CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Apr-1,

Apr-2,

2011

2010

Revenue

$                   384,293

$                    319,015

Cost of sales

192,763

160,018

Gross margin

191,530

158,997

Gross margin (%)

49.8%

49.8%

Operating expenses

   Research and development

43,232

35,890

   Sales and marketing

61,207

49,768

   General and administrative

33,472

28,547

   Restructuring

767

631

   Amortization of purchased intangible assets

9,177

8,046

      Total operating expenses

147,855

122,882

Operating income

43,675

36,115

Non-operating income, net

   Interest income

285

399

   Interest expense

(496)

(398)

   Foreign currency transaction gain, net

306

746

   Income from equity method investments, net

2,763

2,474

   Other income (expense), net

(252)

314

      Total non-operating income, net

2,606

3,535

Income before taxes

46,281

39,650

Income tax provision

7,409

11,498

Net income

38,872

28,152

Less: Net income (loss) attributable to noncontrolling interests

(831)

254

Net income attributable to Trimble Navigation Ltd.

$                     39,703

$                      27,898

Earnings per share attributable to Trimble Navigation Ltd.

    Basic

$                         0.33

$                          0.23

    Diluted

$                         0.32

$                          0.23

Shares used in calculating earnings per share:

   Basic

121,819

120,760

   Diluted

125,856

123,829

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

Apr-1,

Dec-31

2011

2010

Assets

Current assets:

  Cash and cash equivalents

$                   244,342

$                   220,788

  Accounts receivables, net

265,693

222,820

  Other receivables

25,983

21,069

  Inventories, net

203,014

192,852

  Deferred income taxes

36,620

36,924

  Other current assets

20,279

19,917

     Total current assets

795,931

714,370

Property and equipment, net

51,634

50,692

Goodwill

863,459

828,737

Other purchased intangible assets, net

215,394

204,948

Other non-current assets

73,286

68,145

     Total assets

$                1,999,704

$                1,866,892

Liabilities

Current liabilities:

  Current portion of long-term debt

$                   153,029

$                       1,993

  Accounts payable

89,357

72,349

  Accrued compensation and benefits

51,987

60,976

  Deferred revenue

81,501

73,888

  Accrued warranty expense

12,829

12,868

  Other accrued liabilities

32,977

29,741

     Total current liabilities

421,680

251,815

Non-current portion of long-term debt

271

151,160

Non-current deferred revenue

7,736

10,777

Deferred income taxes

31,447

24,598

Other non-current liabilities

49,569

42,843

     Total liabilities

510,703

481,193

Commitments and contingencies

Equity

Shareholders' equity:

  Common stock

826,495

781,779

  Retained earnings

575,968

536,350

  Accumulated other comprehensive income

67,826

48,027

Total Trimble Navigation Ltd. shareholders' equity

1,470,289

1,366,156

Noncontrolling interests

18,712

19,543

     Total equity

1,489,001

1,385,699

     Total liabilities and equity

$                1,999,704

$                1,866,892

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

Apr-1,

Apr-2,

2011

2010

Cash flow from operating activities:

   Net Income

$                38,872

$                 28,152

   Adjustments to reconcile net income  to net cash provided by

      operating activities:

        Depreciation expense

4,603

4,451

        Amortization expense

16,065

13,817

        Provision for doubtful accounts

359

1,038

        Deferred income taxes

(1,393)

103

        Stock-based compensation

6,798

5,641

        (Income) loss from equity method investments

(2,763)

(2,474)

        Excess tax benefit for stock-based compensation

(8,357)

(482)

        Provision for excess and obsolete inventories

2,489

1,902

        Other non-cash items

577

(1,760)

   Add decrease (increase) in assets:

        Accounts receivables

(40,624)

(31,546)

        Other receivables

5,776

8,060

        Inventories

(8,717)

(9,441)

        Other current and non-current assets

4,927

(2,103)

   Add increase (decrease) in liabilities:

        Accounts payable

16,377

27,319

        Accrued compensation and benefits

(10,241)

4,741

        Accrued liabilities

4,398

2,617

        Deferred revenue

(1,219)

5,468

Net cash provided by operating activities

27,927

55,503

Cash flow from investing activities:

     Acquisitions of businesses, net of cash acquired

(38,979)

(21,571)

     Acquisition of property and equipment

(4,036)

(5,299)

     Acquisitions of intangible assets

(250)

(297)

     Purchases of equity method investments

-

(2,750)

     Other

44

1

Net cash used in investing activities

(43,221)

(29,916)

Cash flow from financing activities:

     Issuance of common stock, net

27,785

8,649

     Excess tax benefit for stock-based compensation

8,357

482

     Payments on long-term debt and revolving credit lines

(672)

(54)

Net cash provided by (used in) financing activities

35,470

9,077

Effect of exchange rate changes on cash and cash equivalents

3,378

(1,439)

Net increase (decrease) in cash and cash equivalents

23,554

33,225

Cash and cash equivalents - beginning of period

220,788

273,848

Cash and cash equivalents - end of period

$              244,342

$               307,073

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)

Reporting Segments

Engineering

and

Field

Mobile

Advanced

Construction

Solutions

Solutions

Devices

THREE MONTHS ENDED APRIL 1, 2011:

Revenue

$               190,034

$             123,053

$                44,421

$             26,785

Operating income (loss) before corporate allocations:

$                 22,779

$               52,505

$                 (1,334)

$               3,863

Operating margin (% of segment external net revenues)

12.0%

42.7%

(3.0%)

14.4%

THREE MONTHS ENDED APRIL 2, 2010:

Revenue

$               157,618

$               95,901

$                37,959

$             27,537

Operating income before corporate allocations:

$                 18,807

$               39,313

$                  1,899

$               5,625

Operating margin (% of segment external net revenues)

11.9%

41.0%

5.0%

20.4%

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Apr-1,

Apr-2,

2011

2010

Dollar

% of

Dollar

% of

Amount

Revenue

Amount

Revenue

GROSS MARGIN:

GAAP gross margin:

$                  191,530

49.8%

$                  158,997

49.8%

Restructuring

( A )

99

0.0%

43

0.0%

Amortization of purchased intangibles

( B )

6,888

1.9%

5,769

1.8%

Stock-based compensation

( C )

468

0.1%

501

0.2%

Amortization of acquisition-related inventory step-up

( D )

508

0.1%

71

0.0%

Non-GAAP gross margin:

$                  199,493

51.9%

$                  165,381

51.8%

OPERATING EXPENSES:

GAAP operating expenses:

$                  147,855

38.5%

$                  122,882

38.5%

Restructuring

( A )

(767)

-0.2%

(631)

-0.2%

Amortization of purchased intangibles

( B )

(9,177)

-2.4%

(8,046)

-2.5%

Stock-based compensation

( C )

(6,330)

-1.6%

(5,140)

-1.6%

Non-recurring acquisition costs

( E )

(2,190)

-0.6%

(738)

-0.2%

Non-GAAP operating expenses:

$                  129,391

33.7%

$                  108,327

34.0%

OPERATING INCOME:

GAAP operating income:

$                    43,675

11.4%

$                    36,115

11.3%

Restructuring

( A )

866

0.2%

674

0.2%

Amortization of purchased intangibles

( B )

16,065

4.2%

13,815

4.4%

Stock-based compensation

( C )

6,798

1.8%

5,641

1.8%

Amortization of acquisition-related inventory step-up

( D )

508

0.1%

71

0.0%

Non-recurring acquisition costs

( E )

2,190

0.5%

738

0.2%

Non-GAAP operating income:

$                    70,102

18.2%

$                    57,054

17.9%

NON-OPERATING INCOME, NET:

GAAP non-operating income, net:

$                      2,606

$                      3,535

Non-recurring acquisition (gains) costs

( E )

765

(200)

Non-GAAP non-operating income, net:

$                      3,371

$                      3,335

INCOME TAX PROVISION (BENEFIT):

GAAP income tax provision (benefit):

$     7,409

16%

$   11,498

29%

Non-GAAP items tax effected

( I )

4,353

6,014

Non-GAAP income tax provision (benefit):

$   11,762

16%

$   17,512

29%

NET INCOME:  

GAAP net income attributable to Trimble Navigation Ltd.

$                    39,703

$                    27,898

Restructuring

( A )

866

674

Amortization of purchased intangibles

( B )

16,065

13,815

Stock-based compensation

( C )

6,798

5,641

Amortization of acquisition-related inventory step-up

( D )

508

71

Non-recurring acquisition costs

( E )

2,955

538

Income tax effect on non-GAAP adjustments

( F )

(4,353)

(6,014)

Non-GAAP net income attributable to Trimble Navigation Ltd.

$                    62,542

$                    42,623

DILUTED NET INCOME PER SHARE:

GAAP diluted net income per share attributable to Trimble Navigation Ltd.

$                        0.32

$                        0.23

Restructuring

( A )

0.01

0.01

Amortization of purchased intangibles

( B )

0.13

0.11

Stock-based compensation

( C )

0.05

0.04

Amortization of acquisition-related inventory step-up

( D )

-

-

Non-recurring acquisition costs

( E )

0.02

-

Income tax effect on non-GAAP adjustments

( F )

(0.03)

(0.05)

Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd.

$                        0.50

$                        0.34

OPERATING LEVERAGE:

Increase in non-GAAP operating income

$                    13,048

$                    11,146

Increase in revenue

$                    65,278

$                    30,061

Operating leverage (increase in non-GAAP operating

income as a % of increase in revenue)

20.0%

37.1%

GAAP TO NON-GAAP RECONCILIATION (CONTINUED)

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Apr-1,

Apr-2,

2011

2010

% of Segment

% of Segment

SEGMENT OPERATING INCOME:

Revenue

Revenue

Engineering and Construction

GAAP operating income before corporate allocations:

$                    22,779

12.0%

$                    18,807

11.9%

Stock-based compensation

( G )

2,338

1.2%

1,726

1.1%

Non-GAAP operating income before corporate allocations:

$                    25,117

13.2%

$                    20,533

13.0%

Field Solutions

GAAP operating income before corporate allocations:

$                    52,505

42.7%

$                    39,313

41.0%

Stock-based compensation

( G )

512

0.4%

455

0.5%

Non-GAAP operating income before corporate allocations:

$                    53,017

43.1%

$                    39,768

41.5%

Mobile Solutions

GAAP operating income (loss) before corporate allocations:

$                    (1,334)

-3.0%

$                      1,899

5.0%

Stock-based compensation

( G )

996

2.2%

1,202

3.2%

Non-GAAP operating income before corporate allocations:

$                       (338)

-0.8%

$                      3,101

8.2%

Advanced Devices

GAAP operating income before corporate allocations:

$                      3,863

14.4%

$                      5,625

20.4%

Stock-based compensation

( G )

651

2.5%

443

1.6%

Non-GAAP operating income before corporate allocations:

$                      4,514

16.9%

$                      6,068

22.0%

FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

(Unaudited)

The non-GAAP financial measures included in the previous table are non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP non-operating income, net, non-GAAP net income, non-GAAP diluted net income per share and operating leverage, and non-GAAP segment operating income before corporate allocations.  These non-GAAP measures can be used to evaluate the Company's historical and prospective financial performance, as well as its performance relative to competitors.  The Company believes some of its investors track the Company's "core operating performance" as a means of evaluating the Company's performance in the ordinary, ongoing, and customary course of its operations.  Management also believes that looking at its core operating performance provides a supplemental way to provide consistency in period to period comparisons.  Accordingly, management excludes from non-GAAP those items relating to restructuring, amortization of purchased intangibles, stock based compensation, amortization of acquisition-related inventory step-up,  and non-recurring acquisition costs.  The Company does not believe that these items are indicative of its core operating performance.

( A )

Restructuring. Included in our GAAP presentation of cost of sales and operating expenses, restructuring costs recorded are primarily for employee compensation resulting from reductions in employee headcount in connection with our company restructurings.  We exclude restructuring costs from our non-GAAP measures because we believe they are not indicative of our core operating performance.

( B )

Amortization of purchased intangibles.  Included in our GAAP presentation of cost of sales and operating expenses, amortization of purchased intangibles recorded arises from prior acquisitions and are non-cash in nature.  We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.

( C )

Stock-based compensation. Included in our GAAP presentation of cost of sales and operating expenses, stock-based compensation consists of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan.  We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.   For the three months ended April 1, 2011 and April 2, 2010, stock-based compensation was allocated as follows:

Three Months Ended

Apr-1,

Apr-2,

(Dollars in thousands)

2011

2010

Cost of sales

$                         468

$                         501

Research and development

1,096

947

Sales and Marketing

1,634

1,383

General and administrative

3,600

2,810

$                      6,798

$                      5,641

( D )

Amortization of acquisition-related inventory step-up.  The purchase accounting entries associated with our business acquisitions require us to record inventory at its fair value, which is sometimes greater than the previous book value of the inventory.  Included in our GAAP presentation of cost of sales, the increase in inventory value is amortized to cost of sales over the period that the related product is sold.  We exclude inventory step-up amortization from our non-GAAP measures because we do not believe it is indicative of our core operating performance.

( E )

Non-recurring acquisition (gains) costs.  Included in our GAAP presentation of operating expenses and non-operating income, net, non-recurring acquisition (gains) costs consist of external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence and integration costs.  Also included are unusual acquisition related items such as an adjustment to a previous gain on bargain purchase (resulting from the fair value of identifiable net assets acquired exceeding the consideration transferred), adjustments to the fair value of earnout liabilities and payments made or received to settle earnout and holdback disputes.  We exclude these items because they are non-recurring and unique to specific acquisitions and are not indicative of our core operating performance.

( F )

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

( G )

Stock-based compensation. The amounts consist of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan. As referred to above we exclude stock-based compensation here because investors may view it as not reflective of our core operating performance.  However, management does include stock-based compensation for budgeting and incentive plans as well as for reviewing internal financial reporting. We discuss our operating results by segment with and without stock-based compensation expense, as we believe it is useful to investors.  Stock-based compensation not allocated to the reportable segments was approximately $2.3 million and $1.8 million for the three months ended April 1, 2011 and April 2, 2010, respectively.