
reliability of the Company's products, which would, intern, cause a material
adverse effect on the Company's operating results. In addition, emissions from
mobile satellite service and other equipment operating in adjacent frequency
bands may materially and adversely affect the utility and reliability of the
Company's products, which could result in a material adverse effect on the
Company's operating results.
The Company's products rely on signals from the GPS NAVSTAR satellite
system built and maintained by the U.S. Department of Defense. NAVSTAR
satellites and their ground support systems are complex electronic systems
subject to electronic and mechanical failures and possible sabotage. The
satellites have design lives of 7.5 years and are subject to damage by the
hostile space environment in which they operate. The array of satellites
consists of 27 of which the oldest satellite has been in orbit for 20 years and
the youngest satellite has been in orbit for 4 years. To repair 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 would impair the current utility of the GPS
system and the growth of current and additional market opportunities. In
addition, there can be no assurance that the U.S. government will remain
23
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committed to the operation and maintenance of GPS satellites over a long period
of time, or that the policies of the U.S. government for the use of GPS without
charge will remain unchanged. However, in 1996 the U.S. Administration announced
the first comprehensive national policy statement on GPS, known as the
Presidential Decision Directive, which confirms civilian, commercial, and
consumer access to the use of GPS free of direct user fees. The U.S. Congress
provided a statutory foundation for this access in the National Defense
Authorization Act for fiscal year 1998. Because of ever-increasing commercial
applications of GPS, other U.S. government agencies may become involved in the
administration or the regulation of the use of GPS signals in the future. Any of
the foregoing factors could affect the willingness of buyers of the Company's
products to select GPS-based systems instead of products based on competing
technologies. Any resulting change in market demand for GPS products would have
a material adverse effect on the Company's financial results. In 1995, certain
European government organizations expressed concern regarding the susceptibility
of GPS equipment to intentional or inadvertent signal interference. Such similar
concern could translate into reduced demand for GPS products in certain
geographic regions in the future.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The following is a discussion of the Company's exposure to market risk
related to changes in interest rates and foreign currency exchange rates. The
Company uses certain derivative financial instruments to manage these risks. The
Company does not use derivative financial instruments for speculative or trading
purposes. All financial instruments are used in accordance with board-approved
polices.
Market Interest Rate Risk
Short-term Investments Owned by the Company. As of July 2, 1999, the
Company had short-term investments of $23.6 million. These short-term
investments consist of highly liquid investments with original maturities at the
date of purchase between three and twelve months. These investments are subject
to interest rate risk and will decrease in value if market interest rates
increase. A hypothetical 10 percent increase in market interest rates from
levels at July 2, 1999 would cause the fair value of these short-term
investments to decline by an immaterial amount. Because the Company has the
ability to hold these investments until maturity the Company would not expect
the value of these investments to be affected to any significant degree by the
effect of a sudden change in market interest rates. Declines in interest rates
over time will, however, reduce the Company's interest income.
Outstanding Debt of the Company. As of July 2, 1999, the Company had
outstanding long-term debt of approximately $30.0 million of subordinated
promissory notes at a fixed interest rate of 10 percent. The interest rate of
this instrument is fixed. However, a hypothetical 10 percent decrease in the
interest rates would not have a material impact on the Company. Increases in
interest rates could, however, increase interest expense associated with future
borrowings of the Company, if any. The Company does not currently hedge against
interest rate increases.
Foreign Currency Exchange Rate Risk
The Company hedges risks associated with foreign currency transactions in
order to minimize the impact of changes in foreign currency exchange rates on
earnings. The Company utilizes forward contracts to hedge trade and intercompany
receivables and payables. These contracts reduce the exposure to fluctuations in
exchange rate movements, as the gains and losses associated with foreign
currency balances are generally offset with the gains and losses on the hedge
contracts. All hedge instruments are marked to market through earnings every
period.
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* The Company does not anticipate any material adverse effect on its
consolidated financial position utilizing the current hedging strategy.
All contracts have a maturity of less than one year, and the Company does
not defer any gains and losses, as they are all accounted for through earnings
every period.
The following table provides information about the Company's foreign
exchange forward contracts outstanding:
Foreign Contract Value Fair Value
Buy/ Currency Amount USD in USD
Currency Sell (in thousands) (in thousands) (in thousands)
- --------------- -------- --------------------- ------------------ ------------
YEN Sell 293,900 $ 2,554 $ 2,447
NZD Buy 4,600 $ 2,522 $ 2,456
Euro Sell 1,050 $ 1,097 $ 1,077
STERLING Buy 1,000 $ 1,605 $ 1,580
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 the Company's 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.
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PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 annual meeting of shareholders was held at the Westin
Hotel in Santa Clara, located at 5101 Great America Parkway, Santa Clara,
California 95054 in the Magnolia Room, on Wednesday, June 2, 1999, at 1:00 p.m.
local time.
At the annual shareholder meeting, an election of directors was held with
the following individuals being elected to the Company's Board of Directors.
Vote
-----------------------------------------
For Withheld
Steven W. Berglund 19,150,980 610,037
Robert S. Cooper 16,698,377 3,062,640
John B. Goodrich 16,683,621 3,077,396
William Hart 18,025,068 1,735,949
Norman Y. Mineta 19,101,810 659,207
Bradford W. Parkinson 17,440,460 2,320,557
Other matters voted upon at the annual shareholder meeting and the results
of the voting with respect to each such matter were as follows:
1. To approve an increase of 1,200,000 shares in the number of shares of
Common Stock reserved for issuance under the Company's 1993 Stock Option Plan
from 3,800,000 shares to an aggregate of 5,000,000 shares (10,152,549 in favor;
2,520,461 opposed; 66,448 abstentions; 7,021,559 broker non-votes).
2. To approve an increase of 600,000 shares in the number of shares of
Common Stock available for purchase by eligible employees under the Company's
1988 Employee Stock Purchase Plan from 2,350,000 shares to an aggregate of
2,950,000 shares (11,329,140 in favor; 1,354,579 opposed; 55,739 abstentions;
7,021,559 broker non-votes).
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the current fiscal year ending December 31, 1999
(19,513,165 in favor; 197,052 opposed; 197,052 abstentions; 0 broker non-votes).
Item 5. OTHER INFORMATION
On August 10, 1999, the Company signed an Asset Purchase Agreement with
Solectron Corporation and Solectron Federal Systems, Inc. (collectively,
"Solectron"). The closing of the transaction occurred on August 13, 1999. At the
closing of the Asset Purchase Agreement, the Company transferred to Solectron
substantially all of the Company's tangible manufacturing assets located at the
Company's Sunnyvale, California campus, including but not limited to equipment,
fixtures and work in progress, and certain contract and other intangible assets
and rights, together with certain related obligations, including but not limited
to real property subleases covering the Company's manufacturing floor space, and
outstanding purchase order commitments. In addition, the Asset Purchase
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Agreement also provides for Solectron's subsequent purchase, on August 30, 1999,
of all of Trimble's component inventory which was on hand as of August 13, 1999.
Trimble received cash at the closing of the Asset Purchase Agreement,
representing an interim estimate of the value of the assets purchased by
Solectron, excluding inventory, and expects to receive an additional cash
payment on August 30, 1999, representing an interim estimate of the component
inventory to be sold to Solectron.
The final purchase price for all of the Company's assets to be sold to
Solectron, including the component inventory, will be determined, and the cash
payment between the parties will be adjusted, based upon a subsequent
determination of all such purchased assets actually on hand at Trimble as of the
date of closing of the Asset Purchase Agreement. The Company estimates that the
final purchase price as so determined will be approximately $28 million. Such
final determination, and the final purchase price, is expected to be finalized
by the end of the Company's third fiscal quarter. Upon such final determination,
the Company will calculate its gain on the transaction, if any, and will
recognize any such gain over the exclusive life of the Supply Agreement
described below.
Concurrently with the closing of the Asset Purchase Agreement, the Company
and Solectron also entered into a Supply Agreement. The Supply Agreement
provides for the exclusive manufacture by Solectron of almost all Trimble
products for a period of three years.
Solectron will initially manufacture such Trimble products under the Supply
Agreement in the same Trimble buildings in which such products were previously
manufactured by Trimble, and Trimble has sublet such space to Solectron as part
of this transaction. Solectron has offered employment to approximately 230
Trimble manufacturing, engineering and related support personnel, and Trimble
understands that substantially all such employees have accepted employment with
Solectron.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.59 1993 Stock Option Plan, as amended
10.60 1988 Employee Stock Purchase Plan, as amended
27.1 Financial Data Schedule for the quarters ended
July 2, 1999 and July 3, 1998
B. Reports on Form 8-K
There were no reports on Form 8-K filed during the fiscal
quarter ended July 2, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRIMBLE NAVIGATION LIMITED
(Registrant)
By: /s/ Mary Ellen Genovese
Mary Ellen Genovese
(Chief Financial Officer, Vice President Finance, and
Corporate Controller)
DATE: August 13, 1999
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EXHIBIT 10.59
TRIMBLE NAVIGATION LIMITED
1993 STOCK OPTION PLAN
(as amended June 2, 1999)
1. Purposes of the Plan. The purposes of this Stock Option Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(e) "Common Stock" shall mean the Common Stock of the Company.
(f) "Company" shall mean Trimble Navigation Limited, a California
corporation.
(g) "Consultant" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not, provided that the term Consultant shall not include
directors who are not compensated for their services or are paid only a
director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Company or any Parent or Subsidiary of the
Company; provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
(i) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(k) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i)If the Common Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported, as quoted on such system or exchange for the last market trading day
prior to the time of determination) as reported in the Wall Street Journal or
such other source as the Administrator deems reliable;
(ii)If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high and low asked prices for the Common Stock or;
(iii)In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.
(l) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(n) "Option" shall mean a stock option granted pursuant to the Plan.
(o) "Optioned Stock" shall mean the Common Stock subject to an Option.
(p) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(q) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(r) "Plan" shall mean this 1993 Stock Option Plan.
(s) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(t) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 5,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, shares
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issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i)Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of
Employeesand Consultants.
(ii)Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii)Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:
(i)to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;
(ii)to select the officers, Consultants and Employees
to whom Options may from time to time be granted hereunder;
(iii)to determine whether and to what extent Options
are granted hereunder;
(iv)to determine the number of shares of Common Stock
to be covered by each such award granted hereunder;
(v)to approve forms of agreement for use under the
Plan;
(vi)to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall determine, in its sole
discretion);
(vii)to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(e) instead of
Common Stock;
(viii) to determine whether, to what extent and under
what circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the
amount, if any, of any deemed earnings on any deferred amount during any
deferral period);
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(ix)to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted; and
(c) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.
(d) Grant Limits. The following limitations shall apply to grants of
Options under the Plan:
(i) No employee shall be granted, in any fiscal year
of the Company, Options under the Plan to purchase more than 150,000 Shares,
provided that the Company may make an additional one-time grant of up to
250,000 Shares to newly-hired Employees.
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iii) If an Option is cancelled (other than in
connection with a transaction described in Section 11), the cancelled Option
shall be counted against the limits set forth in Section 4(d)(i). For this
purpose, if the exercise price of an Option is reduced, the transaction
will be treated as a cancellation of the Option and the grant of a new Option.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted only to Employees,
Directors, and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee, Director, or Consultant who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to occur of
its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 14 of the
Plan.
7. Term of Option. The term of each Option shall be ten (10) years from the
date of grant thereof or such shorter term as may be provided in the Option
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Agreement. However, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.
8. Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i)In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B)granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii)In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the Administrator. In the case
of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator and may consist entirely of (1) cash, (2) check, (3)
promissory note, (4) other Shares which (x) either have been owned by the
Optionee for more than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) authorization from the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (6) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price, (7) delivery
of an irrevocable subscription agreement for the Shares which irrevocably
obligates the option holder to take and pay for the Shares not more than twelve
months after the date of delivery of the subscription agreement, (8) any
combination of the foregoing methods of payment, (9) or such other consideration
and method of payment for the issuance of Shares to the extent permitted under
Applicable Laws. In making its determination as to the type of consideration to
accept, the Board shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
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as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee or Consultant. In the event
of termination of an Optionee's Continuous Status as an Employee or Consultant
(as the case may be), such Optionee may, but only within thirty (30) days (or
such other period of time, not exceeding three (3) months in the case of an
Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Board) after the date of such termination (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), exercise his Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his total and permanent disability (as
defined in Section 22(e)(3) of the Code), he may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Board) from the date of such termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that he was not entitled to exercise
the Option at the date of termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i)during the term of the Option who is at the time
of his death an Employee or Consultant of the Company and who shall have been
in Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
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by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee or Consultant twelve (12) months after the date of death,
subject to the limitation set forth in Section 5(b); or
(ii)within thirty (30) days (or such other period of
time not exceeding three (3) months as is determined by the Board) after the
termination of Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within twelve (12) months following the date of death
(but in no event later than the date of expiration of the term of such Option as
set forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
10. Non-Transferability of Options. Options may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. The designation of a beneficiary
by an Optionee does not constitute a transfer. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or a transferee
permitted by this Section 10.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Board shall notify the Optionee at least fifteen (15) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed action. In
the event of a merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
In the even the successor corporation does not agree to assume the option or the
substitute and equivalent option, the Board shall, in lieu of such assumption or
substitution, provide for the Optionee to have the right to vest in and exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be vested or exercisable. If the Board makes an
Option fully vested and exercisable in lieu of assumption or substitution in the
event of a merger, the Board shall notify the Optionee that the Option shall be
fully vested and exercisable for a period of fifteen (15) days from the date of
such notice, and the Option will terminate upon the expiration of such period.
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If, in such a merger, the Option is assumed or an equivalent option is
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, and if during a one-year period after the effective date
of such merger, the Optionee's Continuous Status as an Employee or Consultant is
terminated for any reason other than the Optionee's voluntary termination of
such relationship, then the Optionee shall have the right within thirty days
thereafter to exercise the Option as to all of the Optioned Stock, including
Shares as to which the Option would not be otherwise exercisable, effective as
of the date of such termination.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the discretion
of the Administrator, Optionees may satisfy withholding obligations as provided
in this paragraph. When an Optionee incurs tax liability in connection with an
Option, which tax liability is subject to tax withholding under applicable tax
laws, and the Optionee is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
upon exercise of the Option, if any, that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined.
13. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Section 422 of the Code (or
any other applicable law or regulation, including the requirements of the NASD
or an established stock exchange), the Company shall obtain shareholder approval
of any Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
36
<PAGE>
16. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
17. Option Agreement. Options shall be evidenced by written option agreements
in such form as the Board shall approve.
18. Shareholder Approval. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws.
37
<PAGE>
EXHIBIT 10.60
TRIMBLE NAVIGATION
1988 EMPLOYEE STOCK PURCHASE PLAN
(as amended June 2, 1999)
The following constitute the provisions of the Employee Stock Purchase
Plan of Trimble Navigation.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Trimble Navigation.
(e) "Compensation" shall mean all regular straight time gross
earnings, commissions, incentive bonuses, overtime, shift premium, lead pay and
other similar compensation, but excluding automobile allowances, relocation and
other non-cash compensation. Notwithstanding the foregoing, the Employee may
elect to exclude bonuses from the calculation of compensation.
(f) "Continuous Status as an Employee" shall mean the absence
of any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(g) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(h) "Employee" shall mean any person, including an officer,
whose customary employment with the Company is at least twenty (20) hours per
week by the Company or one of its Designated Subsidiaries and more than five (5)
months in any calendar year.
(i) "Enrollment Date" shall mean the first day of each
Offering Period.
38
<PAGE>
(j) "Exercise Date" shall mean the last day of each Offering
Period.
(k) "Offering Period" shall mean, except with respect to the
first Offering Period as described herein, a period of six (6) months during
which an option granted pursuant to the Plan may be exercised. The first
Offering Period shall commence August 15, 1988, and end December 31, 1988.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any Employee as defined in paragraph 2 who has been
continuously employed by the Company for at least two (2) consecutive months and
who shall be employed by the Company on a given Enrollment Date shall be
eligible to participate in the Plan. However, notwithstanding the foregoing, for
purposes of the first Offering Period only, any Employee defined in paragraph 2
who was employed by the Company as of August 9, 1988 shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 425(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any subsidiary of the Company, or (ii)
which permits his or her rights to purchase stock under all employee stock
purchase plans of the Company and its subsidiaries to accrue at a rate which
exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on or about January 1 and
July 1 of each year; provided, however, that the first Offering Period shall
commence on or about August 15, 1988. The Plan shall continue thereafter until
terminated in accordance with paragraph 19 hereof. Subject to the shareholder
approval requirements of paragraph 19, the Board of Directors of the Company
shall have the power to change the duration of Offering Periods with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
at least five (5) business days prior to the applicable Enrollment Date, unless
a later time for filing the subscription agreement is set by the Board for all
eligible Employees with respect to a given Offering Period.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in paragraph 10.
39
<PAGE>
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he receives on each payday during the Offering Period, and
the aggregate of such payroll deductions during the Offering Period shall not
exceed ten percent (10%) of the participant's aggregate Compensation during said
Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan. A participant may not make any
additional payments into such account.
(c) A participant may discontinue his or her participation in
the Plan as provided in paragraph 10, or may decrease, but not increase, the
rate of his or her payroll deductions during the Offering Period (within the
limitations of Section 6(a)) by completing or filing with the Company a new
subscription agreement authorizing a change in payroll deduction rate. The
change in rate shall be effective with the first full payroll period following
five (5) business days after the Company's receipt of the new subscription
agreement. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless revised as provided herein or terminated as
provided in paragraph 10.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and paragraph 3(b) herein, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar year (the
"Current Offering Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Offering Period which is scheduled to
end in the following calendar year, unless terminated by the participant as
provided in paragraph 10.
7. Grant of Option.
(a) On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period up to a
number of shares of the Company's Common Stock determined by dividing such
Employee's payroll deductions accumulated prior to such Exercise Date and
retained in the Participant's account as of the Exercise Date by the lower of
(i) eighty-five percent (85%) of the fair market value of a share of the
Company's Common Stock on the Enrollment Date or (ii) eighty-five percent (85%)
of the fair market value of a share of the Company's Common Stock on the
Exercise Date; provided that in no event shall an Employee be permitted to
purchase during each Offering Period more than a number of shares determined by
dividing $12,500 by the fair market value of a share of the Company's Common
Stock on the Enrollment Date, and provided further that such purchase shall be
subject to the limitations set forth in Section 3(b) and 12 hereof. Exercise of
the option shall occur as provided in Section 8, unless the participant has
withdrawn pursuant to Section 10, and shall expire on the last day of the
Offering Period. Fair market value of a share of the Company's Common Stock
shall be determined as provided in Section 7(b) herein.
(b) The option price per share of the shares offered in a
given Offering Period shall be the lower of: (i) 85% of the fair market value of
a share of the Common Stock of the Company on the Enrollment Date; or (ii) 85%
of the fair market value of a share of the Common Stock of the Company on the
Exercise Date. The fair market value of the Company's Common Stock on a given
40
<PAGE>
date shall be determined by the Board in its discretion; provided, however, that
where there is a public market for the Common Stock, the fair market value per
share shall be the closing price of the Common Stock for such date, as reported
by the NASDAQ National Market System, or, in the event the Common Stock is
listed on a stock exchange, the fair market value per share shall be the closing
price on such exchange on such date, as reported in the Wall Street Journal.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in paragraph 10 below, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable option price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased and any payroll deductions
accumulated in a participant's account which are not used to purchase shares
shall remain in the participant's account for the subsequent Offering Period,
subject to an earlier withdrawal as provided in paragraph 10. During a
participant's lifetime, a participant's option to purchase shares hereunder is
exercisable only by him or her.
9. Delivery. Unless a participant makes an election to delay the
issuance of Certificate representing purchased shares, as promptly as
practicable after each Exercise Date on which a purchase of shares occurs, the
Company shall arrange the delivery to each participant, as appropriate, of a
certificate representing the shares purchased upon exercise of his or her
option. A participant may make an election to delay the issuance of stock
certificates representing shares purchased under the Plan by giving written
notice to the Company the form of Exhibit D to this Plan. Any such election
shall remain in effect until it is revoked by the participant or, if earlier,
upon the termination of the participant's Continuous Status as an Employee. The
Company may limit the time or times during which participants may revoke such
elections, except that a participant shall automatically receive a certificate
as soon as practicable following termination of his or her Continuous Status as
an Employee and that participants shall be given the opportunity to revoke such
elections at least once each calendar year.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account will be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Offering Period.
If a participant withdraws from an Offering Period, payroll deductions will not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon termination of the participant's Continuous Status as
an Employee prior to the Exercise Date for any reason, including retirement or
death, the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option will be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under paragraph 14, and such participant's option will be
automatically terminated.
(c) In the event an Employee fails to remain in Continuous
Status as an Employee of the Company for at least twenty (20) hours per week
during an Offering Period in which the Employee is a participant, he or she will
be deemed to have elected to withdraw from the Plan and the payroll deductions
credited to his or her account will be returned to such participant and such
participant's option terminated.
41
<PAGE>
(d) A participant's withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 2,950,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in paragraph 18. If on a given Exercise Date the number of shares with respect
to which options are to be exercised exceeds the number of shares then available
under the Plan, the Company shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration. The Plan shall be administered by the Board of the
Company or a committee of members of the Board appointed by the Board. The
administration, interpretation or application of the Plan by the Board or its
committee shall be final, conclusive and binding upon all participants. Members
of the Board who are eligible Employees are permitted to participate in the
Plan.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
42
<PAGE>
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in paragraph 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with paragraph 10.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees semi-annually promptly following the Exercise Date, which statements
will set forth the amounts of payroll deductions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
19. Amendment or Termination. The Board of Directors of the Company may
at any time and for any reason terminate or amend the Plan. Except as provided
in paragraph 18, no such termination can affect options previously granted,
provided that an Offering Period may be terminated by the Board of Directors on
any Exercise Date if the Board determines that the termination of the Plan is in
the best interests of the Company and its shareholders. Except as provided in
paragraph 18, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant. In addition, to the
extent necessary to comply with Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as so
required.
43
<PAGE>
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve months before or after
the date the Plan is adopted. Such shareholder approval shall be obtained in the
manner and degree required under the applicable state and federal tax and
securities laws.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in paragraph 21. It shall continue in
effect for a term of twenty (20) years unless sooner terminated under paragraph
19.
44
<PAGE>
EXHIBIT A
TRIMBLE NAVIGATION
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _________________________hereby elects to participate in the Trimble
Navigation Employee Stock Purchase Plan (the "Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common
Stock in accordance with this Subscription Agreement and the Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (not to exceed 10%) during
the Offering Period in accordance with the Stock Purchase Plan.
________ Include bonuses as part of Compensation subject to payroll
deduction.
________Exclude bonuses from Compensation subject to payroll deduction.
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price
determined in accordance with the Stock Purchase Plan. I understand
that if I do not withdraw from an Offering Period, any accumulated
payroll deductions will be used to automatically exercise my option.
4. I have received a copy of the complete "Trimble Navigation Employee
Stock Purchase Plan." I understand that my participation in the Stock
Purchase Plan is in all respects subject to the terms of the Plan. I
understand that the grant of the option by the Company under this
Subscription Agreement is subject to obtaining shareholder approval of
the Stock Purchase Plan.
5. Shares purchased for me under the Stock Purchase Plan should be issued
in the name(s) of:________________________________________
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day
of the Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
delivered to me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any such disposition. However, if I dispose of such shares at any
time after the expiration of the 2-year holding
period, I understand that I will be treated for federal income tax
purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only
to the extent of an amount equal to the lesser of (1) the excess of the
fair market value of the shares at the time of such disposition over
the purchase price which I paid for the shares under the option, or (2)
the excess of the fair market value of the shares over the option
45
<PAGE>
price, measured as if the option had been exercised on the Enrollment
Date. The remainder of the gain, if any, recognized on such disposition
will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Stock Purchase Plan. The
effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Stock Purchase Plan:
--------------------------------------------------
NAME: (Please print) (First) (Middle) (Last)
- -------------------------------- ------------------------------
Relationship
------------------------------
(Address)
--------------------------------------------------
NAME: (Please print) (First) (Middle) (Last)
- ------------------------------- -----------------------------
Relationship
----------------------------
(Address)
Employee's Social
Security Number: ----------------------------
Employee's Address: ----------------------------
----------------------------
----------------------------
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: _____________________ _____________________________
Signature of Employee
46
<PAGE>
EXHIBIT B
TRIMBLE NAVIGATION
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Trimble
Navigation Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as possible all the payroll deductions credited to his
or her account with respect to such Offering Period. The undersigned understands
and agrees that his or her option for such Offering Period will be automatically
terminated. The undersigned understands further that no further payroll
deductions will be made for the purchase of shares in the current Offering
Period and the undersigned shall be eligible to participate in succeeding
Offering Periods only by delivering to the Company a new Subscription Agreement.
Name and Address of Participant
-------------------------------
-------------------------------
-------------------------------
Signature
-------------------------------
Date:__________________________
47
<PAGE>
EXHIBIT C
TRIMBLE NAVIGATION
EMPLOYEE STOCK PURCHASE PLAN
NOTICE TO RESUME PAYROLL DEDUCTIONS
The undersigned participant in the Offering Period of the Trimble
Navigation Employee Stock Purchase Plan which began on ______________, 19___
hereby notifies the Company to resume payroll deductions for his or her account
at the beginning of the next Exercise Period within such Offering Period in
accordance with the terms of the Subscription Agreement executed by the
undersigned at the beginning of the Offering Period. The undersigned understands
that he or she may change the payroll deduction rate or the beneficiaries named
in such Subscription Agreement by submitting a revised Subscription Agreement.
Name and Address of Participant
-------------------------------
-------------------------------
-------------------------------
Signature
-------------------------------
Date:__________________________
48
<PAGE>
EXHIBIT D
TRIMBLE NAVIGATION
EMPLOYEE STOCK PURCHASE PLAN
ELECTION/REVOCATION OF ELECTION
DELAY ISSUANCE OF CERTIFICATE
The undersigned participant in the 1988 Trimble Navigation Employee
Stock Purchase Plan (the "Stock Purchase Plan"), hereby elects to allow Trimble
Navigation (the "Company") or its agent to delay issuance of a certificate
representing shares purchased under the Plan in accordance with the provisions
of the Stock Purchase Plan. This election shall continue in effect until the
termination of the undersigned's Continuous Status as an Employee or until
revoked pursuant to such Stock Purchase Plan. This election shall not otherwise
affect the participant's rights as a shareholder of the Company.
-OR-
____________________ hereby revokes his or her prior election to allow
the Company to delay issuance of a certificate pursuant to the terms of the
Stock Purchase Plan. The Company shall deliver to participant as promptly as
practicable a certificate representing all shares purchased thereby.
Name and Address of Participant
-------------------------------
-------------------------------
-------------------------------
Signature
-------------------------------
Date:__________________________
49
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF
EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 JAN-01-1999
<PERIOD-END> JUL-02-1999 JUL-3-1998
<CASH> 41,180 23,180
<SECURITIES> 23,643 43,492
<RECEIVABLES> 38,953 45,874
<ALLOWANCES> 0 0
<INVENTORY> 32,788 51,709
<CURRENT-ASSETS> 139,707 168,620
<PP&E> 13,762 19,198
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 162,576 204,862
<CURRENT-LIABILITIES> 48,509 37,314
<BONDS> 0 0
0 0
0 0
<COMMON> 124,149 127,804
<OTHER-SE> (40,095) 7,824
<TOTAL-LIABILITY-AND-EQUITY> 162,576 204,862
<SALES> 139,609 147,697
<TOTAL-REVENUES> 139,609 147,697
<CGS> 66,431 73,112
<TOTAL-COSTS> 66,431 73,112
<OTHER-EXPENSES> 63,880 68,608
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,701 1,704
<INCOME-PRETAX> 9,024 6,594
<INCOME-TAX> 1,354 700
<INCOME-CONTINUING> 7,670 5,894
<DISCONTINUED> 0 (3,724)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,670 2,170
<EPS-BASIC> 0.34 0.10
<EPS-DILUTED> 0.34 0.09
</TABLE>
