CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Apr-2,

Apr-3,

2010

2009

Revenue

$                   319,015

$                    288,954

Cost of sales

160,018

144,996

Gross margin

158,997

143,958

Gross margin (%)

49.8%

49.8%

Operating expenses

   Research and development

35,890

34,137

   Sales and marketing

49,768

48,935

   General and administrative

28,547

26,042

   Restructuring

631

3,623

   Amortization of purchased intangible assets

8,046

6,969

      Total operating expenses

122,882

119,706

Operating income

36,115

24,252

Non-operating income (loss), net

   Interest income

399

199

   Interest expense

(398)

(493)

   Foreign currency transaction gain, net

746

184

   Income (loss) from equity method investments, net

2,474

(107)

   Other income (expense), net

314

(439)

      Total non-operating income (loss), net

3,535

(656)

Income before taxes

39,650

23,596

Income tax provision

11,498

5,899

Net income

28,152

17,697

Less: Net income attributable to noncontrolling interests

254

232

Net income attributable to Trimble Navigation Ltd.

$                     27,898

$                      17,465

Earnings per share attributable to Trimble Navigation Ltd.

    Basic

$                         0.23

$                          0.15

    Diluted

$                         0.23

$                          0.14

Shares used in calculating earnings per share:

   Basic

120,760

119,260

   Diluted

123,829

120,926

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

Apr-2,

Jan-1,

2010

2010

Assets

Current assets:

  Cash and cash equivalents

$                   307,073

$                   273,848

  Accounts receivables, net

236,788

202,293

  Other receivables

3,893

11,856

  Inventories, net

150,657

144,012

  Deferred income taxes

39,504

39,686

  Other current assets

21,106

18,383

     Total current assets

759,021

690,078

Property and equipment, net

45,250

44,635

Goodwill

771,046

764,193

Other purchased intangible assets, net

201,105

202,782

Other non-current assets

57,231

51,589

     Total assets

$                1,833,653

$                1,753,277

Liabilities

Current liabilities:

  Current portion of long-term debt

$                          394

$                          445

  Accounts payable

81,082

53,775

  Accrued compensation and benefits

47,661

43,272

  Deferred revenue

71,582

68,968

  Accrued warranty expense

14,375

14,744

  Other accrued liabilities

39,383

42,041

     Total current liabilities

254,477

223,245

Non-current portion of long-term debt

151,059

151,038

Non-current deferred revenue

16,365

15,599

Deferred income taxes

41,658

38,857

Other non-current liabilities

65,184

59,983

     Total liabilities

528,743

488,722

Commitments and contingencies

Equity

Shareholders' equity:

  Common stock

735,126

720,248

  Retained earnings

519,265

491,367

  Accumulated other comprehensive income

40,793

48,297

Total Trimble Navigation Ltd. shareholders' equity

1,295,184

1,259,912

Noncontrolling interests

9,726

4,643

     Total equity

1,304,910

1,264,555

     Total liabilities and equity

$                1,833,653

$                1,753,277

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

Apr-2,

Apr-3,

2010

2009

Cash flow from operating activities:

   Net Income

$                28,152

$                 17,697

   Adjustments to reconcile net income  to net cash provided by

      operating activities:

        Depreciation expense

4,451

4,463

        Amortization expense

13,817

12,298

        Provision for doubtful accounts

1,038

2,212

        Amortization of debt issuance cost

57

56

        Deferred income taxes

103

(1,606)

        Stock-based compensation

5,641

4,226

        (Income) loss from equity method investments

(2,474)

107

        Excess tax benefit for stock-based compensation

(482)

(21)

        Provision for excess and obsolete inventories

1,902

904

        Other non-cash items

(1,817)

(2,333)

   Add decrease (increase) in assets:

        Accounts receivables

(31,546)

(18,712)

        Other receivables

8,060

5,486

        Inventories

(9,441)

(7,327)

        Other current and non-current assets

(2,103)

730

   Add increase (decrease) in liabilities:

        Accounts payable

27,319

12,682

        Accrued compensation and benefits

4,741

2,391

        Accrued liabilities

2,677

5,801

        Deferred revenue

5,468

4,107

        Income taxes payable

(583)

-

Net cash provided by operating activities

54,980

43,161

Cash flow from investing activities:

     Acquisitions of businesses, net of cash acquired

(21,571)

(17,294)

     Acquisition of property and equipment

(5,299)

(3,261)

     Acquisitions of intangible assets

(297)

(26,001)

     Purchases of equity method investments

(2,750)

-

     Purchases of short-term investments

-

(1,999)

     Other

1

14

Net cash used in investing activities

(29,916)

(48,541)

Cash flow from financing activities:

     Issuance of common stock

9,172

4,602

     Excess tax benefit for stock-based compensation

482

21

     Payments on long-term debt and revolving credit lines

(54)

-

Net cash provided by financing activities

9,600

4,623

Effect of exchange rate changes on cash and cash equivalents

(1,439)

(1,946)

Net increase in cash and cash equivalents

33,225

(2,703)

Cash and cash equivalents - beginning of period

273,848

142,531

Cash and cash equivalents - end of period

$              307,073

$               139,828

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)

Reporting Segments

Engineering

and

Field

Mobile

Advanced

Construction

Solutions

Solutions

Devices

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%

THREE MONTHS ENDED APRIL 3, 2009:

Revenue

$        127,651

$      99,157

$      38,288

$      23,858

Operating income before corporate allocations:

$            2,509

$      42,203

$        3,148

$        4,312

Operating margin (% of segment external net revenues)

2.0%

42.6%

8.2%

18.1%

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Apr-2,

Apr-3,

2010

2009

Dollar

% of

Dollar

% of

Amount

Revenue

Amount

Revenue

GROSS MARGIN:

GAAP gross margin:

$                  158,997

49.8%

$                  143,958

49.8%

Restructuring

( A )

43

0.0%

865

0.3%

Amortization of purchased intangibles

( B )

5,769

1.8%

5,285

1.8%

Stock-based compensation

( C )

501

0.2%

438

0.2%

Amortization of acquisition-related inventory step-up

( D )

71

0.0%

223

0.1%

Non-GAAP gross margin:

$                  165,381

51.8%

$                  150,769

52.2%

OPERATING EXPENSES:

GAAP operating expenses:

$                  122,882

$                  119,706

Restructuring

( A )

(631)

(3,623)

Amortization of purchased intangibles

( B )

(8,046)

(6,969)

Stock-based compensation

( C )

(5,140)

(3,788)

Non-recurring acquisition costs

( E )

(738)

(465)

Non-GAAP operating expenses:

$                  108,327

$                  104,861

OPERATING INCOME:

GAAP operating income:

$                    36,115

11.3%

$                    24,252

8.4%

Restructuring

( A )

674

0.2%

4,488

1.5%

Amortization of purchased intangibles

( B )

13,815

4.4%

12,254

4.2%

Stock-based compensation

( C )

5,641

1.8%

4,226

1.5%

Amortization of acquisition-related inventory step-up

( D )

71

0.0%

223

0.1%

Non-recurring acquisition costs

( E )

738

0.2%

465

0.2%

Non-GAAP operating income:

$                    57,054

17.9%

$                    45,908

15.9%

NET INCOME:  

GAAP net income attributable to Trimble Navigation Ltd.

$                    27,898

$                    17,465

Restructuring

( A )

674

4,488

Amortization of purchased intangibles

( B )

13,815

12,254

Stock-based compensation

( C )

5,641

4,226

Amortization of acquisition-related inventory step-up

( D )

71

223

Non-recurring acquisition costs

( E )

538

465

Income tax effect on non-GAAP adjustments

( F )

(6,014)

(5,414)

Non-GAAP net income attributable to Trimble Navigation Ltd.

$                    42,623

$                    33,707

DILUTED NET INCOME PER SHARE:

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

$                        0.23

$                        0.14

Restructuring

( A )

0.01

0.04

Amortization of purchased intangibles

( B )

0.11

0.10

Stock-based compensation

( C )

0.04

0.04

Amortization of acquisition-related inventory step-up

( D )

-

-

Non-recurring acquisition costs

( E )

-

-

Income tax effect on non-GAAP adjustments

( F )

(0.05)

(0.04)

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

$                        0.34

$                        0.28

OPERATING LEVERAGE:

Increase (decrease) in non-GAAP operating income

$                    11,146

$                  (27,101)

Increase (decrease) in revenue

$                    30,061

$                  (66,342)

Operating leverage (increase in non-GAAP operating

income as a % of increase in revenue)

37.1%

N/A

% of Segment

% of Segment

SEGMENT OPERATING INCOME:

Revenue

Revenue

Engineering and Construction

GAAP operating income before corporate allocations:

$                    18,807

11.9%

$                      2,509

2.0%

Stock-based compensation

( G )

1,726

1.1%

1,308

1.0%

Non-GAAP operating income before corporate allocations:

$                    20,533

13.0%

$                      3,817

3.0%

Field Solutions

GAAP operating income before corporate allocations:

$                    39,313

41.0%

$                    42,203

42.6%

Stock-based compensation

( G )

455

0.5%

222

0.2%

Non-GAAP operating income before corporate allocations:

$                    39,768

41.5%

$                    42,425

42.8%

Mobile Solutions

GAAP operating income before corporate allocations:

$                      1,899

5.0%

$                      3,148

8.2%

Stock-based compensation

( G )

1,202

3.2%

1,144

3.0%

Non-GAAP operating income before corporate allocations:

$                      3,101

8.2%

$                      4,292

11.2%

Advanced Devices

GAAP operating income before corporate allocations:

$                      5,625

20.4%

$                      4,312

18.1%

Stock-based compensation

( G )

443

1.6%

325

1.3%

Non-GAAP operating income before corporate allocations:

$                      6,068

22.0%

$                      4,637

19.4%

FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands)

(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 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, which the Company believes are not 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 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 arise 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 determined in accordance with SFAS 123(R).  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 2, 2010 and April 3, 2009, stock-based compensation was allocated as follows:

Three Months Ended

Apr-2,

Apr-3,

2010

2009

Cost of sales

$                         501

$                         438

Research and development

947

784

Sales and Marketing

1,383

1,004

General and administrative

2,810

2,000

$                      5,641

$                      4,226

( 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 costs.  Included in our GAAP presentation of operating expenses and non-operating income (loss), net, non-recurring acquisition 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 adjustments to the fair value of earnout liabilities and payments made 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 adjustments 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 determined in accordance with SFAS 123(R). 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 to understand the impact of the application of SFAS 123(R) to our results of operations.  Stock-based compensation not allocated to the reportable segments was approximately $1,815 and $1,227 for the three months ended April 2, 2010 and April 3, 2009, respectively.