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 March 31, 2000
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 incorporation (I.R.S Employer
or organization) Employer Identification No.)
645 North Mary Avenue, Sunnyvale, CA 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 April 28, 2000, there were 22,985,724 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 -
March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations -
Three Months ended March 31, 2000 and April 2, 1999 4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 2000 and April 2, 1999 5
Notes to Condensed Consolidated Financial Statement 6-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-20
Item 3. Quantitative and Qualitative Disclosure of Market Risk 20-21
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMBLE NAVIGATION LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
-----------------------------------------------------------------------------
(In thousands) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 56,157 $ 49,264
Short term investments 54,850 52,728
Accounts and other receivable, net 40,257 36,005
Inventories 16,233 16,435
Other current assets 4,215 4,510
------------ -----------
Total current assets 171,712 158,942
Net property and equipment 11,980 12,333
Intangible assets 1,113 1,238
Deferred income taxes 372 387
Other assets 9,346 8,851
------------ -----------
Total assets $ 194,523 $ 181,751
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,388 $ 1,388
Accounts payable 11,904 11,710
Accrued compensation and benefits 7,808 7,011
Accrued liabilities 15,005 14,091
Accrued liabilities related to disposal of
General Aviation 1,570 2,212
Accrued warranty expense 5,869 5,786
Income taxes payable 3,230 2,983
Deferred gain on sale of assets 1,953 1,953
------------ -----------
Total current liabilities 48,727 47,134
------------ -----------
Noncurrent portion of long-term debt and
other liabilities 30,677 30,566
Noncurrent portion of gain on sale of assets 2,767 3,255
------------ ----------
Total liabilities 82,171 80,955
------------ ----------
Shareholders' equity:
Common stock 130,048 126,962
Accumulated deficit (16,413) (25,125)
Accumulated other comprehensive loss (1,283) (1,041)
------------- -----------
Total shareholders' equity 112,352 100,796
------------- -----------
Total liabilities and shareholders' equity $ 194,523 $ 181,751
============= ===========
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
TRIMBLE NAVIGATION LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31, April 2,
2000 1999
- --------------------------------------------------------------------------------
(In thousands, except per share data)
Total revenue $ 65,140 $ 68,770
-------------- --------------
Operating expenses:
Cost of sales 28,095 33,203
Research and development 8,877 8,507
Sales and marketing 12,646 13,304
General and administrative 6,300 10,023
-------------- --------------
Total operating expenses 55,918 65,037
-------------- --------------
Operating income 9,222 3,733
-------------- --------------
Nonoperating income (expense):
Interest income 1,481 691
Interest and other expenses (1,053) (817)
Foreign exchange gain (loss) , net 30 (61)
-------------- --------------
458 (187)
-------------- --------------
Income before income taxes 9,680 3,546
Income tax provision 968 532
-------------- --------------
Net income $ 8,712 $ 3,014
============== ==============
-------------- --------------
Basic net income per share $ 0.38 $ 0.14
============== ==============
Shares used in calculating basic
income (loss) per share 22,849 22,262
============== ==============
-------------- --------------
Diluted net income per share $ 0.35 $ 0.14
============== ==============
Shares used in calculating diluted
income (loss) per share 24,972 22,265
============== ==============
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
TRIMBLE NAVIGATION LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31, April 2,
2000 1999
- --------------------------------------------------------------------------------
(In thousands)
Net cash provided by operating activities $ 7,734 $ 8,054
---------- ---------
Cash flow from investing activities:
Purchase of short term investments (6,220) (2,595)
Maturities of short term investments 4,098 10,250
(Purchase)/sale of equity investments/loans (525) -
Acquisition of property and equipment (1,216) (2,186)
Capitalized patent expenditures (143) (277)
---------- ---------
Net cash provided (used) in investing activities (4,006) 5,192
---------- ---------
Cash flow from financing activities:
Issuance of common stock 3,086 165
Repurchase of common stock - -
(Payment)/collections of notes receivable 48 (877)
Proceeds from long-term debt and revolving
credit facilities 31 28
---------- ---------
Net cash provided (used) by financing activities 3,165 (684)
---------- ---------
Net increase in cash and cash equivalents 6,893 12,562
Cash and cash equivalents -- beginning of period 49,264 40,865
---------- ---------
Cash and cash equivalents -- end of period $ 56,157 $ 53,427
========== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 788 $ 838
Income taxes, net of refunds $ 640 $ (31)
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 months ended
March 31, 2000, and April 2, 1999, which are presented in this Quarterly Report
on Form 10-Q are unaudited. The balance sheet at December 31, 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 Trimble's Annual Report on Form 10-K for the year ended
December 31, 1999.
Trimble has a 52-53 week fiscal year, which ends on the Friday nearest to
December 31, which for fiscal 2000 will be December 29, 2000. The Company's
fiscal year normally consists of 52 weeks split into four equal quarters of 13
weeks each; however, due to the fact that there are not exactly 52 weeks in a
calendar year and that there is at least slightly more than one additional day
per calendar year, as compared to a 52-week fiscal year, the Company will have a
fiscal year composed of 53 weeks in certain fiscal years.
In those resulting fiscal years that have 53 weeks, one quarter of the
fiscal year will have 14 weeks and the Company will record an extra week of
revenues, costs and related financial activity. Therefore, the financial results
of those fiscal years, and the associated quarter, having the extra week, will
not be exactly comparable to the prior and subsequent 52-week fiscal years, and
the associated quarters having only 13 weeks. Thus, due to the inherent nature
of a 52-53 week fiscal year, the Company, analysts, shareholders, investors and
others will have to make appropriate adjustments to any analysis performed when
comparing the Company's activities and results in fiscal years that contain 53
weeks, to those that contain only the standard 52 weeks. The next 53 weeek year
will be fiscal year 2002.
The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 29, 2000.
NOTE 2 - Cash Equivalents and Short term investments:
Trimble considers all highly liquid investments with an original maturity
of three months or less when purchased to be cash equivalents. All other liquid
investments are classified as short-term investments. Trimble has classified all
its short-term/marketable investments as "available-for-sale" securities.
Available-for-sale securities are carried at fair value, with the unrealized
holding gains and losses, net of tax effects, reported as a separate component
of shareholders' equity. Fair value is based on quoted market prices. The cost
of debt securities in this classification is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization, as well as
interest, dividends, and realized gains and losses, is included in interest and
investment income. The cost of securities sold is based on the specific
identification method. Trimble has classified all investments as short-term
since it has the intent and ability to redeem them within the year.
At March 31, 2000, investments with scheduled maturities within one year
were $53.8 million and for maturities between one to three years were $1.1
million. At December 31, 1999, investments with scheduled maturities within one
year were $50.2 million and for maturities between one to three years were $2.5
million.
6
<PAGE>
NOTE 3 - Inventories:
Inventories consist of the following:
March 31, December 31,
2000 1999
- ------------------------------------------------------------------------------
(In thousands)
Raw materials $ 2,543 $ 2,582
Work-in-process 2,056 2,232
Finished goods 11,634 11,621
----------------- -----------------------
$ 16,233 $ 16,435
----------------- -----------------------
NOTE 4 - Discontinued Operations:
On October 2, 1998, Trimble adopted a plan to discontinue its General
Aviation division. 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.
The original estimated loss on the disposal of the discontinued operation
in fiscal 1998 was $19.9 million, but was adjusted in March 1999 for certain
product lines that were retained (see further discussion below). The adjusted
estimated loss on the disposal is $20.3 million. The original fiscal 1998
estimate included a write-off of net assets of $12.7 million and a provision of
$7.2 million for costs of disposal, including severance costs, facility and
certain other contractual costs, and anticipated operating losses through the
estimated date of disposal. The adjusted fiscal 1999 estimate included the
write-off of net assets of $12.7 million and a provision of $7.6 million for
costs of disposal, including severance costs, facility and certain other
contractual costs, and anticipated operating losses through the estimated date
of disposal.
On March 31, 1999, Trimble made the decision to retain certain product
lines included within the General Aviation division which were part of the
previously planned discontinued operation. The basis of the decision was that
these products use common raw materials and labor which are necessary for
Trimble'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.
As of March 31, 2000, Trimble has a remaining provision of $1.6 million,
which includes $0.6 million for the estimated remaining operating losses for
service and warranty support and remaining severance costs, and $1.0 million for
facility and certain other contractual costs.
NOTE 5 - Restructuring Charge:
In fiscal 1998, Trimble recorded restructuring charges totaling $10.3
million in operating expenses.
These charges were a result of Trimble's reorganization activities, through
which the Company downsized its operations, including reducing headcount and
facilities space usage, and canceled its enterprise-wide information system
project and certain research and development projects. The impact of these
decisions was that significant amounts of Trimble's fixed assets, prepaid
expenses, and purchased technology have been impaired and certain liabilities
incurred. Trimble wrote down the related assets to their net realizable values
and made provisions for the estimated liabilities.
The activity in fiscal 2000, 1999 and 1998 related to the restructuring
charges and the amounts remaining at March 31, 2000 on the balance sheet are as
follows (in thousands):
7
<PAGE>
<TABLE>
<CAPTION>
Total
charged to Amounts paid/ Amounts paid/ Amounts paid/ Remaining in
expense in written off written off written off accrued liabilites
fiscal 1998 in fiscal 1998 in fiscal 1999 fiscal Q1 2000 as of March 31, 2000
-------------- ------------------- ------------------- --------------- ------------------------
<S> <C> <C> <C> <C> <C>
Employee termination benefits $ 2,864 $ (1,200) $ (371) $ - $ 1,293
Facility space reductions 1,061 - (1,053) $ (5) 3
ERP system abandonment 6,360 (4,895) (1,465) $ - -
------------- ------------------- ------------------ -------------- ------------------------
Subtotal $ 10,285 $ (6,095) $ (2,889) $ (5) $ 1,296
============== =================== ================== ============== ========================
</TABLE>
NOTE 6 - Segment Information:
Trimble operates in a single industry segment as a leader in designing and
developing innovative products enabled by GPS technology. We provide end-user
and Original Equipment Manufacture solutions for diverse applications in our
target markets. These applications include:
o Architecture/Engineering/Construction - surveying, mapping, and
construction machine guidance control;
o Asset Management and Tracking - fixed asset mapping and fleet management
using mobile positioning;
o Agriculture - mapping, yield monitoring, variable rate applications, and
machine guidance/control; and
o GPS Component Technologies - automotive navigation, timing systems,
commercial avionics, and military systems.
To achieve distribution, marketing, production, and technology advantages
for our targeted markets we manage our industry segment within two Business
Units: the Precision Positioning Group (PPG) and the Mobile and Timing
Technologies (MTT) Group.
The Precision Positioning Group derives its revenue from precision
positioning solutions for the architecture, engineering, construction, asset
management, and agriculture markets. These markets require sub-centimeter to
meter 3D positioning accuracy for surveying, mapping, and machine
guidance/control applications. The Mobile and Timing Technologies Group derives
its revenues from automotive, timing, fleet management, commercial aviation,
military systems and from development of software licenses and other rights for
the use of our GPS technology to third parties. Trimble evaluates these Business
Units' performance and allocates resources based on profit and loss from
operations before income taxes.
The accounting policies applied by each of the markets are the same as
those used by Trimble in general.
The table on the following page presents revenues, operating income (loss),
and identifiable assets by Trimble's two Business Units. There is no recognition
of inter-Business Unit sales or transfers. Operating income (loss) is net sales
less operating expenses, excluding general corporate expenses, interest income
(expense), and income taxes. The identifiable assets that Trimble's Chief
Operating Decision Maker (CODM) views by industry market are accounts receivable
and inventory. Trimble does not report depreciation and amortization or capital
expenditures by industry markets to the CODM.
8
<PAGE>
----------------------------------------------
Three Months Ended
March 31, 2000
----------------------------------------------
(in thousands)
----------------------------------------------
PPG MTT Total
----------------------------------------------
External net revenue $ 40,548 $ 24,592 $ 65,140
Operating profit before corporate
allocations 13,890 4,664 18,554
Corporate allocations (1) (5,808) (2,579) (8,387)
----------------------------------------------
Operating profit $ 8,082 $ 2,085 $ 10,167
Assets:
Accounts recievable (2) $ 33,931 $ 19,139 $ 53,070
Inventory 6,164 8,338 14,502
----------------------------------------------
Three Months Ended
April 2, 1999
----------------------------------------------
(in thousands)
----------------------------------------------
PPG MTT Total
----------------------------------------------
External net revenue $ 42,566 $ 26,204 $ 68,770
Operating profit before corporate
allocations 14,385 3,325 17,710
Corporate allocations (1) (6,186) (2,491) (8,677)
----------------------------------------------
Operating profit $ 8,199 $ 834 $ 9,033
----------------------------------------------
Twelve Months Ended
December 31, 1999
----------------------------------------------
(in thousands)
----------------------------------------------
Assets: PPG MTT Total
----------------------------------------------
Accounts recievable (2) $ 29,205 $ 20,204 $ 49,409
Inventory 6,720 9,715 16,435
- --------------------------------------------------------
(1) For the fiscal quarters ended March 31, 2000 and April 2, 1999, the
Company determined the amount of corporate allocations charged to each of 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).
(2) As presented, the accounts receivable number excludes cash in advance
and reserves, which are not allocated between Business Unit segments.
9
<PAGE>
The following are reconciliations corresponding to totals in the accompanying
consolidated financial statements (in thousands):
Three Months Ended
March 31, April 2,
Revenues: 2000 1999
- -------------------------------------------------------------------------------
Total for reportable markets $ 65,140 $ 68,770
=================== ==================
Operating profit:
- --------------------------------------
Total for reportable markets $ 10,167 $ 9,033
Unallocated corporate expenses (945) (5,300)
------------------- ------------------
Income before income taxes $ 9,222 $ 3,733
=================== ==================
Three Months Twelve Months
Ended Ended
March 31, December 31,
Assets: 2000 1999
- --------------------------------------------------------- ------------------
Accounts receivable total for
reportable markets $ 53,070 $ 49,409
Unallocated (1) (12,813) (13,404)
------------------- ------------------
Total $ 40,257 $ 36,005
=================== ==================
Inventory total for reportable markets $ 14,502 $ 16,435
Common inventory (2) 1,731 -
------------------- ------------------
Net inventory $ 16,233 $ 16,435
=================== ==================
- ----------------------------------------------------------------------
(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.
NOTE 7 - Comprehensive Income (Loss):
The components of comprehensive income (loss), net of related tax include:
Three Months Ended
March 31, April 2,
2000 1999
- --------------------------------------------------------------------------------
(In thousands)
Net unrealized gain (loss) on short-term investments 64 (7)
Cummulative foreign currency translation adjustments (306) (113)
------------- ----------
Accumulated other comprehensive income (loss) $ (242) $ (120)
============= ==========
10
<PAGE>
Accumulated other comprehensive income (loss) on the condensed consolidated
balance sheets consists of unrealized gains on available for sale investments
and foreign currency translation adjustments. The components of accumulated
other comprehensive income (loss), net of related tax include:
March 31, December 31,
2000 1999
- ------------------------------------------------------------------ -------------
(In thousands)
Net unrealized gains (loss) on short-term investments $ 64 $ (142)
Cummulative foreign currency translation adjustments (306) (107)
----------- -------------
Accumulated other comprehensive income (loss) $ (242) $ (249)
=========== =============
NOTE 8 - 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 Trimble 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, 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. Trimble expects to adopt SFAS 133 as of the beginning of its fiscal year
2001. The effect of adopting the SFAS 133 is currently being evaluated, but is
not expected to have a material adverse effect on Trimble's financial position
or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements,"
which summarizes the staff's views regarding the application of generally
accepted accounting principles to selected revenue recognition issues and is
effective April 1, 2000. The Company is currently assessing the impact SAB 101
will have on the Company's results of operations.
11
<PAGE>
NOTE 9 - Earnings Per Share:
The following table sets forth the computation of Trimble's basic and
diluted earnings per share:
Three Months Ended
March 31, April 2,
2000 1999
- --------------------------------------------------------------------------------
(In thousands, except per share amounts)
Numerator:
Income available to common shareholders used in
basic and diluted income per share $ 8,712 $ 3,014
========= =========
Denominator:
Weighted-average number of common
shares used in calculating basic income per share 22,849 22,262
Effect of dilutive securities:
Common stock options 1,882 3
Common stock warrants 241 -
--------- ---------
Weighted-average number of common
shares and dilutive potential common shares
used in calculating diluted income per share 24,972 22,265
========= =========
Basic income per share $ 0.38 $ 0.14
======== =========
Diluted income per share $ 0.35 $ 0.14
======== =========
12
<PAGE>
NOTE 10 - Contingencies:
Pending Matters. 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. Trimble and
SiRF are in the process of finalizing the details of a negotiated settlement,
which includes cross licensing.
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. and Garmin International Inc., and both
have 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.
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 believes that there will be no adverse
consequences to the Company as a result of this inquiry. The Company is also a
party to other disputes incidental to its business.
The Company believes that the ultimate liability of the Company as a result
of such disputes, if any, would not be material to its overall financial
position, results of operations, or liquidity.
13
<PAGE>
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results could differ materially from
those indicated in the forward-looking statements due to a number of factors
including, but not limited to, as a result of the risk factors set forth below
in this report as well as the Company's Annual Report on Form 10-K and other
reports and documents that the Company files from time to time with the
Securities and Exchange Commission. The Company has attempted to identify
forward-looking statements in this report by placing an asterisk (*) before
paragraphs containing such material.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues
Revenues from Trimble's operations for the three months ended March 31,
2000 decreased 5% to $65,140,000 from $68,770,000 in the corresponding period
during fiscal 1999. The table below breaks out Trimble's revenues by segment:
Three Months Ended
-------------------------------------------
March 31, April 2,
2000 1999 Decrease
- -------------------------------------------------------------------------------
(In thousands)
Precision Positioning Group $ 40,548 $ 42,566 (5%)
Mobile and Timing Technologies 24,592 26,204 (6%)
----------- ----------------- ----------
Total $ 65,140 $ 68,770 (5%)
----------- ----------------- ----------
Precision Positioning Group
The Precision Positioning Group revenues decreased by 5% for the three
months ended March 31, 2000, as compared with corresponding period in 1999. The
fiscal year 2000 revenue decrease compared to 1999 is due to the following:
o Continued delivery problems due to critical part shortages in our supply
chain, and transitional issues with outsourcing our manufacturing had a negative
impact on revenue.
o An increase in dealer discounts primarily in the land surveying market as
Trimble continues the change in dealer structure from commission dealers to
buy/sell dealers.
o An increase in agricultural market revenues, a result of maturing
distribution channel and geographical expansion, partially offset the declines
stated above.
Mobile and Timing Technologies
Mobile and Timing Technologies revenues decreased 6% for the three
months ended March 31, 2000, as compared with corresponding period in 1999. The
fiscal year 2000 revenue decrease compared to 1999 is due to the following:
o Asset management and tracking revenues were down, due to the continued
delivery problems due to critical part shortages in our supply chain, and
transitional issues with outsourcing our manufacturing.
o Trimble's decision to exit the commercial marine business in the fourth
quarter of 1998 and sold the last of such products in the second quarter of
1999.
o The increase in the GPS Component Technologies market for automotive
navigation, timing systems, and military systems partially offset the declines
in asset management and tracking, and the commercial marine markets.
14
<PAGE>
Revenues outside the U.S.
* Sales to unaffiliated customers in locations outside the U.S. comprised
approximately 56% and 50% of the Company's revenues in the first three months of
fiscal 2000 and 1999, respectively. During the first three months of 2000, the
Company experienced strong demand in Europe and South and Central America.
Trimble anticipates that export revenue and sales made by its subsidiaries in
locations outside the U.S. will continue to account for a significant portion of
its revenue. For this reason, Trimble is subject to the risks inherent in these
foreign sales, including unexpected changes in regulatory requirements, exchange
rates, governmental approval, and tariffs or other barriers. Even though the
U.S. Government announced on March 29, 1996, that it would support and maintain
the GPS system, and on May 1, 2000 eliminated the use of Selective Availability
(SA) -- a method of degrading GPS accuracy -- there may be a reluctance in
certain foreign markets to purchase products based on GPS technology, given the
control of GPS by the U.S. Government. Trimble's results of operations could be
adversely affected if we were unable to continue to generate significant sales
in locations outside the U.S.
Gross Margin
* Gross margin varies on a quarterly basis due to a number of factors,
including product mix, 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 57% and 52% for the three months ending March 31, 2000 and
April 2, 1999. The increase in gross margin percentages is primarily due to
favorable product mix for the quarter of Precision Positioning Group products,
which yield higher margins due to integration of software and wireless
communications. In addition, gross margins for the first three months of fiscal
2000 were favorably impacted by the cost benefits of outsourcing our
manufacturing. Because of product mix changes within and among the industry
markets, market pressures on unit selling prices, fluctuations in unit
manufacturing costs, including increases in component prices and other factors,
positive future gross margins cannot be assured.
* Trimble expects that in the future a higher percentage of its business
will be conducted through alliances with strategic partners. As a result of
volume pricing and the assumption of certain operating costs by the partner,
margins on this business are likely to be lower than sales directly to
end-users.
Operating Expenses
The following table shows operating expenses for the periods indicated and
should be read in conjunction with the narrative descriptions of those operating
expenses below:
Three Months Ended
---------------------------------------------------
March 31, April 2, Increase/
2000 1999 (Decrease)
- ------------------------------------------------------------------------------
(in thousands)
Research and development $ 8,877 $ 8,507 4%
Sales and marketing 12,646 13,304 (5)%
General and administrative 6,300 10,026 (37)%
---------------- ----------------- -----------
Total $ 27,823 $ 31,837 (13)%
---------------- ----------------- -----------
Research and Development
* Research and development expenses increased slightly in the three months
ended March 31, 2000, as compared with the corresponding period in fiscal 1999
due to the following:
o Trimble's receipt of approximately $884,000 more funds from cost
reimbursement projects in 1999 as compared to 2000.
o Decreases in our expenses of approximately $998,000 related to personnel,
temporary help, and consulting.
o The above decreases were partially offset by approximately $484,000
related to facility costs and other expenses.
15
<PAGE>
The Company plans to continue its aggressive development of future
products.
Sales and Marketing
* Sales and marketing expenses decreased for three months ended March 31,
2000, as compared with the corresponding period in fiscal 1999. The primary
reason for the dollar and percentage decrease in expenses from 1999 to 2000 is
as follows:
o Sales commissions were lower as a percentage of sales, due to the change
in dealer structure for some of our product lines from commission dealers to
buy/sell.
* Trimble's future growth will depend in part on the timely development and
continued viability of the markets in which we currently compete, and on our
ability to continue to identify and exploit new markets for our products. In
addition, we have encountered significant competition in selected markets, and
we expect such competition to intensify as the market for GPS applications
receives acceptance. Several of Trimble's competitors are major corporations
with substantially greater financial, technical, and marketing resources.
Increased competition may result in reduced market share and is likely to result
in price reductions of GPS-based products, which could adversely affect
Trimble's revenues and profitability.
General and Administrative
General and administrative expenses decreased for the three months ended
March 31, 2000, as compared with the corresponding period for fiscal 1999. The
primary reasons for the decrease is as follows:
o Approximately a $1.3 million allowance for doubtful accounts charge in
the first three months of fiscal 1999 related to customers in South America
which was not repeated in the first three months of fiscal 2000.
o Trimble had decreases of approximately $2.4 in expenses for personnel,
travel, legal, equipment rental, facilities and other office supplies.
Income Taxes
Trimble's effective income tax rates from continuing operations are 10% and
15% for the three months ended March 31, 2000 and April 2, 1999, respectively.
These rates are less than the federal statutory rate of 35% primarily due to the
realization of the benefits from prior net operating losses and 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 March 31, 2000, Trimble had cash and cash equivalents of $56.2 million
and $54.9 million in short-term investments. Trimble's cash and cash equivalents
and short-term investments increased from the prior year, due to an increase in
net income. Trimble's long-term debt consisted primarily of a $30.0 million note
obligation due in 2001. We had no debt outstanding under our $50,000,000
unsecured line of credit but had issued certain letters of credit as of March
31, 2000, amounting to approximately $939,000. Trimble 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, 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 operating cash needs for
at least the next twelve months.
* For the three months ended March 31, 2000, the cash provided by operating
activities was $7.7 million, as compared to cash provided of $8.1 million in the
corresponding period in fiscal 1999. Cash provided by operating activities in
fiscal 2000 arose from the Company's net income, plus depreciation and
amortization and decreases in inventories and offset partially by increases in
accounts receivable. Trimble'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.
16
<PAGE>
Cash provided by sales of common stock in fiscal year 2000 represents the
proceeds from purchases made by employees pursuant to Trimble's stock option
plan and totaled $3.1 million for the three months ended March 31, 2000.
* In August 1997, Trimble entered into a three-year, $50,000,000 unsecured
revolving credit facility with four banks (the "Credit Agreement"). The Credit
Agreement enables Trimble to borrow up to $50,000,000, provided that certain
financial and other covenants are met. As of October 20, 1999, Trimble, the
Agent, and the Lenders agreed to change and amend certain covenants for the life
of the loan, which expires in August of 2000. The $50,000,000 revolving credit
facility was modified to include Trimble's prior separate $5,000,000 line of
credit and to simplify the entire arrangement. 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, Trimble 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, Trimble has not made any
borrowings under the $50,000,00 unsecured revolving credit facility, but has
issued certain letters of credit as of March 31, 2000, amounting to
approximately $939,000. In addition, Trimble is restricted from paying dividends
under the terms of the Credit Agreement.
In June 1994, Trimble 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 Trimble 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, Trimble 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 have been 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 notes, Trimble is required to meet a minimum consolidated
net worth requirement. If Trimble falls below the minimum consolidated net worth
requirement we could be in default of our loan covenants. Such events could have
a material adverse effect on Trimble's operations and liquidity.
Trimble announced in February 1996 that it had approved a discretionary
program whereby up to 600,000 shares of its common stock could be repurchased on
the open market by the Company to offset the potential dilutive effects to
earnings (loss) per share from the issuance of additional stock options. In
1998, Trimble approved the repurchase of an additional 1.6 million shares under
the discretionary program. During 1997, Trimble purchased 139,500 shares at a
cost of $1.8 million. During 1998, Trimble purchased 1.08 million shares at a
cost of $16.1 million. During fiscal 1999 and the first three months of fiscal
2000, no shares were repurchased under the discretionary program. Trimble 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.
* Trimble 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. Trimble does not currently
believe that the introduction of the Euro will have a material effect on its
foreign exchange and hedging activities. Trimble has also assessed the potential
impact the Euro conversion will have in regard to its internal systems
accommodating Euro-denominated transactions. Trimble will continue to evaluate
the impact of the Euro introduction over time, based on currently available
information. Trimble does not currently anticipate any adverse impact of the
Euro conversion on the Company.
17
<PAGE>
Year 2000 Issues
* Computers and software, as well as other equipment that rely 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." Trimble is not aware of any year 2000 issues that
have affected its business. In preparation for the year 2000, we incurred
internal staff costs as well as consulting and other expenses. Trimble updated a
significant portion of its computer software to be year 2000 compliant. Trimble
is also not aware of any material problems with customers or suppliers.
Accordingly, Trimble does not anticipate incurring material expenses or
experiencing any material operational disruption as a result of any year 2000
issues.
Other Risk Factors
With the selection of Solectron as an exclusive manufacturing partner,
Trimble is substantially dependent upon a sole supplier for the manufacture of
its precision positioning and mobile and timing technologies products. In
addition, we rely on sole suppliers for a number of our critical ASICS. The
dependence upon these sole suppliers subjects Trimble to risks associated with
an interruption of supply if we are 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 Trimble's business and results of operations.
The Company's ability to meet customer demands depends in part on our
ability to obtain timely delivery of parts and components from our suppliers. We
have experienced component shortages in the past that have adversely affected
our operations. Although we work closely with our suppliers to avoid these types
of shortages, there can be no assurances that we will not continue to encounter
these problems in the future.
Trimble'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 Trimble'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.
Due to competitive pressure, prices of certain of Trimble's products have
declined substantially since their introduction, and increased competition may
result in further price reduction, which could adversely affect our net revenue.
Trimble'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 Trimble's
stock. Additionally, certain macro-economic factors such as changes in interest
rates could also have an impact on the trading price of Trimble stock.
The value of Trimble's products relies substantially on our technical
innovation in fields in which there are many current patent filings. Trimble
recognizes that as new patents are issued or are brought to our attention by the
holders of such patents, it may be necessary for us to withdraw products from
the market, take a license from such patent holders, or redesign our products.
Trimble does not believe any of its products currently infringe patents or other
proprietary rights of third parties, but we cannot be certain they do not do so.
In addition, the legal costs and engineering time required to safeguard
intellectual property or to defend against litigation could become a significant
expense of operations. Such events could have a material adverse effect on
Trimble's revenues or profitability. (See also Note 10 to the Condensed
Consolidated Financial Statements).
Trimble's future revenue stream depends to a large degree on our ability to
bring new products to market on a timely basis. In some of our markets -- for
example, Land Survey and GIS where we currently have a market leadership
position, a delay in new product introductions could have a significant impact
on our results of operations. No assurance can be given that we will not incur
problems in the future in innovating and introducing new products.
Trimble is continuously evaluating alliances and external investments in
technologies related to its business, and has already entered into certain
strategic alliances and has made relatively small strategic investments in a
number of GPS
18
<PAGE>
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 Trimble's business, financial condition, and results
of operations. No assurances can be given that we will not incur problems from
current or future alliances, acquisitions, or investments. Furthermore, there
can be no assurance that we will realize value from any such strategic
alliances, acquisitions, or investments.
Trimble currently enjoys strong relationships with a few key customers. An
increasing amount of our revenue is generated from large OEMs such as Philips
VDO, Nortel, Caterpillar, CNH Global (formerly Case Corporation), and others. A
reduction or loss of business with these customers could have a material adverse
effect on our financial condition and results of operations. There can be no
assurance that Trimble will be able to continue to realize value from these
relationships in the future.
The ability of Trimble 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 our industry and location is intense, and there can be no assurance
that we will be able to attract, motivate and retain enough qualified employees
necessary for the future continued development of our business and products.
Trimble 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, Trimble'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 our Real-time Kinematic products because of interference with
certain other users of similar radio frequencies. An inability or delay in
obtaining such certifications or delays of the FCC could have an adverse effect
on our operating results.
Trimble'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 our products, which would, in turn, cause a material adverse
effect on our operating results. In addition, emissions from mobile satellite
service and other equipment operating in adjacent frequency bands or inband may
materially and adversely affect the utility and reliability of our products,
which could result in a material adverse effect on our operating results.
Navstar satellites and their ground support systems are complex electronic
systems subject to electronic and mechanical failures and possible sabotage. The
satellites were originally designed to have lives of 7.5 years and are subject
to damage by the hostile space environment in which they operate. However, of
the current deployment of 27 satellites in place, some have already been in
place for 11 years and have an average age of 6 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
committed to the operation and maintenance of GPS satellites over a long period,
or that the policies of the U.S. Government for the use of GPS without charge
will remain unchanged. However, a 1996 Presidential Decision Directive marks the
first time in the evolution of GPS that access for civilian use has a solid
foundation in law. 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. 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 could have a material adverse effect on Trimble's
financial results. For example, in 1995, certain European government
organizations expressed concern regarding the susceptibility of GPS equipment to
intentional or inadvertent signal interference. Such concern could translate
into reduced demand for GPS products in certain geographic regions in the
future.
19
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The following is a discussion of Trimble's exposure to market risk related
to changes in interest rates and foreign currency exchange rates. Trimble uses
certain derivative financial instruments to manage these risks. Trimble does not
use derivative financial instruments for speculative or trading purposes. All
financial instruments are used in accordance polices approved by Trimble's board
of directors.
Market Interest Rate Risk
Short-term Investments Owned by the Company. As of March 31, 2000, Trimble
had short-term investments of $54.9 million. These short-term investments
consisted of $53.8 million of highly liquid investments, with original
maturities at the date of purchase between three and twelve months and a $1.1
million liquid investment with an original maturity at the date of purchase of
18 months. (See Note 2 to the Condensed Consolidated Financial Statements) 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 March 31, 2000, would cause the fair value of
these short-term investments to decline by an immaterial amount. Because Trimble
has the ability to hold these investments until maturity, we 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 our interest income.
Outstanding Debt of the Company. As of March 31, 2000, Trimble 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
these instruments is fixed. A hypothetical 10 percent decrease in the interest
rates would not have a material impact on Trimble. Increases in interest rates
could, however, increase interest expense associated with future borrowings of
Trimble, if any. We do not currently hedge against interest rate increases.
Foreign Currency Exchange Rate Risk
Trimble hedges risks associated with foreign currency transactions in order
to minimize the impact of changes in foreign currency exchange rates on
earnings. Trimble 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.
* Trimble does not anticipate any material adverse effect on its
consolidated financial position utilizing our current hedging strategy.
All contracts have a maturity of less than one year, and we do not defer
any gains and losses, as they are all accounted for through earnings every
period.
The following table provides information about Trimble's foreign exchange
forward contracts outstanding as of March 31, 2000:
<TABLE>
<CAPTION>
Foreign Contract Value Fair Value
Buy/ Currency Amount USD in USD
Currency Sell (in thousands) (in thousands) (in thousands)
- -------------------- -------- -------------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
YEN Buy 36,000 $ 334 $ 353
YEN Sell 426,000 $ 4,066 $ 4,174
NZD Buy 4,150 $ 2,070 $ 2,077
EURO Buy 680 $ 692 $ 652
EURO Sell 2,895 $ 2,900 $ 2,774
Sterling Buy 1360 $ 2,164 $ 2,165
</TABLE>
* 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 Trimble's management, should the
20
<PAGE>
hypothetical market changes actually occur over time. As a result, actual
earnings effects in the future will differ from those quantified above.
21
<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Page
Number
A. Exhibits
27.1 Financial Data Schedule for the quarters ended
March 31, 2000 and April 2, 1999 24
B. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
March 31, 2000.
22
<PAGE>
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
(Vice President Finance, and Chief Financial Officer and
Corporate Controller)
DATE: May 5, 2000
23
<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> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-29-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 APR-02-1999
<CASH> 56,157 53,427
<SECURITIES> 54,850 8,614
<RECEIVABLES> 40,257 37,079
<ALLOWANCES> 0 0
<INVENTORY> 16,233 34,879
<CURRENT-ASSETS> 171,712 139,041
<PP&E> 11,980 15,001
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 194,523 163,938
<CURRENT-LIABILITIES> 48,727 54,659
<BONDS> 0 0
0 0
0 0
<COMMON> 130,048 122,366
<OTHER-SE> (17,696) (44,616)
<TOTAL-LIABILITY-AND-EQUITY> 112,352 163,938
<SALES> 65,140 68,770
<TOTAL-REVENUES> 65,140 68,770
<CGS> 28,095 33,203
<TOTAL-COSTS> 28,095 33,203
<OTHER-EXPENSES> 27,823 31,834
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 851 856
<INCOME-PRETAX> 9,680 3,546
<INCOME-TAX> 968 532
<INCOME-CONTINUING> 8,712 3,014
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,712 3,014
<EPS-BASIC> 0.38 0.14
<EPS-DILUTED> 0.35 0.14
</TABLE>
