UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 2003
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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
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(State or other jurisdiction of incorporation or organization)
94-2802192
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(I.R.S. Employer Identification No.)
645 North Mary Avenue, Sunnyvale, CA 94085
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 481-8000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section
12(g) of the Act:
Common Stock
Preferred Share Purchase Rights
(Title of Class)
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 period 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant, based upon the last sale price of the Common Stock reported on
the Nasdaq National Market on June 28, 2002 was approximately $455 million.
There were 29,350,366 shares of the registrant's Common Stock issued and
outstanding as of March 5, 2003.
DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of Trimble Navigation Limited's Proxy Statement relating to
the annual meeting of stockholders to be held on May 20, 2003 (the "Proxy
Statement") are incorporated by reference into Part III of this Annual Report on
Form 10-K.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which are subject to the "safe harbor" created
by those sections. The forward-looking statements regarding future events and
the future results of Trimble Navigation Limited ("Trimble" or " The Company" or
"We" or "Our" or "Us") are based on current expectations, estimates, forecasts,
and projections about the industries in which Trimble operates and the beliefs
and assumptions of the management of Trimble. Discussions containing such
forward-looking statements may be found in "Management's Discussion and Analysis
of Financial Condition and Results of Operations." In some cases,
forward-looking statements can be identified by terminology such as "may,"
"will," "should," "could," "predicts," "potential," "continue," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates," and
similar expressions. These forward-looking statements involve certain risks and
uncertainties that could cause actual results, levels of activity, performance,
achievements and events to differ materially from those implied by such
forward-looking statements, but are not limited to those discussed in this
Report under the section entitled "Other Risk Factors" and elsewhere, and in
other reports Trimble files with the Securities and Exchange Commission ("SEC"),
specifically the most recent reports on Form 8-K and Form 10-Q, each as it may
be amended from time to time. These forward-looking statements are made as of
the date of this Annual Report on Form 10-K. We reserve the right to update
these statements for any reason, including the occurrence of material events.
The risks and uncertainties under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Risks and
Uncertainties" contained herein, among other things, should be considered in
evaluating our prospects and future financial performance. We have attempted to
identify forward-looking statements in this report by placing an asterisk (*)
before paragraphs containing such material.
TRIMBLE NAVIGATION LIMITED
2002 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1 Business..............................................................5
Item 2 Properties...........................................................17
Item 3 Legal Proceedings....................................................17
Item 4 Submission of Matters to a Vote of Security Holders..................18
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters..................................................19
Item 6 Selected Financial Data..............................................20
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................23
Item 7A Quantitative and Qualitative Disclosures about Market Risk...........52
Item 8 Financial Statements and Supplementary Data..........................56
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................................................94
PART III
Item 10 Directors and Executive Officers of the Registrant...................94
Item 11 Executive Compensation...............................................94
Item 12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters..........................................94
Item 13 Certain Relationships and Related Transactions.......................94
Item 14 Controls and Procedures..............................................94
PART IV
Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K..95-108
TRADEMARKS
Trimble, SiteVision, GeoExplorer, AgGPS, Thunderbolt, FirstGPS, and
CrossCheck are trademarks of Trimble Navigation Limited registered in the United
States Patent and Trademark Office. Spectra Precision, Lassen, Force, Galaxy,
EZ-Guide, Placer, Trimble Toolbox and Telvisant are trademarks of Trimble
Navigation Limited. All other trademarks are the property of their respective
owners.
PART I
Item 1 Business Overview
Trimble Navigation Limited, a California corporation ("Trimble" or " the
Company" or "we" or "our" or "us"), provides advanced positioning products and
solutions to industrial, commercial, governmental entities, and professional
customers in a number of markets including surveying, construction, agriculture,
urban and resource management, military, transportation, and telecommunications.
Customer benefits resulting from our products typically include cost savings or
avoidance, improved quality, higher productivity, and increased efficiency.
Examples of our products and solutions include guidance for earthmoving
operations, surveying instrumentation, fleet management for specialized trucks
such as concrete mixers, positioning technology for vehicle navigation and
telematics products, tractor guidance for farming, field data collection
equipment, and timing technology for synchronization of wireless networks.
Our expertise is focused in positioning, communication, and information
technologies, which form the core of our products. Positioning technologies used
include the Global Positioning System (GPS), laser, optical, and inertial, while
communication techniques include both public networks such as cellular, and
private networks such as business band radio. The unique nature of many of our
products and solutions is created through information technologies - both
firmware that enables the positioning solution and applications software that
allows the customer to make use of the positioning information.
We design and market our own products. Assembly and manufacturing for many
of our products are subcontracted to third parties. We conduct our business
globally with major operations in the United States, Sweden, Germany, New
Zealand, and the Netherlands. Products are sold through dealers,
representatives, partners, and other channels throughout the world. Products are
supported by sales offices in 22 countries.
We began operations in 1978 and incorporated in California in 1981. Our
common stock has been publicly traded on Nasdaq since 1990 under the symbol
TRMB.
Technology Overview
A major portion of our revenues is derived from applying GPS to terrestrial
applications. GPS is a system of 24 orbiting satellites and associated ground
control that is funded and maintained by the U. S. Government and is available
worldwide free of charge. GPS positioning is based on a technique that precisely
measures distances from four or more satellites. The satellites continuously
transmit precisely timed radio signals using extremely accurate atomic clocks. A
GPS receiver measures distances from the satellites in view by determining the
travel time of a signal from the satellite to the receiver, and then uses those
distances to compute its position. Under normal circumstances, a stand-alone GPS
receiver is able to calculate its position at any point on earth, in the earth's
atmosphere, or in lower earth orbit, to approximately 10 meters, 24 hours a day.
Much better accuracies are possible through a technique called "differential
GPS." In addition, GPS provides extremely accurate time measurement.
The usefulness of GPS is dependent upon the locations of the receiver and
the GPS satellites that are above the horizon at any given time. Reception of
GPS signals requires line-of-sight visibility between the satellites and the
receiver, which can be blocked by buildings, hills, and dense foliage. The
receiver must have a line of sight to at least four satellites to determine its
latitude, longitude, altitude, and time. The accuracy of GPS may also be limited
by distortion of GPS signals from ionospheric and other atmospheric conditions,
and intentional or inadvertent signal interference or Selective Availability.
Selective Availability, which was the largest component of GPS distortion, is
controlled by the U.S. Department of Defense and was deactivated on May 1, 2000.
Our GPS products are based on proprietary receiver technology. The
convergence of positioning, wireless, and information technologies enables
significant new value to be added to positioning systems, thereby creating a
more robust solution for the user. In addition, recent developments in wireless
technology and deployments of wireless networks have enabled less expensive
wireless communications. These developments allow for the efficient transfer of
position data to locations away from the positioning field device, allowing the
data to be accessed by more users and thereby increasing productivity.
Our laser and optical products measure distances and angles accurately
using light. We generally use commercially available laser diodes to create
light beams for distance measurement. In addition, our proprietary precision
mechanics and software algorithms in these products combine to give robust,
accurate distance and angle measurements for a variety of agricultural,
surveying, and construction applications.
Business Strategy
Our business strategy leverages our expertise in positioning to provide
solutions for our customers, built around several key initiatives:
o Focus on attractive markets - We focus on markets that offer potential for
revenue growth, profitability, and market leadership.
o Create innovative solutions that provide significant economic benefits to
our customers - We seek to apply our technology to applications for which
position data has a high value. We anticipate that further advances in
positioning, wireless, and information technologies will enable new classes
of solutions to emerge that will create new opportunities.
o Develop distribution channels to best access our markets - We utilize a
range of distribution channels to best serve the needs of individual
markets. These channels can include independent dealers, direct sales, OEM
sales, and distribution alliances with key partners. In addition, we will
continue to extend our international distribution.
Business Segments and Markets
We are organized into four main operating segments encompassing our various
applications and product lines: Engineering and Construction, Field Solutions,
Component Technologies, and Mobile Solutions. We also operate in smaller
business areas, primarily Military and Advanced Systems, and Tripod Data
Systems, which aggregate into the Portfolio Business segment. Our segments are
distinguished by the markets they serve. Each division is responsible for
product development, marketing, sales, strategy, financial performance, and is
headed by a general manager.
Segment Realignment
In the first fiscal quarter of 2002, we realigned two of our reportable
segments. The Agriculture segment was combined with the Mapping and Geographic
Information Systems (GIS) business to form Field Solutions. Mapping and GIS were
previously part of Fleet and Asset Management. The Mobile Positioning business
that was part of Fleet and Asset Management is now Mobile Solutions.
We began breaking out Mobile Solutions as a separate reporting segment
during the first quarter of 2002 to address the growing importance of the mobile
asset management business and its impact on our profitability. At the same time,
we combined our GIS and Agriculture businesses to create a new segment called
Field Solutions in order to recognize the synergies and similar product
requirements between the two businesses.
Engineering and Construction
We employ GPS, optical, lasers, communications, and information technology
to pursue the opportunities in the Engineering and Construction industry
segment. Products in this segment increase productivity and accuracy for the
entire construction process including the initial survey, planning, design,
earthmoving, and building phases. These products are aimed at making each
individual task more efficient, as well as speeding up the entire process by
improving information flow from one step to the next, and facilitating faster
redesign when needed.
For example, our GPS and robotic optical technology allows surveying tasks
to be completed faster and with a smaller crew. Similarly, construction machine
guidance products allow the operator to achieve the desired landform by
eliminating stakeout and reducing rework. These steps in the operation can be
readily linked together with data collection modules and software to minimize
the time and effort required to get the job done accurately.
We sell and distribute our products from this segment through a global
network of independent dealers and our sales staff. This channel is supplemented
by relationships that create additional channel breadth including our joint
venture with Caterpillar and private branding arrangements with other companies.
Competition in this segment comes from companies that provide optical,
laser, or GPS positioning products. Our principal competitors are Topcon
Corporation and Leica Geosystems. Price points in this segment range from less
than $1,000 for certain laser systems to approximately $125,000 for a high-
precision, three-dimensional, machine control system.
Representative products sold in this segment include:
5800 RTK Rover - This is an integrated unit that allows the surveyor to
make centimeter-level measurements or do construction stakeout with only one
person. Wireless technology eliminates cables that could otherwise snag on
foliage and structures. The rover weighs 3.5kg for an entire system on a pole
including batteries.
5600 Total Station - This optical total station series provides a choice of
increasing levels of automation that allow the surveyor to choose a system that
will best suit his work. Depending on the job, these configurations enable
one-person stakeout and survey. The included Attachable Control Unit (ACU) also
works with the 5800 RTK Rover providing complete measurement compatibility
regardless of the technology used.
SiteVision(R) GPS System - SiteVision GPS is a machine-mounted, positioning
system that guides the operator by comparing the actual position of the blade
with the digitized design that resides in a computer on the machine. The use of
this system enables faster machine speed, eliminates the need for placing
stakes, and lowers the number of passes needed to get the desired grade.
Applications include road construction and site preparation.
Spectra Precision(TM) Laser GL 700 Series - This laser product provides
grade control capability for heavy equipment on a construction site. The level
surface of the laser light can be precisely controlled, and machines with a
laser receiver can be controlled to establish a precise and uniform grade over
the desired area. Applications include trenching, pipe laying, machine control
grading, and road construction applications.
Field Solutions
Our Field Solutions division addresses the two business areas of
Agriculture and Geographical Information System (GIS). Products and solutions
from the GIS business area are targeted at collecting feature and attribute
information in the field to be used within GIS databases and providing
position-related information directly to a person working in the field in the
mobile GIS market. The manner in which information is presented or collected is
of key importance to the customer, as well as the applicability and value of the
information itself.
In the agricultural market, our products provide navigation guidance for
tractors and other farm equipment used in spraying, planting, cultivation, and
harvesting applications. The benefits to the farmer include faster machine
operation, higher yields, and lower consumption of chemicals. We also provide
positioning solutions for leveling agricultural fields in irrigation
applications and aligning drainage systems to better manage water flow in
fields.
Our distribution to the agricultural market is through multiple channels.
Revenue is generated through independent dealers and through partners such as
CNH Global. Competitors in this market are either vertically integrated
implement companies such as John Deere, or agricultural instrumentation
suppliers such as Raven, CSI Wireless, and Integrinautics.
The other principle market within Field Solutions is GIS. Our products
enable the efficient acquisition of features, attributes, and positions of fixed
infrastructure and natural resource assets. An example of the type of data being
collected would be that of a utility company performing a survey of its
transmission poles including the age and condition of each telephone pole. Our
handheld unit enables this data to be collected and automatically stored while
confirming the location of the asset. The collected data can then be downloaded
into a GIS database. This stored data could later be used to navigate back to
any individual asset or item for maintenance or data update.
Distribution for GIS applications is primarily through a network of
independent dealers and business partners, supported by an internal sales staff.
Competitors in this market are typically either survey instrument companies
having GPS technology and/or consumer GPS companies. Two examples are Leica
Geosystems and Garmin.
Approximate price points in this segment range from $2,500 for a handheld
unit to $35,000 for a fully automated, farm equipment control system.
Representative products sold within this segment include:
GeoExplorer(R) CE Series - Combines a GPS receiver in a rugged handheld
unit running Microsoft's Windows CE operating system that makes it easy to
collect and maintain data about objects in the field.
AgGPS(R) Autopilot System - A GPS-enabled, agricultural navigation system
that connects to a tractor's steering system and automatically steers the
tractor along a precise path to within three centimeters or less. This enables
both higher machine productivity and more precise application of seed and
chemicals, thereby reducing costs to the farmer.
AgGPS(R) EZ-Guide(TM) System - A GPS-enabled, manual guidance system that
provides the tractor operator with steering visual corrections required to stay
on course to within 25 centimeters. This system reduces the overlap or gap in
spraying, fertilizing, and other field applications.
Component Technologies
Our Component Technologies segment provides components for applications
that require embedded position or time, primarily based on GPS technology. Our
largest markets are in the telecommunications and automotive industries where we
supply modules, boards, custom integrated circuits and software, or single
application IP licenses to the customer according to the needs of the
application. Sales are made directly to original equipment manufacturers (OEMs)
and system integrators who incorporate our component into a sub-system or a
complete system-level product.
In the telecommunication infrastructure market, we provide timing modules
that keep wireless networks synchronized and on frequency. For example, CDMA
cellular telephone networks require a high level of both short-term and
long-term frequency stability for proper operation (synchronization of
information/voice flow to avoid dropped calls). Our timing modules meet these
needs at a much lower cost than the atomic standards or other specially prepared
components that would otherwise be required. Customers include wireless
infrastructure companies such as Nortel, Samsung, UTStarcom, and Grayson
Wireless.
In the automotive market, we provide a GPS component that is embedded into
in-vehicle navigation systems. Our focus on high reliability, continuous
improvement, and low cost has earned us supplier awards and continuing business
in this market. Customers include IVN system manufacturers and integrators such
as Siemens VDO Automotive AG, Blaupunkt, and Magnetti Marelli.
* The declining size and power requirements for GPS components, coupled
with improving capabilities, allow GPS to potentially be used in a new class of
applications such as position-aware cellular telephones or other wireless
handheld devices. We expect our strength in GPS technology will expand our
participation in this market.
Competitors in the telecommunication infrastructure market include
Symmetricom. Competitors in the automotive market are typically component
companies with GPS capability including Japan Radio Corporation, Motorola, and
SiRF.
Representative products sold by this segment include:
Thunderbolt(R) GPS Disciplined Clock - The Thunderbolt Clock is used as a
time source for the synchronization of wireless networks. By combining a GPS
receiver with a high-quality quartz oscillator, the Thunderbolt achieves the
performance of an atomic standard with much higher reliability and much lower
price.
FirstGPS(R) Technology - We license our FirstGPS Technology, which is a
host-based, GPS system available as two integrated circuits and associated
software. The software runs on a customer's existing microprocessor system
complementing the work done by the integrated circuit to generate position,
velocity, and time. This low-power technology is particularly suitable for
small, mobile, battery-operated applications.
Lassen(TM) SQ Module - Our new Lassen SQ module adds complete GPS
functionality to a mobile product in a postage stamp-sized footprint with
ultra-low power consumption, consuming less than 100mW at 3.3V. This module is
designed for portable handheld, battery-powered applications such as cell
phones, pagers, PDAs, digital cameras, and many others.
Mobile Solutions
Our Mobile Solutions segment addresses the market for fleet management by
providing a bundled solution including both hardware and software needed to run
the application. In almost all cases, the software solution is provided to the
user through Internet-enabled access for a monthly service fee. The bundled
solution enables the fleet owner to dispatch, track, and monitor the conditions
of vehicles in the fleet on a real-time basis. A vehicle-mounted unit consists
of a single module including a GPS receiver, sensor interface, and a cellular
modem. Our solution includes the communication service from the vehicle to our
data center and access over the Internet to the application software, relieving
the user of the need to maintain extensive computer operations.
Our agreement with McNeilus Companies, Inc., a major manufacturer of trucks
for the ready mix concrete and waste management industries, facilitates the
delivery of a complete management solution when a new fleet is acquired.
McNeilus' sales team will market our solution, which includes our GPS-enabled
hardware and hosted software provided for a monthly service fee to its customers
as a retrofit for trucks already in the field, or as a factory-installed option.
Our Mobile Solutions segment maintains multiple distribution channels
including independent dealers, key accounts and strategic partners such as
McNeilus. Approximate prices for the hardware fall in the range of $300 to
$3000, while the monthly software service fees range from approximately $20 to
approximately $55, depending on the customer service level. Competition comes
largely from service-oriented businesses such as @Road, @Track, Aether Systems,
and Minorplanet.
Representative products sold by this division include:
Telvisant(TM) System - Our fleet management service offering, Telvisant
provides different levels of service that run from snapshots of fleet activity
to real-time fleet dispatch capability. Telvisant includes truck communication
service and computer backbone support of the software. Variations of Telvisant
are tailored for specific industry applications.
CrossCheck(R) Module - This hardware, mounted on the vehicle, provides
location and information through its built-in cellular interface. This module
also includes GPS positioning, sensor interfaces for vehicle conditions, and
built-in intelligence for distributed decision-making.
Portfolio Business
Our Portfolio Business segment includes various operations that each equal
less than 10 percent of our total operating revenue. The products in this
segment are data collection products as well as navigation modules and embedded
sensors that are used in avionics, flight, and military applications. The two
most significant components in this segment are Tripod Data Systems (TDS), and
Military and Advanced Systems (MAS).
TDS designs and markets handheld data collectors and data collection
software for field use by surveyors and other professionals. Products are sold
directly, through dealers, and other survey manufacturers. Competitors in this
portion of the business are small and geographically diverse.
Our MAS business supplies GPS modules that use the military's GPS Precise
Positioning Service. These modules are most often used in aviation or
ground-based military equipment. Military products are sold directly by our
sales force to either the U.S. Government or a contractor. Sales are also made
to foreign governments, with the sales of the encrypted components taking place
through the U.S. Government. Competitors in this market include Rockwell, L3,
Raytheon, and Thales.
Representative products sold by this segment include:
TDS Ranger(TM) Series - The TDS Ranger device is a handheld data collector
supporting Microsoft's Windows CE operating system. Running TDS survey software,
this unit can control and collect data from all major brands of optical and GPS
surveying instruments. The operator can also run his or her own application
programs for the Microsoft Windows CE operating system on the platform.
Force(TM) 5 Module - The Force 5 GPS Receiver Application Module (GRAM) is
a dual-frequency, GPS module that is used in a variety of military GPS signal
embedded airborne and ground applications.
Acquisitions and Joint Ventures
The markets in which we compete require a wide variety of technologies,
products, and capabilities. Through acquisitions, investments, and joint
development agreements or alliances, we are able to deliver products and
services to customers in target markets. We employ the following strategies to
satisfy the need for new or enhanced products and solutions: develop new
technologies and products internally; enter into joint ventures with strategic
partners; resell another company's product; or acquire all or part of another
company.
Acquisitions
* We have acquired a number of companies in the past and we expect to make
acquisitions in the future. Mergers and acquisitions of high-technology
companies are inherently risky. No assurance can be given that our previous or
future acquisitions will be successful or will not materially adversely affect
our financial condition or operating results. The risks associated with
acquisitions are more fully discussed in the "Risks and Uncertainties" section
contained in Part II, Item 7 of this Report.
LeveLite - On August 15, 2002, we acquired LeveLite Technology, Inc. This
was a strategic acquisition for us, as it not only extended the product
portfolio of our commercial construction business in the entry-level market for
laser-levels, but it also strengthened our presence in certain distribution
channels, such as the construction supply houses and power tool manufacturers.
Caterpillar Joint Venture
On April 1, 2002, Trimble and Caterpillar established and began operations
of a joint venture called Caterpillar Trimble Control Technologies, LLC, in
which each company has a 50% ownership stake and have equal voting rights. The
purpose of this joint venture is to develop the next generation of machine
control products for the construction and mining markets.
* Today, we sell construction machine control products to contractors
through our dealer channel, for installation on bulldozers, motorgraders, and
excavators that are already in the field (the "after-market"). However, both
companies believe that this "after-market" solution will spur future demand for
a machine control product that can be integrated into the design of new
Caterpillar machines, while also still being available for "after-market"
installation.
Patents, Licenses and Intellectual Property
We hold 582 U.S. patents and 114 foreign patents, the majority of which
cover GPS technology and applications, and over 100 of which cover optical and
laser technology and applications.
We prefer to own the intellectual property used in our products, either
directly or though subsidiaries. Although this is not a significant factor in
our business, from time to time we license technology from third parties.
There are 74 trademarks registered to Trimble and its subsidiaries.
Specifically, "Trimble" with the sextant logo, "AgGPS", "GeoExplorer," and "GPS
Total Station," are examples of trademarks of Trimble Navigation Limited
registered in the United States and other countries. Additional trademarks are
pending registration.
Although we believe that our patents and trademarks have value, we cannot
be sure that those patents and trademarks, or any additional patents and
trademarks that may be obtained in the future, will provide meaningful
protection from competition. We actively develop and protect our intellectual
property through a program of patenting, enforcement, and licensing.
We do not believe that any of our products infringe patent or other
proprietary rights of third parties, but we cannot be certain that they do not
do so. (See Note 20 of the Notes to the Consolidated Financial Statements.) If
infringement is alleged, legal defense costs could be material, and there can be
no assurance that the necessary licenses could be obtained on terms or
conditions that would not have a material adverse effect on our profitability.
Sales and Marketing
We currently have regional sales offices throughout North America and
Europe. Offices serving the rest of the world include Australia, China, Japan,
Philippines, New Zealand, Singapore, and United Arab Emirates. We tailor the
distribution channel to the needs of the product and regional market. Therefore,
we have a number of forms of sales channel solutions around the world.
North America
We sell our products in the United States and Canada primarily through
dealers, distributors, and authorized representatives. This channel is
supplemented and supported by our employees who provide additional sales
support. In some cases, where third party distribution is not available, we
utilize a direct sales force. We also utilize distribution alliances and OEM
relationships with other companies as a means to serve selected markets.
International
We market to end-users through a network of dealers and distributors in
more than 85 countries. Distributors carry one or more product lines and are
generally limited to selling either in one country or in a portion of a country.
We occasionally grant exclusive rights to market certain products within
specified countries.
Sales to unaffiliated customers outside the United States comprised
approximately 49% in 2002, 50% in 2001, and 52% in 2000. During the 2002 fiscal
year, North and South America represented 55%, and Europe, the Middle East and
Africa represented 32%, and Asia represented 13%. In fiscal 2002, the United
States comprised approximately 51% and Germany 16% of sales to unaffiliated
customers.
Support and Warranty
The warranty periods for our products are generally between one and three
years from date of shipment. Selected military programs may require extended
warranty periods, and certain products sold by our TDS subsidiary have a 90-day
warranty period. We support our GPS products through a circuit board replacement
program from locations in the United Kingdom, Germany, Japan, and the United
States. The repair and calibration of our non-GPS products are available from
company-owned or authorized facilities. We reimburse dealers and distributors
for all authorized warranty repairs they perform.
While we engage in extensive product quality programs and processes,
including actively monitoring and evaluating the quality of component suppliers,
our warranty obligation is affected by product failure rates, material usage,
and service delivery costs incurred in correcting a product failure. Should
actual product failure rates, material usage, or service delivery costs differ
from the estimates, revisions to the estimated warranty accrual and related
costs may be required.
Seasonality of Business
* Our revenues are affected by seasonal buying patterns in some of our
business areas. Over half of our total revenue comes from our Engineering and
Construction business, which has the biggest seasonal impact on our total
revenue. This business, and therefore our total revenue, is seasonally strongest
during the second quarter due to the start of the construction buying season in
the northern hemisphere in spring. Typically, we expect the first and fourth
quarters to be the seasonal lows due to the lack of construction and farming
during the winter months. If other factors such as economic conditions or
underlying growth in the business are removed, the historical variability in our
total quarterly revenue from seasonality has generally been less than 10
percent.
Working Capital
Our working capital needs are typically for inventories, accounts
receivable, and short-term debt. As the business is generally dependent upon a
steady stream of new products, some amount of working capital is devoted to the
ramp up and ramp down of product volumes as new products get introduced and
older models are taken out of production.
Backlog
In most of our markets, the time between order placement and shipment is
short. Therefore, we believe that backlog is not a reliable indicator of present
or future business conditions.
Manufacturing
Manufacturing for most of our GPS products is subcontracted to Solectron
Corporation. Solectron is responsible for substantially all material
procurement, assembly, and testing. We continue to manage product design up
through pilot production for the subcontracted products, and we are directly
involved in qualifying suppliers and key components used in all our products.
During the fourth quarter of 2002, Solectron began assembling some of our
Component Technologies products in China. Our current contract with Solectron is
due to expire in August 2003.
We manufacture laser and optics-based products at our plants in Dayton,
Ohio; Danderyd, Sweden; and Jena and Kaiserslautern, Germany. Some of these
products or portions of these products are also subcontracted to third parties
for assembly.
Most of the components used in our products are standard parts readily
available from more than one supplier. A few components are from sole suppliers
or are custom parts unique to our company. While custom parts make our products
hard to imitate, they also represent a manufacturing risk due to the lack of
alternative suppliers. If these parts became unavailable, redesign or
modification of our products could be required. In addition, suppliers may cease
manufacturing common components, replacing them with newer parts, which require
requalification. These risks could cause an interruption in our ability to
provide a steady stream of products to our customers.
Research and Development
We believe that our competitive position is maintained through the
development and introduction of new products having improved features, better
performance, smaller size and weight, lower cost, or some combination of these
factors. We invest substantially in the development of new products. We also
make significant investment in the positioning, communication, and information
technologies that underlie our products and will likely provide competitive
advantages.
Recent developments have produced small, low-power, OEM GPS receivers,
accurate and versatile rotating lasers for construction use, and light weight
and compact GPS surveying rovers.
Our research and development expenditure, net of reimbursed amounts was
$61.2 million for fiscal 2002, $62.9 million for fiscal 2001, and $46.5 million
for fiscal 2000.
* We expect to continue investing in research and development with the goal
of maintaining or improving our competitive position, as well as the goal of
entering new markets and satisfying new needs for positioning related solutions.
There can be no assurance that we will succeed in doing so.
Employment
As of January 3, 2003, we employed a total of 2,050 employees, including
686 in sales and marketing, 631 in manufacturing, 505 in engineering, and 228 in
general and administrative positions. Of these employees, 607 were located in
Europe and in the Middle East (primarily in Germany and Sweden), 252 were
situated in the Asia Pacific region (primarily in New Zealand), and 1,191
employed in the Americas (primarily in the United States).
Our employees are not represented by unions except for those in Sweden and
Germany. We also employ temporary and contract personnel that are not included
in the above headcount numbers. We have not experienced work stoppages or
similar labor actions.
Available Information
Our Internet address is www.trimble.com. Information contained on our
website is not part of this annual report on Form 10-K. We make available free
of charge on www.trimble.com, our annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after we electronically file such material with, or
furnish it to, the SEC.
In addition, you may request a copy of these filings (excluding exhibits)
at no cost by writing or telephoning us at the following address or telephone
number:
Trimble Navigation Limited
645 North Mary Avenue, Sunnyvale, CA 94088
Attention: Investor Relations
Telephone: 408-481-8000
Executive Officers
The names, ages, and positions of the Company's executive officers as of
March 5, 2003 are as follows:
Name Age Position
- -------------------------------------------------------------------------
Steven W. Berglund.......51 President and Chief Executive Officer
Mary Ellen P. Genovese...43 Chief Financial Officer
William C. Burgess.......56 Vice President, Human Resources
Joseph F. Denniston, Jr..42 Vice President, Operations
Bryn A. Fosburgh.........40 Vice President and General Manager,
Geomatics and Engineering
John E. Huey.............53 Treasurer
Irwin L. Kwatek..........63 Vice President and General Counsel
Michael W. Lesyna........42 Vice President and General Manager,
Mobile Solutions
Bruce E. Peetz...........51 Vice President, Advanced Technology and Systems
Christopher J. Shephard..40 Vice President and General Manager,
Construction Instruments
Anup V. Singh............32 Corporate Controller
Alan R. Townsend.........54 Vice President and General Manager,
Field Solutions
Dennis L. Workman........57 Vice President and General Manager,
Component Technologies
Steven W. Berglund - Steven Berglund joined Trimble as president and chief
executive officer in March 1999. Prior to joining Trimble, Mr. Berglund was
president of Spectra Precision, Inc., a pioneer in the development of laser
systems. He spent 14 years at Spectra Precision in a variety of senior
leadership positions. In the early 1980s, Mr. Berglund spent a number of years
at Varian Associates in Palo Alto, where he held a variety of planning and
manufacturing roles. Mr. Berglund began his career as a process engineer at
Eastman Kodak in Rochester, New York. He attended the University of Oslo and the
University of Minnesota where he received a B.S. in chemical engineering in
1974. He later received his M.B.A. from the University of Rochester in New York
in 1977.
Mary Ellen Genovese - Mary Ellen Genovese, chief financial officer, has been
responsible for the overall financial activities of Trimble since September
2000. Ms. Genovese was vice president of finance and corporate controller from
1997 to September 2000. From 1994 to 1997, Ms. Genovese served as business unit
controller for Software and Component Technologies, and Tracking and
Communications. She joined Trimble as controller of manufacturing operations in
December 1992. Prior to joining Trimble, Ms. Genovese was chief financial
officer for Minton Co., a distributing company to the commercial building
market, from 1991 to 1992. Prior to 1991, she worked for 10 years with General
Signal Corp. in several management positions. Ms. Genovese is a certified public
accountant and received her B.S. in accounting from Fairfield University in
Connecticut in 1981.
William C. Burgess - William Burgess joined Trimble in August of 2000 as vice
president of Human Resources, with global responsibility for Human Resources.
Prior to joining Trimble, Mr. Burgess was vice president of Human Resources and
Management Information Systems for Sonoma West Holdings, Inc. From 1993 to 1997,
he served as vice president of Human Resources for Optical Coating Laboratory,
from 1990 to 1993, he established and managed the human resources function at
Teknekron Communications Systems, and from 1985 to 1990 he was vice president of
Human Resources for a $25 billion, 35,000-employee segment of Asea Brown Boveri
(ABB), a global technology company. Mr. Burgess received a B.S. from the
University of Nebraska and an M.S. in organizational development from Pepperdine
University.
Joseph F. Denniston, Jr. - Joseph Denniston joined Trimble as vice president of
operations in April 2001, responsible for worldwide manufacturing, distribution
and logistics strategy. Prior to Trimble, Denniston worked for 3Com Corporation.
During his 14-year tenure, he served as vice president of supply chain
management for the Americas and held several positions in test engineering,
manufacturing engineering and operations. Previously at Sentry Schlumberger, he
held several positions including production engineering, production management
and test engineering over six years. Mr. Denniston received a B.S. in electrical
engineering technology from the Missouri Institute of Technology in 1981 and an
M.S. in computer science engineering from Santa Clara University in 1990.
Bryn A. Fosburgh - Bryn Fosburgh was appointed vice president and general
manager of the Geomatics and Engineering (G&E) business area in July 2002, with
responsibility for all the division-level activities associated with survey,
construction, and infrastructure solutions. From October 1999 to July 2002, Mr.
Fosburgh served as division vice president of survey and infrastructure. In
1997, Mr. Fosburgh was appointed director of development for the Company's land
survey business unit where he oversaw the development of field and office
software that enabled the interoperability of Trimble survey products. Mr.
Fosburgh joined Trimble in 1994 as technical service manager for surveying,
mining, and construction. Prior to Trimble, Mr. Fosburgh was a civil engineer
with the Wisconsin Department of Transportation where he was responsible for
coordinating the planning, data acquisition, and data analysis for statewide GPS
surveying projects in support of transportation improvement projects. He has
also held various engineering, research and operational positions for the U.S.
Army Corps of Engineers and Defense Mapping Agency. Mr. Fosburgh received a B.S.
in geology from the University of Wisconsin in Green Bay in 1985 and an M.S. in
civil engineering from Purdue University in 1989.
John E. Huey - John Huey joined Trimble in 1993 as director corporate credit and
collections, and was promoted to assistant treasurer in 1995 and treasurer in
1996. Past experience includes two years with ENTEX Information Services, five
years with National Refractories and Minerals Corporation (formerly Kaiser
Refractories), and thirteen years with Kaiser Aluminum and Chemical Sales, Inc.
He has held positions in credit management, market research, inventory control,
sales, and as an assistant Controller. Mr. Huey received his B.A. degree in
Business Administration in 1971 from Thiel College in Greenville, Pennsylvania
and an MBA in 1972 from West Virginia University in Morgantown, West Virginia.
Irwin L. Kwatek - Irwin Kwatek has served as vice president and general counsel
of Trimble since November 2000. Prior to joining Trimble, Mr. Kwatek was vice
president and general counsel of Tickets.com, a ticketing service provider, from
May 1999 to November 2000. Prior to Tickets.com, he was engaged in the private
practice of law for more than six years. During his career, he has served as
vice president and general counsel to several publicly held high-tech companies
including Emulex Corporation, Western Digital Corporation and General
Automation, Inc. Mr. Kwatek received his B.B.A. from Adelphi College in Garden
City, New York and an M.B.A. from the University of Michigan in Ann Arbor. He
received his J.D. from Fordham University in New York City in 1968.
Michael W. Lesyna - Michael Lesyna has been vice president and general manager
of the Mobile Solutions business area since September 2000. Prior to Trimble,
Mr. Lesyna spent six years at Booz Allen & Hamilton where he most recently
served as a principal in the operations management group. Prior to Booz Allen &
Hamilton, Mr. Lesyna held a variety of engineering positions at Allied Signal
Aerospace. Mr. Lesyna received his M.B.A., as well as an M.S. and B.S. in
mechanical engineering from Stanford University.
Bruce E. Peetz - Bruce Peetz has served as vice president of Advanced Technology
and Systems since 1998 and has been with Trimble for 15 years. From 1996 to
1998, Mr. Peetz served as general manager of the Survey Business. Prior to
joining Trimble, Mr. Peetz was a research and development manager at
Hewlett-Packard for 10 years. Mr. Peetz received his B.S. in electrical
engineering from Massachusetts Institute of Technology in Cambridge,
Massachusetts in 1973.
Anup V. Singh - Anup Singh has served as corporate controller since joining
Trimble in December 2001. Prior to joining Trimble, Mr. Singh was with
Excite@Home from July 1999 to December 2001. During his tenure at Excite@Home,
he held the positions of senior director of Corporate Financial Planning and
Analysis, and International Controller. Before Excite@Home, Mr. Singh also
worked for 3Com Corporation from December 1997 to July 1999, and Ernst & Young
LLP in San Jose, California and London, England. Mr. Singh received his B.A. in
1991 and M.A. in 1995 in economics and management science from Cambridge
University in England. He is also a chartered accountant and was admitted as a
member of the Institute of Chartered Accountants in England and Wales in 1994.
Christopher J. Shephard - Chris Shephard was appointed vice president and
general manager of the Construction Instruments (CI) business area in July 2002
after serving as division vice president of operations for Engineering and
Construction since Trimble's acquisition of Spectra Precision Group in July
2000. Prior to Trimble, Mr. Shephard served from 1998 to 2000 as Spectra
Precision's chief financial officer. Mr. Shephard also worked for more than
eight years at Booz Allen & Hamilton. Prior to Booz Allen & Hamilton, Mr.
Shephard spent three years at Copeland Corporation, a division of Emerson, in
their management-training program. Mr. Shephard received a B.A. in business
studies from Manchester Polytechnic in England in 1985 and an M.M. from the J.L.
Kellogg Graduate School of Management at Northwestern University, Evanston,
Illinois in 1990.
Alan R. Townsend - Alan Townsend has served as vice president and general
manager of the Field Solutions business area since November 2001. He also serves
as the managing director of Trimble Navigation New Zealand Ltd. for which he has
overall site responsibility. From 1995 to 2001, Mr. Townsend was general manager
of Mapping and GIS. Mr. Townsend joined Trimble in 1991 as the manager of
Trimble Navigation New Zealand Ltd. Prior to Trimble, Mr. Townsend held a
variety of technical and senior management roles within the Datacomm group of
companies in New Zealand including Managing Director of Datacomm Software
Research Ltd. from 1986 to 1991. In addition, Mr. Townsend is a director of IT
Capital Ltd., a venture capital company based in Auckland, New Zealand. He is
also a fellow of the New Zealand Institute of Management and a past president of
the New Zealand Software Exporters Association. Mr. Townsend received a B.S.c in
economics from the University of Canterbury in 1970.
Dennis L. Workman - Dennis Workman has served as vice president and general
manager of Trimble's Component Technologies business area since September 1999.
From 1998 to 1999, Mr. Workman was senior director and chief technical officer
of the newly formed Mobile and Timing Technologies (MTT) business group, also
serving as general manager of Trimble's Automotive and Timing group. In 1997, he
was director of engineering for Software & Component Technologies. Mr. Workman
joined Trimble in 1995 as director of the newly created Timing vertical market.
Prior to Trimble, Mr. Workman held various senior-level technical positions at
Datum Inc. During his 9-year tenure at Datum, he held the position of CTO. Mr.
Workman received a B.S. in mathematics and physics from St. Marys College in
1967 and an M.S. in electrical engineering from the Massachusetts Institute of
Technology in 1969.
Item 2 Properties
The following table sets forth the significant real property that we own or
lease: