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What changed in Trimble Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Trimble Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+325 added−363 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-17)

Top changes in Trimble Inc.'s 2024 10-K

325 paragraphs added · 363 removed · 235 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+33 added−54 removed59 unchanged
Biggest changeCloud enablement raises the bar with shared, on-demand services that empower network participants to proactively contribute to organic value creation and delivery, directly and with fewer intermediaries. When end users interact on a shared, online platform, the overall value that is created increases as the number of end-user participants increases.
Biggest changeMeanwhile in our Transportation business, the Trimble Transportation Cloud, for example, provides shippers and carriers with the critical information they need to make more informed bid and contract award decisions, while our Transporeon business creates a marketplace for shippers, forwarders, carriers, and retailers to connect online and digitize their end-to-end transportation management processes. ◦ The second element, Scale, allows cloud enablement, which raises the bar with shared, on-demand services that empower network participants to proactively contribute to organic value creation and delivery, directly and with fewer intermediaries.
Utilizing wireless and internet-based site communications infrastructure, our solutions include the ability to track and control equipment, to deploy a 3D model to machines and to track progress of work in real-time, and to reduce re-work. By leveraging our technology, contractors gain greater insight into their operations helping them to lower costs and improve productivity, worker safety, and asset utilization.
Utilizing wireless and internet-based site communications infrastructure, our solutions include the ability to track and control equipment, deploy a 3D model to machines, track progress of work in real-time, and reduce re-work. By leveraging our technology, contractors gain greater insight into their operations helping them to lower costs and improve productivity, worker safety, and asset utilization.
Our enterprise transportation management system automates business processes spanning the entire surface transportation lifecycle for shippers, carriers and intermediaries, delivering visibility, control, and decision support for the intricate relationships and complex processes involved in the movement of freight. Our products also provide truck routing, mileage, and mapping solutions, as well as a voice-guided turn-by-turn navigation solution.
Our enterprise transportation management system automates business processes spanning the entire transportation lifecycle for shippers, carriers, and intermediaries, delivering visibility, control, and decision support for the intricate relationships and complex processes involved in the movement of freight. Our products also provide truck routing, mileage, and mapping solutions, as well as a voice-guided turn-by-turn navigation solution.
The suite also includes applications for sub-contractors and construction trades such as steel, concrete, and mechanical, electrical and plumbing; project coordination; and capital program planning and management. In addition, our Trimble Connect collaboration platform streamlines customer workflows and enables interoperability between Trimble’s and other providers' solutions.
The suite also includes applications for sub-contractors and construction trades such as steel, concrete, and Mechanical, Electrical and Plumbing (“MEP”); project coordination; and capital program planning and management. In addition, our Trimble Connect collaboration platform streamlines customer workflows and enables interoperability between Trimble’s and other providers’ solutions.
We sell and distribute our products in the Building and Infrastructure segment through both a direct sales force and global networks of independent dealers with expertise and customer relationships in the respective markets, including SITECH Technology dealers, which serve the civil construction industry, and BuildingPoint dealers, which serve the building construction industry.
We sell and distribute our products in the Building and Infrastructure segment through both a direct sales force and global networks of independent distributors with expertise and customer relationships in the respective markets, including SITECH Technology dealers, which serve the civil construction industry, and BuildingPoint dealers, which serve the building construction industry.
Between 1996 and 2014, he served in a number of leadership roles at Trimble, including as vice president of channel development; as general manager for the mapping, GIS, and utilities business; and in a variety of product management, marketing, and sales management roles.
Between 1996 and 2014, he served in a number of leadership roles at Trimble, including as vice president of channel development; as general manager for the mapping, GIS, and utilities business; and in a variety of product management, marketing, and sales management roles. Dr.
That company culture is foundational to a thriving workplace; it is the behaviors and values of leaders and employees that are the foundation to who we are. At Trimble, we value being yourself and thriving together; being intentional and humble; and being curious and solving problems.
That company culture is foundational to a thriving workplace; it is the behaviors and values of leaders and employees that are the foundation for who we are. At Trimble, we value being yourself and thriving together; being intentional and humble; and being curious and solving problems.
Geospatial The Geospatial segment primarily serves customers working in surveying, engineering, and government. Within this segment, our most substantial product portfolios are focused on surveying and geospatial and geographic information systems (“GIS”). Surveying and Geospatial.
Geospatial The Geospatial segment primarily serves customers working in surveying, mapping, engineering, and government. Within this segment, our most substantial product portfolios are focused on surveying and geospatial and geographic information systems (“GIS”). Surveying and Geospatial.
Trimble software capabilities include extensive three-dimensional (“3D”) modeling, analysis, planning and design solutions as well as a large suite of domain-specific software applications used across industries including agriculture, construction, geospatial, utilities, and transportation. Our software is sold as perpetual, term, or subscription and can be provisioned for on-premise, and increasingly, hosted as Software as a Service (“SaaS”).
Trimble software capabilities include extensive three-dimensional (“3D”) modeling, analysis, planning and design solutions as well as a large suite of domain-specific software applications used across industries including construction, geospatial, agriculture, utilities, and transportation. Our software is sold as perpetual licenses, term licenses, or subscription services and can be provisioned for on-premise, and increasingly, hosted as Software as a Service (“SaaS”).
Our platform investments allow us to extend our differentiation in positioning and sensing, modeling, and analytics into emerging industry solutions and to drive ecosystem collaboration across our target industries. This improves our value over the customer lifecycle, while enhancing our leadership in software and services, which already account fo r over 65% of our R&D investment.
Our platform investments allow us to extend our differentiation in positioning and sensing, modeling, and analytics into emerging industry solutions and to drive ecosystem collaboration across our target industries. This improves our value over the customer lifecycle, while enhancing our leadership in software and services, which already accounts fo r over 65% of our R&D investment.
Our investments enable us to push the state-of-the-art in key technology areas and to connect other leading technologies to solve customer problems in new and unique ways. As part of our technology development practices, we actively establish and maintain our intellectual property rights through the use of patents, copyrights, trademarks, and trade secret laws.
O ur investments enable us to push the state-of-the-art in key technology areas and to connect other leading technologies to solve customer problems in new and unique ways. As part of our technology development practices, we actively establish and maintain our intellectual property rights through the use of patents, copyrights, trademarks, and trade secret laws.
Trimble offers a diverse range of coherent capabilities that connect applications, data, workflows, and mobile technologies to more efficiently orchestrate work, often in mixed fleet environments. Our advanced positioning and autonomous guidance capabilities enable increased precision with large equipment, such as tractors and bulldozers.
Trimble offers a diverse range of coherent capabilities that connect applications, data, workflows, and mobile technologies to more efficiently orchestrate work, often in mixed fleet environments. Our advanced positioning and autonomous guidance capabilities enable increased precision with large equipment, such as agricultural tractors and construction bulldozers.
Sales are supported by our own offices located in approximately 40 countries around the world. • Optimized go-to-market strategies to best access our markets. We utilize vertically focused go-to-market strategies that leverage domain expertise to best serve the needs of individual markets both domestically and abroad.
Sales are supported by our own offices located in over 40 countries around the world. • Optimized go-to-market strategies to best access our markets. We utilize vertically focused go-to-market strategies that leverage domain expertise to best serve the needs of individual markets both domestically and abroad.
She joined Trimble in December of 2006 as vice president of finance and was appointed chief accounting officer in May 2017. Prior to joining Trimble, she served as vice president of finance and corporate controller at Quantum Corporation.
She joined Trimble in December of 2006 as vice president of finance and was appointed chief accounting officer in May 2007. Prior to joining Trimble, she served as vice president of finance and corporate controller at Quantum Corporation.
She is a member of the AICPA, Financial Executives Institute, and the Institute of Management Accounting, where she currently serves on the Sustainable Business Management - Global Task Force. 17 Table of Contents
She is a member of the AICPA, Financial Executives Institute, and the Institute of Management Accounting, where she currently serves on the Sustainable Business Management - Global Task Force. 11 Table of Contents
Other benefits include fertility, adoption, and surrogacy education assistance; gender affirmation, family and caregiver support; flexible work schedules; education assistance; and on-site services such as health centers and fitness centers at some sites. Talent Development We are committed to providing every employee with the opportunity to learn, grow, and excel in a respectful and collaborative workplace.
Other benefits include fertility, adoption, and surrogacy education assistance; gender affirmation, family and caregiver support; flexible work arrangements; education assistance; and on-site services such as health centers and fitness centers at some sites. Talent Development and Building Connections We are committed to providing every employee with the opportunity to learn, grow, and excel in a respectful and collaborative workplace.
Our technological suite is employed across the entire project lifecycle to improve productivity, reduce waste and re-work, including reduced carbon emissions, and enable more informed decision making through enhanced situational awareness, data flow, data-driven insights and decision support, and project collaboration. At the same time, our solutions can improve worker safety and reduce environmental impact.
Our technological suite is employed across the entire project lifecycle to improve productivity, reduce waste and re-work, including reduced carbon emissions, and enable more informed decision making through enhanced situational awareness, data flow, data-driven insights and decision support, and project 3 Table of Contents collaboration. At the same time, our solutions can improve worker safety and reduce environmental impact.
Painter served in a variety of management and finance positions at Cenveo, Rapt Inc., Bain & Company, Whole Foods Market, and Kraft Foods. Mr. Painter holds a bachelor’s degree in finance from West Virginia University and an MBA from Harvard University. David G. Barnes —David G.
Painter served in a variety of management and finance positions at Cenveo, Rapt Inc., Bain & Company, Whole Foods Market, and Kraft Foods. Mr. Painter holds a bachelor’s degree in finance from West Virginia University and an MBA from Harvard University. 9 Table of Contents David G. Barnes —David G.
We are extending our capabilities to run in multi-cloud environments, while delivering our unique value via domain-specific workflows and lifecycle management in our target industries. 6 Table of Contents Our global operations include major research, development, manufacturing, and logistics operations in the United States, the Netherlands, India, Germany, Finland, Canada, New Zealand, the United Kingdom, and Sweden.
We are extending our capabilities to run in multi-cloud environments, while delivering our unique value via domain-specific workflows and lifecycle management in our target industries. Our global operations include major research, development, manufacturing, and logistics operations in the United States, the Netherlands, India, Germany, Finland, Canada, New Zealand, the United Kingdom, and Sweden.
However, overall, as a company, as a result of diversification of our businesses across segments and the increased impact of software and subscription revenue, we are experiencing less seasonality. Changes in global macroeconomic 11 Table of Contents conditions could also impact the level of seasonality we experience.
However, overall, as a company, we are experiencing less seasonality as a result of diversification of our businesses across segments and the increased impact of software and subscription revenue. Changes in global macroeconomic conditions could also impact the level of seasonality we experience.
The benefits to the farmer include faster machine operation, higher yields, and lower consumption of fuel and chemicals, lower carbon footprint, and improved soil health than conventional equipment. In addition, we provide solutions to automate application of pesticide and seeding.
The benefits to the farmer include faster machine operation, higher yields, lower consumption of fuel and chemicals, lower carbon footprint, and improved soil health as compared to conventional equipment. In addition, we provide solutions to automate application of pesticide and seeding.
O rganic growth continues to be our primary focus, while acquisitions serve to enhance our market position. We acquire businesses that bring domain expertise, geographic presence, technology, products, and distribution capabilities that augment our portfolio and allow us to penetrate existing markets more effectively, or to establish a market beachhead.
O rganic growth continues to be our primary focus, while acquisitions serve to enhance our market position. We acquire businesses that bring domain expertise, geographic presence, technology, products, and distribution capabilities that augment our portfolio and allow us to penetrate existing 2 Table of Contents markets more effectively, or to establish a market beachhead.
We view international expansion as an important element of our strategy, and we continue to position ourselves in geographic markets that will serve as important sources of future growth. Products are sold in more than 150 countries, through dealers, representatives, joint ventures, and other channels throughout the world, as well as direct sales to end users.
We view international expansion as an important element of our strategy, and we continue to position ourselves in geographic markets that will serve as important sources of future growth. Products are sold in more than 150 countries, through dealers, joint ventures, original equipment manufacturers (“OEM”), and other channels throughout the world, as well as direct sales to end users.
Our core industries, such as construction, agriculture, and transportation, are each multi-trillion dollar global industries that operate in demanding environments with technology adoption in the early phases relative to other industries.
Our core industries, such as construction, agriculture, and transportation, are each multitrillion-dollar global industries that operate in demanding environments with technology adoption in the early phases relative to other industries.
This strategy contains two elements. ◦ The first element, Connect, aims to connect more customer workflows, industry lifecycles, and solution offerings, so that we can continue to transform the way our customers work. This includes integrating more of our customers’ data through cloud offerings and making more of our solutions available over time on a subscription basis.
This strategy contains two elements. 1 Table of Contents ◦ The first element, Connect, aims to connect more customer workflows, industry lifecycles, and solution offerings, so that we can continue to transform the way our customers work. This includes integrating more of our customers’ data through cloud offerings and making more of our solutions available on a subscription basis.
For example, our flagship design and construction platform solution,Trimble Connect, enables entire project teams to collaborate in real-time between the office and the field to make efficient decisions around the same data-rich design model.
For example, our flagship design and construction platform solution, Trimble Connect, enables entire project teams to collaborate in real-time between the office and the field to make efficient decisions around the same data-rich design model enhanced by our cloud capabilities.
Our suite of solutions includes field-based data collection systems and field software, real time 9 Table of Contents communications systems, and back-office software for data processing, modeling, monitoring, reporting, and analysis.
Our suite of solutions includes field-based data collection systems and field software, real time communications systems, and back-office software for data processing, modeling, monitoring, reporting, and analysis.
Our suite of integrated solutions and technologies in this area includes field and office software for optimized route selection and design; software for 3D design and data sharing; systems to automatically guide and control construction equipment such as excavators, bulldozers, wheel loaders, motor graders, and paving equipment; systems to monitor, track, and manage assets, equipment, and workers; and software to facilitate the management of the construction process and for sharing and communication of data in real time.
Our suite of integrated solutions and technologies in this area includes field and office software for estimating and job cost management and optimized project design and visualization; software for 3D design and data sharing; systems to automatically guide and control construction equipment such as excavators, bulldozers, wheel loaders, motor graders, and paving equipment; systems to monitor, track, and manage assets, equipment, and workers; and software to facilitate the management of the construction process and for sharing and communication of data in real time.
We have a number of employee resource networks that enhance our inclusive and diverse culture, including networks that support women, caregivers, Black, Hispanic/Latinx and Indian professionals, veterans, employees with disabilities, and our LGBTQ+ community.
A number of employee resource networks exist in Trimble that enhance our inclusive and diverse culture, including networks that support women, caregivers, Black, Hispanic/Latinx and Indian professionals, veterans, employees with disabilities, and our LGBTQ+ community.
For further financial information about our segments, see Note 6 “ Reporting Segment and Geographic Information ” of this report. Buildings and Infrastructure The Buildings and Infrastructure segment primarily serves customers working in architecture, engineering, construction, design, asset management, operations, and maintenance.
For further financial information about our segments, see Note 7 “Reporting Segment and Geographic Information” of this report. Buildings and Infrastructure The Buildings and Infrastructure segment primarily serves customers working in architecture, engineering, construction, design, asset management, operations, and maintenance.
Large holds an Ed.D. from Oklahoma State University, a Master of Science in Management from the Stanford University Graduate School of Business, a Postgraduate Diploma in Strategy and Innovation from the University of Oxford, and a Bachelor of Science (Honors) in Surveying and Mapping Science from the University of Newcastle Upon Tyne. Jennifer K.
Large holds an Ed.D. from Oklahoma State University, a Master of Science in Management from the Stanford University Graduate School of Business, a Postgraduate Diploma in Strategy and Innovation from the University of Oxford, and a Bachelor of Science degree from the University of Newcastle Upon Tyne, U.K.
And, our recently released Trimble Construction Cloud includes capabilities such as a connected data environment for online collaboration, the ability to author unique workflows that connect the digital and physical worlds, and the power to dynamically orchestrate design coordination in the cloud from wherever project stakeholders may be.
Our Trimble Construction Cloud creates a connected data environment for online collaboration, the ability to author unique workflows that connect the digital and physical worlds, and the power to dynamically orchestrate design coordination in the cloud from wherever project stakeholders may be.
Each segment consists of businesses that are responsible for product development, marketing, sales, strategy, and financial performance. We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
Business Segments and Markets Our segments are distinguished by the markets they serve. Each segment consists of businesses that are responsible for product development, marketing, sales, strategy, and financial performance. We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
Our customers in this area gain benefits from the use of our products including significantly improved productivity in both field and office activities, improved safety through non-contact measurement and detection of potentially dangerous ground or structure movement, and improved data flow that enables better decision making. Geographic Information Systems .
Our customers in this area benefit from using our products including significantly improved productivity in both field and office activities, improved safety through non-contact measurement and detection of potentially dangerous ground or structure movement, and improved data flow that enables better decision making. 4 Table of Contents Geographic Information Systems .
Seasonality of Business Construction equipment revenue, within our Buildings and Infrastructure segment, historically has been higher in early spring. Our agricultural equipment revenue, within our Resources and Utilities segment, has historically been the highest in the first quarter, followed by the second quarter, reflecting buying in anticipation of the spring planting season in the Northern hemisphere.
Our agricultural equipment revenue, within our Resources and Utilities segment, has historically been the highest in the first quarter, followed by the second quarter, reflecting buying in anticipation of the spring planting season in the Northern hemisphere.
These go-to-market capabilities include independent dealers, joint ventures, original equipment manufacturers (“OEM”), and 7 Table of Contents distribution alliances with key partners, including Caterpillar and Nikon, as well as direct sales to end users, which provide us with broad market reach and localization capabilities to effectively serve our markets. • Strategic acquisitions and venture fund investments.
These go-to-market capabilities include independent dealers, joint ventures including with Caterpillar and Nikon, OEM, and distribution alliances with key partners, as well as direct sales to end users, which provide us with broad market reach and localization capabilities to effectively serve our markets. • Strategic acquisitions, joint ventures, and investments .
Our contract manufacturing partners are responsible for significant material procurement, assembly, and testing. We continue to manage product design through pilot production for the subcontracted products, and we are directly involved in qualifying suppliers and key components used in all our products. We also utilize original design manufacturers for some of our products.
We continue to manage product design through pilot production for the subcontracted products, and we are directly involved in qualifying suppliers and key components used in all our products. We also utilize original design manufacturers for some of our products.
Item 1. Business Trimble Inc. (“Trimble” or “the Company” or “we” or “our” or “us”) is a leading technology solutions provider that enables office and mobile professionals to connect their workflows and asset lifecycles to drive a more productive, sustainable future.
Item 1. Business Trimble is a leading technology solutions provider that enables office and mobile professionals to connect their workflows and asset lifecycles to drive a more productive, sustainable future.
This network effect means that the willingness of developers, partners, or end users to engage increases as the number of network participants grows, which further enhances the platform experience and end-user value.
When end users interact on a shared, online platform, the overall value that is created increases as the number of end-user participants increases. This network effect means that the willingness of developers, partners, or end users to engage increases as the number of network participants grows, which further enhances the platform experience and end-user value.
Bisio — Ronald Bisio was appointed senior vice president responsible for Trimble’s transportation sector in July 2022. Prior to that, Mr. Bisio was responsible for Trimble’s surveying and geospatial businesses since April 2015, first as vice president and then as senior vice president as of February 2019.
From July 2022 to November 2023, he served as senior vice president responsible for Trimble’s transportation businesses. Prior to that, Mr. Bisio was responsible for Trimble’s surveying and geospatial businesses since April 2015, first as vice president and then as senior vice president as of February 2019.
From July 2021 to October 2022, he was senior vice president responsible for civil infrastructure solutions businesses, which includes Trimble’s civil engineering, construction field systems and software, as well as Trimble’s joint ventures with Caterpillar and Hilti. Prior to that, he was vice president responsible for Trimble’s construction field solutions businesses.
From October 2022 to November 2023, he served as senior vice president responsible for Trimble's buildings and infrastructure segment, and from July 2021 to October 2022, as senior vice president responsible for our civil infrastructure solutions businesses, including Trimble’s joint ventures with Caterpillar and Hilti. Prior to that, he was vice president responsible for Trimble’s construction field solutions businesses.
During 2022, we announced a number of new developments, including: (i) the pending acquisition of Transporeon, a leading European cloud-based transportation management software platform, (ii) the launch of the Engage Lane collaborative procurement platform that was developed through our strategic partnership with Procter & Gamble, (iii) commercial availability of our new in-cab platform, Instinct, that improves the driver experience and can support both Trimble and third-party apps, and (iv) significant progress in integrating data and connecting workflows, from our own unique set of capabilities and a growing network of partners, and through the Trimble Transportation Cloud (TTC).
During 2023, we had a number of important developments, including: (i) the acquisition and integration of Transporeon, a leading European cloud-based transportation management software platform; (ii) the wide-scale launch of our new in-cab platform, Instinct, that improves the driver experience and can support both Trimble and third-party apps; and (iii) significant progress in integrating data and connecting workflows, from our own unique set of capabilities and a growing network of partners, and through the Trimble Transportation Cloud (“TTC”).
Meanwhile in our Transportation business, the Trimble Transportation Cloud, for example, provides shippers and carriers with the critical information they need to make more informed bid and contract award decisions. ◦ The second element, Scale, aims to invest in the people, processes, and technologies that are necessary to streamline and standardize our internal processes, provide a seamless experience for our customers as they engage with our connected solutions, and enable us to continue to grow our business efficiently and effectively for many years into the future. • Increasing focus on software and services.
Scale also aims to invest in the people, processes, and technologies that are necessary to streamline and standardize our internal processes; provide a seamless experience for our customers as they engage with our connected solutions; and enable us to continue to grow our business efficiently and effectively for many years into the future. • Increasing focus on software and services.
We launched new career growth and development initiatives in 2022 to empower employees to identify internal job opportunities, skill development resources, and projects to achieve their personal development goals and full potential. We encourage employees to nurture a love of continuous learning and a resilience that is essential for accomplishment.
Through our internal global talent platform, we empower employees to identify internal job opportunities, skill 8 Table of Contents development resources, and projects to achieve their personal development goals and full potential. We encourage employees to nurture a love of continuous learning and resilience that is essential for accomplishment.
We believe our diversity makes us stronger and better able to solve complex problems for our customers. Diversity, Equity, and Inclusion (“DEI”) We value diversity in our workforce, including various cultures, backgrounds, ages, genders, races and ethnicities, nationalities, sexual orientations, religions, people with different abilities, parents and caregivers, and many other characteristics, knowing that it drives our best thinking.
Diversity, Equity, and Inclusion (“DEI”) We value diversity in our workforce, including various cultures, backgrounds, ages, genders, races and ethnicities, nationalities, sexual orientations, religions, people with different abilities, parents and caregivers, and many other characteristics, knowing that it drives our best thinking. Our focus on diversity starts at the top.
No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites. 15 Table of Contents Information about our Executive Officers The names, ages, and positions of our executive officers as of February 17, 2023, are as follows: Name Age Position Steve W. Berglund 71 Executive Chairman Robert G.
No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites. Information about our Executive Officers The names, ages, and positions of our executive officers as of February 26, 2024, are as follows: Name Age Position Robert G. Painter 52 President and Chief Executive Officer David G.
Within this segment, our most substantial product portfolio addresses the agriculture market. Our precision agriculture products and services consist of guidance and positioning systems, including autonomous steering systems, automated and variable-rate application and technology systems, and information management solutions that enable farmers and their partners to improve crop performance, profitability, and environmental quality.
See Note 4 “Divestitures” of this report for additional discussion of this transaction. Our precision agriculture products and services consist of guidance and positioning systems, including autonomous steering systems, automated and variable-rate application and technology systems, and information management solutions that enable farmers and their partners to improve crop performance, profitability, and environmental quality.
Major competitors in this segment are typically survey instrument companies that provide software-driven 3D measurement and imaging solutions. We compete principally on the basis of innovation, differentiated products, integrated workflow solutions, domain expertise, service, quality, and geographic reach. Resources and Utilities The Resources and Utilities segment primarily serves customers working in agriculture, forestry, and utilities.
We sell and distribute our products in the Geospatial segment primarily through a global network of independent distribution partners. Major competitors in this segment are typically survey instrument companies that provide software-driven 3D measurement and imaging solutions. We compete principally based on innovation, differentiated products, integrated workflow solutions, domain expertise, service, quality, and geographic reach.
Our leaders inspire purpose and vision, engage to draw out the best from each other, and strive to achieve meaningful results. This mindset shapes how we treat one another and how we serve our customers, colleagues, and stockholders. These attributes serve as a common foundation across the global organization and also adapt locally to diverse geographic and operational business models.
Our leaders inspire purpose and vision, engage to draw out the best from each other, and strive to achieve meaningful results. This mindset shapes how we treat one another and how we serve our customers, colleagues, and stockholders.
Bisio earned an MBA from the University of Denver, a Master of Regional Planning from the University of Massachusetts, and a Bachelor of Science in Cartography from Salem State University in Salem, Massachusetts. James A. Kirkland —James Kirkland currently serves as Trimble’s senior vice president, general counsel, and secretary.
Bisio earned an MBA from the University of Denver, a Master of Regional Planning from the University of Massachusetts, and a Bachelor of Science in Cartography from Salem State University in Salem, Massachusetts. Peter Large —Peter Large currently serves as senior vice president in charge of strategy, corporate development, corporate partnerships and alliances, and Trimble’s office of technology innovation.
At the end of 2022, we employed 11,825 full-time and part-time employees, the overwhelming majority of which were full-time employees. Approximately 48%, 30%, 18%, and 4% of employees reside in North America, Europe, Asia-Pacific, and the rest of the world. Our employees are working in around 200 locations in over 40 countries. Collectively, we speak more than 45 different languages.
At the end of 2023, we employed over 12,700 full-time and part-time employees, the overwhelming majority of which were full-time employees. Approximately 42%, 37%, 17%, and 4% of employees reside in North America, Europe, Asia-Pacific, and the rest of the world. Our employees are working in approximately 200 locations in over 40 countries.
Aligned with this strategy, in February 2023, we gave CNH a 12-month notification that we will no longer supply aftermarket precision agriculture products to CNH for resale through the CNH dealer network. We will continue to supply hardware to CNH for their factory installations.
In 2023, the following changes occurred in the Ag distribution channels as follows: • In February, we gave CNH a 12-month notification that we will no longer supply aftermarket precision agriculture products to CNH for resale through the CNH dealer network. 5 Table of Contents • In December, we gave CNH a 12-month notification that we will no longer supply hardware for their factory installations.
Our focus on diversity starts at the top. Four out of our eleven board members are female or ethnically diverse, and we are making progress to increase global female employees and U.S. ethnically diverse employees in our workforce and in our leadership positions across the company.
Three out of our ten board members are female or ethnically diverse, and we are making progress towards our goal of increasing global female employees and U.S. ethnically diverse employees in our workforce and in our leadership positions across the company.
Accordingly, we are committed to the health, safety, and wellness of our employees.
Health, Safety, and Wellness The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety, and wellness of our employees.
Transportation Our transportation solutions provide capabilities for the long-haul trucking and freight shipper markets to create a connected supply chain and integrate all forms of transportation, drivers, back-office management, shippers, and freight.
W e compete principally on the basis of robust performance, ease of use, domain expertise, customer support, price, interoperability, interconnectedness, and the completeness of our solutions. Transportation Our transportation solutions provide capabilities for the long-haul trucking and freight shipper markets to create a connected supply chain and integrate all forms of transportation, drivers, back-office management, shippers, and freight.
Trimble delivers digital technologies that enhance the physical world by integrating and connecting industry workflows, stakeholders, and data, while modernizing its interfaces and business models to make it easier for customers to do business.
Research and Development and Intellectual Property We believe that our competitive position is maintained through the development and introduction of new products, including software and services. Trimble delivers digital technologies that enhance the physical world by integrating and connecting industry workflows, stakeholders, and data, while modernizing its interfaces and business models to make it easier for customers to do business.
As further described in the below Human Capital section, we are focused on building a welcoming, diverse, equitable, and inclusive workplace. We are committed to providing every employee with the opportunity to learn, grow, and excel. We believe our diversity makes us stronger and better able to solve complex problems for our customers. Communities.
As further described in the below Human Capital section, we are focused on building a welcoming, diverse, equitable, and inclusive workplace. We believe our diversity makes us stronger and better able to solve complex problems for our customers. 7 Table of Contents Leading with Integrity. We are dedicated to leadership principles that ensure excellence in all we do.
As our solutions have expanded, our go-to-market model has also evolved, with a balanced mix between direct, distribution, and OEM customers, as well as an increasing number of enterprise-level customer relationships. Business Segments and Markets Our segments are distinguished by the markets they serve.
Our focus on these growth drivers has led over time to growth in revenue and profitability and an increasingly diversified business model. As our solutions have expanded, our go-to-market model has also evolved, with a balanced mix between direct, distribution, and OEM customers, as well as an increasing number of enterprise-level customer relationships.
We manufacture our optics-based products, as well as some of our GPS products, at our plants in Dayton, Ohio; Danderyd, Sweden; and Salzkotten, Germany. Some of these products or portions of these products are also subcontracted to third parties for assembly.
We manufacture our optics-based products, as well as some of our GPS products, at our plants in Dayton, Ohio and Danderyd, Sweden .
He is also a member of the board of directors and audit committee of Belden Inc., a global provider of end-to-end signal transmission solutions. Robert G. Painter —Robert Painter became Trimble’s president and chief executive officer in January 2020. From 2016 through 2019, he served as the Company’s chief financial officer. Prior to that, Mr.
Painter —Robert Painter became Trimble’s president and chief executive officer in January 2020. From 2016 through 2019, he served as the Company’s chief financial officer. Prior to that, Mr.
During 2022, we announced a number of new developments, including: (i) the introduction of the scalable and configurable Trimble R780 GNSS Modular Receiver that includes our industry-leading ProPoint engine and tilt technology, (ii) the launch of the newest addition to our scanning portfolio, the Trimble X12 3D laser scanning system, and (iii) the introduction of the Trimble TDC650 handheld data collector for mapping professionals.
During 2023, we announced several new developments, including: (i) the scalable and configurable Trimble R580 GNSS Integrated Receiver that includes our industry-leading ProPoint engine; (ii) the newest addition to our scanning portfolio, the Trimble X9 3D laser scanning system; and (iii) the Trimble T10x model 2 tablet for survey and mapping professionals.
Historically, through delivering productivity and efficiency gains, Trimble products have delivered sustainability for our customers, and we envision more opportunities to deliver expanded carbon reductions and other sustainability benefi ts, such as water management in agriculture and utilities. Our focus on these growth drivers has led over time to growth in revenue and profitability and an increasingly diversified business model.
The global economy is experiencing a fundamental shift toward sustainability driven through broad stakeholder engagement, with a focus on decarbonization. Historically, through delivering productivity and efficiency gains, Trimble products have delivered sustainability for our customers, and we envision more opportunities to deliver expanded carbon reductions and other sustainability benefi ts, such as water management in agriculture and utilities.
Gladys West Scholarship Program through the Trimble Foundation, which honors a GPS technology pioneer and woman of color, and we award scholars at three universities serving underrepresented students. Compensation and Benefits We believe people should be paid for the role they perform and their skills and experience, regardless of their gender, race, age, or other personal characteristics.
Compensation and Benefits We believe people should be paid for the role they perform and their skills and experience, regardless of their gender, race, age, or other personal characteristics.
Barnes joined Trimble as chief financial officer in January 2020 with more than 35 years of financial and strategic management experience, including treasury, tax, investor relations, and risk management. Prior to Trimble, he served as chief financial officer at MWH Global Inc., a global provider of engineering and construction services, from January 2009 to May 2016.
Barnes joined Trimble as chief financial officer in January 2020 with more than 35 years of financial and strategic management experience, including treasury, tax, investor relations, and risk management. Mr. Barnes will retire from the Company in May 2024, and Phillip Sawarynski will be his successor at that time.
Additionally, we delivered multiple feature releases in our powerful Trimble Business Center office software, adding productivity gains through improved connectivity, simplicity, and efficiency enhancements for survey and construction professionals. We sell and distribute our products in the Geospatial segment primarily through a global network of independent dealers and business partners.
Additionally, we delivered multiple feature releases in our powerful Trimble Access field software, Trimble Business Center office software, Trimble 4D Control Monitoring software, as well as TerraFlex and TerraOffice enabling productivity gains through improved connectivity, simplicity, and efficiency enhancements for survey, mapping, and construction professionals.
At MWH, he served on the board of directors and had responsibility for information technology and procurement in addition to his financial role. Following the sale of MWH to Stantec Inc., he assumed operational responsibility for Stantec’s businesses outside North America from September 2017 to January 2019.
Following the sale of MWH to Stantec Inc., he assumed operational responsibility for Stantec’s businesses outside North America from September 2017 to January 2019. He also served as a leader on the committee overseeing the integration of MHW into Stantec from May 2016 to July 2017.
He also served as a leader on the committee overseeing the integration of MHW into Stantec from May 2016 to July 2017. Prior to MWH, he held financial leadership positions at Western Union, Coors, and YUM Brands. He began his career as a strategy consultant at Bain & Company. Mr.
Prior to MWH, he held financial leadership positions at Western Union, Coors, and YUM Brands. He began his career as a strategy consultant at Bain & Company. Mr. Barnes received a Bachelor of Science in Applied Mathematics from Yale University and an MBA in Finance and Marketing from the University of Chicago. Mr.
We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.
We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs that offer choice where possible, so they can customize their benefits to meet their needs and the needs of their families.
Painter 51 President and Chief Executive Officer David G. Barnes 61 Chief Financial Officer Ronald J. Bisio 54 Senior Vice President James A. Kirkland 63 Senior Vice President, General Counsel and Secretary Peter Large 53 Senior Vice President Jennifer K. Lin 52 Chief Platform Officer Darryl R. Matthews 55 Senior Vice President Julie A.
Barnes 62 Chief Financial Officer Jennifer Allison 51 Vice President, General Counsel and Secretary Ronald J. Bisio 55 Senior Vice President Peter Large 54 Senior Vice President Phillip Sawarynski 51 Vice President, Treasurer Mark Schwartz 49 Senior Vice President Julie A. Shepard 66 Chief Accounting Officer Robert G.
Our primary design, manufacturing, and distribution sites in Dayton, Ohio; Sunnyvale, California; Danderyd, Sweden; Eindhoven, Netherlands; and Salzkotten, Germany are registered to ISO9001:2015 covering the design, production, distribution, and servicing of our products. Research and Development and Intellectual Property We believe that our competitive position is maintained through the development and introduction of new products, including software and services.
Some of these products or portions of these products are also subcontracted to third parties for assembly. 6 Table of Contents Our primary design, manufacturing, and distribution sites in Dayton, Ohio; Sunnyvale, California; Eindhoven, Netherlands; and Danderyd, Sweden are registered to ISO9001:2015 covering the design, production, distribution, and servicing of our products.
Competitors in this segment are typically companies that provide fleet mobility services, transportation management software, and digital freight matching. We compete principally on the basis of interoperability, domain expertise, customer support and service, price, innovative product offerings, quality, and the completeness of our solutions.
We compete principally on the basis of interoperability, domain expertise, customer support and service, price, innovative product offerings, quality, and the completeness of our solutions. Seasonality of Business Construction equipment revenue, within our Buildings and Infrastructure segment, historically has been higher in early spring.
We use multiple distribution approaches to access the mixed fleet agricultural market including independent dealers and direct selling to enterprise accounts. A significant portion of our aftermarket sales have historically been generated through CNH Industrial (“CNH”), which resells our aftermarket products through its dealer network.
We use multiple distribution approaches to access the mixed fleet agricultural market including independent dealers and direct selling to enterprise accounts. Our aftermarket solutions address both new equipment as well as equipment already in the field.
Inspired by our mission—“Transforming the Way the World Works,”—and fueled by the dedication of our employees, we will work to build momentum and strive for continual improvement and measurable progress. We organize our ESG efforts around five pillars: (1) Solutions, (2) People, (3) Communities, (4) Environment, and (5) Governance. Highlights of each of these pillars are discussed below.
Inspired by our mission of “Transforming the Way the World Works,” and fueled by the dedication of our employees, we are working to build momentum and strive for continual improvement and measurable progress in shaping a sustainable future. Sustainability is deeply integrated into our business strategy, threaded throughout our products and solutions and our people and culture.
Since our employees are passionate about a variety of causes, our company giving and volunteering programs support and encourage employees by engaging with those causes. In our offices around the world, our employee-led committees select local organizations to support, often in the form of grants and employee fundraising.
We believe that building connections between our employees, their families, and our communities creates a more meaningful, fulfilling, and enjoyable workplace. In our offices around the world, our employee-led committees select local organizations to support, often in the form of grants and employee fundraising.
Market facing solutions enabled by TTC include Connected Maintenance, Connected Locations, and the previously mentioned Engage Lane. The Transportation segment generally sells directly to end users and OEMs. Although sales cycles tend to be months long, the products are difficult to replace once implemented.
Market facing solutions enabled by TTC include Connected Maintenance, Connected Locations, and Connected Workflows. The Transportation segment generally sells directly to end users and OEMs. Competitors in this segment are typically companies that provide fleet mobility services, transportation management software, and digital freight matching.
The Trimble Foundation Fund is a donor-advised fund that focuses its charitable giving across three areas—natural disaster recovery and relief and climate resilience; female education and empowerment; and advancing diversity, equity, and inclusion—while also supporting the philanthropic efforts of our local offices.
Our Trimble Foundation Fund (the “Foundation”) aligns international philanthropic efforts by giving back to the communities where Trimble does business and helping those in need. The Foundation focuses on three key areas within our communities (i) Disaster and Climate Resilience, (ii) Female Education and Empowerment, and (iii) Advancing Diversity, Equity, and Inclusion.
Competitors in the agricultural market are vertically integrated farm equipment and implement companies, agricultural instrumentation companies, and companies that provide agricultural software and services. W e compete principally on the basis of robust performance, ease of use, domain expertise, customer support, price, interoperability, interconnectedness, and the completeness of our solutions.
When the proposed transaction with AGCO closes, the JV will be the exclusive distributor in the agriculture market. Competitors in the agricultural market are vertically integrated farm equipment and implement companies, agricultural instrumentation companies, and companies that provide agricultural software and services.
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The state of the world today requires us to step up with an accelerated focus on our strategic approach to manage the environmental, social, and governance (“ESG”) aspects of our business. These efforts will make us a better, more resilient company and motivate us to create greater sustainability solutions for the customers and stakeholders we serve.
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Our success in targeting and effectively integrating acquisitions is an important aspect of our growth strategy. To further grow and position the Company, we partner with leaders in various fields by investing in early-to-growth stage companies through our venture fund and through strategic formation of joint ventures.
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Our tiered subscription offerings can include both hardware and software, providing a complete customer solution with technology assurance as new generations of hardware become available.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, our business, financial condition, and results of operations, including our ability to design, develop, or sell products, may be adversely affected by a number of factors outside of our control, including: • global and local economic conditions, such as inflation and recession; • the demand and cost of commodities, such as corn and oil; • the strength of the agricultural, engineering, and construction markets; • inadequate infrastructure and other disruptions, such as supply chain interruptions and large-scale outages or unreliable provision of services from utilities, transportation, data hosting, or telecommunications providers; • government restrictions on our operations in any country, or restrictions on our ability to repatriate earnings from a particular country; • differing employment practices and labor issues; • formal or informal imposition of new or revised export and/or import and doing-business regulations, including trade sanctions, tariffs, and import or export licensing requirements, which could be changed without notice; • ineffective legal protection of our IP rights in certain countries; • uncertain economic and political conditions in countries where we do business; • local business and cultural factors that differ from our normal standards and practices; • differing regional responses and restrictions related to global pandemics, like the COVID-19 pandemic; and • uncertainty regarding social, political, immigration, and trade policies in the U.S. and abroad.
Biggest changeAs a result, our business, financial condition, and results of operations, including our ability to design, develop, or sell products, has been and may continue to be adversely affected by a number of factors outside of our control, including: • global and local economic conditions, such as inflation and recession; • the demand and cost of commodities, such as corn and oil; • the strength of the agricultural, engineering and construction, and transportation markets; • inadequate infrastructure and other disruptions, such as supply chain interruptions and large-scale outages or unreliable provision of services from utilities, transportation, data hosting, or telecommunications providers; • government restrictions on our operations in any country, or restrictions on our ability to repatriate earnings from a particular country; • differing employment practices and labor issues and the challenges and costs of staffing and managing a global workforce; • imposition of new and changing trade barriers, including trade sanctions, duties, tariffs, and import or export licensing requirements or restrictions; • compliance with differing local laws and regulations, including those relating to privacy, labor, and local content; • ineffective legal protection of our IP rights in certain countries or difficulties procuring or enforcing our IP rights; • volatile geopolitical conditions, including significant regional military conflicts and political and economic instability, in countries where we do business; • local business and cultural factors that differ from our normal standards and practices, which can include longer payment cycles and difficulties in enforcing agreements and collecting receivables in certain foreign jurisdictions; • fluctuations in currency rates; and • uncertainty regarding social, political, including elections, immigration, tax, and trade policies in the U.S. and abroad.
If we are unable to effectively integrate, streamline and manage our increasingly diverse and complex businesses and operations, our ability to generate growth and revenue from new or existing customers may be adversely affected Because our operations are geographically diverse and increasingly complex, our personnel resources and infrastructure could become strained, and our reputation in the market and our ability to successfully manage and grow our business may be adversely affected.
If we are unable to effectively integrate, streamline and manage our diverse and complex businesses and operations, our ability to generate growth and revenue from new or existing customers may be adversely affected Because our operations are geographically diverse and increasingly complex, our personnel resources and infrastructure could become strained, and our reputation in the market and our ability to successfully manage and grow our business may be adversely affected.
Errors, viruses, or bugs may be present in software or hardware that we acquire or license from third parties and incorporate into our products or in third-party software or hardware that our customers use in conjunction with our products. Our customers’ proprietary software and network firewall protections may corrupt data from our products and create difficulties in implementing our solutions.
Errors, viruses, or bugs may be present in software or hardware that we acquire or license from third parties and incorporate into our products or in third-party software or hardware that our customers use in conjunction with our products. Our customers’ proprietary software and network firewall protections may corrupt data from our products or create difficulties in implementing our solutions.
If we are not able to develop software and other solutions that address the increasingly sophisticated needs of our customers, or if we are unable to adapt to new platforms, technologies, or new industry standards that impact our markets, our ability to retain or increase market share, business, financial condition, and results of operations could be adversely affected.
If we are not able to develop software and other solutions that address the increasingly sophisticated needs of our customers, or if we are unable to adapt to new platforms, technologies, or new industry standards that impact our markets, our ability to retain or increase market share could be adversely affected, harming our business, financial condition, and results of operations.
Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive or confidential information in order to gain access to data. We have experienced security breaches in the past, and despite our efforts to maintain the security and integrity of our systems, it is impossible to eliminate this risk.
Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive or confidential information to gain access to data. We have experienced security breaches in the past, and despite our efforts to maintain the security and integrity of our systems, it is impossible to eliminate this risk.
Pursuant to our Connect and Scale strategy, we are investing substantial resources in integrating our product offerings and transitioning our businesses to common core services and systems in order to achieve economies of scale, simplify our operations, and improve the customer experience.
Pursuant to our Connect and Scale strategy, we are investing substantial resources in integrating our product offerings and transitioning our businesses to common core services and systems to achieve economies of scale, simplify our operations, and improve the customer experience.
We may not be able to enter into or maintain important alliances and distribution relationships We believe that in certain business opportunities, our success will depend on our ability to form and maintain alliances with industry participants.
We may not be able to continue to enter into or maintain important alliances and distribution relationships We believe that in certain business opportunities, our success will depend on our ability to form and maintain alliances with industry participants.
Damage to our reputation could significantly harm our businesses, competitive position, and prospects for growth Our ability to attract and retain investors, customers, and employees could be adversely affected by damage to our reputation resulting from various sources, including environmental, social, and governance (“ESG”) related issues; employee misconduct, litigation, or regulatory outcomes; failure to deliver minimum standards of service and quality; compliance failures; unethical behavior; unintended breach of confidential information; and the activities of our customers and commercial partners.
Damage to our reputation could significantly harm our businesses, competitive position, and prospects for growth Our ability to attract and retain investors, customers, and employees could be adversely affected by damage to our reputation resulting from various events, including environmental, social, and governance (“ESG”) related issues; employee misconduct, litigation, or regulatory outcomes; failure to deliver minimum standards of service and quality; compliance failures; unethical behavior; unintended breach of confidential information; and the activities of our customers and commercial partners.
We must continue to make significant investments in research and development in order to continue to develop new products and services, enhance existing products, and achieve market acceptance of such products and services. We may encounter problems in the future in innovating and introducing new products and services.
We must continue to make significant investments in research and development to continue to develop new products and services, enhance existing products, and achieve market acceptance of such products and services. We may encounter problems in the future in innovating and introducing new products and services.
Acquisitions entail numerous risks, including: • potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated benefits from integration; • loss of key employees or customers of acquired operations; 20 Table of Contents • difficulty of assimilating geographically dispersed operations and personnel of the acquired companies; • potential disruption of our business or the acquired business; • unanticipated expenses related to acquisitions; • unanticipated difficulties in conforming business practices, policies, procedures, internal controls, and financial records of acquisitions with our own business; • impairment of relationships with employees, customers, vendors, distributors or business partners of either an acquired company or our own business; • inability to accurately forecast the performance of recently acquired businesses, resulting in unforeseen adverse effects on our operating results; • potential liabilities, including liabilities resulting from known or unknown compliance or legal issues, associated with an acquired business; and • adverse accounting impact to our results of operations because of purchase accounting treatment and the business or accounting practices of acquired companies.
Acquisitions entail numerous risks, including: • potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated benefits from integration; • loss of key employees or customers of acquired operations; • difficulty of assimilating geographically dispersed operations and personnel of the acquired companies; • potential disruption of our business or the acquired business; • unanticipated expenses related to acquisitions; • unanticipated difficulties in conforming business practices, policies, procedures, internal controls, and financial records of acquisitions with our own business; • impairment of relationships with employees, customers, vendors, distributors or business partners of either an acquired company or our own business; • inability to accurately forecast the performance of recently acquired businesses, resulting in unforeseen adverse effects on our operating results; • potential liabilities, including liabilities resulting from known or unknown compliance or legal issues, associated with an acquired business; and • adverse accounting impact to our results of operations because of purchase accounting treatment and the business or accounting practices of acquired companies.
The systems we rely upon also remain vulnerable to damage or interruption from a number of other factors, including access to the internet, the failure of our network or software systems, or significant variability in visitor traffic on our product websites, earthquakes, floods, fires, power loss, telecommunication failures, computer viruses, human error, and similar events or disruptions.
The systems we rely upon also remain vulnerable to damage or interruption from a number of other factors, including access to the internet, the failure of our network or software systems, or significant variability in visitor traffic on our product websites, 17 Table of Contents earthquakes, floods, fires, power loss, telecommunication failures, computer viruses, human error, and similar events or disruptions.
Civil unrest, local conflicts, or other 29 Table of Contents political instability may adversely impact regional economies, cause work stoppages, or result in limitations on business transactions with the affected jurisdictions.
Civil unrest, local conflicts, or other 23 Table of Contents political instability may adversely impact regional economies, cause work stoppages, or result in limitations on business transactions with the affected jurisdictions.
If we fail to achieve, are perceived to have failed or been delayed in achieving, or improperly report our progress toward achieving our publicly stated goals and commitments or compliance with U.S. and international ESG laws and regulations, our business reputation and our financial condition, and results of operations may be negatively impacted.
If we fail to achieve, are perceived to have failed or been delayed in achieving, or improperly report our progress toward achieving our publicly stated goals and 24 Table of Contents commitments or compliance with U.S. and international ESG laws and regulations, our business reputation and our financial condition, and results of operations may be negatively impacted.
If a significant number of satellites were to become inoperable, there could be a substantial delay before they are replaced with new satellites. A reduction in the number of operating satellites below the 24-satellite standard established for GPS may impair the utility of the GPS system and the growth of current and additional market opportunities.
If a significant number of satellites were to become inoperable, 19 Table of Contents there could be a substantial delay before they are replaced with new satellites. A reduction in the number of operating satellites below the 24-satellite standard established for GPS may impair the utility of the GPS system and the growth of current and additional market opportunities.
International allocations of radio frequency are made by the International Telecommunications Union (“ITU”), a specialized technical agency of the United Nations. These allocations are further governed by radio regulations that have treaty status and which 24 Table of Contents may be subject to modification every two to three years by the World Radio Communication Conference.
International allocations of radio frequency are made by the International Telecommunications Union (“ITU”), a specialized technical agency of the United Nations. These allocations are further governed by radio regulations that have treaty status and which may be subject to modification every two to three years by the World Radio Communication Conference.
These efforts may result in disruptions to our operations, which could have an adverse effect on our customers, may cost more than we anticipate increasing our expenses, and take longer than planned. These factors or a combination of these factors could have an adverse impact on our business, financial condition, and results of operations.
These efforts may result in disruptions to our operations, which could have an adverse effect on our customers, may cost more than we anticipate increasing our expenses, and take longer than planned. These factors could have an adverse impact on our business, financial condition, and results of operations.
The timely availability and cost-effective production of these products in volume and their acceptance by customers are important to our future success. This has been and may 23 Table of Contents continue to be negatively impacted by the global supply chain shortage.
The timely availability and cost-effective production of these products in volume and their acceptance by customers are important to our future success. This has been and may continue to be negatively impacted by the global supply chain shortage.
Changing market dynamics, global policy developments, and the increasing frequency and impact of extreme weather events on critical infrastructure in the U.S. and elsewhere have the 30 Table of Contents potential to disrupt our business, the business of our third-party suppliers, and the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
Changing market dynamics, global policy developments, and the increasing frequency and impact of extreme weather events on critical infrastructure in the U.S. and elsewhere, each have the potential to disrupt our business, the business of our third-party suppliers, and the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
The CCPA and CPRA, among other things, give California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. Other U.S. states and the U.S.
The CCPA, as amended by the CPRA, among other things give California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. Other U.S. states and the U.S.
Some of our products that use integrated radio communication technology require product type certification and some products require an end user to obtain licensing from the 26 Table of Contents FCC and other national authorities for frequency-band usage.
Some of our products that use integrated radio communication technology require product type certification and some products require an end user to obtain licensing from the FCC and other national authorities for frequency-band usage.
Failure to comply with evolving requirements could result in fines and limitations on sales of our products. Financial and tax risks Our debt could adversely affect our cash flow and prevent us from fulfilling our financial obligations At the end of 2022, our total debt was $1.5 billion, of which $1.3 billion was senior notes.
Failure to comply with evolving requirements could result in fines and limitations on sales of our products. Financial and tax risks Our debt could adversely affect our cash flow and prevent us from fulfilling our financial obligations At the end of 2023, our total debt was $3.1 billion, of which $1.8 billion was senior notes.
Results in any period could be affected by: • changes in market demand; • competitive market conditions; • supply chain disruptions; • the amount of inventory that our dealer networks carry; • the timing of recognizing revenue; • fluctuations in foreign currency exchange rates; • the cost and availability of components; • the mix of our customer base and sales channels; • the mix of products sold; • pricing of products; • changes in the U.S. or foreign policies on taxes, trade, or spending; • regional responses and restrictions related to global pandemics, like the COVID-19 pandemic; and • other risks, including those described below.
Results in any period could be affected by: • changes in market demand; • competitive market conditions; • supply chain disruptions; • the amount of inventory that our dealer networks carry; • the timing of recognizing revenue; • fluctuations in foreign currency exchange rates; • the cost and availability of components; • the mix of our customer base and sales channels; • the mix of products sold; • pricing of products; • execution of objectives and key results; • changes in the U.S. or foreign policies on taxes, trade, or spending; • regional responses and restrictions related to global pandemics; and • other risks, including those described below.
Our outstanding indebtedness, including the substantial indebtedness we plan to incur in connection with the pending acquisition of Transporeon, could have other important consequences, such as: • decreasing our business flexibility, limiting access to capital, and/or increasing our borrowing costs; • requiring us to dedicate a portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures, general corporate purposes, and other cash requirements, particularly if the ratings assigned to our debt securities by rating organizations were revised downward; • increasing our vulnerability to adverse economic and industry conditions; • reducing our ability to make investments and acquisitions, which support the growth of the company, or to repurchase shares of our common stock; and • limiting our flexibility in planning for, or reacting to changes and opportunities in our industry, which may place us at a competitive disadvantage.
Our outstanding indebtedness could have other important consequences, such as: • decreasing our business flexibility, limiting access to capital, and/or increasing our borrowing costs; • requiring us to dedicate a portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures, general corporate purposes, and other cash requirements, particularly if the ratings assigned to our debt securities by rating organizations were revised downward; • increasing our vulnerability to adverse economic and industry conditions; • reducing our ability to make investments and acquisitions, which support the growth of the company, or to repurchase shares of our common stock; and • limiting our flexibility in planning for, or reacting to changes and opportunities in our industry, which may place us at a competitive disadvantage.
If we are unable to attract and retain qualified personnel, our business, financial condition, and results of operations could be harmed Our continued success depends, in part, on our ability to hire and retain qualified personnel and to advance our corporate strategy, and preserve the key aspects of our corporate culture.
If we are unable to attract and retain qualified personnel, our business could be harmed Our continued success depends, in part, on our ability to hire and retain qualified personnel, advance our corporate strategy, and preserve the key aspects of our corporate culture.
Future disruptions could occur as a result of any number of events, including, but not limited to, inflationary cost increases, increases in wages that drive up prices or labor, the imposition of new regulations, quotas or embargoes on components, a scarcity of, or significant increase in the price of, required components for our products, trade restrictions, tariffs or duties, fluctuations in currency exchange rates, transportation failures affecting the supply chain and shipment of materials and finished goods, third party interference in the integrity of the products sourced through the supply chain, the unavailability of raw materials, severe weather conditions, natural disasters, civil unrest, military conflicts, geopolitical developments, war or terrorism, and disruptions in utility and other services.
Future disruptions could occur as a result of any number of events, such as: • inflationary cost increases, • increases in wages that drive up prices of labor, 12 Table of Contents • the imposition of new regulations, quotas or embargoes on components, • a scarcity of, or significant increase in the price of, raw materials or required components for our products, • trade restrictions, tariffs, or duties, • fluctuations in currency exchange rates, • transportation failures affecting the supply chain and shipment of materials and finished goods, • third party interference in the integrity of the products sourced through the supply chain, • severe weather conditions or natural disasters, • civil unrest, military conflicts, geopolitical developments, war or terrorism, and • disruptions in utility and other services.
Our annual and quarterly performance may fluctuate, which could adversely impact our financial condition, results of operations, and stock price Our operating results have fluctuated and can be expected to continue to fluctuate in the future on a quarterly and annual basis as a result of a number of factors, many of which are beyond our control.
Our annual and quarterly performance fluctuates, which can adversely impact our stock price Our operating results have fluctuated and can be expected to continue to fluctuate in the future on a quarterly and annual basis as a result of a number of factors, many of which are beyond our control.
Market acceptance of such offerings is affected by a variety of factors, including but not limited to security, reliability, performance, current license terms, customer preference and industry adoption, social/community engagement, customer concerns with entrusting a third party to store and manage their data, public concerns regarding privacy and the enactment of restrictive laws or regulations.
Market acceptance of such offerings is affected by a variety of factors, such as security, reliability, performance, current license terms, customer preference and industry adoption, social/community engagement, customer concerns with entrusting a third party to store and manage their data, public concerns 13 Table of Contents regarding privacy and the enactment of restrictive laws or regulations.
The rights granted under these patents may not provide competitive advantages to us. Any of our pending or future patent applications may not be issued within the scope of the claims sought by us, if at all.
The patents owned or licensed by us may be invalidated, circumvented, infringed, or challenged. The rights granted under these patents may not provide competitive advantages to us. Any of our pending or future patent applications may not be issued within the scope of the claims sought by us, if at all.
Significant judgment is required to determine and estimate worldwide tax liabilities. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
Customer satisfaction with our services is affected by a variety of factors, including but not limited to security, reliability, performance, concerns about data privacy, current subscription terms, customer preference, and industry adoption. If customers 19 Table of Contents do not renew their contracts for our products, our maintenance and subscription revenue will decline, and our financial results will suffer.
Customer satisfaction with our services is affected by a variety of factors, such as security, reliability, performance, concerns about data privacy, current subscription terms, customer preference, and industry adoption. If customers do not renew their contracts for our products, our maintenance and subscription revenue will decline, and our financial results will suffer.
These arrangements can generally be terminated with a limited notice. Our current reliance on a limited group of contract manufacturers and suppliers involves risks, including the potential inability to obtain products or components to meet customers’ delivery requirements, reduced control over pricing and delivery schedules and discontinuation of or increased prices for certain components.
Our current reliance on a limited group of contract manufacturers and suppliers involves risks, including the potential inability to obtain products or components to meet customers’ delivery requirements, reduced control over pricing and delivery schedules and discontinuation of or increased prices for certain components.
Investing in and integrating new acquisitions or divesting businesses could be costly, place a significant strain on our management systems and resources, or fail to deliver expected outcomes, which could adversely impact our business, financial conditions, and results of operations We typically acquire a number of businesses each year and we intend to continue to acquire other businesses.
Investing in and integrating new acquisitions or divesting businesses could be costly, place a significant strain on our management systems and resources, or fail to deliver expected outcomes We typically acquire a number of businesses each year and we intend to continue to acquire other businesses.
Climate change may have an impact on our business While we seek to mitigate our business risks associated with climate change by establishing robust environmental programs and partnering with organizations who are also focused on mitigating their own climate-related risks, we recognize that there are inherent climate-related risks wherever business is conducted.
Climate change could disrupt or harm our business While we seek to mitigate our business risks associated with climate change by establishing robust environmental programs and partnering with organizations who are also focused on mitigating their own climate-related risks, we recognize that there are inherent climate-related risks wherever business is conducted.
The jurisdictions where we do business may change tax laws, regulations, and interpretations on a prospective or retroactive basis and these potential changes could adversely affect our effective tax rates. As these and other tax laws and related regulations change, our financial results could be materially impacted.
The jurisdictions where we do business may change tax laws, regulations, and interpretations on a prospective or retroactive basis and these potential changes could adversely affect our effective tax rates and impact our financial results.
In addition, the stock market in general and the markets for shares of “high-tech” companies in particular have frequently experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected companies. Any such fluctuations could adversely affect the market price of our common stock.
In addition, the stock market in general and the markets for shares of “high-tech” companies in particular have frequently experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected companies.
Geopolitical risks, resulting from the Russia and Ukraine conflict, could result in increased market volatility and uncertainty, which could negatively impact our business, financial condition, and results of operations The uncertain nature, magnitude, and duration of hostilities stemming from the ongoing military conflict between Russia and Ukraine, including effects of sanctions on the world economy and markets, possible retaliatory cyber-attacks, and supply chain disruptions, have contributed to increased market volatility and uncertainty, and could have an adverse impact on our business and could amplify the existing supply chain challenges we faced.
The uncertain nature, magnitude, and duration of hostilities stemming from the ongoing military conflict in the Middle East and between Russia and Ukraine, including effects of sanctions on the world economy and markets, possible retaliatory cyber-attacks, and supply chain disruptions, have contributed to increased market volatility and uncertainty, and could have an adverse impact on our business and could amplify the existing supply chain challenges we faced.
We believe that a variety of factors could cause the price of our common stock to fluctuate, perhaps substantially, including: • general conditions in the worldwide economy; • quarterly fluctuations in our actual or anticipated operating results and order levels; • announcements and reports of developments related to our business, our major customers and partners, and the industries in which we compete, or the industries in which our customers compete; • security breaches; • acquisition announcements; 28 Table of Contents • new products or product enhancements announced or introduced by us or our competitors; • disputes with respect to developments in patents or other intellectual property rights; • developments in our relationships with our partners, customers, and suppliers; • the imposition of tariffs or other trade barriers; • political, economic, or social uncertainty, such as the ongoing military conflict between Russia and Ukraine; • global pandemics, like the COVID-19 pandemic; and • acts of terrorism.
A variety of factors can cause the price of our common stock to fluctuate, perhaps substantially, including: • quarterly fluctuations in our actual or anticipated operating results and order levels; • announcements and reports of developments related to our business, our major customers and partners, and the industries in which we compete, or the industries in which our customers compete; • security breaches; • acquisition announcements; 22 Table of Contents • new products or product enhancements announced or introduced by us or our competitors; • disputes with respect to developments in patents or other intellectual property rights; • developments in our relationships with our partners, customers, and suppliers; • the imposition of tariffs or other trade barriers; • political, economic, or social uncertainty, such as the conflicts in the Middle East and between Russian and Ukraine; • general conditions in the worldwide economy; • catastrophic or geopolitical events, including global pandemics; and • acts of terrorism.
For example, in 2022, we established science-based targets for Scope 1, 2, and 3 greenhouse gas emissions, certain commitments on sourcing renewable energy, and certain commitments to partner with suppliers that have announced their own science-based targets. Implementation of our goals and targets may require capital improvements.
For example, in 2022, we established science-based targets for Scope 1, 2, and 3 greenhouse gas emissions, certain commitments on sourcing renewable energy, and the goal to engage 70% of our suppliers in setting their own science-based targets. Implementation of our goals and targets may require capital improvements.
Even if successfully negotiated and closed, acquisitions may not yield expected synergies, may not advance our business strategy as expected, may fall short of expected return-on-investment targets, or may not prove successful or effective for our business.
Acquisitions may not yield expected synergies, may not grow, scale, or advance our business strategy as expected, may fall short of expected return-on-investment targets, or may not prove successful or effective for our business.
Risks related to our business We operate globally and are subject to significant risks in many jurisdictions, and our business, financial condition, and results of operations have been and may continue to be impacted by adverse global and regional economic conditions We have operations in many countries, and a significant portion of our revenue is derived from countries outside of the United States.
Risks related to our business We operate globally and are subject to significant risks in many jurisdictions, including risks related to adverse economic, political, regulatory, and other global and regional conditions We have operations in many countries, and a significant portion of our revenue is derived from countries outside of the United States.
These factors or any combination of these factors could adversely affect our business, financial condition, and results of operations.
Any of the foregoing factors could adversely affect our business, financial condition, and results of operations.
From time to time we have divested businesses, and we expect to do so in the future. Any such divestiture may result in: • a disruption of our business; • reduced synergies, including the loss of scale or key employees; • impairment of customer relationships; and • reductions in the breadth of our product offerings.
Any such divestiture may result in: • a disruption of our business; • reduced synergies, including the loss of scale or key employees; • impairment of customer relationships; and • reductions in the breadth of our product offerings.
The time and expense required for sales and marketing organizations of our channel partners to become familiar with our product offerings, including our new product developments, and newer types of offering, such as subscription programs for integrated solutions that include hardware, software maintenance, and other recurring services, may make it more difficult to introduce those products to end users and delay end-user adoption, which could result in lower revenue.
The time and expense required for sales and marketing organizations of our channel partners to become familiar with our product offerings, including our new product developments, and newer types of offering, such as subscription programs for integrated solutions that include hardware, software maintenance, and other recurring services, may make it more difficult to introduce those products to end users and delay end-user adoption, which could result in lower revenue. 15 Table of Contents Disruption of dealer coverage within specific geographic or end-user markets could cause difficulties in marketing, selling, or servicing our products and have an adverse effect on our business, financial condition, and results of operations.
Some countries are considering or have passed legislation that requires local storage and processing of data, including geospatial data, which could impact our ability to deliver cloud-based solutions in an efficient manner.
Some countries are considering or have passed legislation that requires local storage and processing of data, 20 Table of Contents including geospatial data, which could impact our ability to deliver cloud-based solutions in an efficient manner. In 2023, the U.S. and European Union agreed on a new EU-U.S.
Changes in our software and subscription businesses may adversely impact our business, financial condition and results of operations An increasing portion of our revenue is generated through software maintenance and subscription revenue, which includes Software as a Service (“SaaS”) and new subscription services for integrated solutions.
Changes in our software and subscription businesses may adversely affect our revenue An increasing portion of our revenue is generated through software maintenance and subscription revenue, which includes “Software as a Service” (“ SaaS”) and new subscription services for integrated solutions.
Actual or perceived security vulnerabilities in our products could harm our reputation and lead some customers to return products, to reduce or delay future purchases, or use competitive products. 22 Table of Contents Our internal and customer-facing systems, and systems of third parties we rely upon, may be subject to cybersecurity breaches, disruptions, or delays A cybersecurity incident in our own systems or the systems of our third-party providers may compromise the confidentiality, integrity, or availability of our own internal data, the availability of our products and websites designed to support our customers, or our customer data.
Our internal and customer-facing systems, and systems of third parties we rely upon, may be subject to cybersecurity breaches, disruptions, or delays A cybersecurity incident in our own systems or the systems of our third-party providers may compromise the confidentiality, integrity, or availability of our own internal data, the availability of our products and websites designed to support our customers, or our customer data.
A default under our debt instruments may also significantly affect our ability to obtain additional or alternative financing. Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness will depend on our operating and financial performance, which in turn, is subject to prevailing economic conditions and to financial, business, and other factors beyond our control.
Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness will depend on our operating and financial performance, which in turn, is subject to prevailing economic conditions and to financial, business, and 21 Table of Contents other factors beyond our control.
In the first half of 2022, we have 18 Table of Contents experienced disruption in our supply chain as a result of the effects of COVID-19 and the geopolitical conditions such as the ongoing military conflict between Russia and Ukraine and related events and their impact on our suppliers and on international trade in general, leading to shortfalls in available components we need to make products as well as increased costs to obtain components, to make products, and to transport components and products.
The geopolitical conditions such as the ongoing military conflict in the Middle East and between Russia and Ukraine and related events and their impact on our suppliers and on international trade in general, have led to shortfalls in available components we need to make products as well as increased costs to obtain components, to make products, and to transport components and products.
We have experienced disruption in our supply chain including the effects of COVID-19 and related events, and are subject to ongoing supply chain risks, which could adversely affect our revenue and results of operations We are dependent upon a limited number of contract manufacturers for the manufacture, testing, and assembly of certain products and specific suppliers for a number of our critical components.
We have experienced disruption in our supply chain and related events, and are subject to ongoing supply chain risks We are dependent upon a limited number of contract manufacturers for the manufacture, testing, and assembly of certain products and specific suppliers for a number of our critical components. These arrangements can generally be terminated with a limited notice.
In addition, because of our sales structure, cash, and equity incentive compensation plans, we may be at increased risk of losing employees at certain times. For example, the retention value of our compensation plans decreases after the payment of periodic bonuses or the vesting of equity awards.
In addition, because of our sales structure, cash, and equity incentive compensation plans, we may be at increased risk of losing employees at certain times.
In such event, we could be required to seek licenses from third parties in order to continue offering our products, to disclose and offer royalty-free licenses in connection with our own source code, to re-engineer our products, or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, financial condition, and results of operations.
In such event, we could be required to seek licenses from third parties in order to continue offering our products, to disclose and offer royalty-free licenses in connection with our own source code, to re-engineer our products, or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, financial condition, and results of operations. 18 Table of Contents We are dependent on proprietary technology, which could result in litigation that could divert significant valuable resources Our future success and competitive position are dependent upon our proprietary technology, and we rely on patent, trade secret, trademark, and copyright laws to protect our intellectual property.
Aligned with this strategy, in February 2023, we gave CNH a 12-month notification that we will no longer be supplying aftermarket precision agriculture products to CNH for resale through the CNH dealer network. We will continue to supply hardware to CNH for their factory installations.
In February 2023, we gave CNH a 12-month notification that we would no longer be supplying aftermarket precision agriculture products to CNH for resale through the CNH dealer network. In December 2023, we notified CNH that our OEM agreement to supply CNH with products for factory installation would terminate in 2024.
In addition, the California Consumer Privacy Act (the “CCPA”), which took effect in January 2020, was amended by the California Privacy Rights Act (“the “CPRA”) and took full effect in January 2023, with enforcement to begin on July 1, 2023.
In addition, the California Privacy Rights Act (“the “CPRA”) amendments to the California Consumer Privacy Act (the “CCPA”) took full effect in January 2023, with enforcement to begin in March 2024.
Congress have introduced, and some states like Virginia, Colorado, Connecticut and Utah have enacted, data privacy legislation, which may impact our business.
Congress have introduced, and a number of states have enacted, data privacy legislation, which may impact our business.
Any of our primary locations may be vulnerable to the adverse effects of climate change. The 2021 wildfires in Colorado occurred in close proximity to our headquarters in Westminster, Colorado.
Any of our primary locations may be vulnerable to the adverse effects of climate change.
Our products, which commonly use GNSS for basic location information, may be subject to competition from alternative location technologies such as simultaneous location and mapping technology. In our software and subscription services businesses, we face competition from a group of large, well-established companies, particularly in the areas of design, enterprise resource planning (“ERP”), and collaboration and project management solutions.
In our software and subscription services businesses, we face competition from a group of large, well-established companies, particularly in the areas of design software, enterprise resource planning (“ERP”) solutions, and collaboration and project management offerings.
If taxing authorities of any jurisdiction were to successfully challenge a material tax position, we could become subject to higher taxes and our earnings could be adversely affected. We may be affected by fluctuations in currency exchange rates Over half of our revenue is derived from sales to customers outside of the U.S.
If taxing authorities of any jurisdiction were to successfully challenge a material tax position, we could become subject to higher taxes and our earnings could be adversely affected.
Our integrated hardware and software products may be subject to increasing competition from mass market devices such as smartphones and tablets used in conjunction with relatively inexpensive applications, which have not been heavily used for commercial applications in the past. 21 Table of Contents These competitive developments may require us to rapidly adapt to technological and customer preference changes that we have not previously been exposed to, including those related to cloud computing, mobile devices, and new computing platforms.
Our integrated hardware and software products may be subject to increasing competition from mass market devices such as smartphones and tablets used in conjunction with relatively inexpensive applications, which have not been heavily used for commercial applications in the past.
Lastly, due to supply chain issues, we may accumulate excess inventories if we inaccurately forecast demand for our products.
Lastly, due to supply chain issues, we have in the past and may in the future accumulate excess inventories if we inaccurately forecast demand for our products, or if dealers are unable to work through their excess inventory.
We could also experience higher than expected transaction costs and business sale losses, which may adversely affect our business, financial condition, and results of operations .
We could also experience higher than expected transaction costs and business sale losses, which may adversely affect our business, financial condition, and results of operations . Additionally, we typically agree to provide certain transitional services and support when we divest a business, and we may face significant, unanticipated costs in providing such services.
Risks related to our technology and products Our products are highly technical and may contain undetected errors, product defects, security vulnerabilities, or software errors Our products, including our software products, are highly technical and complex and, when deployed, may contain errors, defects, or security vulnerabilities.
For example, the retention value of our compensation plans decreases after the payment of periodic bonuses or the vesting of equity awards. 16 Table of Contents Risks related to our technology and products Our products are highly technical and may contain undetected errors, product defects, or security vulnerabilities Our products, including our software products, are highly technical and complex and, when deployed, may contain errors, defects, or security vulnerabilities.
Risks related to ownership of our stock The volatility of our stock price could adversely affect an investment in our common stock The market price of our common stock has been, and may continue to be, highly volatile. During 2022, our stock price ranged from $47.52 to $88.06.
Risks related to ownership of our stock Our stock price is volatile The market price of our common stock has been, and may continue to be, highly volatile. During 2023, our stock price ranged from $39.57 to $62.01.
We face substantial competition in our markets, which could decrease our revenue and growth rates or impair our business, financial condition, and results of operations Our markets are highly competitive, and we expect that both direct and indirect competition will increase in the future.
Since these strategic relationships contribute to significant ongoing business in certain o f our important markets, changes in these relationships could adversely affect our sales. We face substantial competition in our markets, which could decrease our revenue and growth rates Our markets are highly competitive, and we expect that both direct and indirect competition will increase in the future.
Dealers who carry products that compete with our products may focus their inventory purchases and sales efforts on goods provided by competitors due to industry demand or profitability. Such sourcing decisions can adversely impact our business, financial condition, an d results of operations.
We utilize dealer networks, including dealers associated with Caterpillar to market, sell, and service many of our products. Dealers who carry products that compete with our products may focus their inventory purchases and sales efforts on goods provided by competitors due to industry demand or profitability.
Companies that we acquire may operate with different cost and margin structures, which could further cause fluctuations in our operating results and adversely affect our business, financial condition, and results of operations. In December 2022, we signed a definitive agreement to acquire Transporeon, a leading European cloud-based transportation management software platform.
Companies that we acquire may operate with different cost and margin structures, which could further cause fluctuations in our operating results and adversely affect our business, financial condition, and results of operations. From time to time we have divested businesses, and we expect to do so in the future.
Such competition has in the past resulted, and in the future may result, in price reductions, reduced margins, or loss of market share, any of which could decrease our revenue and growth rates or impair our operating results and financial condition.
These competitive developments may require us to rapidly adapt to technological and customer preference changes, including those related to cloud computing, mobile devices, and new computing platforms. Such competition has in the past resulted, and in the future may result, in price reductions, reduced margins, or loss of market share, any of which could decrease our revenue and growth rates.
The U.S. and European Union continue to pursue agreement on the governing basis for data transfers from the EU to the U.S. but have not yet adopted the EU-U.S. Data Privacy Framework. International transfers of personal data present ongoing compliance challenges and complicate our business transactions and operations.
Data Privacy Framework to provide a mechanism for data transfers from the EU to the U.S. as a replacement for the invalided Privacy Shield program, but legal challenges to the Framework are currently pending. International transfers of personal data present ongoing compliance challenges and complicate our business transactions and operations.
If we are unable to develop timely and competitive commercial products using these systems, or obtain timely and equal access to service signals, this could result in lost revenue. 25 Table of Contents Regulatory risks We face risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations These laws and regulations include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, export control laws, and laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers, including the U.S.
Regulatory risks Compliance with international and U.S. laws and regulations that apply to our international operations can be complex, and exposes us to various risks related to potential non-compliance These laws and regulations include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, export control laws, and laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers, including the U.S.
We are potentially exposed to adverse as well as beneficial movements in currency exchange rates. Historically, the majority of our revenue contracts are denominated in U.S. Dollars, with the most significant exception being Europe, where we invoice primarily in Euro.
We may be affected by fluctuations in currency exchange rates Over half of our revenue is derived from sales to customers outside of the U.S., and we are potentially exposed to adverse as well as beneficial movements in currency exchange rates. Historically, the majority of our revenue contracts are denominated in U.S.
Significant increases in our level of indebtedness could impact the ratings assigned to our debt securities by rating organizations, which in turn would increase the interest rates and fees that we pay in connection with our indebtedness. 27 Table of Contents Changes in our effective tax rate may reduce our net income in future periods We are subject to income and other taxes in the United States and numerous foreign jurisdictions.
If interest rates increase, our interest expense will also increase as would the costs of refinancing existing indebtedness or obtaining new debt. Significant increases in our level of indebtedness could impact the ratings assigned to our debt securities by rating organizations, which in turn would increase the interest rates and fees that we pay in connection with our indebtedness.
GNSS signals are also subject to FCC waiver requirements and to restrictions based upon international trade or geopolitical considerations.
GNSS signals are also subject to FCC waiver requirements and to restrictions based upon international trade or geopolitical considerations. If we are unable to develop timely and competitive commercial products using these systems, or obtain timely and equal access to service signals, this could result in lost revenue.
Additionally, a portion of our expenses, primarily the cost to manufacture, cost of personnel to deliver technical support on our products and professional services, sales and sales support, and research and development, are denominated in foreign currencies, primarily the Euro.
Dollars, with the most significant exception being Europe, where we invoice primarily in Euro. Additionally, a portion of our expenses, such as the cost to manufacture and costs of personnel, are denominated in foreign currencies, primarily the Euro.
Evolution of our respective business strategies and diversification of product portfolios may lead to increased competition with our other strategic allies, placing additional pressure on these relationships. Since these strategic relationships contribute to significant ongoing business in certain o f our important markets, changes in these relationships could adversely affect our sales.
O ur revenue from the independent dealer network, whether owned by us or the JV, might not offset the reduction in revenue resulting from our discontinuance of sales of aftermarket products to CNH. Evolution of our respective business strategies and diversification of product portfolios may lead to increased competition with our other strategic allies, placing additional pressure on these relationships.
This could have an adverse effect on our business, financial condition, and results of operations. We also incorporate open-source software into our products.
We also incorporate open-source software into our products.
Removed
There is an inherent risk that political, diplomatic, or military events could result in trade disruptions, including tariffs, trade embargoes, export restrictions, and other trade barriers.
Added
For significant divestitures, these transitional services can take up considerable corporate resources and attention, which may then adversely affect our other businesses, operations, and results.
Removed
Given the geopolitical climate, there is uncertainty about the trade policies, treaties, government regulations, and tariffs that could apply to trade.
Added
We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, it could impact our ability to produce timely and accurate financial statements or comply with applicable laws and regulations. 14 Table of Contents As more fully disclosed in Part II, Item 9A, “Controls and Procedures,” we identified a material weakness in internal control over financial reporting for the fiscal year ended December 29, 2023.
Removed
Risks associated with engaging in international business include: • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • difficulties and costs of staffing and managing international operations; • differing local customer product preferences and requirements than our U.S. markets; • difficulties protecting or procuring intellectual property rights; and • compliance with changes in local laws, including those relating to privacy, labor and local content.
Added
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Westminster, Colorado where we own approximately 250 thousand square feet. We also currently own approximately 500 thousand square feet in Dayton, Ohio. These facilities are used by all reporting segments. For financial information regarding leases, refer to Note 8 “Leases” of this report.
Biggest changeItem 2. Properties Our corporate headquarters is located in Westminster, Colorado where we own approximately 250 thousand square feet. We also currently own approximately 500 thousand square feet in Dayton, Ohio. These facilities are used by all reporting segments. For financial information regarding leases, refer to Note 9 “Leases” of this report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere were no purchases of equity securities in the fourth quarter of 2022. During 2022, we repurchased approximately 6.0 million shares of common stock in open market purchases under the 2021 Stock Repurchase Programs, at an average price of $65.90 per share, for a total of $394.7 million.
Biggest changeThe following table provides information relating to our purchase of equity securities for the fourth quarter of 2023; these purchases were made under the 2021 Stock Repurchase Program: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program September 30, 2023 – November 3, 2023 — $ — — $ 215,255,003 November 4, 2023 – December 1, 2023 2,352,860 $ 42.50 2,352,860 $ 115,255,017 December 2, 2023 – December 29, 2023 — $ — — $ 115,255,017 Total 2,352,860 2,352,860 During 2023, we repurchased approximate ly 2.4 million shares of common stock in open market purchases under our 2021 Stock Repurchase Programs, at an average price of $42.50 per share, for a total of $100.0 million.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Company Stock Performance Our common stock trades on NASDAQ under the symbol “TRMB.” The following graph compares the cumulative five-year total return provided stockholders on our common stock relative to the cumulative total returns of the S&P 500 Index, the S&P 500 Information Technology Index, and the S&P 500 Industrials Index.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Company Stock Performance Our common stock trades on NASDAQ under the symbol “TRMB.” The following graph compares the cumulative five-year total return provided to stockholders on our common stock relative to the cumulative total returns of the S&P 500 Index, the S&P 500 Information Technology Index, and the S&P 500 Industrials Index.
The timing and actual number of any shares repurchased will depend on a variety of factors, including market conditions, our share price, other available uses of capital, applicable legal requirements, and other factors. The 2021 Stock Repurchase Program may be suspended, modified, or discontinued at any time at without prior notice.
The timing and actual number of any stock repurchased will depend on a variety of factors including market conditions, our stock price, other available uses of capital, applicable legal requirements, and other factors. The 2024 Stock Repurchase Program may be suspended, modified, or discontinued at any time without prior notice.
At this time, we intend to retain future earnings, if any, to fund the development and growth of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. 32 Table of Contents
At this time, we intend to retain future earnings, if any, to fund the development and growth of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2017, and its relative performance is tracked through December 31, 2022.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2018, and its relative performance is tracked through December 31, 2023.
Stock Repurchase Program In August 2021, our Board of Directors approved a new share repurchase program (“2021 Stock Repurchase Program”) authorizing up to $750.0 million in repurchases of our common stock.
Stock Repurchase Program In August 2021, our Board of Directors approved a stock repurchase program (“2021 Stock Repurchase Program”) authorizing up to $750.0 million in repurchases of our common stock. On January 28, 2024, our Board of Directors approved a new stock repurchase program (“2024 Stock Repurchase Program”) authorizing up to $800.0 million in repurchases of our common stock.
Under the 2021 Stock Repurchase Program, we may repurchase shares from time to time, subject to business and market conditions and other investment opportunities, through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means.
According to the 2024 Stock Repurchase Program, we may repurchase stocks from time to time through accelerated stock repurchase programs, open market transactions, privately negotiated transactions, block purchases, tender offers or other means.
Under the 2021 Stock Repurchase Program, the share repurchase authorization does not have an expiration date and supersedes and replaces the $600.0 million share repurchase authorization approved by our Board of Directors in November 2017 (“2017 Stock Repurchase Program”), of which $50.7 million was remaining and has been cancelled.
The 2024 Stock Repurchase Program replaced the 2021 Stock Repurchase Program, which has been cancelled. Under the 2024 Stock Repurchase Program, the stock repurchase authorization does not have an expiration date.
Removed
At the end of 2022, the 2021 Stock Repurchase Program had remaining authorized funds of $215.3 million. Our pending acquisition of Transporeon, for a cash purchase price of €1.88 billion or $2.0 billion, will be funded through a combination of cash on hand and debt and is expected to occur in the first half of 2023.
Added
At the end of 2023, the 2021 27 Table of Contents Stock Repurchase Program had remaining authorized funds of $115.3 million, which amount was subsequently replaced with $800.0 million under the 2024 Stock Repurchase Program. As of February 20, 2024, there were approximately 499 registered holders of record of our common stock.
Removed
Because of the additional outstanding indebtedness we have and expect to incur in connection with the pending acquisition, we have temporarily discontinued share repurchases. As of February 14, 2023, there were approximately 506 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe non-GAAP financial measures, definitions, and explanations to the adjustments to comparable GAAP measures are included below: Years 2022 2021 2020 (In millions, except per share data) Dollar Amount % of Revenue Dollar Amount % of Revenue Dollar Amount % of Revenue REVENUE: GAAP revenue: $ 3,676.3 $ 3,659.1 $ 3,147.7 Purchase accounting adjustments (A) — 0.3 4.3 Non-GAAP revenue: $ 3,676.3 $ 3,659.4 $ 3,152.0 GROSS MARGIN: GAAP gross margin: $ 2,105.6 57.3 % $ 2,034.7 55.6 % $ 1,754.9 55.8 % Purchase accounting adjustments (A) 85.0 88.0 96.6 Acquisition / divestiture items (B) 0.2 — 1.7 Stock-based compensation / deferred compensation (C) 12.1 9.8 7.2 Restructuring and other costs (D) 1.7 0.2 1.2 Non-GAAP gross margin: $ 2,204.6 60.0 % $ 2,132.7 58.3 % $ 1,861.6 59.1 % OPERATING EXPENSES: GAAP operating expenses: $ 1,594.7 43.4 % $ 1,473.7 40.3 % $ 1,335.1 42.4 % Purchase accounting adjustments (A) (46.6) (46.5) (60.0) Acquisition / divestiture items (B) (32.6) (21.8) (19.7) Stock-based compensation / deferred compensation (C) (99.9) (118.8) (83.2) Restructuring and other costs (D) (52.5) (10.9) (30.2) Non-GAAP operating expenses: $ 1,363.1 37.1 % $ 1,275.7 34.9 % $ 1,142.0 36.2 % OPERATING INCOME: GAAP operating income: $ 510.9 13.9 % $ 561.0 15.3 % $ 419.8 13.3 % Purchase accounting adjustments (A) 131.6 134.5 156.6 Acquisition / divestiture items (B) 32.8 21.8 21.4 Stock-based compensation / deferred compensation (C) 112.0 128.6 90.4 Restructuring and other costs (D) 54.2 11.1 31.4 Non-GAAP operating income: $ 841.5 22.9 % $ 857.0 23.4 % $ 719.6 22.8 % 45 Table of Contents NON-OPERATING INCOME (EXPENSE), NET: GAAP non-operating income (expense), net: $ 58.2 $ 13.6 $ (24.8) Acquisition / divestiture items (B) (107.5) (42.1) (12.2) Deferred compensation (C) 8.5 (6.1) (7.5) Restructuring and other costs (D) 6.0 — — Non-GAAP non-operating expense, net: $ (34.8) $ (34.6) $ (44.5) GAAP and Non-GAAP Tax Rate % (H) GAAP and Non-GAAP Tax Rate % (H) GAAP and Non-GAAP Tax Rate % (H) INCOME TAX PROVISION (BENEFIT): GAAP income tax provision: $ 119.4 21.0 % $ 81.8 14.2 % $ 4.4 1.1 % Non-GAAP items tax effected (E) 49.9 41.4 48.5 Difference in GAAP and Non-GAAP tax rate (F) (22.9) 7.5 (4.9) IP restructuring and tax law change impacts (G) — 14.4 64.0 Non-GAAP income tax provision: $ 146.4 18.2 % $ 145.1 17.6 % $ 112.0 16.6 % NET INCOME: GAAP net income attributable to Trimble Inc.: $ 449.7 $ 492.7 $ 389.9 Purchase accounting adjustments (A) 131.6 134.5 156.6 Acquisition / divestiture items (B) (74.7) (20.3) 9.2 Stock-based compensation / deferred compensation (C) 120.5 122.5 82.9 Restructuring and other costs (D) 60.2 11.1 31.4 Non-GAAP tax adjustments (E) - (G) (27.0) (63.3) (107.6) Non-GAAP net income attributable to Trimble Inc.: $ 660.3 $ 677.2 $ 562.4 DILUTED NET INCOME PER SHARE: GAAP diluted net income per share attributable to Trimble Inc.: $ 1.80 $ 1.94 $ 1.55 Purchase accounting adjustments (A) 0.53 0.53 0.62 Acquisition / divestiture items (B) (0.30) (0.08) 0.04 Stock-based compensation / deferred compensation (C) 0.48 0.48 0.33 Restructuring and other costs (D) 0.24 0.04 0.12 Non-GAAP tax adjustments (E) - (G) (0.11) (0.25) (0.43) Non-GAAP diluted net income per share attributable to Trimble Inc.: $ 2.64 $ 2.66 $ 2.23 ADJUSTED EBITDA: OPERATING INCOME: GAAP net income attributable to Trimble Inc.: $ 449.7 $ 492.7 $ 389.9 Non-operating income (expense), net, income tax provision, and net gain attributable to noncontrolling interests 61.2 68.3 29.9 GAAP operating income: 510.9 561.0 419.8 Purchase accounting adjustments (A) 131.6 134.5 156.6 Acquisition / divestiture items (B) 32.8 21.8 21.4 Stock-based compensation / deferred compensation (C) 112.0 128.6 90.4 Restructuring and other costs (D) 54.2 11.1 31.4 Non-GAAP operating income: $ 841.5 $ 857.0 $ 719.6 Depreciation expense and cloud computing amortization 44.7 42.2 39.7 Income from equity method investments, net 31.1 37.7 39.4 Adjusted EBITDA: $ 917.3 25.0 % $ 936.9 25.6 % $ 798.7 25.3 % 46 Table of Contents Non-GAAP Definitions Non-GAAP revenue We define Non-GAAP revenue as GAAP revenue, excluding the effects of purchase accounting adjustments for acquisitions occurring prior to 2021.
Biggest changeThe non-GAAP financial measures, definitions, and explanations to the adjustments to comparable GAAP measures are included below: Years 2023 2022 Dollar % of Dollar % of (In millions, except per share amounts) Amount Revenue Amount Revenue REVENUE: GAAP revenue: $ 3,798.7 $ 3,676.3 GROSS MARGIN: GAAP gross margin: $ 2,332.8 61.4 % $ 2,105.6 57.3 % Amortization of purchased intangible assets (A) 108.7 85.0 Acquisition / divestiture items (B) 0.5 0.2 Stock-based compensation / deferred compensation (C) 15.0 12.1 Restructuring and other costs (D) (0.1) 1.7 Non-GAAP gross margin: $ 2,456.9 64.7 % $ 2,204.6 60.0 % OPERATING EXPENSES: GAAP operating expenses: $ 1,884.0 49.6 % $ 1,594.7 43.4 % Amortization of purchased intangible assets (A) (103.6) (46.6) Acquisition / divestiture items (B) (71.9) (32.6) Stock-based compensation / deferred compensation (C) (136.1) (99.9) Restructuring and other costs (D) (50.2) (52.5) Non-GAAP operating expenses: $ 1,522.2 40.1 % $ 1,363.1 37.1 % OPERATING INCOME: GAAP operating income: $ 448.8 11.8 % $ 510.9 13.9 % Amortization of purchased intangible assets (A) 212.3 131.6 Acquisition / divestiture items (B) 72.4 32.8 Stock-based compensation / deferred compensation (C) 151.1 112.0 Restructuring and other costs (D) 50.1 54.2 Non-GAAP operating income: $ 934.7 24.6 % $ 841.5 22.9 % NON-OPERATING INCOME (EXPENSE), NET: GAAP non-operating income (expense), net: $ (91.8) $ 58.2 Acquisition / divestiture items (B) (36.5) (107.5) Deferred compensation (C) (5.8) 8.5 Restructuring and other costs (D) 1.3 6.0 Non-GAAP non-operating expense, net: $ (132.8) $ (34.8) GAAP and Non-GAAP Tax Rate % GAAP and Non-GAAP Tax Rate % (G) (G) INCOME TAX PROVISION: GAAP income tax provision: $ 45.7 12.8 % $ 119.4 21.0 % Non-GAAP items tax effected (E) 56.9 49.9 Difference in GAAP and Non-GAAP tax rate (F) 35.6 (22.9) Non-GAAP income tax provision: $ 138.2 17.2 % $ 146.4 18.2 % NET INCOME: GAAP net income: $ 311.3 $ 449.7 Amortization of purchased intangible assets (A) 212.3 131.6 Acquisition / divestiture items (B) 35.9 (74.7) Stock-based compensation / deferred compensation (C) 145.3 120.5 Restructuring and other costs (D) 51.4 60.2 Non-GAAP tax adjustments (E) - (F) (92.5) (27.0) Non-GAAP net income: $ 663.7 $ 660.3 39 Table of Contents Years 2023 2022 DILUTED NET INCOME PER SHARE: GAAP diluted net income per share: $ 1.25 $ 1.80 Amortization of purchased intangible assets (A) 0.85 0.53 Acquisition / divestiture items (B) 0.14 (0.30) Stock-based compensation / deferred compensation (C) 0.58 0.48 Restructuring and other costs (D) 0.21 0.24 Non-GAAP tax adjustments (E) - (F) (0.37) (0.11) Non-GAAP diluted net income per share: $ 2.66 $ 2.64 ADJUSTED EBITDA: GAAP operating income: $ 448.8 11.8 % $ 510.9 13.9 % Amortization of purchased intangible assets (A) 212.3 131.6 Acquisition / divestiture items (B) 72.4 32.8 Stock-based compensation / deferred compensation (C) 151.1 112.0 Restructuring and other costs (D) 50.1 54.2 Non-GAAP operating income: 934.7 24.6 % 841.5 22.9 % Depreciation expense and cloud computing amortization 46.9 44.7 Income from equity method investments, net 28.1 31.1 Adjusted EBITDA $ 1,009.7 26.6 % $ 917.3 25.0 % Non-GAAP Definitions Non-GAAP gross margin We define Non-GAAP gross margin as GAAP gross margin, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs.
We believe non-GAAP financial measures provide useful information to investors and others in understanding our “core operating performance”, which excludes the (i) effect of non-cash items and certain variable charges not expected to recur; and (ii) transactions that are not meaningful in comparison to our past operating performance or not reflective of ongoing financial results.
We believe non-GAAP financial measures provide useful information to investors and others in understanding our “core operating performance”, which excludes (i) the effect of non-cash items and certain variable charges not expected to recur; and (ii) transactions that are not meaningful in comparison to our past operating performance or not reflective of ongoing financial results.
When determining the fair values, we make significant estimates and assumptions, especially concerning intangible assets. Critical estimates when valuing intangible assets include expected future cash flows based on consideration of future growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates.
When determining the fair values, we make significant estimates and assumptions, especially concerning intangible assets. Critical estimates when valuing intangible assets include expected future cash flows based on consideration of revenue and revenue growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under “Risks Factors.” This section of this report generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under “Risks Factors.” This section of this report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations; however, determining whether products or services are considered distinct performance obligations that should be accounted for separately versus together may sometimes require significant judgment.
We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations; however, 30 Table of Contents determining whether products or services are considered distinct performance obligations that should be accounted for separately versus together may sometimes require significant judgment.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this report can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K, for the year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this report can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K, for the year ended December 30, 2022.
We provide a reconciliation tables showing the change in revenue growth to organic revenue growth in the “ Results of Operations ” section found earlier in this Item 7. In addition to providing non-GAAP financial measures, we disclose Annualized Recurring Revenue (“ARR”) to give the investors supplementary indicators of the value of our current recurring revenue contracts.
We provide reconciliation tables showing the change in revenue growth to organic revenue growth in the “ Results of Operations ” section found earlier in this Item 7. 38 Table of Contents In addition to providing non-GAAP financial measures, we disclose Annualized Recurring Revenue (“ARR”) to give the investors supplementary indicators of the value of our current recurring revenue contracts.
These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies. Our accounting policies are more fully described in Note 1 “ Description of Business and Accounting Policies ” of this report.
These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies. Our accounting policies are more fully described in Note 1 “Description of Business and Accounting Policies” of this report.
These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes. 48 Table of Contents
These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes. 41 Table of Contents
Transporeon, a Germany-based company, is a leading cloud-based transportation management software platform that connects key stakeholders across the industry lifecycle to positively impact the optimization of global supply chains, in alignment with our Connect and Scale strategy.
Transporeon is a Germany-based company and leading cloud-based transportation management software platform that connects key stakeholders across the industry lifecycle to positively impact the optimization of global supply chains, which aligns with our Connect and Scale strategy.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, costs of sales, operating expenses, and related disclosures. We consider the accounting polices described below to be our critical accounting policies.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, costs of sales, operating expenses, and related disclosures. We consider the accounting polices described below to be our critical accounting policies.
In addition, we have unrecognized tax benefits of $75.5 million included in Other non-current liabilities, including interest and penalties. At this time, we cannot make a reasonably reliable estimate of the period of cash settlement with tax authorities regarding this liability. Refer to Note 12 “Income Taxes” of this report for additional information regarding our taxes.
In addition, we have unrecognized tax benefits of $88.3 million included in Other non-current liabilities, including interest and penalties. At this time, we cannot make a reasonably reliable estimate of the period of cash settlement with tax authorities regarding this liability. Refer to Note 1 3 “Income Taxes” of this report for additional information regarding our taxes.
Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” , we refer to organic revenue growth, which is a non-GAAP measure.
Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to organic revenue growth, which is a non-GAAP measure.
Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing 47 Table of Contents potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, depreciation, and amortization of purchased intangibles and cloud computing costs.
Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, depreciation, and amortization of purchased intangibles and cloud computing costs. Explanations of Non-GAAP adjustments (A).
Our growth strategy is centered on multiple elements: • Executing on our Connect and Scale strategy; • Increasing focus on software and services; • Focus on attractive markets with significant growth and profitability potential; • Domain knowledge and technological innovation that benefit a diverse customer base; • Geographic expansion with localization strategy; • Optimized go-to-market strategies to best access our markets; • Strategic acquisitions and venture fund investments; and • Sustainability.
Our growth strategy is centered on multiple elements: • Executing on our Connect and Scale strategy; • Increasing focus on software and services; • Focus on attractive markets with significant growth and profitability potential; • Domain knowledge and technological innovation that benefits a diverse customer base; • Geographic expansion with a localization strategy; • Optimized go-to-market strategies to best access our markets; • Strategic and targeted acquisitions, joint ventures, and investments; and • Sustainability.
(F) Difference in GAAP and Non-GAAP tax rate . This amount represents the difference between the GAAP and non-GAAP tax rates applied to the non-GAAP operating income plus the non-GAAP non-operating expense, net.
This amount represents the difference between the GAAP and non-GAAP tax rates applied to the non-GAAP operating income plus the non-GAAP non-operating expense, net.
We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes. Determining whether an uncertain tax position is effectively settled requires judgment.
Judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes. Determining whether an uncertain tax position is effectively settled requires judgment.
ARR is calculated by taking our non-GAAP recurring revenue for the current quarter and adding the portion of the contract value of all of our term licenses attributable to the current quarter, and dividing that sum by the number of days in the quarter and then multiplying that quotient by 365.
ARR is calculated by taking our subscription, maintenance and support, and recurring transaction revenue for the current quarter and adding the portion of the contract value of all our term licenses attributable to the current quarter, then dividing that sum by the number of days in the quarter and then multiplying that quotient by 365.
(B) Acquisition / divestiture items . Non-GAAP gross margin and operating expenses exclude acquisition costs consisting of external and incremental costs resulting directly from merger and acquisition and strategic investment activities such as legal, due diligence, integration, and other closing costs, including the acceleration of acquisition stock options and adjustments to the fair value of earn-out liabilities.
Non-GAAP gross margin and operating expenses exclude costs consisting of external and incremental costs resulting directly from acquisitions, divestitures, and strategic investment activities such as legal, due diligence, integration, and other closing costs, including the acceleration of acquisition stock awards and adjustments to the fair value of earn-out liabilities.
Our material cash requirements include the following contractual and other obligations and cash needs: Leases We have operating leases primarily for certain of our major facilities including corporate offices, research and development facilities, and manufacturing facilities. Operating leases represent undiscounted lease payments and include short-term leases.
Our material cash requirements include the following contractual and other obligations and cash needs: Leases We have operating leases primarily for certain of our major facilities including corporate offices, research and development facilities, and manufacturing facilities.
Our Chief Executive Officer and Chief Operating Decision Maker views and evaluates operations based on the results of our reportable operating segments under our management reporting system. These results are not necessarily in conformance with U.S. GAAP. For additional discussion of our segments, refer to Note 6 “Reporting Segment and Geographic Information” of this report.
Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”) views and evaluates operations based on the results of our reportable operating segments under our management reporting system. These results are not necessarily in conformance with U.S. GAAP. For additional discussion of our segments, refer to Note 7 “Segment Information” of this report.
Non-GAAP gross margin We define Non-GAAP gross margin as GAAP gross margin, excluding the effects of purchase accounting adjustments, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions, and manufacturing costs influence our business.
We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions, and manufacturing costs influence our business. Non-GAAP operating expenses We define Non-GAAP operating expenses as GAAP operating expenses, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs.
Basis of Presentation We use a 52–53 week fiscal year ending on the Friday nearest to December 31, which for 2022 was December 30, 2022. Both 2022 and 2021 were 52–week years.
Basis of Presentation We use a 52–53 week fiscal year ending on the Friday nearest to December 31, which for 2023 was December 29, 2023. Both 2023 and 2022 were 52–week years. 2024 will be a 53-week year.
Non-GAAP operating expenses We define Non-GAAP operating expenses as GAAP operating expenses, excluding the effects of purchase accounting adjustments, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue.
We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating income We define Non-GAAP operating income as GAAP operating income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs.
Stock Repurchase Program We have a 2021 Stock Repurchase Program authorized by our Board of Directors, that allows us to repurchase shares from time to time, subject to business and market conditions and other investment opportunities, through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means for up to $750 million.
Stock Repurchase Program At the end of 2023, we had a 2021 Stock Repurchase Program authorized by our Board of Directors that allowed us to repurchase stocks from time to time, subject to business and market conditions and other investment opportunities, through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means for up to $750.0 million.
Other Purchase Obligations and Commitments Purchase obligations and commitments primarily relate to investments in our platform associated with our Connect and Scale strategy and non-cancellable inventory commitments. At the end of 2022, we had operating purchase obligations and commitments of $858.8 million, with $326.2 million payable within the next 12 months.
Other Purchase Obligations and Commitments Purchase obligations and commitments primarily relate to investments in our platform associated with our Connect and Scale strategy and non-cancellable inventory commitments. At the end of 2023, we had operating purchase obligations and commitments of $618.9 million, with $253.5 million payable within the next 12 months.
Non- GAAP gross margin and operating expenses exclude restructuring and other costs comprised of termination benefits related to reductions in employee headcount and closure or exit of facilities, executive severance agreements, costs incurred in exiting business activities in Russia and Belarus, other business exit costs, Bridge Facility fees, as well as a $20 million commitment to donate to the Trimble Foundation to be paid over four quarters.
Non-GAAP gross margin and operating expenses exclude restructuring and other costs comprised of termination benefits related to reductions in employee headcount and closure or exit of facilities, executive severance agreements, business exit costs, as well as a $20 million commitment to donate to the Trimble Foundation that was paid over four quarters ending in the first quarter of 2023. (E).
Tax Payable At the end of 2022, we had income taxes payab le of $64.6 million, with $23.7 million payable within the next 12 months. The amount payable within the next 12 months includes $13.6 million representing a one-time transition tax liability as a result of the 2017 Tax Cuts and Jobs Act (the “Tax Act”).
Tax Payable At the end of 2023, we had income taxes payable of $62.4 million, with $39.7 million payable within the next 12 months. The amount payable within the next 12 months includes $18.2 million representing a one-time transition tax liability as a result of the 2017 Tax Cuts and Jobs Act (the “Tax Act”).
Non-GAAP diluted net income per share We define Non-GAAP diluted net income per share as GAAP diluted net income per share, excluding the effects of purchase accounting adjustments, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments.
Non-GAAP net income We define Non-GAAP net income as GAAP net income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments.
Non-GAAP operating income We define Non-GAAP operating income as GAAP operating income, excluding the effects of purchase accounting adjustments, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring, and other costs. We believe our investors benefit by understanding our non-GAAP operating income trends, which are driven by revenue, gross margin, and spending.
We believe our investors benefit by understanding our non-GAAP operating income trends, which are driven by revenue, gross margin, and spending. Non-GAAP non-operating expense, net We define Non-GAAP non-operating expense, net as GAAP non-operating income (expense), net, excluding acquisition/divestiture items, deferred compensation, and restructuring and other costs. We believe this measure helps investors evaluate our non-operating expense trends.
We continue to experience a shift toward a more significant mix of recurring revenue contracts, as demonstrated by our success in driving annualized recurring revenue (“ARR”) of $1,603.7 million, which represents growth of 14% year-over-year at the end of 2022. ARR organic growth was 16%.
We continue to experience a shift toward a more significant mix of recurring revenue as demonstrated by our success in driving annualized recurring revenue (“ARR”) of $1,982.3 million, which represents growth of 24% year-over-year at the end of 2023 . Excluding the impact of foreign currency, acquisitions, and divestitures, ARR organic growth was 13% .
Cash and Cash Equivalents We believe that our cash and cash equivalents and borrowings, along with cash provided by operations will be sufficient in the foreseeable future to meet our anticipated operating cash needs, expenditures related to our Connect and Scale strategy, and debt service.
Cash and Cash Equivalents We believe that our cash and cash equivalents and available borrowing capacity under our existing lines of credit, along with cash provided by operations will be sufficient in the foreseeable future to meet our anticipated operating cash needs, including expenditures related to our Connect and Scale strategy, debt service, acquisitions, and any stock repurchases under the stock repurchase program.
The following table shows a breakdown of revenue and operating income by segment for the periods indicated: 2022 2021 Dollar Change % Change (In millions) Buildings and Infrastructure Segment revenue $ 1,494.0 $ 1,422.7 $ 71.3 5 % Segment revenue as a percent of total revenue 40.6 % 38.9 % Segment operating income $ 406.3 $ 411.7 $ (5.4) (1) % Segment operating income as a percent of segment revenue 27.2 % 28.9 % Geospatial Segment revenue $ 756.5 $ 828.9 $ (72.4) (9) % Segment revenue as a percent of total revenue 20.6 % 22.6 % Segment operating income $ 221.4 $ 244.1 $ (22.7) (9) % Segment operating income as a percent of segment revenue 29.3 % 29.4 % Resources and Utilities Segment revenue $ 821.6 $ 771.3 $ 50.3 7 % Segment revenue as a percent of total revenue 22.4 % 21.1 % Segment operating income $ 278.3 $ 264.0 $ 14.3 5 % Segment operating income as a percent of segment revenue 33.9 % 34.2 % Transportation Segment revenue $ 604.2 $ 636.5 $ (32.3) (5) % Segment revenue as a percent of total revenue 16.4 % 17.4 % Segment operating income $ 58.8 $ 43.4 $ 15.4 35 % Segment operating income as a percent of segment revenue 9.7 % 6.8 % 40 Table of Contents The following table shows a reconciliation of our consolidated segment operating income to our consolidated income before income taxes for the periods indicated: 2022 2021 (In millions) Consolidated segment operating income $ 964.8 $ 963.2 Unallocated general corporate expenses (123.3) (106.2) Purchase accounting adjustments (131.6) (134.5) Acquisition / divestiture items (32.8) (21.8) Stock-based compensation / deferred compensation (112.0) (128.6) Restructuring and other costs (54.2) (11.1) Consolidated operating income 510.9 561.0 Total non-operating income, net 58.2 13.6 Consolidated income before taxes $ 569.1 $ 574.6 Buildings and Infrastructure 2022 Change versus 2021 % Change Change in revenue - Buildings and Infrastructure 5 % Acquisitions 2 % Divestitures (5) % Foreign currency exchange (3) % Organic revenue growth 11 % Organic revenue increased due to demand for our subscription and term license software recurring offerings.
The following table is a summary of revenue and operating income by segment compared for the periods indicated: 2023 2022 Dollar Change % Change (In millions) Buildings and Infrastructure Segment revenue $ 1,593.1 $ 1,494.0 $ 99.1 7% Segment revenue as a % of total revenue 42 % 41 % Segment operating income $ 440.8 $ 406.3 $ 34.5 8% Segment operating income as a % of segment revenue 27.7 % 27.2 % Geospatial Segment revenue $ 695.5 $ 756.5 $ (61.0) (8)% Segment revenue as a % of total revenue 18 % 21 % Segment operating income $ 209.1 $ 221.4 $ (12.3) (6)% Segment operating income as a % of segment revenue 30.1 % 29.3 % Resources and Utilities Segment revenue $ 769.1 $ 821.6 $ (52.5) (6)% Segment revenue as a % of total revenue 20 % 22 % Segment operating income $ 270.6 $ 278.3 $ (7.7) (3)% Segment operating income as a % of segment revenue 35.2 % 33.9 % Transportation Segment revenue $ 741.0 $ 604.2 $ 136.8 23% Segment revenue as a % of total revenue 20 % 16 % Segment operating income $ 130.2 $ 58.8 $ 71.4 121% Segment operating income as a % of segment revenue 17.6 % 9.7 % The following table is a reconciliation of our consolidated segment operating income to consolidated income before taxes: 2023 2022 (In millions) Consolidated segment operating income $ 1,050.7 $ 964.8 Unallocated general corporate expenses (116.0) (123.3) Purchase accounting adjustments (212.3) (131.6) Acquisition / divestiture items (72.4) (32.8) Stock-based compensation / deferred compensation (151.1) (112.0) Restructuring and other costs (50.1) (54.2) Consolidated operating income 448.8 510.9 Total non-operating income (expense), net (91.8) 58.2 Consolidated income before taxes $ 357.0 $ 569.1 34 Table of Contents Buildings and Infrastructure Change versus 2022 2023 % Change Change in Revenue - Buildings and Infrastructure 7 % Acquisitions 2 % Divestitures (2) % Foreign currency exchange — % Organic growth 7 % Organic revenue increased due to strong demand for our subscription and term license software.
We believe that the development and introduction of new solutions are critical to our future success, and we expect to continue the active development of new products. S&M expense increased primarily due to higher compensation expense, including commissions, higher marketing costs including trade shows, higher travel expenses, and the impact of acquisitions.
We believe that the development and introduction of new solutions are critical to our future success, and we expect to continue the active development of new products. S&M expense increased slightly primarily due to the Transporeon acquisition.
The estimated future cash flows are primarily based on assumptions about expected future operating performance. 36 Table of Contents RESULTS OF OPERATIONS Overview The following table shows revenue by category, gross margin and gross margin as a percentage of revenue, operating income and operating income as a percentage of revenue, diluted earnings per share, and annualized recurring revenue compared for the periods indicated: 2022 2021 Dollar Change % Change (In millions) Revenue: Product $ 2,152.0 $ 2,247.5 $ (95.5) (4) % Service 641.3 649.4 (8.1) (1) % Subscription 883.0 762.2 120.8 16 % Total revenue $ 3,676.3 $ 3,659.1 $ 17.2 — % Gross margin 2,105.6 2,034.7 70.9 3 % Gross margin as a % of revenue 57.3 % 55.6 % Operating income 510.9 561.0 (50.1) (9) % Operating income as a % of revenue 13.9 % 15.3 % Diluted earnings per share $ 1.80 $ 1.94 $ (0.14) (7) % Non-GAAP revenue (1) $ 3,676.3 $ 3,659.4 $ 16.9 — % Non-GAAP operating income (1) 841.5 857.0 (15.5) (2) % Non-GAAP operating income as a % of Non-GAAP revenue (1) 22.9 % 23.4 % Non-GAAP diluted earnings per share (1) $ 2.64 $ 2.66 $ (0.02) (1) % Annualized Recurring Revenue (“ARR”) (1) $ 1,603.7 $ 1,409.1 $ 194.6 14 % (1) Refer to “Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue” of this report for definitions.
The estimated future cash flows are primarily based on assumptions about expected future operating performance. 31 Table of Contents RESULTS OF OPERATIONS Overview The following table shows revenue by category, gross margin and gross margin as a percentage of revenue, operating income and operating income as a percentage of revenue, diluted earnings per share, and annualized recurring revenue compared for the periods indicated: 2023 2022 Dollar Change % Change (In millions, except per share amounts) Revenue: Product $ 1,771.7 $ 1,986.1 $ (214.4) (11)% Subscription and services 2,027.0 1,690.2 336.8 20% Total revenue $ 3,798.7 $ 3,676.3 $ 122.4 3% Gross margin $ 2,332.8 $ 2,105.6 $ 227.2 11% Gross margin as a % of revenue 61.4 % 57.3 % Operating income $ 448.8 $ 510.9 $ (62.1) (12)% Operating income as a % of revenue 11.8 % 13.9 % Diluted earnings per share $ 1.25 $ 1.80 $ (0.55) (31)% Non-GAAP operating income (1) $ 934.7 $ 841.5 $ 93.2 11% Non-GAAP operating income as a % of revenue (1) 24.6 % 22.9 % Non-GAAP diluted earnings per share (1) $ 2.66 $ 2.64 $ 0.02 1% Annualized Recurring Revenue (“ARR”) (1) $ 1,982.3 $ 1,603.7 $ 378.6 24% (1) Refer to “Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue” of this report for definitions.
We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP presentation and a difference in the GAAP and non-GAAP tax rates. Non-GAAP net income We define Non-GAAP net income as GAAP net income, excluding the effects of purchase accounting adjustments, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments.
We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP presentation and a difference in the GAAP and non-GAAP tax rates.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS The impact of recent accounting pronouncements is disclosed in Note 1 “Description of Business and Accounting Policies” of this report. 44 Table of Contents SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES AND ANNUALIZED RECURRING REVENUE To supplement our consolidated financial information, we include non-GAAP financial measures, which are not meant to be considered in isolation or as a substitute for comparable GAAP.
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES AND ANNUALIZED RECURRING REVENUE To supplement our consolidated financial information, we included non-GAAP financial measures, which are not meant to be considered in isolation or as a substitute for comparable GAAP.
The non-GAAP tax rate excludes charges and benefits such as net deferred tax impacts resulting from a non-U.S. intercompany transfer of intellectual property and significant one-time reserve releases upon statute of limitations expirations. (G) IP restructuring and tax law change impacts.
The non-GAAP tax rate excludes charges and benefits such as (i) deferred tax impacts from tax amortization relating to a non-U.S. intercompany transfer of intellectual property and R&D cost capitalization impact to global intangible low-taxed income ("GILTI"), and (ii) significant one-time reserve releases upon statute of limitations expirations. (G). GAAP and non-GAAP tax rate percentages .
Amortization of Purchased Intangible Assets The following table shows amortization of purchased intangible assets for the periods indicated: 2022 2021 Dollar Change % Change (In millions) Cost of sales $ 85.0 $ 87.7 $ (2.7) (3) % Operating expenses 46.6 50.9 (4.3) (8) % Total amortization expense of purchased intangibles $ 131.6 $ 138.6 $ (7.0) (5) % Total amortization expense of purchased intangibles as a percentage of revenue 4 % 4 % In 2022, total amortization of purchased intangibles decreased primarily due to the expiration of prior years’ acquisition amortization.
Amortization of Purchased Intangible Assets The following table shows amortization of purchased intangible assets for the periods indicated: 2023 2022 Dollar Change % Change (In millions) Cost of sales $ 108.7 $ 85.0 $ 23.7 28% Operating expenses 103.6 46.6 57.0 122% Total amortization expense of purchased intangibles $ 212.3 $ 131.6 $ 80.7 61% Total amortization expense of purchased intangibles as a percentage of revenue 6 % 4 % In 2023, total amortization expense of purchased intangibles increased primarily due to amortization of intangibles acquired from the Transporeon acquisition, which were not applicable in the prior year .
Impact of Recent Events on Our Business Macroeconomic conditions, including geopolitical tensions, such as the ongoing military conflict between Russia and Ukraine and related sanctions, exchange rate and interest rate volatility, and inflationary pressures, will continue to evolve globally.
We have included the financial results of Transporeon in our Consolidated Financial Statements starting in the second quarter of 2023. Macroeconomic Conditions Macroeconomic conditions, including geopolitical tensions, such as the ongoing military conflicts in the Middle East and between Russia and Ukraine and related sanctions, exchange rate and interest rate volatility, and inflationary pressures, will continue to evolve globally.
Operating income as a percentage of revenue decreased primarily due to higher operating expense, partially offset by gross margin expansion due to product mix.
Operating income and operating income as a percentage of revenue increased primarily from gross margin expansion due to increased sales and a higher mix of software and subscription revenue, partially offset by increased operating expense. Operating expense increased due to increased compensation expense and investments, including our Connect and Scale strategy.
Operating income as a percentage of revenue decreased primarily due to increased operating expense, partially offset by increased gross margin as a percentage of revenue. 38 Table of Contents Research and Development, Sales and Marketing, and General and Administrative Expenses The following table shows research and development (“R&D”), sales and marketing (“S&M”), and general and administrative (“G&A”) expense along with these expenses as a percentage of revenue for the periods indicated: 2022 2021 Dollar Change % Change (In millions) Research and development $ 542.1 $ 536.6 $ 5.5 1 % Percentage of revenue 14.7 % 14.7 % Sales and marketing 553.6 506.8 46.8 9 % Percentage of revenue 15.1 % 13.9 % General and administrative 422.2 369.1 53.1 14 % Percentage of revenue 11.5 % 10.1 % Total $ 1,517.9 $ 1,412.5 $ 105.4 7 % R&D expense increased primarily due to slightly higher compensation expense and the impact of acquisitions, partially offset by favorable foreign currency and divestitures.
Research and Development, Sales and Marketing, and General and Administrative Expense The following table shows research and development (“R&D”), sales and marketing (“S&M”), and general and administrative (“G&A”) expense along with these expenses as a percentage of revenue for the periods indicated: 2023 2022 Dollar Change % Change (In millions) Research and development $ 664.3 $ 542.1 $ 122.2 23% Percentage of revenue 17.5 % 14.7 % Sales and marketing $ 583.0 $ 553.6 $ 29.4 5% Percentage of revenue 15.3 % 15.1 % General and administrative $ 487.5 $ 422.2 $ 65.3 15% Percentage of revenue 12.8 % 11.5 % Total $ 1,734.8 $ 1,517.9 $ 216.9 14% R&D expense increased primarily due to higher compensation expense, including incentive compensation, and to a lesser extent, the Transporeon acquisition.
At the end of 2022, we had fixed lease payment obligations of $171.6 million, with $48.7 million payable within the next 12 months. Refer to Note 8 “ Leases ” of this report for additional information regarding our leases.
Operating leases represent undiscounted lease payments and include short-term leases. 37 Table of Contents At the end of 2023, we had fixed lease payment obligations of $208.9 million, with $49.3 million payable within the next 12 months. Refer to Note 9 “Leases” of this report for additional information regarding our leases.
Non-GAAP operating expenses exclude the adjustments that eliminate the capitalized sales commissions. F or acquisitions occurring prior to 2021, non-GAAP operating expenses exclude the adjustment of ac quired capitalized commissions amortization. (iii) Amortization of purchased intangible assets . Non-GAAP gross margin and operating expenses exclude the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed.
Amortization of purchased intangible assets . Non-GAAP gross margin and operating expenses exclude the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed. (B). Acquisition / divestiture items .
(E) Non-GAAP items tax effected . This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) - (D) on non-GAAP net income. This amount excludes the GAAP tax rate impact resulting from the non-U.S. intercompany transfer of intellectual property, which is separately disclosed in item (G).
Non-GAAP items tax effected . This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) - (D) on non-GAAP net income. (F). Difference in GAAP and Non-GAAP tax rate .
The 2021 Stock Repurchase Program does not obligate us to acquire any specific number of shares. Because of the additional outstanding indebtedness we have and expect to incur in connection with the pending Transporeon acquisition, we have temporarily discontinued share repurchases. Refer to Note 14 “Common Stock Repurchase” of this report for additional information regarding our 2021 Stock Repurchase Program.
The 2024 Stock Repurchase Program does not obligate us to acquire any specific number of shares. The 2024 Stock Repurchase Program replaced the 2021 Stock Repurchase Program, which was cancelled. Refer to Note 1 5 “Common Stock Repurchase” of this report for additional information regarding our 2021 Stock Repurchase Program and 2024 Stock Repurchase Program.
Refer to Note 9 “Commitments and Contingencies” of this report for additional information regarding our purchase obligations and commitments.
Refer to Note 8 “Debt” of this report for additional information regarding our debt.
Acquisitions and Divestitures We acquire businesses that align with our long-term growth strategies including our strategic product roadmap and, conversely, we divest certain business that no longer fit those strategies. In December 2022, we signed a definitive agreement to acquire Transporeon in an all-cash transaction valued at approximately €1.88 billion or $2.0 billion.
Impact of Recent Events on Our Business Acquisitions and Divestitures We acquire businesses that align with our long-term growth strategies including our strategic product roadmap and, conversely, we divest certain businesses that no longer fit those strategies.
Non-Operating Income, Net The following table shows non-operating income, net for the periods indicated: 2022 2021 Dollar Change % Change (In millions) Divestitures gain, net $ 99.0 $ 41.4 $ 57.6 139 % Interest expense, net (71.1) (65.4) (5.7) 9 % Income from equity method investments, net 31.1 37.7 (6.6) (18) % Other expense, net (0.8) (0.1) (0.7) 700 % Total non-operating income, net $ 58.2 $ 13.6 $ 44.6 328 % In 2022, non-operating income increased primarily due to higher gains from divestitures, partially offset by lower joint-venture profitability, higher interest expense due to Bridge Facility fees, and fluctuations in deferred compensation plan assets included in Other expense, net. 39 Table of Contents Income Tax Provision Our effective income tax rates for 2022 and 2021 were 21.0% and 14.2%.
Non-Operating Income (Expense), Net The following table shows non-operating income (expense), net for the periods indicated: 2023 2022 Dollar Change % Change (In millions) Divestitures gain, net $ 9.2 $ 99.0 $ (89.8) (91)% Interest expense, net (161.0) (71.1) (89.9) 126% Income from equity method investments, net 28.1 31.1 (3.0) (10)% Other income (expense), net 31.9 (0.8) 32.7 (4088)% Total non-operating income (expense), net $ (91.8) $ 58.2 $ (150.0) (258)% Non-operatin g expense, net in creased primarily due to lower net gains from divestitures and higher interest expense from the new debt associated with the Transporeon acquisition, partially offset by foreign currency hedging gains associated with the Transporeon acquisition and fluctuations in the deferred compensation plan assets, both included in Other income (expense), net.
ARR represents the estimated annualized value of recurring revenue, including subscription, maintenance and support revenue, and term license contracts for the quarter.
ARR represents the estimated annualized value of recurring revenue.
This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our non-GAAP tax rate.
This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our non-GAAP tax rate. 40 Table of Contents Non-GAAP diluted net income per share We define Non-GAAP diluted net income per share as GAAP diluted net income per share, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments.
In the second half of the year, slowing demand for our hardware and related software products impacted sales in Buildings and Infrastructure, Geospatial, and Resources and Utilities. Organic service revenue was relatively flat. Organic subscription revenue increased primarily due to strong growth in Buildings and Infrastructure and, to a lesser extent, in Resources and Utilities, Transportation, and Geospatial.
Organic subscription and services revenue was up primarily due to strong growth in subscription and software term licenses in Buildings and Infrastructure, and to a lesser extent, positioning services in Resources and Utilities, and enterprise and MAPS in Transportation.
Operating income decreased primarily due to divestitures and reduced revenue, partially offset by better gross margin due to product mix.
The decrease was partially offset by higher subscription revenue in positioning services. Operating income decreased slightly due to reduced revenue and higher operating expense, largely offset by gross margin expansion.
Despite revenue and gross margin expansion, operating income decreased primarily due to higher operating expense, unfavorable foreign currency , and divestitures. Operating expense increased due to investments in our Connect and Scale strategy as well as higher marketing and travel costs.
Operating Income Operating income decreased slightly primarily due to increased operating expense, partially offset by revenue and gross margin expansion. Operating expense increased due to the Transporeon acquisition, higher research and development, and general and administrative costs, including investments related to our Connect and Scale strategy and increased amortization of purchased intangibles.
LIQUIDITY AND CAPITAL RESOURCES At the End of Year 2022 2021 Dollar Change % Change (In millions) Cash and cash equivalents $ 271.0 $ 325.7 $ (54.7) (17) % As a percentage of total assets 3.7 % 4.6 % Principal balance of outstanding debt $ 1,525.0 $ 1,300.0 $ 225.0 17 % Years 2022 2021 Dollar Change % Change (In millions) Cash provided by operating activities $ 391.2 $ 750.5 $ (359.3) (48) % Cash used in investing activities (226.3) (203.5) (22.8) 11 % Cash used in financing activities (199.0) (447.7) 248.7 (56) % Effect of exchange rate changes on cash and cash equivalents (20.6) (11.3) (9.3) 82 % Net increase in cash and cash equivalents $ (54.7) $ 88.0 Operating Activities The decrease in cash provided by operating activities was primarily driven by lower net income after adjusting for non-cash items and divestiture gains, higher bonus and cash tax payments, higher accounts receivable, higher inventory purchases, and lower accounts payable associated with the timing of inventory payments.
We continue to maintain focus on new product introductions and transitions to recurring revenue. 36 Table of Contents LIQUIDITY AND CAPITAL RESOURCES At the End of Year 2023 2022 Dollar Change % Change (In millions, except percentages) Cash and cash equivalents (1) $ 238.9 $ 271.0 $ (32.1) (12) % As a percentage of total assets 2.5 % 3.7 % Principal balance of outstanding debt $ 3,080.4 $ 1,525.0 $ 1,555.4 102 % Years 2023 2022 Dollar Change % Change (In millions) Net cash provided by operating activities $ 597.1 $ 391.2 $ 205.9 53 % Net cash used in investing activities (2,068.1) (226.3) (1,841.8) 814 % Net cash provided by (used in) financing activities 1,431.5 (199.0) 1,630.5 (819) % Effect of exchange rate changes on cash and cash equivalents 7.4 (20.6) 28.0 (136) % Net (decrease) increase in cash and cash equivalents $ (32.1) $ (54.7) (1) Includes $9.1 million of cash and cash equivalents classified as held for sale as of December 29, 2023.
This shift towards recurring revenue has positively impacted our revenue mix and growth over time and is leading to improved visibility in our businesses. As our solutions have expanded, our go-to-market model has also evolved with a balanced mix between direct, distribution, and OEM customers as well as an increasing number of enterprise level customer relationships.
Additionally, we continue to maintain focus on new product introductions and transitions to recurring revenue as evidenced by the Transporeon business and the pending Trimble Ag JV Transaction (as described below). As our solutions have expanded, our go-to-market model has also evolved with a balanced mix between direct, distribution, and OEM customers as well as enterprise-level customer relationships.
The increases resulted from higher sales to new and existing customers, as well as conversions from perpetual software to recurring offerings.
The increases resulted from higher sales to new and existing customers as well as cumulative conversions from perpetual software to recurring offerings. The increase was offset by lower civil construction hardware sales due to reductions in dealer inventory levels as a result of improved lead times and reduced end user demand.
Year 2022 Compared with Year 2021 Revenue 2022 Change versus 2021 % Change Change in total revenue — % Acquisitions 1 % Divestitures (4) % Foreign currency exchange (4) % Organic revenue growth - total revenue 7 % Although organic revenue increased for fiscal 2022, it decelerated in the second half of the year due to slowing demand in some of our end markets and reductions in dealer inventory levels as a result of improved product lead times and macroeconomic concerns.
Resources and Utilities Change versus 2022 2023 % Change Change in Revenue - Resources and Utilities (6) % Acquisitions 1 % Divestitures (1) % Organic growth (6) % Organic revenue decreased due to reductions in channel inventory levels as a result of improved lead times and slowing demand in agriculture markets, as well as impacts related to changes in our distribution network.
Gross margin as a percentage of total revenue increased due to an increased mix of software and subscription sales, price increases, and to a lesser extent, divestitures of lower margin hardware centric businesses. Operating Income Operating income decreased primarily due to divestitures and unfavorable foreign currency, partially offset by organic revenue and gross margin expansion.
Additionally, North American mobility hardware sales increased in 2023. Operating income and operating income as a percentage of revenue increased primarily due to gross margin expansion, driven by a higher mix of subscription revenue, including the impact of the Transporeon acquisition.
Other than the items discussed above, we do not have any off-balance sheet financing arrangements or liabilities. 43 Table of Contents Debt At the end of 2022, we had outstanding floating and fixed-rate senior notes with varying maturities for an aggregate principal amount of approximately $1.5 billion.
Debt At the end of 2023, we had outstanding fixed-rate senior notes and floating credit facilities with varying maturities for an aggregate principal amount of approximately $3.1 billion. Future interest payments total $898.4 million, with $190.7 million payable within the next 12 months.
The decreases were partially offset by an increase in deferred revenue. 42 Table of Contents Investing Activities The increase in cash used in investing activities was primarily due to higher payments related to businesses acquired in 2022, partially offset by higher proceeds from divestitures.
Investing Activities The increase in cash used in investing activities was primarily due to acquisition activities in the current year, including the Transporeon acquisition, and higher proceeds from divestitures in the prior year.
Future interest payments total $260.5 million, with $67.3 million payable within the next 12 months. During 2022, we had $224.6 million of proceeds from debt, net of the payments. Refer to Note 7 “Debt” of this report for additional information regarding our debt.
We anticipate repaying $1.1 billion of our debt through the use of the net proceeds from the proposed AGCO JV transaction. Refer to Note 4 “ Divestitures ” of this report for additional information. During 2023, we had $1.6 billion of proceeds from debt, net of the payments.
We do not expect the provisions of the IRA to have a material impact on our financial results. Results by Segment We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
The decrease was primarily due to an increases in tax benefit from U.S. federal R&D credit and foreign-derived intangible income (“FDII”) in 2023, and change in geographic mix of earnings, partially offset by lower stock-based compensation deductions in the current year. 33 Table of Contents Results by Segment We report our financial performance, including revenue and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.
I n March 2022, we entered into a five-year, unsecured revolving loan facility for borrowings up to $1.25 billion, which replaced the 2018 Credit Facility. The 2022 Credit Facility contains an option to increase the borrowings up to $1.75 billion with lender approval. At the end of 2022, $225.0 million was outstanding under the 2022 Credit Facility.
Our 2022 Credit Facility allows us to borrow up to $1.25 billion, with an option to increase the borrowings up to $1.75 billion with lender approval. As of December 29, 2023, $150.0 million was outstanding under the 2022 Credit Facility. Our 2023 Senior Notes totaling $300.0 million matured and were paid in June 2023.
In the second half of 2022, our organic hardware sales growth and bookings moderated from slowing demand in some of our end markets served by our dealer channels and also from dealer inventories moving towards lower levels due to improved product lead times and macroeconomic concerns.
In 2023, as compared to the prior year, our organic hardware sales declined and bookings moderated as dealers moved toward lower levels of inventories due to improved product lead times and reduced end user demand. Buildings and Infrastructure, Geospatial, and Resources and Utilities all had stronger hardware sales in the prior year.
Enterprise subscription revenue continued to experience growth as the business transitions from a perpetual software license model. Operating income and operating income as a percentage of revenue increased primarily due to targeted cost reductions and gross margin expansion due to product mix, partially offset by divestitures and reduced revenue.
Federal government sales in the current year; the timing of government sales can fluctuate from period to period. Operating income decreased due to reduced revenue, partially offset by gross margin expansion driven by product mix and lower hardware supply chain costs. Operating income as a percentage of revenue was relative flat.
These increases were partially offset by favorable foreign currency and divestitures. G&A expense increased primarily due to investments related to our Connect and Scale strategy, charitable donations to the Trimble Foundation, and acquisition and divestiture transaction costs. These increases were partially offset by a reduction in incentive compensation, favorable foreign currency, and divestitures.
G&A expense increased primarily due to higher acquisition and divestiture transaction costs, the Transporeon acquisition, and to a lesser extent, increased compensation expense, including incentive compensation.
Removed
The greatest impact was a decline in Europe where the impacts of foreign currency exchange rates, the ongoing military conflict in Ukraine, and energy inflation were the greatest.
Added
This shift toward recurring revenue h as positively impacted our revenue mix and growth over time and is leading to improved visibility in our businesses. Our software, services, and recurring revenue represented 67% and 59% of total revenue for 2023 and 2022.
Removed
Supply Chain Over the past year, we experienced inflationary cost increases for certain components of our hardware products due to supply chain disruptions resulting from parts and labor shortages and an increase in worldwide demand for components. In response, we increased customer pricing to offset inflationary pressures.
Added
On September 28, 2023, we executed a definitive agreement with AGCO that provides for the formation of a JV with AGCO in the mixed fleet precision agriculture market. Under the terms of the agreement, we will contribute the Trimble Ag business, excluding certain GNSS and guidance technologies, and AGCO will contribute its JCA Technologies business to the JV.
Removed
In the second half of 2022, these cost pressures lessened as component supply became more readily available. We expect these cost pressures will continue to diminish over time as suppl y chain conditions continue to normalize. Additionally, over the past year, due to extended component lead times, we made binding commitments over a longer horizon for certain components.
Added
We will sell an interest in the JV to AGCO for $2.0 billion in pre-tax cash proceeds, subject to working capital adjustments.
Removed
This has impacted our working capital in the short term; however, we expect supply dynamics and customer demand to normalize over time. 34 Table of Contents Foreign Currency Fluctuations We generate over half of our revenue from sales to customers outside of the U .S.
Added
Immediately following the closing of this proposed transaction, we will own 15% of the JV and AGCO will own 85% of the JV. 29 Table of Contents Additionally, we plan to enter into the following agreements with AGCO as part of the overall proposed transaction: • a seven-year, renewable Supply Agreement through which we will provide key GNSS and guidance technologies to the JV for use in professional agriculture machines sold by AGCO, on an exclusive basis with limited exceptions; • a Technology Transfer and License Agreement to govern the licensing of certain non-divested intellectual property and technology for use by the JV in the agriculture field and, upon expiration of the Supply Agreement, to govern fixed and variable royalty payments made to us by the JV; • a Trademark License Agreement to govern the licensing of certain Trimble trademarks for use by the JV in the agriculture field; • a Positioning Services Agreement through which the JV will serve as our channel partner for the positioning services in the agriculture market; and • a Transition Services Agreement to provide contract manufacturing services for the divested products for two years following closing of the proposed transaction.
Removed
In 2022, due to the strengthening of the U.S. dollar, year-over-year unfavorable foreign currency impacts on revenue and operating income were $114.1 million or 4% and $26.0 million or 5%. Interest Rates Fluctuations The global inflation rate has risen sharply, and interest rates are rising in an effort to curb inflation.
Added
The formation of the JV is expected to better serve farmers with factory fit and aftermarket applications in the mixed fleet precision agriculture market to help farmers drive productivity, efficiency, and sustainability.
Removed
In addition to the negative impact macroeconomic conditions have had on our sales, we may experience higher borrowing costs on existing variable rate debt and future debt issuances, including financing related to the pending acquisition of Transporeon. Ongoing Military Conflict in Ukraine We are monitoring and responding to effects of the ongoing military conflict in Ukraine.
Added
Additionally, the proposed transaction is expected to (i) simplify our Connect and Scale strategy, (ii) reduce risk of channel transition in the agriculture market, and (iii) enhance our financial profile and flexibility with a resulting higher mix of software, services, and recurring revenue, as well allowing us to repurchase stock and repay $1.1 billion of our debt through use of the net proceeds.
Removed
In the first quarter of 2022, we stopped selling to Russia and Belarus customers and wrote off uncollected customer receivables and inventory located in these countries, which was not material to our consolidated financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+5 added−7 removed3 unchanged
Biggest changeForeign currency contracts outstanding at the end of 2022 and 2021 are summarized as follows: At the End of 2022 At the End of 2021 Nominal Amount Fair Value Nominal Amount Fair Value (In millions) Forward contracts: Purchased $ (77.9) $ — $ (107.5) $ 0.1 Sold $ 130.6 $ 0.2 $ 183.6 $ (0.2) Foreign currency exchange contract related to acquisition $ 1,999.4 $ 10.4 $ — $ — While not predictive, a hypothetical 5% decrease in the Euro as of December 30, 2022 would change the fair value of the foreign currency exchange contract related to the pending acquisition of Transporeon by $68 million. 50 Table of Contents TRIMBLE INC.
Biggest changeForeign currency contracts outstanding at the end of 2023 and 2022 are summarized as follows: At the End of 2023 At the End of 2022 Nominal Amount Fair Value Nominal Amount Fair Value (In millions) Forward contracts: Purchased $ (120.3) $ 0.3 $ (77.9) $ — Sold 50.8 (0.3) 130.6 0.2 Foreign currency exchange contract related to acquisition — — 1,999.4 10.4 42 Table of Contents TRIMBLE INC.
We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on cash, debt, and certain trade and intercompany receivables and payables, primarily denominated in Euro, New Zealand Dollars, Brazilian Real, and Canadian Dollars.
We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on cash, debt, and certain trade and intercompany receivables and payables, primarily denominated in Euro, Canadian Dollars, New Zealand Dollars, British Pound, and Brazilian Real.
Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations, which can affect our operating income. As exchange rates vary, operating income may differ from expectations. In 2022, revenue and operating income were unfavorably impacted by foreign currency exchange rates by $114.1 million and $26.0 million.
Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations, which can affect our operating income. As exchange rates vary, operating income may differ from expectations.
These contracts reduce the exposure to fluctuations in foreign currency exchange rate movements, as the gains and losses associated with foreign currency balances are generally offset with the gains and losses on the forward contracts.
These contracts reduce the exposure to fluctuations in foreign currency exchange rate movements, as the gains and losses associated with foreign currency balances are generally offset with the gains and losses on the forward contracts. We occasionally enter into foreign currency exchange contracts to hedge the purchase price of some of our larger business acquisitions.
Due to the nature of our cash equivalents that they are readily convertible to cash, we do not anticipate any material effect on our portfolio due to fluctuations in interest rates.
Due to the nature of our cash equivalents that they are readily convertible to cash, we do not anticipate any material effect on our portfolio due to fluctuations in interest rates. In the second quarter of 2023, we borrowed $1.2 billion of variable-rate debt in conjunction with the Transporeon acquisition.
In addition, volatile market conditions arising from the COVID-19 pandemic could result in changes in exchange rates. Historically, the majority of our revenue contracts are denominated in U.S. Dollars, with the most significant exception being Europe, where we invoice primarily in Euro.
Dollar and various foreign currencies, the most significant of which is the Euro. Historically, the majority of our revenue contracts are denominated in U.S. Dollars, with the most significant exception being Europe, where we invoice primarily in Euro.
Additionally, in December 2022, we entered into a foreign currency exchange rate contract to minimize foreign currency fluctuations on the €1.88 billion or $2.0 billion pending acquisition of Transporeon. 49 Table of Contents Our foreign currency contracts are marked-to-market through earnings every period and generally range in maturity from one to two months, or from four to six months for acquisitions.
Our foreign currency contracts are marked-to-market through earnings every period and generally range in maturity from one to two months, or from four to six months for acquisitions. We do not enter into foreign currency contracts for trading purposes.
Treasury rate as of December 30, 2022 would change the fair value of the Treasury Rate Lock by $16.5 million. Foreign Currency Exchange Rate Risk We operate in international markets, which expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. Dollar and various foreign currencies, the most significant of which is the Euro.
While not predictive, a hypothetical 50 basis point increase in interest rates on our variable-rate debt would result in an increase of approximately $6.5 million in annual interest expense. Foreign Currency Exchange Rate Risk We operate in international markets, which expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S.
Removed
We are exposed to market risk due to the possibility of changing interest rates under our credit facilities, including the 2022 Credit Facility, 2022 Term Loan Credit Agreement, and the Bridge Facility. We also have four unsecured, uncommitted, revolving credit facilities that are callable by the bank at any time.
Added
At the end of 2023, our outstanding balance of variable-rate debt was $1.3 billion, see details in Note 8 “Debt” of this report. We are exposed to market risk due to the possibility of changing interest rates.
Removed
We may borrow funds under the 2022 Credit Facility and uncommitted facilities in U.S. Dollars, Euros, or in certain other agreed currencies as described in Note 7 “Debt” of this report. At the end of 2022, we had two $75.0 million, one €100.0 million, and one £55.0 million revolving credit facilities, which are uncommitted.
Added
In 2023, changes in foreign currency exchange rates had a favorable impact of $0.9 million on revenue and an unfavorable impact of $5.8 million on operating income.
Removed
At the end of 2022, $225.0 million was outstanding under the 2022 Credit Facility. We expect to issue fixed-rate debt in the first half of 2023 as part of the pending acquisition of Transporeon and to refinance existing debt.
Added
INDEX TO FINANCIAL STATEMENTS Consolidated Balance Sheets 44 Consolidated Statements of Income 45 Consolidated Statements of Comprehensive Income 46 Consolidated Statements of Stockholders’ Equity 47 Consolidated Statements of Cash Flows 48 Notes to Consolidated Financial Statements 49 Note 1. De scription of Business and Accounting Policies 49 Note 2. Earnings per Share 54 Note 3. Acquisitio ns 54 Note 4.
Removed
To minimize interest rate fluctuations, in December 2022, we entered into a contract to offset the changes in the price of U.S. Treasury Notes with an original maturity of 10 years for the period commencing on the contract date and ending May 31, 2023 (“Treasury Rate Lock”).
Added
D ivestitures 56 Note 5. Intangible Assets and Goodwill 57 Note 6. Certain Balance Sheet Components 58 Note 7. Reporting Segment and Geographic Information 59 Note 8. Debt 62 Note 9. Leases 63 Note 10. Commitments and Contingencies 64 Note 11. Fair Value Measurements 65 Note 12. Deferred Revenue and Remaining Performance Obligations 66 Note 13.
Removed
The Treasury Rate Lock is marked-to-market each period through other comprehensive income until the debt is issued, and the effective interest rate method is applied. The nominal amount is $400 million, and the fair value at the end of 2022 is $7.2 million. While not predictive, a hypothetical 50 basis point increase or decrease in the 10-year U.S.
Added
Income Taxes 66 Note 14. Employee Stock Benefit Plans 69 Note 15. Common Stock Repurchase 71 Note 1 6 . S ubsequent Event 71 Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 72 43 Table of Contents Index to Financial Statements
Removed
We do not enter into foreign currency contracts for trading purposes.
Removed
INDEX TO FINANCIAL STATEMENTS Consolidated Balance Sheets 52 Consolidated Statements of Income 53 Consolidated Statements of Comprehensive Income 54 Consolidated Statements of Stockholders’ Equity 55 Consolidated Statements of Cash Flows 56 Notes to Consolidated Financial Statements 57 Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 77 51 Table of Contents

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