Trimble's Fourth Quarter Revenue Up 4 Percent and Non-GAAP Operating Income Up 18 Percent as Compared to the Fourth Quarter 2008

FTRMB

    
    
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME               
                      (In thousands, except per share data)                  
                                   (Unaudited)                               
                                                                             
                                  Three Months Ended    Twelve Months Ended  
                                  ------------------    -------------------  
                                                                             
                                    Jan-1,    Jan-2,      Jan-1,      Jan-2,
                                     2010      2009        2010        2009 
                                     ----      ----        ----        ---- 
                                                                             
    Revenue                       $277,529  $268,084  $1,126,259  $1,329,234 
    Cost of sales                  146,877   146,046     576,391     680,098 
                                   -------   -------     -------     ------- 
    Gross margin                   130,652   122,038     549,868     649,136 
                                   -------   -------     -------     ------- 
    Gross margin (%)                  47.1%     45.5%       48.8%       48.8%
                                                                             
    Operating expenses                                                       
        Research and development    35,795    36,167     136,639     148,265 
        Sales and marketing         48,739    44,564     189,859     196,290 
        General and administrative  24,929    23,972     100,830      94,023 
        Restructuring                  588       287       6,385       2,722 
        Amortization of purchased                                            
         intangible assets           7,924     6,608      30,335      22,376 
                                     -----     -----      ------      ------ 
           Total operating                                                   
            expenses               117,975   111,598     464,048     463,676 
                                   -------   -------     -------     ------- 
                                                                                                                                     
                                                                                                                                                          
        Operating  income                                12,677        10,440            85,820          185,460  
                                                                                                                                                          
        Non-operating  income  (loss),  net                                                                                  
                Interest  income                                237              675                  783              2,044  
                Interest  expense                            (404)      (1,371)          (1,812)          (2,760)
                Foreign  currency                                                                                                          
                  transaction  gain  (loss),  net  (297)          (829)                463              1,509  
                Income  from  joint                                                                                                        
                  ventures,  net                                    60          1,185                  429              7,981  
                Other  income  (expense),  net        410        (1,130)            1,938            (2,791)
                                                                              ---        ------              -----            ------  
                      Total  non-operating                                                                                              
                        income  (loss),  net                      6        (1,470)            1,801              5,983  
                                                                                  -        ------              -----              -----  
                                                                                                                                                          
        Income  before  taxes                          12,683          8,970            87,621          191,443  
                                                                                                                                                          
        Income  tax  provision                          3,414        (4,270)          23,658            50,470  
                                                                          -----        ------            ------            ------  
        Net  income                                              9,269        13,240            63,963          140,973  
            Less:  Net  income  (loss)                                                                                                
              attributable  to                                                                                                              
              noncontrolling  interests              (278)          (499)                517                (499)
                                                                            ----            ----                  ---                ----  
        Net  income  attributable  to                                                                                              
          Trimble  Navigation  Ltd.                $9,547      $13,739          $63,446        $141,472  
                                                                        ======      =======          =======        ========  
                                                                                                                                                          
        Earnings  per  share  attributable
          to  Trimble  Navigation  Ltd.                                                                                              
                  Basic                                              $0.08          $0.12              $0.53              $1.17  
                                                                          -----          -----              -----              -----  
                  Diluted                                          $0.08          $0.11              $0.52              $1.14  
                                                                          -----          -----              -----              -----  
                                                                                                                                                          
        Shares  used  in  calculating                                                                                              
          earnings  per  share:                                                                                                          
                Basic                                            120,395      119,342          119,814          120,714  
                                                                      -------      -------          -------          -------  
                Diluted                                        123,155      121,728          122,208          124,235  
                                                                      -------      -------          -------          -------  
        
        
        
 
         
        
                                      CONDENSED  CONSOLIDATED  BALANCE  SHEETS                              
                                                              (In  thousands)                                                    
                                                                (Unaudited)                                                        
                                                                                                                                              
                                                                                                                                              
                                                                                                          Jan-1,          Jan-2,  
                                                                                                            2010              2009
                                                                                                            ----              ----
        Assets                                                                                                                          
                                                                                                                                              
        Current  assets:                                                                                                        
              Cash  and  cash  equivalents                                        $273,848      $142,531
              Short-term  investments                                                            -            5,000
              Accounts  receivables,  net                                          202,293        204,269
              Other  receivables                                                            11,856          17,540
              Inventories,  net                                                            144,012        160,893
              Deferred  income  taxes                                                    39,686          41,810
              Other  current  assets                                                      18,383          16,404
                                                                                                            ------          ------
                    Total  current  assets                                              690,078        588,447
                                                                                                                                              
        Property  and  equipment,  net                                              44,635          50,175
        Goodwill                                                                                  764,193        715,571
        Other  purchased  intangible  assets,  net                      202,782        228,901
        Other  non-current  assets                                                    51,589          51,922
                                                                                                            ------          ------
                                                                                                                                              
                    Total  assets                                                        $1,753,277  $1,635,016
                                                                                                    ==========  ==========
                                                                                                                                              
        Liabilities                                                                                                                
                                                                                                                                              
        Current  liabilities:                                                                                              
              Current  portion  of  long-term  debt                                $445              $124
              Accounts  payable                                                              53,775          49,611
              Accrued  compensation  and  benefits                            43,272          41,291
              Deferred  revenue                                                              68,968          55,241
              Accrued  warranty  expense                                              14,744          13,332
              Other  accrued  liabilities                                            42,041          63,719
                                                                                                            ------          ------
                    Total  current  liabilities                                    223,245        223,318
                                                                                                                                              
        Non-current  portion  of  long-term  debt                        151,038        151,464
        Non-current  deferred  revenue                                            15,599          12,418
        Deferred  income  taxes                                                          38,857          42,207
        Other  non-current  liabilities                                          59,983          61,553
                                                                                                            ------          ------
                    Total  liabilities                                                    488,722        490,960
                                                                                                          -------        -------
                                                                                                                                              
        Commitments  and  contingencies                                                                            
                                                                                                                                              
        Equity                                                                                                                          
                                                                                                                                              
        Shareholders'  equity:                                                                                            
              Common  stock                                                                    720,248        684,831
              Retained  earnings                                                          491,368        427,921
              Accumulated  other  comprehensive  income                  48,296          27,649
                                                                                                            ------          ------
        Total  Trimble  Navigation  Ltd.  shareholders'                                                
          equity                                                                                1,259,912    1,140,401
        Noncontrolling  interests                                                      4,643            3,655
                                                                                                              -----            -----
                    Total  equity                                                          1,264,555    1,144,056
                                                                                                                                              
                    Total  liabilities  and  equity                        $1,753,277  $1,635,016
                                                                                                    ==========  ==========
        
        
        
 
         
        
                                  CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS                            
                                                                    (In  thousands)                                                            
                                                                        (Unaudited)  
                                                                  
                                                                                                                            Twelve  Months  
                                                                                                                                    Ended        
                                                                                                                          ---------------
                                                                                                                          Jan-1,        Jan-2,
                                                                                                                            2010            2009  
                                                                                                                            ----            ----  
                                                                                                                                                            
        Cash  flow  from  operating  activities:                                                                            
                Net  Income                                                                                    $63,963    $140,973  
                                                                                                                                                            
                Adjustments  to  reconcile  net  income    to  net  cash                                            
                  provided  by  operating  activities:                                                                        
                                                                                                                                                            
                          Depreciation  expense                                                        18,795        19,047  
                          Amortization  expense                                                        52,672        45,066  
                          Provision  for  doubtful  accounts                                    4,139          2,709  
                          Amortization  of  debt  issuance  cost                                  226              169  
                          Deferred  income  taxes                                                      (7,473)    (17,356)
                          Stock-based  compensation                                                18,659        16,166  
                          Equity  gain  from  joint  ventures                                      (429)      (7,981)
                          Excess  tax  benefit  for  stock-based  compensation  (1,453)      (5,970)
                          Provision  for  excess  and  obsolete  inventories        3,530          4,426  
                          Other  non-cash  items                                                        (3,036)            151  
                                                                                                                                                            
                Add  decrease  (increase)  in  assets:                                                                        
                          Accounts  receivables                                                        (3,935)      33,414  
                          Other  receivables                                                                3,516        (7,422)
                          Inventories                                                                          13,292      (16,461)
                          Other  current  and  non-current  assets                            (620)            779  
                                                                                                                                                            
                Add  increase  (decrease)  in  liabilities:                                                              
                          Accounts  payable                                                                  2,631      (20,898)
                          Accrued  compensation  and  benefits                                    245      (12,487)
                          Accrued  liabilities                                                            4,433          3,069  
                          Deferred  revenue                                                                25,476        (1,320)
                                                                                                                          ------        ------  
          Net  cash  provided  by  operating  activities                            194,631      176,074  
                                                                                                                        -------      -------  
                                                                                                                                                            
          Cash  flow  from  investing  activities:                                                                          
                    Acquisitions  of  businesses,  net  of  cash  acquired    (52,018)  (115,137)
                    Acquisition  of  property  and  equipment                          (12,706)    (16,196)
                    Acquisitions  of  intangible  assets                                  (26,839)                -  
                    Net  maturities  of  short-term  investments                        5,000        (5,000)
                    Investment  in  joint  venture                                                    (750)                -  
                    Capital  infusion  from  minority  investor                                  -          4,200  
                    Dividends  received                                                                    2,896        10,648  
                    Other                                                                                                  491        (5,211)
                                                                                                                                ---        ------  
          Net  cash  used  in  investing  activities                                    (83,926)  (126,696)
                                                                                                                        -------    --------  
                                                                                                                                                            
          Cash  flow  from  financing  activities:                                                                          
                    Issuance  of  common  stock                                                      14,855        22,802  
                    Excess  tax  benefit  for  stock-based  compensation          1,453          5,970  
                    Repurchase  and  retirement  of  common  stock                              -    (125,888)
                        Proceeds  from  long-term  debt  and  revolving                                                
                        credit  lines                                                                                    -      151,000  
                      Payments  on  long-term  debt  and  revolving  credit                                        
                      lines                                                                                              (183)    (60,314)
                    Other                                                                                                      -              (11)
                                                                                                                                ---              ---  
          Net  cash  provided  by  (used  in)  financing  activities          16,125        (6,441)
                                                                                                                          ------        ------  
                                                                                                                                                            
            Effect  of  exchange  rate  changes  on  cash  and  cash                                                
            equivalents                                                                                          4,487        (3,608)
                                                                                                                            -----        ------  
                                                                                                                                                            
          Net  increase  in  cash  and  cash  equivalents                            131,317        39,329  
          Cash  and  cash  equivalents  -  beginning  of  period                142,531      103,202  
                                                                                                                        -------      -------  
                                                                                                                                                            
          Cash  and  cash  equivalents  -  end  of  period                          $273,848    $142,531  
                                                                                                                      ========    ========  
        
        
        
 
         
        
                                                                REPORTING  SEGMENTS                                                        
                                                            (Dollars  in  thousands)                                                    
                                                                        (Unaudited)                                                              
                                                                                                                                                            
                                                                                                                                                            
                                                                                            Reporting  Segments                            
                                                                                            ------------------                            
                                                                    Engineering                                                                  
                                                                            and                Field            Mobile      Advanced  
                                                                  Construction    Solutions    Solutions      Devices  
                                                                  ------------    ---------    ---------      -------  
                                                                                                                                                            
        THREE  MONTHS  ENDED  JANUARY  1,                                                                                          
          2010:                                                                                                                                        
            Revenue                                                $154,304        $57,154        $37,956      $28,115  
                                                                                                                                                            
            Operating  income  before                                                                                                  
              corporate  allocations:                  $15,482        $15,861          $4,178        $3,594
                Operating  margin  (%  of
                  segment  external  net
                  revenues)                                              10.0%            27.8%            11.0%          12.8%
                                                                                                                                                            
        THREE  MONTHS  ENDED  JANUARY  2,                                                                                    
          2009:                                                                                                                                        
            Revenue                                                $142,611        $58,247        $39,995      $27,231  
                                                                                                                                                            
            Operating  income  before                                                                                                  
              corporate  allocations:                    $2,339        $17,528          $3,331        $6,340  
                Operating  margin  (%  of  
                  segment  external  net
                  revenues)                                                1.6%            30.1%              8.3%          23.3%
                                                                                                                                                            
        TWELVE  MONTHS  ENDED  JANUARY  1,                                                                                
          2010:                                                                                                                                        
            Revenue                                                $578,579      $291,752      $154,881    $101,047  
                                                                                                                                                            
            Operating  income  before                                                                                                  
              corporate  allocations:                  $58,282      $104,498        $14,341      $17,227  
                Operating  margin  (%  of
                  segment  external  net
                  revenues)                                              10.1%            35.8%              9.3%          17.0%
                                                                                                                                                            
        TWELVE  MONTHS  ENDED  JANUARY  2,                                                                                        
          2009:                                                                                                                                        
            Revenue                                                $741,668      $300,708      $167,113    $119,745  
                                                                                                                                                            
            Operating  income  before                                                                                                  
              corporate  allocations:                $126,014      $109,489        $11,328      $24,445  
                Operating  margin  (%  of
                  segment  external  net
                  revenues)                                              17.0%            36.4%              6.8%          20.4%
        
        
        
 
         
        
                                                        GAAP  TO  NON-GAAP  RECONCILIATION
                                          (Dollars  in  thousands,  except  per  share  data)
                                                                          (Unaudited)
        
                                                                                              Three  Months  Ended
                                                                                              ------------------
                                                                                        Jan-1,                          Jan-2,
                                                                                          2010                              2009
                                                                                          ----                              ----
                                                                          Dollar              %  of          Dollar        %  of
                                                                          Amount            Revenue      Amount      Revenue
                                                                          ------            -------      ------      -------
        GROSS  MARGIN:
            GAAP  gross  margin:                      $130,652                47.1%  $122,038          45.5%
                Restructuring            (  A  )            1,036                  0.3%            559            0.2%
                Amortization  of
                  purchased
                  intangibles              (  B  )            5,780                  2.1%        5,418            2.0%
                Stock-based
                  compensation            (  C  )                486                  0.2%            487            0.2%
                Amortization  of
                  acquisition-
                  related  inventory
                  step-up                      (  D  )                    -                  0.0%            813            0.3%
                                                                                ---                  ---              ---            ---
            Non-GAAP  gross  margin:              $137,954                49.7%  $129,315          48.2%
                                                                      --------                ----    --------          ----
        
        OPERATING  EXPENSES:
            GAAP  operating
              expenses:                                      $117,975                            $111,598
                Restructuring            (  A  )              (588)                                  (287)
                Amortization  of
                  purchased
                  intangibles              (  B  )          (7,924)                              (6,608)
                Stock-based
                  compensation            (  C  )          (4,852)                              (4,076)
                Non-recurring
                  acquisition  costs  (  E  )              (440)                                        -
                                                                              ----                                      ---
            Non-GAAP  operating  expenses:  $104,171                            $100,627
                                                                      --------                            --------
        
        OPERATING  INCOME:
            GAAP  operating
              income:                                            $12,677                  4.6%    $10,440            3.9%
                Restructuring            (  A  )            1,624                  0.6%            846            0.3%
                Amortization  of
                  purchased
                  intangibles              (  B  )          13,704                  4.9%      12,026            4.5%
                Stock-based
                  compensation            (  C  )            5,338                  1.9%        4,563            1.7%
                Amortization  of
                  acquisition-
                  related  inventory
                  step-up                      (  D  )                    -                  0.0%            813            0.3%
                Non-recurring
                  acquisition  costs  (  E  )                440                  0.2%                -            0.0%
                                                                                ---                  ---              ---            ---
            Non-GAAP  operating  income:        $33,783                12.2%    $28,688          10.7%
                                                                        -------                ----      -------          ----
        
        NET  INCOME:
            GAAP  net  income  attributable
              to  Trimble  Navigation  Ltd.        $9,547                              $13,739
                Restructuring            (  A  )            1,624                                      846
                Amortization  of
                  purchased
                  intangibles              (  B  )          13,704                                12,026
                Stock-based
                  compensation            (  C  )            5,338                                  4,563
                Amortization  of
                  acquisition-
                  related  inventory
                  step-up                      (  D  )                    -                                      813
                Non-recurring
                  acquisition  costs  (  E  )                826                                          -
                Income  tax  effect
                  on  non-GAAP
                  adjustments              (  F  )          (5,785)                              (3,029)
                                                                          ------                                ------
            Non-GAAP  net  income
              attributable  to  Trimble
              Navigation  Ltd.                            $25,254                              $28,958
                                                                        -------                              -------
        
        DILUTED  NET  INCOME  PER  SHARE:
            GAAP  diluted  net  income
              per  share  attributable  to
              Trimble  Navigation  Ltd.                $0.08                                  $0.11
                Restructuring            (  A  )              0.01                                    0.01
                Amortization  of
                  purchased
                  intangibles              (  B  )              0.11                                    0.10
                Stock-based
                  compensation            (  C  )              0.05                                    0.04
                Amortization  of
                  acquisition-
                  related  inventory
                  step-up                      (  D  )                    -                                    0.01
                Non-recurring
                  acquisition  costs  (  E  )              0.01                                          -
                Income  tax  effect
                  on  non-GAAP
                  adjustments              (  F  )            (0.05)                                (0.03)
                                                                            -----                                  -----
            Non-GAAP  diluted  net  income
              per  share  attributable  to
              Trimble  Navigation  Ltd.                $0.21                                  $0.24
                                                                            -----                                  -----
        
        OPERATING  LEVERAGE:
            Increase  (decrease)  in
              non-GAAP  operating  income          $5,095
            Increase  (decrease)  in  revenue  $9,445
            Operating  leverage  (increase
              in  non-GAAP  operating  income
              as  a  %  of  increase  in  revenue)    53.9%
        
                                                                                                    %  of                              %  of
                                                                                                  Segment                        Segment
        SEGMENT  OPERATING  INCOME:                                        Revenue                        Revenue
                                                                                                  -------                        -------
            Engineering  and  Construction
                GAAP  operating  income
                  before  corporate
                  allocations:                              $15,482                10.0%      $2,339            1.6%
                    Stock-based
                      compensation        (  G  )            2,010                  1.3%        1,533            1.1%
                                                                            -----                  ---          -----            ---
                Non-GAAP  operating  income
                  before  corporate
                  allocations:                              $17,492                11.3%      $3,872            2.7%
                                                                        -------                ----        ------            ---
        
            Field  Solutions
                GAAP  operating  income
                  before  corporate
                  allocations:                              $15,861                27.8%    $17,528          30.1%
                    Stock-based
                      compensation        (  G  )                311                  0.5%            221            0.4%
                                                                                ---                  ---              ---            ---
                Non-GAAP  operating  income
                  before  corporate
                  allocations:                              $16,172                28.3%    $17,749          30.5%
                                                                        -------                ----      -------          ----
        
            Mobile  Solutions
                GAAP  operating  income  before
                  corporate  allocations:            $4,178                11.0%      $3,331            8.3%
                    Stock-based
                      compensation        (  G  )            1,011                  2.7%        1,167            2.9%
                                                                            -----                  ---          -----            ---
                Non-GAAP  operating  income
                  before  corporate
                  allocations:                                $5,189                13.7%      $4,498          11.2%
                                                                          ------                ----        ------          ----
        
            Advanced  Devices
                GAAP  operating  income  before
                  corporate  allocations:            $3,594                12.8%      $6,340          23.3%
                    Stock-based
                      compensation        (  G  )                527                  1.9%            399            1.4%
                                                                                ---                  ---              ---            ---
                Non-GAAP
                  operating  income
                  before  corporate
                  allocations:                                $4,121                14.7%      $6,739          24.7%
                                                                          ------                ----        ------          ----
 
         
        
                                                                                                Twelve  Months  Ended
                                                                                                -------------------
                                                                                      Jan-1,                            Jan-2,
                                                                                        2010                                2009
                                                                                        ----                                ----
                                                                                                  %  of                                %  of
                                                                                                Revenue                          Revenue
                                                                                                -------                          -------
        GROSS  MARGIN:
            GAAP  gross  margin:                    $549,868                48.8%  $649,136            48.8%
                Restructuring                                4,369                  0.4%        1,919              0.1%
                Amortization  of
                  purchased  intangibles            22,201                  2.0%      22,515              1.7%
                Stock-based  compensation          1,854                  0.2%        1,920              0.2%
                Amortization  of
                  acquisition-related
                  inventory  step-up                          470                  0.0%        1,414              0.1%
                                                                              ---                  ---          -----              ---
            Non-GAAP  gross  margin:            $578,762                51.4%  $676,904            50.9%
                                                                    --------                ----    --------            ----
        
        OPERATING  EXPENSES:
            GAAP  operating  expenses:        $464,048                            $463,676
                Restructuring                              (6,385)                              (2,722)
                Amortization  of
                  purchased  intangibles          (30,335)                            (22,376)
                Stock-based  compensation      (16,805)                            (14,246)
                Non-recurring
                  acquisition  costs                    (3,822)                                        -
                                                                        ------                                      ---
            Non-GAAP  operating
              expenses:                                    $406,701                            $424,332
                                                                    --------                            --------
        
        OPERATING  INCOME:
            GAAP  operating  income:              $85,820                  7.6%  $185,460            14.0%
                Restructuring                              10,754                  1.0%        4,641              0.3%
                Amortization  of
                  purchased  intangibles            52,536                  4.7%      44,891              3.4%
                Stock-based  compensation        18,659                  1.7%      16,166              1.2%
                Amortization  of
                  acquisition-related
                  inventory  step-up                          470                  0.0%        1,414              0.1%
                Non-recurring
                  acquisition  costs                      3,822                  0.3%                -              0.0%
                                                                          -----                  ---              ---              ---
            Non-GAAP  operating  income:    $172,061                15.3%  $252,572            19.0%
                                                                    --------                ----    --------            ----
        
        NET  INCOME:
            GAAP  net  income  attributable
              to  Trimble  Navigation  Ltd.    $63,446                            $141,472
                Restructuring                              10,754                                  4,641
                Amortization  of
                  purchased  intangibles            52,536                                44,891
                Stock-based  compensation        18,659                                16,166
                Amortization  of
                  acquisition-related
                  inventory  step-up                          470                                  1,414
                Non-recurring
                  acquisition  costs                      3,822                                          -
                Income  tax  effect  on
                  non-GAAP  adjustments            (23,196)                            (17,649)
                                                                      -------                              -------
            Non-GAAP  net  income
              attributable  to  Trimble
              Navigation  Ltd.                        $126,491                            $190,935
                                                                    --------                            --------
        
        DILUTED  NET  INCOME  PER  SHARE:
            GAAP  diluted  net  income
              per  share  attributable
              to  Trimble  Navigation
              Ltd.                                                    $0.52                                  $1.14
                Restructuring                                  0.09                                    0.04
                Amortization  of
                  purchased  intangibles                0.43                                    0.36
                Stock-based  compensation            0.15                                    0.13
                Amortization  of
                  acquisition-related
                  inventory  step-up                        0.01                                    0.01
                Non-recurring
                  acquisition  costs                        0.03                                          -
                Income  tax  effect  on
                  non-GAAP  adjustments                (0.19)                                (0.14)
                                                                          -----                                  -----
            Non-GAAP  diluted  net
              income  per  share
              attributable  to  Trimble
              Navigation  Ltd.                              $1.04                                  $1.54
                                                                          -----                                  -----
        
        OPERATING  LEVERAGE:
            Increase  (decrease)  in
              non-GAAP  operating
              income                                          $(80,511)
            Increase  (decrease)  in
              revenue                                      $(202,975)
            Operating  leverage
              (increase  in  non-GAAP
              operating  income  as  a  %
              of  increase  in  revenue)                  N/A
        
                                                                                                  %  of                                %  of
                                                                                                Segment                          Segment
        SEGMENT  OPERATING  INCOME:                                      Revenue                          Revenue
                                                                                                -------                          -------
            Engineering  and  Construction
                GAAP  operating  income
                  before  corporate
                  allocations:                            $58,282                10.1%  $126,014            17.0%
                    Stock-based  compensation      6,312                  1.1%        4,726              0.6%
                                                                          -----                  ---          -----              ---
                Non-GAAP  operating
                  income  before  corporate
                  allocations:                            $64,594                11.2%  $130,740            17.6%
                                                                      -------                ----    --------            ----
        
            Field  Solutions
                GAAP  operating  income
                  before  corporate
                  allocations:                          $104,498                35.8%  $109,489            36.4%
                    Stock-based  compensation      1,086                  0.4%            821              0.3%
                                                                          -----                  ---              ---              ---
                Non-GAAP  operating
                  income  before  corporate
                  allocations:                          $105,584                36.2%  $110,310            36.7%
                                                                    --------                ----    --------            ----
        
            Mobile  Solutions
                GAAP  operating  income
                  before  corporate
                  allocations:                            $14,341                  9.3%    $11,328              6.8%
                    Stock-based  compensation      4,216                  2.7%        4,749              2.8%
                                                                          -----                  ---          -----              ---
                Non-GAAP  operating
                  income  before  corporate
                  allocations:                            $18,557                12.0%    $16,077              9.6%
                                                                      -------                ----      -------              ---
        
            Advanced  Devices
                GAAP  operating  income
                  before  corporate
                  allocations:                            $17,227                17.0%    $24,445            20.4%
                    Stock-based  compensation      1,595                  1.6%        1,378              1.2%
                                                                          -----                  ---          -----              ---
                Non-GAAP  operating
                  income  before  corporate
                  allocations:                            $18,822                18.6%    $25,823            21.6%
                                                                      -------                ----      -------            ----
        
        
        
 
         
        
                          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  and  twelve  months  ended  
                      January  1,  2010  and  January  2,  2009,  stock-based  compensation  was  
                      allocated  as  follows:          
                                                                                                                                    
                                                                            Three  Months    Twelve  Months  
                                                                                    Ended                    Ended        
                                                                            ------------    -------------  
                                                                            Jan-1,  Jan-2,    Jan-1,    Jan-2,
                                                                              2010      2009        2010        2009
                                                                              ----      ----        ----        ----
                Cost  of  sales                                    $486      $487    $1,854    $1,920
                Research  and  development                972        860      3,476      3,489
                Sales  and  Marketing                      1,246    1,095      4,446      3,993
                General  and  administrative        2,634    2,121      8,883      6,764
                                                                            -----    -----      -----      -----
                                                                          $5,338  $4,563  $18,659  $16,166
                                                                          ------  ------  -------  -------
                                                                                                                                    
        (  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,  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  a  gain  on  bargain  
                      purchase  (resulting  from  the  fair  value  of  indentifiable  net  assets
                      acquired  exceeding  the  consideration  transferred)  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  $1,479K  and  $1,243K  for  the  
                      three  months  ended  January  1,  2010  and  January  2,  2009,  
                      respectively  and  $5,450K  and  $4,492K  for  the  twelve  months  ended  
                      January  1,  2010  and  January  2,  2009,  respectively.  "        
        
        
        
 

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