Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

At the End of Fiscal Year	2018				2017
					*As Adjusted
(In millions, except par values)
ASSETS
Current assets:
Cash and cash equivalents	$	172.5			$	358.5
Short-term investments	—				178.9
Accounts receivable, net	512.6				427.7
Other receivables	33.2				42.8
Inventories	298.0				264.6
Other current assets	72.8				39.2
Total current assets	1,089.1				1,311.7
Property and equipment, net	212.9				174.0
Goodwill	3,540.0				2,287.1
Other purchased intangible assets, net	744.3				364.8
Deferred costs, non-current	41.3				35.0
Other non-current assets	148.8				143.7
Total assets	$	5,776.4			$	4,316.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt	$	256.2			$	128.4
Accounts payable	147.6				146.0
Accrued compensation and benefits	169.2				143.9
Deferred revenue	348.4				237.6
Accrued warranty expense	15.3				18.3
Other current liabilities	118.5				99.2
Total current liabilities	1,055.2				773.4
Long-term debt	1,712.3				785.5
Non-current deferred revenue	38.8				39.0
Deferred income tax liabilities	73.8				47.8
Income taxes payable	71.3				94.1
Other non-current liabilities	150.2				162.0
Total liabilities	3,101.6				1,901.8
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value; 3.0 shares authorized; none issued and outstanding	—				—
Common stock, $0.001 par value; 360.0 shares authorized; 250.9 and 248.9 shares issued and outstanding at the end of fiscal 2018 and 2017, respectively	0.3				0.2
Additional paid-in-capital	1,591.9				1,461.1
Retained earnings	1,268.3				1,084.6
Accumulated other comprehensive loss	(186.1		)		(131.4		)
Total Trimble Inc. stockholders’ equity	2,674.4				2,414.5
Noncontrolling interests	0.4				—
Total stockholders' equity	2,674.8				2,414.5
Total liabilities and stockholders’ equity	$	5,776.4			$	4,316.3

• See Note 2 for a summary of adjustments

See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions, except per share data)
Revenue:
Product	$	1,999.9			$	1,763.8			$	1,570.6
Service	588.7				475.4				436.7
Subscription	519.8				407.3				354.8
Total revenues	3,108.4				2,646.5				2,362.1
Cost of sales:
Product	938.9				875.6				764.0
Service	247.3				194.4				170.1
Subscription	138.0				113.1				104.9
Amortization of purchased intangible assets	103.2				85.8				88.6
Total cost of sales	1,427.4				1,268.9				1,127.6
Gross margin	1,681.0				1,377.6				1,234.5
Operating expense:
Research and development	446.1				370.2				349.6
Sales and marketing	479.8				400.1				374.7
General and administrative	349.8				301.7				256.0
Restructuring charges	8.2				6.9				11.6
Amortization of purchased intangible assets	76.4				63.0				62.2
Total operating expense	1,360.3				1,141.9				1,054.1
Operating income	320.7				235.7				180.4
Non-operating income (expense), net:
Interest expense, net	(73.2		)		(25.2		)		(25.9		)
Foreign currency transaction gain (loss), net	0.5				3.3				(1.9		)
Income from equity method investments, net	28.7				29.5				17.6
Other income, net	1.3				4.9				5.9
Total non-operating income (expense), net	(42.7		)		12.5				(4.3		)
Income before taxes	278.0				248.2				176.1
Income tax provision (benefit)	(5.3		)		129.7				43.9
Net income	283.3				118.5				132.2
Net gain (loss) attributable to noncontrolling interests	0.5				0.1				(0.2		)
Net income attributable to Trimble Inc.	$	282.8			$	118.4			$	132.4
Basic earnings per share	$	1.13			$	0.47			$	0.53
Shares used in calculating basic earnings per share	250.0				252.1				250.5
Diluted earnings per share	$	1.12			$	0.46			$	0.52
Shares used in calculating diluted earnings per share	253.4				256.7				253.9

• See Note 2 for a summary of adjustments

See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions)
Net income	$	283.3			$	118.5			$	132.2
Foreign currency translation adjustments, net of tax $0.1 in 2018, $3.7 in 2017, and $(0.2) in 2016	(55.6		)		90.9				(55.2		)
Net unrealized gain (loss) on short-term investments, net of tax	0.2				(0.2		)		—
Net unrealized actuarial gain (loss), net of tax	0.7				(0.3		)		0.3
Comprehensive income	228.6				208.9				77.3
Comprehensive gain (loss) attributable to noncontrolling interests	0.5				0.1				(0.2		)
Comprehensive income attributable to Trimble Inc.	$	228.1			$	208.8			$	77.5

• See Note 2 for a summary of adjustments

See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common stock											Retained Earnings				Accumulated Other Comprehensive Loss				Total Stockholders’ Equity				Noncontrolling Interest				Total
	Shares			Amount				Additional Paid-In Capital
												* As Adjusted				* As Adjusted				* As Adjusted								* As Adjusted
(In millions)
Balance at the end of fiscal 2015	250.7			$	0.3			$	1,238.0			$	1,199.6			$	(166.9	)		$	2,271.0			$	0.9			$	2,271.9
Net income												132.4								132.4				(0.2		)		132.2
Other comprehensive loss																(54.9		)		(54.9		)						(54.9		)
Comprehensive income																				77.5								77.3
Issuance of common stock under employee plans, net of tax withholdings	5.5			—				76.7				(8.8		)						67.9								67.9
Stock repurchases	(4.9	)		—				(24.8		)		(94.7		)						(119.5		)						(119.5		)
Stock-based compensation								53.2												53.2								53.2
Noncontrolling interest investments								0.8												0.8				(0.8		)		—
Tax benefit from stock option exercises								4.4												4.4								4.4
Balance at the end of fiscal 2016	251.3			$	0.3			$	1,348.3			$	1,228.5			$	(221.8	)		$	2,355.3			$	(0.1	)		$	2,355.2
Net income												118.4								118.4				0.1				118.5
Other comprehensive income																90.4				90.4								90.4
Comprehensive income																				208.8								208.9
Issuance of common stock under employee plans, net of tax withholdings	5.0			—				90.0				(16.7		)						73.3								73.3
Stock repurchases	(7.4	)		(0.1		)		(42.2		)		(246.0		)						(288.3		)						(288.3		)
Stock-based compensation								65.0												65.0								65.0
Noncontrolling interest investments																				—				—				—
Tax benefit from stock option exercises												0.4								0.4								0.4
Balance at the end of fiscal 2017	248.9			$	0.2			$	1,461.1			$	1,084.6			$	(131.4	)		$	2,414.5			$	—			$	2,414.5
Net income												282.8								282.8				0.5				283.3
Other comprehensive loss																(54.7		)		(54.7		)						(54.7		)
Comprehensive income																				228.1								228.6
Issuance of common stock under employee plans, net of tax withholdings	4.4			0.1				67.5				(27.4		)						40.2								40.2
Stock repurchases	(2.4	)		—				(14.7		)		(75.3		)						(90.0		)						(90.0		)
Stock-based compensation								78.0												78.0								78.0
Noncontrolling interest investments																				—				(0.1		)		(0.1		)
Tax benefit on new accounting guidance adoption												3.6								3.6								3.6
Balance at the end of fiscal 2018	250.9			$	0.3			$	1,591.9			$	1,268.3			$	(186.1	)		$	2,674.4			$	0.4			$	2,674.8

• See Note 2 for a summary of adjustment

See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions)
Cash flows from operating activities:
Net income	$	283.3			$	118.5			$	132.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	35.6				34.6				37.0
Amortization expense	179.6				148.8				150.8
Stock-based compensation	76.9				64.8				52.6
Income (loss) from equity method investments	1.9				(11.4		)		—
Other non-cash items	14.7				(1.3		)		18.4
Add decrease (increase) in assets:
Accounts receivable, net	(51.0		)		(42.7		)		3.8
Inventories	(45.0		)		(37.3		)		26.2
Other current and non-current assets	(22.6		)		(10.0		)		2.2
Add increase (decrease) in liabilities:
Accounts payable	(2.0		)		25.7				10.8
Accrued compensation and benefits	18.6				34.0				0.3
Deferred revenue	76.3				19.3				19.5
Other liabilities	(79.6		)		86.7				(22.7		)
Net cash provided by operating activities	486.7				429.7				431.1
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	(1,763.5		)		(280.2		)		(23.7		)
Acquisitions of property and equipment	(67.6		)		(43.7		)		(26.0		)
Purchases of short-term investments	(24.0		)		(288.0		)		(113.3		)
Proceeds from maturities of short-term investments	6.2				122.1				2.4
Proceeds from sales of short-term investments	196.8				97.7				—
Other	2.5				20.9				13.7
Net cash used in investing activities	(1,649.6		)		(371.2		)		(146.9		)
Cash flows from financing activities:
Issuance of common stock, net of tax withholdings	40.2				73.8				67.5
Repurchases of common stock	(93.0		)		(285.3		)		(119.5		)
Proceeds from debt and revolving credit lines	2,976.4				786.0				355.0
Payments on debt and revolving credit lines	(1,925.1		)		(495.4		)		(465.3		)
Other	(9.1		)		(12.6		)		(15.0		)
Net cash provided by (used in) financing activities	989.4				66.5				(177.3		)
Effect of exchange rate changes on cash and cash equivalents	(12.5		)		17.4				(6.8		)
Net increase (decrease) in cash and cash equivalents	(186.0		)		142.4				100.1
Cash and cash equivalents, beginning of fiscal year	358.5				216.1				116.0
Cash and cash equivalents, end of fiscal year	$	172.5			$	358.5			$	216.1

• See Note 2 for a summary of adjustments

See accompanying Notes to the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS

The Company began operations in 1978 and was originally incorporated in California as Trimble Navigation Limited in 1981. On October 1, 2016, Trimble Navigation Limited changed its name to Trimble Inc. ("Trimble" or the "Company") and changed its state of incorporation from the State of California to the State of Delaware. Other than the change in corporate domicile, the reincorporation did not result in any change in the business, physical location, management, assets, liabilities or total stockholders' equity of the Company, nor did it result in any change in location of the Company's employees, including the Company's management.

Trimble is a leading provider of technology solutions that optimize the work processes of office and mobile field professionals around the world. Our comprehensive work process solutions are used across a range of industries including agriculture, architecture, civil engineering, construction, government, natural resources, transportation and utilities. Representative Trimble customers include engineering and construction firms, contractors, surveying companies, farmers and agricultural companies, long haul trucking companies, energy, utility companies, and state, federal and municipal governments.

Trimble focuses on integrating its broad technological and application capabilities to create vertically-focused, system-level solutions that transform how work is done within the industries the Company serves. Products are sold based on return on investment and provide benefits such as lower operational costs, higher productivity, improved quality, enhanced safety and regulatory compliance, and reduced environmental impact. Representative products include equipment that automates large industrial equipment such as tractors and bulldozers; integrated systems that track fleets of vehicles and workers and provide real-time information and powerful analytics to the back-office; data collection systems that enable the management of large amounts of geo-referenced information; software solutions that connect all aspects of a construction site or a farm; and building information modeling ("BIM") software that is used throughout the design, build, and operational phases of construction projects.

NOTE 2: ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for revenue recognition, including determining the nature and timing of satisfaction of performance obligations and determining standalone selling price of performance obligations, allowances for doubtful accounts, sales returns reserve, allowances for inventory valuation, warranty costs, investments, goodwill impairment, intangibles impairment, purchased intangibles, useful lives for tangible and intangible assets, stock-based compensation, and income taxes among others. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Actual results and outcomes may differ from management's estimates and assumptions.

Basis of Presentation

The Company has a 52-53 week fiscal year, ending on the Friday nearest to December 31. Fiscal 2018, 2017 and 2016 were all 52-week years, and ended on December 28, 2018, December 29, 2017 and December 30, 2016, respectively. Unless otherwise stated, all dates refer to the Company’s fiscal year.

These Consolidated Financial Statements include the results of the Company and its consolidated subsidiaries. Inter-company accounts and transactions have been eliminated. Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the net assets and results of operations of the Company’s consolidated subsidiaries.

The Company has presented revenue and cost of sales separately for products, service and subscriptions. Product revenue includes hardware, software licenses, parts and accessories; service revenue includes maintenance and support for hardware and software products, training and professional services; subscription revenue includes software as a service ("SaaS").

Effective the first quarter of fiscal 2018, the Company adopted the new revenue recognition standard, Revenue from Contracts with Customers, and several other new standards as described below. All amounts and disclosures set forth in this Form 10-K have been updated to comply with the new standards. Certain prior period amounts reported in the Company's Consolidated Financial Statements and notes thereto have been reclassified to conform to the current presentation.

Reportable Segments

The Company reports its financial performance, including revenues and operating income, based on four new reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.

The Company's Chief Executive Officer (chief operating decision maker) views and evaluates operations based on the results of the Company’s reportable operating segments under its management reporting system. These results are not necessarily in conformance with U.S. GAAP. Beginning with the third quarter of fiscal 2018, the Company presented segment revenue and income excluding the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Segment income also excludes the effects of certain acquired capitalized commissions that were eliminated in purchase accounting, along with other adjustments that have historically been excluded in prior periods, as though the acquired companies operated independently in the periods presented. This is consistent with the way the chief operating decision maker evaluates each segment's performance and allocates resources.

Comparative period financial information by reportable segment has been recast to conform with the current presentation. See Note 6 of the Notes to the Consolidated Financial Statements for further information.

Revenue Recognition

Significant Judgments

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those products or services. Revenue is generally recognized net of allowance for returns and any taxes collected from customers. The Company enters 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.

Judgment is required to determine stand alone selling price ("SSP") for each distinct performance obligation. The Company uses a range of amounts to estimate SSP when products and services are sold separately and determines whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, the Company determines SSP using information that may include market conditions and other observable inputs.

Nature of Goods and Services

The Company generates revenue primarily from products, services and subscriptions; each of which is a distinct performance obligation. Product revenue includes hardware and software. Services, including post contract support and extended warranty, and subscriptions are performance obligations generally recognized over time. Descriptions are as follows:

Product

Revenue for hardware is recognized when the control of the product transfers to the customer, which is generally when the product is shipped. The Company recognizes shipping fees reimbursed by the customer as revenue and the cost for shipping as an expense in Cost of sales when control over products has transferred to the customer.

Revenue for perpetual and term software licenses is recognized upon delivery and commencement of license term. In general, the Company’s contracts do not provide for customer specific acceptances.

A small amount of revenue is derived from the licensing of software to OEM customers. Royalty revenue is recognized as and when the sales or usage occurs, which generally is at the time the OEM ships products incorporating the Company’s software.

Services

Professional services include installation, training, configuration, project management, system integrations, customization, data migration/conversion and other implementation services. The majority of professional services are not complex, can be provided by other vendors, are readily available and billed on a time-and-material basis. Revenue for distinct professional services is recognized over time, based on work performed.

In some contracts, products and professional services may be combined into a single performance obligation. This generally arises when products or subscriptions are sold with significant customization, modification, or integration services. Revenue for the combined performance is recognized over time as the work progresses because of the continuous transfer of control to the customer. When the Company is unable to reasonably estimate the total costs for the performance obligation, but expects to recover the costs incurred, revenue is recognized to the extent of the costs incurred (zero margin) until such time the Company can reasonably measure the expected costs.

Post contract support entitles the customer to receive software product upgrades and enhancements on a when and if available basis and technical support. Post contract support is recognized on a straight-line basis commencing upon product delivery over the post contract support term, which ranges from one to three years, with one year term being most common.

Extended warranty entitles the customer to receive replacement parts and repair services. Extended warranty is separately priced and is recognized on a straight-line basis over the extended service period which begins after the standard warranty period, ranging from one to two years depending on the product line.

Subscription

The Company’s software as a service ("SaaS") performance obligations may be sold with devices used to collect, generate and transmit data. SaaS is distinct from the related devices. In addition, the Company may host the software which the customer has separately licensed. Hosting services are distinct from the underlying software.

Subscription terms generally range from month-to-month to five years. Subscription revenue is recognized monthly over the service duration, commencing from activation.

Deferred Costs to Obtain Customer Contracts

The Company's incremental cost of obtaining contracts, which consists of sales commissions related to customer contracts that include maintenance or subscriptions revenue, are deferred if the contractual term is greater than a year or if renewals are expected and the renewal commission is not commensurate with the initial commission. These commission costs are deferred and amortized over a benefit period, either the contract term or the shorter of customer or product life, which is generally between three to seven years. The Company has elected the practical expedient to exclude contracts with an amortization period of a year or less from this deferral requirement.

See Note 11 - Deferred Costs to Obtain Customer Contracts for further information.

Remaining Performance Obligations

Remaining performance obligations represents contracted revenue for which goods or services have not been delivered. The contracted revenue, that will be recognized in future periods, includes both invoiced amounts in deferred revenue as well as amounts that are not yet invoiced.

See Note 12 - Deferred Revenue and Remaining Performance Obligations for further information.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in local currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments, net of tax, recorded in Accumulated other comprehensive loss within the stockholders’ equity section of the Consolidated Balance Sheets. Income and expense accounts are translated at average monthly exchange rates during the year.

Derivative Financial Instruments

The Company enters into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations on cash, certain trade and inter-company receivables and payables, primarily denominated in Euro, British pound, New Zealand dollars and Canadian dollars. These contracts reduce the exposure to fluctuations in 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 instruments are marked to market through earnings every period and generally range from one to two months in original maturity. The Company occasionally enters into foreign exchange forward contracts to hedge the purchase price of some of its larger business acquisitions. The Company does not enter into foreign exchange forward contracts for trading purposes. As of the fiscal years ended 2018 and 2017, there were no derivative financial instruments outstanding that were accounted for as hedges.

Cash, Cash Equivalents and Short-Term Investments

The Company's cash equivalents and short-term investments consisted primarily of treasury bills, debt securities, and commercial paper, interest and non-interest bearing bank deposits as well as bank time deposits. The Company classifies all investments that are considered readily convertible to known amounts of cash and have stated maturities of three months or less from the date of purchase as cash equivalents and those with stated maturities of greater than three months as short-term investments based on the nature of the investments and their availability for use in current operations. The Company has classified and accounted for such investments in cash equivalents and short-term investments as available-for-sale securities. The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of those instruments.

The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such designation at each balance sheet date. These investments are carried at fair value, and any unrealized gains and losses, net of taxes, are reported in Accumulated other comprehensive loss, except for unrealized losses determined to be other-than-temporary, which would be recorded within Other income, net. The Company has not recorded any such impairment charge in the fiscal year 2018. Realized gains or losses on the sale of marketable securities are determined on a specific identification method, and such gains and losses are recorded as a component of Other income, net.

Concentrations of Risk

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents, short-term investments and accounts receivable. The Company's cash equivalents and short-term investments consisted primarily of treasury bills, debt securities and commercial paper, interest, and non-interest bearing bank deposits, as well as bank time deposits. The main objective of these instruments is safety of principal and liquidity while maximizing return, without significantly increasing risk. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal credit risk.

The Company's investment policy requires the portfolio to include only securities with high credit quality and a weighted average maturity not to exceed six months, with the main objective of preserving capital and maintaining liquidity. The Company maintains an investment portfolio of various holdings, types, and maturities.

The Company is also exposed to credit risk in the Company’s trade receivables, which are derived from sales to end-user customers in diversified industries as well as various resellers. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended, when deemed necessary but generally does not require collateral.

With Flex Ltd. as an exclusive manufacturing partner for many of its products, the Company is dependent upon a sole supplier for the manufacture of these products. In addition, the Company relies on sole suppliers for a number of its critical components.

Accounts Receivable, Net

Accounts receivable, net, includes billed and unbilled amounts due from customers. Unbilled receivables include revenue recognized that exceed the amount billed to customer, provided the billing is not contingent upon future performance and the company has the unconditional right to future payment with only the passage of time required. Both billed and unbilled amounts due are stated at their net estimated realizable value.

The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. Each reporting period, the Company evaluates the collectibility of its trade accounts receivable based on a number of factors such as age of the accounts receivable balances, credit quality, historical experience and current economic conditions that may affect a customer’s ability to pay. The allowance for doubtful accounts was $4.6 million, $3.6 million and $5.0 million at the end of the fiscal 2018, 2017 and 2016, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Adjustments are also made to reduce the cost of inventory for estimated excess or obsolete balances. Factors influencing these adjustments include declines in demand which impact inventory purchasing forecasts, technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues. If the Company's estimates used to reserve for excess and obsolete inventory are different from what it expected, the Company may be required to recognize additional reserves, which would negatively impact its gross margin.

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the shorter of the estimated useful lives or the lease terms when applicable. Useful lives generally include a range from four to six years for machinery and equipment, five to ten years for furniture and fixtures, two to five years for computer equipment and software, thirty-nine years for buildings, and the life of the lease for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range generally from two to five years. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Depreciation expense was $35.6 million in fiscal 2018, $34.6 million in fiscal 2017 and $37.0 million in fiscal 2016.

Lease Obligations

The Company enters into lease arrangements for office space, facilities, and equipment under non-cancelable operating leases. Certain operating lease agreements contain rent holidays, rent escalation provisions, and lease incentives. Rent holidays, rent escalation provisions, and lease incentives are considered in determining the straight-line rent expense that is recorded over the lease term, which begins at the date of initial possession of the leased property. The Company does not include renewals in its determination of the lease term, unless the renewals are deemed reasonably assured of exercise at lease inception.

Business Combinations

The Company allocates the fair value of purchase consideration to the assets acquired, liabilities assumed, and non-controlling interests in the acquiree based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired, liabilities assumed and non-controlling interests in the acquiree is recorded as goodwill.

When determining the fair values of assets acquired, liabilities assumed, and non-controlling interests in the acquiree, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in 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. Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Goodwill and Purchased Intangible Assets

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets acquired individually, with a group of other assets, or in a business combination are recorded at fair value. Identifiable intangible assets are comprised of distribution channels and distribution rights, patents, licenses, technology, acquired backlog, trademarks and in-process research and development. Identifiable intangible assets are being amortized over the period of estimated benefit using the straight-line method and have estimated useful lives ranging from four years to ten years with a weighted average useful life of 6.5 years. Goodwill is not subject to amortization, but is subject to, at a minimum, an annual assessment for impairment.

Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets

The Company evaluates goodwill on an annual basis and whenever events and changes in circumstances indicate that the carrying amount may not be recoverable. The annual goodwill impairment test is performed at the reporting unit level on the first day of the fourth fiscal quarter of each year. We utilize either a qualitative assessment or a quantitative test to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount. In performing the qualitative assessment, the Company considers events and circumstances, including but not limited to, macroeconomic conditions, industry and market considerations, cost factors, and overall financial performance. When the Company performs a quantitative test, the estimation of the fair value of a reporting unit involves the use of certain estimates and assumptions including expected future operating performance using risk-adjusted discount rates.

Identifiable intangible assets are being amortized over the period of estimated benefit using the straight-line method. Changes in circumstances such as technological advances, changes to its business model, or changes in the capital strategy could result in the actual useful lives of intangible assets differing from initial estimates. In cases where the Company determines that the useful life of an asset should be revised, the net book value in excess of the estimated residual value will be depreciated over its revised remaining useful life. These assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable based on their future cash flows. The estimated future cash flows are primarily based upon assumptions about expected future operating performance. The assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the estimated undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value.

Warranty

The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, technical support labor costs, and costs incurred by third parties performing work on the Company’s behalf. The Company’s expected future cost is primarily estimated based upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the equipment. When products sold include warranty provisions, they are covered by a warranty for periods ranging generally from one year to two years.

While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, its warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage, or service delivery costs differ from the estimates, revisions to the estimated warranty accrual and related costs may be required.

Changes in the Company’s product warranty liability during the fiscal years ended 2018 and 2017 are as follows:

Fiscal Years	2018				2017
(In millions)
Beginning balance	$	18.3			$	17.2
Acquired warranties	—				0.5
Accruals for warranties issued	15.4				20.4
Changes in estimates	(0.1		)		(0.8		)
Warranty settlements (in cash or in kind)	(18.3		)		(19.0		)
Ending Balance	$	15.3			$	18.3

Guarantees, Including Indirect Guarantees of Indebtedness of Others

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company. For example, the Company has agreed to hold other parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made by certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents.

It is not possible to determine the maximum potential exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not been material, and no liabilities have been recorded on the Consolidated Balance Sheets at the end of fiscal 2018 and 2017.

Advertising and Promotional Costs

The Company expenses all advertising and promotional costs as incurred. Advertising and promotional expense was approximately $42.7 million, $37.2 million, and $37.2 million, in fiscal 2018, 2017, and 2016, respectively.

Research and Development Costs

Research and development costs are charged to expense as incurred. Cost of software developed for external sale subsequent to reaching technical feasibility were not significant and were expensed as incurred. The Company received third-party funding of approximately $19.5 million, $18.1 million, and $13.0 million in fiscal 2018, 2017, and 2016, respectively. The Company offsets research and development expense with any unconditional third-party funding earned. The Company retains the rights to any technology developed under such arrangements.

Stock-Based Compensation

The Company has employee stock benefit plans, which are described more fully in "Note 15: Employee Stock Benefit Plans." Stock-based compensation expense recognized in the Consolidated Statements of Income is based on the grant date fair value of the portion of share-based payment awards expected to vest during the period, net of estimated forfeitures. The Company attributes the fair value of stock options and restricted stock units ("RSUs") to expense using the straight-line method. The fair value for time-based and performance-based RSUs ("PSUs") is measured at the grant date using the fair value of Trimble’s common stock, with total expense for PSUs based upon the probable expected achievement of the underlying performance goals as adjusted in future periods for changes in expectations and actual achievement. The fair value for RSUs with market-based vesting conditions is measured at the grant date using a Monte Carlo model. The grant date fair value for stock options is estimated using the Black-Scholes option pricing model. The fair value of rights to purchase shares under the Company's Employee Stock Purchase Plan ("ESPP") is estimated using the Black-Scholes option pricing model. The Company estimates forfeitures at the date of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical and current information to estimate forfeitures.

Income Taxes

Income taxes are accounted for under the liability method, whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not such assets will not be realized. The Company’s valuation allowance is primarily attributable to foreign net operating losses and state research and development credit carryforwards. Management believes that it is more likely than not that the Company will not realize certain of these deferred tax assets, and, accordingly, a valuation allowance has been provided for such amounts. Valuation allowance adjustments associated with an acquisition after the measurement period are recorded through income tax expense.

Relative to uncertain tax positions, the Company only recognizes a tax benefit if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The Company considers 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. Changes in recognition or measurement of the Company's uncertain tax positions would result in the recognition of a tax benefit or an additional charge to the tax provision. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company is subject to income taxes in the U.S. and numerous other countries, and is subject to routine corporate income tax audits in many of these jurisdictions. The Company generally believes that positions taken on its tax returns are more likely than not to be sustained upon audit, but tax authorities in some circumstance have, and may in the future, successfully challenge these positions. Accordingly, the Company’s income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the Company’s income tax provision and, therefore, could have a material impact on its income tax provision, net income, and cash flows. The Company’s accrual for uncertain tax positions includes uncertainties concerning the tax treatment of our international operations, including the allocation of income among different jurisdictions, intercompany transactions, and related interest. See Note 13 of the Notes to Consolidated Financial Statements for additional information.

Computation of Earnings Per Share

The number of shares used in the calculation of basic earnings per share represents the weighted average common shares outstanding during the period and excludes any potentially dilutive securities. The dilutive effects of outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and restricted stock units are included in diluted earnings per share.

Recent Accounting Pronouncements

Fiscal 2018 Adoption

Financial Instruments - Overall

In January 2016, the FASB issued new guidance that requires entities to measure equity investments previously accounted for under the cost method at fair value and recognize any changes in fair value in net income. For equity investments without readily determinable fair values, an entity may elect an alternative measurement method at cost minus impairment, if any, plus or minus any adjustments from observable market transactions. The Company adopted the guidance in the first quarter of fiscal 2018 on a prospective basis for equity investments without readily determinable fair values by electing the alternative measurement method. The Company’s equity investments are immaterial on its Consolidated Balance Sheets, therefore, adoption of this guidance did not have a material impact.

Statement of Cash Flows

In August 2016, the FASB issued new guidance related to the statement of cash flows. This guidance clarifies certain classification issues for cash flows provided by or used in operating, financing, or investing activities. The Company adopted the amendments retrospectively to all periods presented in the first quarter of fiscal 2018. The impact of adoption on the Company’s Consolidated Statements of Cash Flows is presented along with adoption of Revenue from Contracts with Customers.

Accounting for Income Taxes - Intra-Entity Asset Transfers

In October 2016, the FASB issued new guidance related to income taxes. This standard requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The Company adopted the guidance beginning in the first quarter of fiscal 2018. The adoption did not have a material impact on the Company's Consolidated Financial Statements.

Other Income - Gains and Losses from the Derecognition of Non-financial Assets

In February 2017, the FASB issued new guidance clarifying the scope and application of existing guidance related to the sale or transfer of non-financial assets to non-customers, including partial sales. In January 2017, the FASB issued amendments to the definition of a business for companies that sell or acquire businesses. The Company adopted both of these amendments beginning in the first quarter of fiscal 2018. The adoption did not have a material impact on the Company's Consolidated Financial Statements.

Compensation - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued new guidance to improve the presentation for components of defined benefit pension cost, which requires employers to report the service cost component of net periodic pension cost in the same line item as other compensation expense arising from services rendered during the period. The standard also requires the other components of net periodic cost be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. The Company adopted the guidance retrospectively to all periods presented beginning in the first quarter of fiscal 2018. The Company has defined benefit pension plans that are immaterial for its Consolidated Financial Statements, therefore, adoption of this guidance did not have a material impact.

Revenue from Contracts with Customers

In May 2014, the FASB issued a comprehensive new revenue recognition standard that replaced the prior revenue recognition guidance under U.S. GAAP. The new standard requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company adopted the requirements of the new standard starting the first quarter of fiscal 2018, utilizing the full retrospective method of transition. Adoption of the new standard resulted in changes to the Company's accounting policies for revenue recognition and accounts receivable, net and deferred costs to obtain customer contracts as described in Note 2 above.

The impact of adopting the new standard on the Consolidated Statements of Income for fiscal 2017 and 2016 was not material. The majority of revenue, which is related to hardware, software perpetual licenses, SaaS and other service and support offerings, remains substantially unchanged. The primary revenue impacts related to the new standard are earlier recognition of software term licenses, certain professional service contracts and non-standard terms and conditions. Previously, the Company expensed the majority of its commission expense as incurred. Under the new standard, the Company capitalizes and amortizes incremental commission costs to obtain the contract over a benefit period. The Company elected a practical expedient to exclude contracts with a benefit period of a year or less from this deferral requirement for both retrospective and future financial statement periods.

The impact of adoption of the new standard on the Consolidated Balance Sheets for fiscal 2017 and 2016 was material with the primary impacts due to a reduction in deferred revenue for revenue streams that are recognized sooner under the new standard and capitalization of incremental costs to obtain customer contracts.

Adoption of the new standard had no impact to cash provided by or used in operating, financing or investing activities on the Statements of Cash Flows for fiscal 2017 and 2016, although cash provided from operating activities had offsetting adjustments within accounts.

Impacts to Previously Reported Results

Adoption of the standard using the full retrospective method required the Company to restate certain previously reported results primarily related to revenue and cost of sales, accounts receivable, net, deferred costs to obtain customer contracts and deferred income taxes as shown in the Company's previously reported results below.

Adoption of Revenue from Contracts with Customers standards and the new Statement of Cash Flows impacted Company's previously reported results as follows:

Fiscal Years	2017												2016
(In millions, except per share amounts)	As Previously Reported				Adjustments a				As Adjusted				As Previously Reported				Adjustments a				As Adjusted
Revenue	$	2,654.2			$	(7.7	)		$	2,646.5			$	2,362.2			$	(0.1	)		$	2,362.1
Gross margin	1,392.6				(15.0		)		1,377.6				1,238.0				(3.5		)		1,234.5
Operating income	246.0				(10.3		)		235.7				181.0				(0.6		)		180.4
Income tax provision	137.9				(8.2		)		129.7				44.5				(0.6		)		43.9
Net Income attributable to Trimble Inc.	$	121.1			$	(2.7	)		$	118.4			$	132.4			$	—			$	132.4
Diluted earnings per share	$	0.47			$	(0.01	)		$	0.46			$	0.52			$	—			$	0.52

	Fiscal Year End 2017
(In millions)	As Previously Reported				Adjustments a				As Adjusted
Accounts receivable, net	$	414.8			$	12.9			$	427.7
Inventories	271.8				(7.2		)		264.6
Deferred costs, non-current	—				35.0				35.0
Other current and non-current assets	205.5				(22.6		)		182.9
Current and non-current deferred revenue	313.4				(36.8		)		276.6
Other current liabilities	101.0				(1.8		)		99.2
Deferred income tax liabilities	40.4				7.4				47.8
Stockholders' equity	$	2,366.0			$	48.5			$	2,414.5

a. Adjusted to reflect the adoption of Revenue from Contracts with Customers

Fiscal Years	2017												2016
(In millions)	As Previously Reported				Adjustments b				As Adjusted				As Previously Reported				Adjustments b				As Adjusted
Net cash provided by operating activities	$	411.9			$	17.8			$	429.7			$	413.6			$	17.5			$	431.1
Net cash used in investing activities	(366.0		)		(5.2		)		(371.2		)		(144.4		)		(2.5		)		(146.9		)
Net cash provided by (used in) financing activities	$	79.1			$	(12.6	)		$	66.5			$	(162.3	)		$	(15.0	)		$	(177.3	)

b. Adjusted to reflect the adoption of Statement of Cash Flows

Fiscal 2019 Adoption

Leases

In February 2016, the FASB issued a new standard that requires lessees to recognize lease assets and lease liabilities on the balance sheet for most leases and provide enhanced disclosures. Most prominent is the recognition of assets and liabilities by lessees for leases classified as operating leases. Leases are classified as either finance or operating leases, and for both, the initial lease liabilities are measured at the present value of the remaining lease payments. The Company will adopt the new lease standard effective beginning in fiscal 2019 using a modified retrospective method and will not restate comparative periods. The Company plans to elect the allowable practical expedients, except for the use of hindsight to determine existing lease terms.

The Company believes that the standard will have a material effect on its Consolidated Balance Sheets by recognizing operating lease assets and liabilities primarily related to its real estate properties. The future minimum payments of these operating leases are disclosed in Note 8: Commitments and Contingencies. The Company is currently revising its systems, processes, and controls to comply with the new standard.

Future Adoption

Financial Instruments - Credit Losses

In June 2016, the FASB issued new guidance that requires credit losses on financial assets measured at amortized cost basis to be presented based on the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. The new standard is effective for the Company beginning in fiscal 2020. Early adoption for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 is permitted. The Company is currently evaluating the effect of the updated standard on its Consolidated Financial Statements.

Intangibles - Goodwill and Other

In January 2017, the FASB issued new guidance that simplifies the accounting for goodwill impairment by requiring impairment charges to be based on the first step in today’s two-step impairment test. The impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new standard is to be applied on a prospective basis and is effective for the Company beginning in fiscal 2020 with early adoption permitted. The Company currently anticipates that the adoption will not have a material impact on its Consolidated Financial Statements.

Intangibles - Internal-Use Software

In August 2018, the FASB issued new guidance that clarifies the customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software. The Company is required to adopt the guidance in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the effect of the new guidance on its Consolidated Financial Statements.

NOTE 3: EARNINGS PER SHARE

Basic earnings per share is computed by dividing Net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing Net income by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, and restricted stock units. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock generally results in a greater dilutive effect from potentially dilutive securities.

The following table shows the computation of basic and diluted earnings per share:

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions, except per share data)
Numerator:
Net income attributable to Trimble Inc.	$	282.8			$	118.4			$	132.4
Denominator:
Weighted average number of common shares used in basic earnings per share	250.0				252.1				250.5
Effect of dilutive securities	3.4				4.6				3.4
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share	253.4				256.7				253.9
Basic earnings per share	$	1.13			$	0.47			$	0.53
Diluted earnings per share	$	1.12			$	0.46			$	0.52

• See Note 2 for a summary of adjustments

For fiscal 2018, 2017, and 2016, the Company excluded 0.8 million shares, 0.5 million shares and 4.3 million shares of outstanding stock options, respectively, from the calculation of diluted earnings per share because their effect would have been antidilutive.

NOTE 4: BUSINESS COMBINATIONS

During fiscal 2018, 2017, and 2016, the Company acquired multiple businesses, all with cash consideration. The Consolidated Statements of Income include the operating results of the businesses from the dates of acquisition.

During fiscal 2018, the Company acquired six businesses, with total purchase consideration of $1,782.9 million. The purchase prices ranged from less than $1.8 million to $1,211.3 million, including the acquisitions of Waterfall Holdings, Inc., the holding company of Viewpoint, Inc. (“Viewpoint”), and e-Builder, Inc. ("e-Builder") having cash transactions valued at $1,211.3 million and $485.2 million, respectively. In the aggregate, the businesses acquired during fiscal 2018 contributed approximately five percent to the Company's total revenue during fiscal 2018.

During fiscal 2017, the Company acquired ten businesses, with total purchase consideration of $331.2 million. The purchase prices ranged from less than $2.0 million to $134.0 million. The largest acquisition was Müller-Elektronik, a privately held German company specializing in implement control and precision farming solutions. In the aggregate, the businesses acquired during fiscal 2017 contributed less than two percent to the Company's total revenue during fiscal 2017.

During fiscal 2016, the Company acquired four businesses, with total purchase consideration of $27.6 million. The purchase prices ranged from less than $0.3 million to $14.0 million. The acquisitions were not significant individually or in the aggregate. The largest acquisition was of a company that manages content and software solutions that enable MEP contractors and engineers to produce intelligent and constructible models, based in Rocklin, California. In the aggregate, the businesses acquired during fiscal 2016 collectively contributed less than one percent to the Company's total revenue during fiscal 2016.

The Company determined the total consideration paid for each of its acquisitions as well as the fair value of the assets acquired and liabilities assumed as of the date of each acquisition. The fair value of liabilities assumed includes deferred revenue which is written down to the cost, plus a reasonable profit margin, to fulfill customer contractual obligations. For certain acquisitions completed in fiscal 2018, the fair value of the assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information, primarily related to adjustments for the true-up of acquired net working capital in accordance with certain purchase agreements, and estimated values of certain net tangible assets and liabilities including tax balances, pending the completion of final studies and analyses. If there are adjustments made for these items the fair value of intangible assets and goodwill could be impacted. Thus, the provisional measurements of fair value set forth below are subject to change. Such changes could be significant. The Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one year from the acquisition date.

The fair value of identifiable assets acquired and liabilities assumed were determined under the acquisition method of accounting for business combinations. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair value of intangible assets acquired is generally determined based on a discounted cash flow analysis. Acquisition costs directly related to all acquisitions, including the changes in the fair value of the contingent consideration liabilities, a net expense of $38.9 million, $7.4 million, and $6.8 million in fiscal 2018, 2017, and 2016, respectively, were expensed as incurred and are included in General and administrative expenses in the Consolidated Statements of Income.

The following table summarizes the Company’s business combinations completed during fiscal 2018, 2017, and 2016:

Fiscal Years	2018				2017				2016
(In millions)
Fair value of total purchase consideration	$	1,782.9			$	331.2			$	27.6
Less fair value of net assets acquired:
Net tangible assets acquired	5.0				29.7				(1.9		)
Identified intangible assets	568.3				166.7				13.6
Deferred taxes	(89.2		)		(5.8		)		(1.3		)
Goodwill	$	1,298.8			$	140.6			$	17.2

Intangible Assets

The following table presents details of the Company’s total intangible assets:

		At the End of Fiscal 2018												At the End of Fiscal 2017
(In millions)	Weighted-Average Useful Lives (in years)	Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount				Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Developed product technology	6	$	1,220.3			$	(825.3	)		$	395.0			$	915.3			$	(729.9	)		$	185.4
Trade names and trademarks	5	72.9				(53.3		)		19.6				58.7				(48.6		)		10.1
Customer relationships	8	715.1				(406.5		)		308.6				512.1				(351.3		)		160.8
Distribution rights and other intellectual properties	6	84.4				(63.3		)		21.1				69.2				(60.7		)		8.5
		$	2,092.7			$	(1,348.4	)		$	744.3			$	1,555.3			$	(1,190.5	)		$	364.8

The estimated future amortization expense of intangible assets at the end of fiscal 2018 is as follows (in millions):

2019	$	168.4
2020	140.4
2021	119.1
2022	99.5
2023	85.6
Thereafter	131.3
Total	$	744.3

Goodwill

The Company reports its financial performance, including revenues and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.

The changes in the carrying amount of goodwill by segment for fiscal 2018 are as follows:

(In millions)	Buildings and Infrastructure				Geospatial				Resources and Utilities				Transportation				Total
At the end of fiscal 2017	$	706.8			$	415.3			$	314.5			$	850.5			$	2,287.1
Additions due to acquisitions and current year acquisitions' purchase price adjustments	1,283.4				—				—				15.4				1,298.8
Purchase price adjustments - prior years' acquisitions	—				—				(0.4		)		(0.8		)		(1.2		)
Foreign currency translation adjustments	(20.0		)		(10.4		)		(8.4		)		(4.1		)		(42.9		)
Divestitures	—				(1.8		)		—				—				(1.8		)
At the end of fiscal 2018	$	1,970.2			$	403.1			$	305.7			$	861.0			$	3,540.0

Viewpoint and e-Builder acquisitions

On July 2, 2018, the Company acquired all of the outstanding shares of Viewpoint, in an all-cash transaction valued at $1,211.3 million. Viewpoint is a provider of construction management software, which integrates a contractor’s financial and resource management to their project operations in the field. The integration across the office, team and field workflows enable contractors to employ Viewpoint to effectively manage and gain visibility over data and workflows that span the construction lifecycle from pre-production planning, to product operations and supply chain management, through project hand over and asset operation and maintenance. The Company incurred approximately $19.0 million in acquisition-related costs, which were expensed as incurred in General and administrative expense.

On February 2, 2018, the Company completed the acquisition of e-Builder. e-Builder is a SaaS-based construction program management solution provider for capital program owners and program management firms that provides an integrated project delivery solution for owners, program managers, and contractors across the design, construct, and operate lifecycle. The Company acquired all of the outstanding shares of common stock of e-Builder for a total purchase price of $485.2 million, subject to certain adjustments described in the purchase agreement. The Company incurred approximately $18.6 million in acquisition-related costs, primarily comprising compensation costs incurred post-closing associated with options which were accelerated in connection with the acquisition transaction, which were expensed as incurred and included in Cost of Sales - Service, Research and development, Sales and marketing, and General and administrative expense.

Viewpoint and e-Builder’s results of operations since their respective acquisition dates have been included in the Company’s Consolidated Statements of Income for fiscal 2018. Both Viewpoint and e-Builder's performance are reported under the Buildings and Infrastructure segment.

The two acquisitions were funded through the use of approximately $211.2 million of the Company’s existing cash, with the remainder funded through the issuance of senior notes and the Company’s 2018 Credit Facilities (as defined below).

The following table summarizes the consideration transferred to acquire Viewpoint and e-Builder, the assets acquired and liabilities assumed, and the estimated useful lives of the identifiable intangible assets as of the date of the acquisition:

	Viewpoint						e-Builder
(In millions)
Total purchase consideration	$	1,211.3					$	485.2
Net tangible assets (liabilities) acquired	(0.9		)				2.0
Intangible assets acquired:					Estimated Useful Life						Estimated Useful Life
Developed product technology	225.4				6 years		60.5				7 years
In-Process Research & Development	12.9				n/a		—
Order backlog	—						1.7				6 months
Customer relationships	158.6				10 years		42.4				10 years
Trade name	8.9				5 years		4.8				7 years
Favorable Lease	4.3				4 - 9 years		—
Subtotal	410.1						109.4
Deferred tax liability	(61.2		)				(18.4		)
Less fair value of all assets/liabilities acquired	348.0						93.0
Goodwill	$	863.3					$	392.2

Details of the net assets (liabilities) acquired are as follows:

	Viewpoint				e-Builder
	As of July 2, 2018				As of February 2, 2018
(In millions)
Cash and cash equivalents	$	9.1			$	2.5
Accounts receivable, net	25.1				14.9
Other receivables	1.3				43.3
Other current assets	4.3				0.7
Property and equipment, net	7.5				—
Other non-current assets	3.0				0.2
Accounts payable	(1.3		)		(8.4		)
Accrued compensation and benefits	(8.0		)		—
Deferred revenue	(26.4		)		(12.1		)
Other current liabilities	(13.2		)		(39.1		)
Other non-current liabilities	(2.3		)		—
Net tangible assets (liabilities) acquired	$	(0.9	)		$	2.0

Goodwill represents the excess of the fair value of consideration paid over the fair value of the underlying net tangible and intangible assets acquired. Goodwill consisted of highly skilled and valuable assembled workforce, a proven ability to generate new products and services to drive future revenue, and a premium paid by the Company for synergies unique to its business. The Company recorded $863.3 million and $392.2 million of goodwill from Viewpoint and e-Builder acquisitions, respectively. Of the fiscal 2018 goodwill balance, $95.8 million is expected to be deductible for tax purposes for Viewpoint.

During fiscal 2018, Viewpoint and e-Builder contributed $125.2 million of revenue and $17.3 million of operating income. The following table presents pro forma results of operations of the Company, Viewpoint and e-Builder, as if the companies had been combined as of the beginning of the earliest period presented. The unaudited pro forma results of operations are not necessarily indicative of results that would have occurred had the acquisitions taken place on the first day of fiscal 2017, or of future results. Included in the pro forma results are fair value adjustments based on the fair values of assets acquired and liabilities assumed as of the applicable acquisition dates. For fiscal 2018 and 2017, the major impacts for the pro-forma results include amortization of intangible assets related to the acquisitions, impacts from adoption of Revenue from Contracts with Customers, interest expense for debt used to purchase Viewpoint and e-Builder, income tax effects, and other adjustments to reflect fair value. The pro forma information for fiscal 2018 and 2017 is as follows:

Fiscal Years	2018				2017
(In millions, except per share data)
Revenue	$	3,205.5			$	2,849.4
Net income attributable to Trimble Inc.	276.9				72.6
Basic earnings per share	1.11				0.29
Diluted earnings per share	1.09				0.28

NOTE 5: CERTAIN BALANCE SHEET COMPONENTS

The following tables provide details of selected balance sheet items:

At the End of Fiscal Year	2018				2017
					*As Adjusted
(In millions)
Inventories:
Raw materials	$	96.2			$	85.2
Work-in-process	12.6				12.4
Finished goods	189.2				167.0
Total inventories	$	298.0			$	264.6

• See Note 2 for a summary of adjustments

Finished goods includes $7.3 million at the end of fiscal year 2018 and $8.7 million at the end of fiscal year 2017 for costs of sales that have been deferred in connection with deferred revenue arrangements.

At the End of Fiscal Year	2018				2017
(In millions)
Property and equipment, net:
Machinery and equipment	$	134.2			$	130.6
Software and licenses	135.9				124.4
Furniture and fixtures	31.4				29.3
Leasehold improvements	40.7				36.6
Construction in progress	16.4				32.9
Buildings	106.5				60.9
Land	9.9				10.0
	475.0				424.7
Less: accumulated depreciation	(262.1		)		(250.7		)
Total property and equipment, net	$	212.9			$	174.0

At the End of Fiscal Year	2018				2017
(In millions)
Other non-current liabilities:
Deferred compensation	$	28.5			$	27.1
Pension	19.2				19.6
Deferred rent	4.3				3.1
Unrecognized tax benefits	65.8				76.4
Other	32.4				35.8
Total other non-current liabilities	$	150.2			$	162.0

NOTE 6: REPORTING SEGMENT AND GEOGRAPHIC INFORMATION

The Company's operating segments were determined based on how the Company's chief operating decision maker views and evaluates operations. Various factors, including market separation and customer specific applications, go-to market channels, and products and services, were considered in determining these operating segments. Segment operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to each segment and to assess performance. In each of its segments, the Company sells many individual products. For this reason it is impracticable to segregate and identify revenue for each of the individual products or group of products.

The Company’s reportable segments are described below:

•	Buildings and Infrastructure: This segment primarily serves customers working in architecture, engineering, construction, and operations and maintenance.

•	Geospatial: This segment primarily serves customers working in surveying, engineering, government, and land management.

•	Resources and Utilities: This segment primarily serves customers working in agriculture, forestry, and utilities.

•	Transportation: This segment primarily serves customers working in long haul trucking, field service management, rail, and military aviation.

The following Reporting Segment tables reflect the results of the Company’s reportable operating segments under its management reporting system. These results are not necessarily in conformity with U.S. GAAP. Beginning with the third quarter of fiscal 2018, the Company presented segment revenue and income excluding the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Segment income presented also excludes the effects of certain acquired capitalized commissions that were eliminated in purchase accounting, along with other adjustments that have historically been excluded in prior periods, as though the acquired companies operated independently in the periods presented. This is consistent with the way the chief operating decision maker evaluates each of the segment's performance and allocates resources. Comparative period financial information by reportable segment has been recast to conform with the current presentation.

	Reporting Segments
	Buildings and Infrastructure				Geospatial				Resources and Utilities				Transportation				Total
(In millions)
Fiscal 2018
Revenue	$	1,065.5			$	723.1			$	567.1			$	752.7			$	3,108.4
Acquired deferred revenue adjustment	22.2				—				1.0				0.4				23.6
Segment revenue	$	1,087.7			$	723.1			$	568.1			$	753.1			$	3,132.0
Operating income	$	239.0			$	166.4			$	167.4			$	142.9			$	715.7
Acquired deferred revenue adjustment	22.2				—				1.0				0.4				23.6
Amortization of acquired capitalized commissions	(4.5		)		—				(0.2		)		—				(4.7		)
Segment operating income	$	256.7			$	166.4			$	168.2			$	143.3			$	734.6
Depreciation expense	$	6.4			$	6.0			$	4.2			$	4.5			$	21.1
Fiscal 2017
Revenue (*As Adjusted)	$	829.4			$	658.5			$	481.0			$	677.6			$	2,646.5
Acquired deferred revenue adjustment	1.1				—				1.0				0.7				2.8
Segment revenue	$	830.5			$	658.5			$	482.0			$	678.3			$	2,649.3
Operating income (*As Adjusted)	$	176.0			$	129.4			$	137.0			$	114.4			$	556.8
Acquired deferred revenue adjustment	1.1				—				1.0				0.7				2.8
Amortization of acquired capitalized commissions	(0.9		)		—				(0.1		)		(0.3		)		(1.3		)
Segment operating income	$	176.2			$	129.4			$	137.9			$	114.8			$	558.3
Depreciation expense	$	6.2			$	5.4			$	3.2			$	5.2			$	20.0
Fiscal 2016
Revenue (*As Adjusted)	$	741.8			$	635.7			$	397.4			$	587.2			$	2,362.1
Acquired deferred revenue adjustment	1.0				—				0.8				0.8				2.6
Segment revenue	$	742.8			$	635.7			$	398.2			$	588.0			$	2,364.7
Operating income (*As Adjusted)	$	132.7			$	120.6			$	118.8			$	103.3			$	475.4
Acquired deferred revenue adjustment	1.0				—				0.8				0.8				2.6
Amortization of acquired capitalized commissions	(1.0		)		—				(0.3		)		(0.3		)		(1.6		)
Segment operating income	$	132.7			$	120.6			$	119.3			$	103.8			$	476.4
Depreciation expense	$	7.0			$	6.5			$	2.0			$	5.5			$	21.0

	Reporting Segments
	Buildings and Infrastructure				Geospatial				Resources and Utilities				Transportation				Total
(In millions)
As of Fiscal Year End 2018
Accounts receivable, net	$	177.5			$	118.7			$	83.8			$	132.6			$	512.6
Inventories	70.3				133.5				46.2				48.0				298.0
Goodwill	1,970.2				403.1				305.7				861.0				3,540.0
As of Fiscal Year End 2017
Accounts receivable, net (*As Adjusted)	$	120.1			$	121.5			$	78.5			$	107.6			$	427.7
Inventories (*As Adjusted)	62.1				110.3				46.0				46.2				264.6
Goodwill	$	706.8			$	415.3			$	314.5			$	850.5			2,287.1
As of Fiscal Year End 2016
Accounts receivable, net (*As Adjusted)	$	104.6			$	109.7			$	65.6			$	86.3			$	366.2
Inventories (*As Adjusted)	51.3				99.2				30.4				32.4				213.3
Goodwill	663.7				405.1				217.7				791.1				2,077.6

• See Note 2 for a summary of adjustments

A reconciliation of the Company’s consolidated segment operating income to consolidated income before income taxes is as follows:

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions)
Consolidated segment operating income	$	734.6			$	558.3			$	476.4
Unallocated corporate expense (1)	(90.7		)		(86.8		)		(70.5		)
Acquired deferred revenue adjustment	(23.6		)		(2.8		)		(2.6		)
Restructuring charges (2)	(8.7		)		(10.5		)		(13.3		)
Amortization of purchased intangible assets	(179.6		)		(148.8		)		(150.8		)
Stock-based compensation	(76.9		)		(64.8		)		(52.6		)
Amortization of acquisition-related inventory step-up	(0.2		)		(2.8		)		—
Acquisition and divestiture items	(38.9		)		(7.4		)		(6.8		)
Executive transition costs	—				—				(1.0		)
Amortization of acquired capitalized commissions	4.7				1.3				1.6
Consolidated operating income	320.7				235.7				180.4
Non-operating income (expense), net:	(42.7		)		12.5				(4.3		)
Consolidated income before taxes	$	278.0			$	248.2			$	176.1

• See Note 2 for a summary of adjustments

(1) Unallocated corporate expense includes general corporate expense.

(2) Restructuring charges primarily consist of severance and benefits, resulting from employee headcount reductions in connection with the Company's restructuring programs related to decisions to streamline processes and reduce the cost structure. As of the end of fiscal 2018, the Company's restructuring liability was $3.0 million, which is expected to be settled in fiscal 2019. Restructuring liabilities are reported within Other current liabilities on the Consolidated Balance Sheets.

On a total Company basis, the disaggregation of revenue by geography is summarized in the tables below. Revenue is defined as revenue from external customers attributed to countries based on the location of the customer and excludes the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting, consistent with the Reporting Segment tables above.

	Reporting Segments
	Buildings and Infrastructure				Geospatial				Resources and Utilities				Transportation				Total
(In millions)
Fiscal 2018
North America	$	595.0			$	290.6			$	175.0			$	609.4			$	1,670.0
Europe	312.1				211.2				260.0				90.2				873.5
Asia Pacific	152.7				171.7				46.4				47.5				418.3
Rest of World	27.9				49.6				86.7				6.0				170.2
Total segment revenue	$	1,087.7			$	723.1			$	568.1			$	753.1			$	3,132.0
Fiscal 2017 (*As Adjusted)
North America	$	428.5			$	257.5			$	163.7			$	562.9			$	1,412.6
Europe	237.9				187.1				189.5				72.7				687.2
Asia Pacific	127.2				162.5				52.6				37.7				380.0
Rest of World	36.9				51.4				76.2				5.0				169.5
Total segment revenue	$	830.5			$	658.5			$	482.0			$	678.3			$	2,649.3
Fiscal 2016 (*As Adjusted)
North America	$	395.6			$	255.5			$	150.6			$	476.2			$	1,277.9
Europe	207.0				172.8				133.5				62.9				576.2
Asia Pacific	105.0				159.9				53.5				34.4				352.8
Rest of World	35.2				47.5				60.6				14.5				157.8
Total segment revenue	$	742.8			$	635.7			$	398.2			$	588.0			$	2,364.7

• Adjusted to reflect adoption of the new revenue recognition standard, Revenue from Contracts with Customers. For further information, see Note 2.

No single customer or country other than the United States accounted for 10% or more of Trimble’s total revenue in fiscal years 2018, 2017 and 2016. No single customer accounted for 10% or more of Trimble's accounts receivable as of fiscal years ended 2018 and 2017.

Property and equipment, net by geographic area was as follows:

At the End of Fiscal Year	2018				2017
(In millions)
Property and equipment, net:
United States	$	170.1			$	131.7
Europe	34.2				33.1
Asia Pacific and other non-US countries	8.6				9.2
Total property and equipment, net	$	212.9			$	174.0

NOTE 7: DEBT

Debt consisted of the following:

At the End of Fiscal Year				Effective interest rate		2018				2017
(In millions, except percentages)		Date of Issuance		for fiscal 2018		Amount				Amount
Senior Notes:
2023 Senior Notes, 4.15%, due June 2023		June 2018		4.36%		$	300.0			$	—
2028 Senior Notes, 4.90%, due June 2028		June 2018		5.04%		600.0				—
2024 Senior Notes, 4.75%, due December 2024		November 2014		4.95%		400.0				400.0
Credit Facilities:
2014 Credit Facility, floating rate, retired		November 2014				—				389.0
2018 Credit Facility, floating rate:
Term Loan, due May 2021		May 2018		4.00%		425.0				—
Uncommitted facilities, floating rate				2.16%		255.9				128.0
Promissory notes and other debt						1.0				1.2
Unamortized discount and issuance costs						(13.4		)		(4.3		)
Total debt						1,968.5				913.9
Less: Short-term debt						256.2				128.4
Long-term debt						$	1,712.3			$	785.5

Each of the Company's debt agreements requires it to maintain compliance with certain debt covenants, all of which the Company was in compliance with at the end of fiscal 2018.

Debt Maturities:

At the end of fiscal 2018, the Company's debt maturities based on outstanding principal were as follows (in millions):

Year Payable
2019	$	256.2
2020	0.5
2021	425.2
2022	—
2023	300.0
Thereafter	1,000.0
Total	$	1,981.9

Senior Notes:

2023 Senior Notes

In June 2018, the Company issued an aggregate principal amount of $300.0 million in senior notes (the "2023 Senior Notes") that will mature in June 2023 and bear interest at a fixed rate of 4.15 percent per annum. The interest is payable semi-annually in June and December of each year, commencing in December 2018. The interest rate is subject to adjustment from time to time if Moody’s or S&P (or, if applicable, a substitute rating agency) downgrades (or subsequently upgrades) its rating assigned to the 2023 Senior Notes, as set of forth in the applicable indenture. The 2023 Senior Notes were sold at 99.964 percent of the aggregate principal amount. The Company incurred issuance costs of $0.9 million in connection with the 2023 Senior Notes that, along with the debt discount upon issuance, are being amortized to interest expense over the term of the 2023 Senior Notes. The 2023 Senior Notes are unsecured and rank equally in right of payment with all of the Company's other senior unsecured indebtedness.

2028 Senior Notes

In June 2018, the Company issued an aggregate principal amount of $600.0 million in senior notes (the "2028 Senior Notes") that will mature in June 2028 and bear interest at a fixed rate of 4.90 percent per annum. The interest is payable semi-annually in June and December of each year, commencing in December 2018. The interest rate is subject to adjustment from time to time if Moody’s or S&P (or, if applicable, a substitute rating agency) downgrades (or subsequently upgrades) its rating assigned to the 2028 Senior Notes, as set of forth in the applicable indenture. The 2028 Senior Notes were sold at 99.867 percent of the aggregate principal amount. The Company incurred issuance costs of $1.8 million in connection with the 2028 Senior Notes that, along with the debt discount upon issuance, are being amortized to interest expense over the term of the 2028 Senior Notes. The 2028 Senior Notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.

2024 Senior Notes

In November 2014, the Company issued an aggregate principal amount of $400.0 million in senior notes (the "2024 Senior Notes") that will mature in December 2024 and bear interest at a fixed rate of 4.75 percent per annum. The interest is payable semi-annually in December and June of each year. The Company incurred issuance costs of $3.0 million in connection with the 2024 Senior Notes that, along with the debt discount upon issuance, are being amortized to interest expense over the term of the senior notes. The 2024 Senior Notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.

The 2023 Senior Notes, the 2028 Senior Notes and the 2024 Senior Notes are collectively referred to herein as the “Senior Notes.” The Company may redeem the notes of each series of Senior Notes at its option in whole or in part at any time, in accordance with the terms and conditions set forth in the indenture governing such series. Such indenture also contains covenants limiting the Company’s ability to create certain liens, enter into sale and lease-back transactions, and consolidate or merge with or into, or convey, transfer or lease all, or substantially all of the Company’s properties and assets, each subject to certain exceptions.

The Senior Notes are classified as long-term debt in the Consolidated Balance Sheets.

Credit facilities:

Bridge Facility

In April 2018, the Company entered into a bridge loan commitment letter with a group of lenders (the “Bridge Facility”) that was subsequently terminated in June 2018 upon the issuance of the 2023 Senior Notes, the 2028 Senior Notes and after entering into the 2018 Credit Facility (as defined below). The Company incurred costs in connection with the Bridge Facility of $5.8 million that were recorded to Interest expense, net.

2018 Credit Facility

In May 2018, the Company entered into a new credit agreement (the “2018 Credit Facility”), with JPMorgan Chase Bank, N.A. and certain other institutional lenders that provides for $1.75 billion of unsecured credit facilities comprised of a $1.25 billion loan facility maturing May 2023 (the “Revolving Credit Facility”) and a $500.0 million delayed draw term loan facility that matures on the third anniversary of the funding date (the “Term Loan”). Subject to the terms of the 2018 Credit Facility, the Company may request an additional loan facility up to $500.0 million. At the end of fiscal 2018, $425.0 million was outstanding under the Term Loan and no amounts were outstanding under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility are available for working capital and general corporate purposes, including permitted acquisitions. The Company recognized $4.9 million of debt issuance costs associated with the 2018 Credit Facility that, along with prior unamortized costs, are being amortized to interest expense over the term of the 2018 Credit Facility.

The Company may borrow funds under the 2018 Credit Facility in U.S. Dollars in the case of the Term Loan and U.S. Dollars, Euros or in certain other agreed currencies in the case of the Revolving Credit Facility. Borrowings will bear interest, at the Company’s option, at either: (a) the alternate base rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the prime rate then in effect, (ii) the federal funds rate then in effect, plus 0.50% per annum, or (iii) an adjusted LIBOR rate determined on the basis of a one-month interest period, plus 1.00%, in each case, plus a margin of between 0.00% and 0.875%; (b) an adjusted LIBOR rate (based on one, two, three or six-month interest periods), plus a margin of between 1.00% and 1.875%; or (c) an adjusted EURIBOR rate (based on one, two, three or six-month interest periods), plus a margin of between 1.00% and 1.875%. The applicable margin in each case is determined based on either the Company’s credit rating at such time or the Company’s leverage ratio as of its most recently ended fiscal quarter, whichever results in more favorable pricing to the Company. Interest is payable quarterly in arrears with respect to borrowings bearing interest at the alternate base rate, or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at LIBOR rate or EURIBOR rate.

The 2018 Credit Facility also contains customary affirmative and negative covenants including, among other requirements, negative covenants that restrict the Company's and its subsidiaries’ ability to create liens and enter into sale and leaseback transactions and

that restrict its subsidiaries’ ability to incur indebtedness. Further, the 2018 Credit Facility contains financial covenants that require the Company to maintain a minimum interest coverage of not less than 3.50 to 1.00 and a maximum leverage ratio of not greater than 3.50:1.00 (or 4.25:1.00 for the four fiscal quarters beginning in the third quarter of fiscal 2018 and 3.75:1.00, for the subsequent two fiscal quarter or for four fiscal quarters in connection with certain material acquisitions).

Uncommitted Facilities

The Company has two $75.0 million and one €100.0 million revolving credit facilities which are uncommitted (the "Uncommitted Facilities") at the end of fiscal 2018. The $255.9 million outstanding under the Uncommitted Facilities at the end of fiscal 2018 and $128.0 million outstanding at the end of fiscal 2017 are classified as short-term debt in the Consolidated Balance Sheet. The weighted average interest rate was 2.16% and 2.24% at the end of fiscal 2018 and 2017, respectively.

Promissory Notes and Other Debt

At the end of fiscal 2018 and 2017, the Company had promissory notes and other notes payable totaling approximately $1.0 million and $1.2 million, respectively, of which $0.7 million and $0.8 million, respectively, was classified as long-term in the Consolidated Balance Sheet.

NOTE 8: COMMITMENTS AND CONTINGENCIES

Operating Leases and Other Commitments

The Company’s principal facilities are leased under various cancelable and non-cancelable operating leases that expire at various dates through 2027. For tenant improvement allowances and rent holidays, Trimble records a deferred rent liability on the Consolidated Balance Sheets and amortizes the deferred rent over the terms of the leases as reductions to rent expense on the Consolidated Statements of Income.

The estimated future minimum payments required under the Company’s operating lease commitments at the end of fiscal 2018 were as follows (in millions):

2019	$	42.7
2020	33.1
2021	25.3
2022	21.6
2023	17.5
Thereafter	26.9
Total	$	167.1

Net rent expense under operating leases was $42.1 million in fiscal 2018, $35.5 million in fiscal 2017, and $34.4 million in fiscal 2016.

At the end of fiscal 2018, the Company had unconditional purchase obligations of approximately $269.0 million. These unconditional purchase obligations primarily represent open non-cancelable purchase orders for material purchases with the Company’s vendors. Purchase obligations exclude agreements that are cancelable without penalty.

Additionally, the Company has certain acquisitions that include additional earn-out cash payments based on estimated future revenues, gross margins, or other milestones. At the end of fiscal 2018, the Company had $5.6 million included in Other current liabilities of $0.1 million and Other non-current liabilities of $5.5 million related to these earn-outs, representing the fair value of the contingent consideration.

Litigation

From time to time, the Company is involved in litigation arising out of the ordinary course of its business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of the Company's or its subsidiaries' property is subject.

NOTE 9. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The Company sold its available-for-sale securities to fund its acquisitions during the first quarter of fiscal 2018. The following table summarizes the Company’s available-for-sale securities at the end of fiscal 2017.

At the End of Fiscal Year	2017
(In millions)
Available-for-sale securities:
U.S. Treasury securities	$	9.6
Corporate debt securities	96.0
Commercial paper	100.1
Total available-for-sale securities	$	205.7
Reported as:
Cash and cash equivalents	$	26.8
Short-term investments	178.9
Total	$	205.7

The gross realized gains or losses on the Company's available-for-sale investments for fiscal 2018 and 2017 were not significant. The gross unrealized losses on the Company's available-for-sale investments at the end of fiscal 2017 were de minimis.

NOTE 10: FAIR VALUE MEASUREMENTS

The Company determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters. Where observable prices or inputs are not available, valuation models are applied. Hierarchical levels, defined by the guidance on fair value measurements, are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows:

Level I—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level III—Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations.

At the End of Fiscal Year	2018																2017
(In millions)	Level I				Level II				Level III				Total				Level I				Level II				Level III				Total
Assets
Available-for-sale securities:
U.S. Treasury securities (1)	$	—			$	—			$	—			$	—			$	—			$	9.6			$	—			$	9.6
Corporate debt securities (1)	—				—				—				—				—				96.0				—				96.0
Commercial paper (1)	—				—				—				—				—				100.1				—				100.1
Total available-for-sale securities	—				—				—				—				—				205.7				—				205.7
Deferred compensation plan assets (2)	28.5				—				—				28.5				27.1				—				—				27.1
Derivative assets (3)	—				0.4				—				0.4				—				0.5				—				0.5
Total assets measured at fair value	$	28.5			$	0.4			$	—			$	28.9			$	27.1			$	206.2			$	—			$	233.3
Liabilities
Deferred compensation plan liabilities (2)	$	28.5			$	—			$	—			$	28.5			$	27.1			$	—			$	—			$	27.1
Derivative liabilities (3)	—				—				—				—				—				0.1				—				0.1
Contingent consideration liabilities (4)	—				—				5.6				5.6				—				—				14.2				14.2
Total liabilities measured at fair value	$	28.5			$	—			$	5.6			$	34.1			$	27.1			$	0.1			$	14.2			$	41.4

(1)	The Company’s available-for sale securities are valued using readily available pricing sources for comparable instruments, or model-driven valuations using significant inputs derived from or corroborated by observable market data, including yield curves and credit ratings.

(2)

The Company maintains a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees. The plan assets and liabilities are invested in actively traded mutual funds and individual stocks valued using observable quoted prices in active markets. Deferred compensation plan assets and liabilities are included in Other non-current assets and Other non-current liabilities, respectively, on the Company's Consolidated Balance Sheets.

(3)

Derivative assets and liabilities primarily represent forward currency exchange contracts. The Company typically enters into these contracts to minimize the short-term impact of foreign currency exchange rates on certain trade and inter-company receivables and payables. Derivative assets and liabilities are included in Other current assets and Other current liabilities on the Company's Consolidated Balance Sheets.

(4)

Contingent consideration liabilities represent arrangements to pay the former owners of certain companies that Trimble acquired. The undiscounted maximum payment under the arrangements is $59.1 million at the end of fiscal 2018. The fair values are estimated using scenario-based methods or option pricing methods based upon estimated future revenues, gross margins or other milestones. Contingent consideration liabilities are included in Other current liabilities and Other non-current liabilities on the Company's Consolidated Balance Sheets.

Additional Fair Value Information

The following table provides additional fair value information relating to the Company’s financial instruments outstanding:

At the End of Fiscal Year	2018								2017
(In millions)	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Liabilities:
2023 Senior Notes	$	300.0			$	300.8			$	—			$	—
2024 Senior Notes	400.0				406.5				400.0				430.4
2028 Senior Notes	600.0				598.5				—				—
2014 Credit Facility, retired	—				—				389.0				389.0
2018 Term Loan	425.0				425.0				—				—
Uncommitted facilities	255.9				255.9				128.0				128.0
Promissory notes and other debt	1.0				1.0				1.2				1.2

The fair value of the Notes was determined based on observable market prices in less active markets and is categorized accordingly as Level II in the fair value hierarchy. The fair value of the bank borrowings and promissory notes has been calculated using an estimate of the interest rate the Company would have had to pay on the issuance of notes with a similar maturity and discounting the cash flows at that rate, and is categorized as Level II in the fair value hierarchy. The fair values do not give an indication of the amount that the Company would currently have to pay to extinguish any of this debt.

NOTE 11. DEFERRED COSTS TO OBTAIN CUSTOMER CONTRACTS

The Company classifies all deferred costs to obtain customer contracts, which consists of deferred commissions, as a non-current asset, included in Deferred costs, non-current on the Company’s Consolidated Balance Sheets. At the end of fiscal 2018, 2017 and 2016, the Company had $41.3 million, $35.0 million and $30.3 million of deferred costs to obtain customer contracts, respectively.

Amortization expense related to deferred costs to obtain customer contracts, for fiscal 2018, 2017 and 2016, was $23.6 million, $21.3 million and $18.7 million, respectively. It was included in sales and marketing expenses in the Company’s Consolidated Statements of Income. There were no impairment losses related to the deferred commissions for the periods presented.

NOTE 12. DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

Deferred Revenue

Changes in the Company’s deferred revenue during fiscal 2018 and 2017 are as follows:

Fiscal Years	2018				2017
(In millions)					*As Adjusted
Beginning balance of the period	$	276.6			$	246.4
Revenue recognized	(226.9		)		(215.2		)
Acquired deferred revenue	50.3				6.1
Net deferred revenue activity	287.2				239.3
Ending balance of the period	$	387.2			$	276.6

• See Note 2 for a summary of adjustments

Remaining Performance Obligations

As of the end of fiscal 2018, approximately $1.1 billion of revenue is expected to be recognized from remaining performance obligations for which goods or services have not been delivered, primarily hardware, subscription, software maintenance and professional services contracts. The Company expects to recognize revenue of approximately 72% and 17% on these remaining performance obligations over the next 12 and 24 months, respectively, with the remainder recognized thereafter.

NOTE 13: INCOME TAXES

Income before taxes and the provision (benefit) for taxes consisted of the following:

Fiscal Years	2018				2017				2016
					*As Adjusted				*As Adjusted
(In millions)
Income before taxes:
United States	$	25.4			$	33.2			$	65.5
Foreign	252.6				215.0				110.6
Total	$	278.0			$	248.2			$	176.1

Provision (benefit) for taxes:
US Federal:
Current	$	(19.7	)		$	98.6			$	34.0
Deferred	(25.8		)		(6.1		)		(15.4		)
	(45.5		)		92.5				18.6
US State:
Current	5.0				4.5				3.6
Deferred	(3.6		)		(1.0		)		0.5
	1.4				3.5				4.1
Foreign:
Current	57.0				42.7				28.8
Deferred	(18.2		)		(9.0		)		(7.6		)
	38.8				33.7				21.2
Income tax provision (benefit)	$	(5.3	)		$	129.7			$	43.9
Effective tax rate	(2		)%		52		%		25		%

• See Note 2 for a summary of adjustments

The difference between the tax provision (benefit) at the statutory federal income tax rate and the tax provision (benefit) as a percentage of income before taxes ("effective tax rate") was as follows:

Fiscal Years	2018			2017			2016
				*As Adjusted			*As Adjusted
Statutory federal income tax rate	21	%		35	%		35	%
Increase (reduction) in tax rate resulting from:
Foreign income taxed at different rates	(7	)%		(15	)%		(10	)%
US State income taxes	1	%		1	%		2	%
US Federal research and development credits	(4	)%		(3	)%		(3	)%
Stock-based compensation	1	%		2	%		3	%
Excess tax benefit related to stock-based compensation	(3	)%		(4	)%		—	%
Effect of U.S. tax law change	(8	)%		33	%		—	%
Other US taxes on foreign operations	2	%		—	%		—	%
Tax reserve releases	(9	)%		—	%		—	%
Divestiture	—	%		—	%		(5	)%
Other	4	%		3	%		3	%
Effective tax rate	(2	)%		52	%		25	%

• See Note 2 for a summary of adjustments

The 2017 Tax Cuts and Jobs Act (the "Tax Act") reduced U.S. federal tax rate from 35% to 21%, imposed a one-time transition tax on accumulated foreign earnings and created new taxes on certain foreign-sourced earnings (referred to as “GILTI”). As a

result, the Company recorded reasonable estimates as provisional amounts during the previous quarters, including a provisional net income tax expense of $80.2 million recorded in the fourth quarter of 2017. In the fourth quarter of 2018, the Company completed the accounting for the tax effects of the Tax Act and made immaterial adjustments to the provisional amounts recorded previously. Additionally, in the fourth quarter of 2018, the Company finalized its accounting policy election to record GILTI deferred taxes and recorded a $15.1 million one-time tax benefit.

The effective income tax rates in fiscal 2018 decreased compared to 2017 primarily due to the one-time impacts from the Tax Act, benefits from reserve releases due to the expiration of the U.S. federal statute of limitations for certain tax years, and a one-time benefit from deferred taxes in relation to GILTI.

The effective tax rate in fiscal 2017 increased compared to 2016 primarily due to the one-time impacts from the Tax Act and a tax benefit from a divestiture of a non-strategic business in 2016, partially offset by a favorable change in the geographic mix of pretax income and stock-based compensation tax benefits.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are as follows:

At the End of Fiscal Year	2018				2017
					*As Adjusted
(In millions)
Deferred tax liabilities:
Purchased intangibles	$	166.0			$	69.8
Depreciation and amortization	5.2				13.1
Deferred revenue	—				1.3
Other	9.5				8.4
Total deferred tax liabilities	180.7				92.6
Deferred tax assets:
Expenses not currently deductible	33.4				24.7
U.S. tax credit carryforwards	30.3				21.9
U.S. net operating loss carryforwards	20.8				6.4
Foreign net operating loss carryforwards	16.9				20.2
Stock-based compensation	20.3				21.4
Global Intangible Low-Taxed Income	13.4				—
Deferred revenue	3.6				—
Other	8.2				(4.4		)
Total deferred tax assets	146.9				90.2
Valuation allowance	(27.8		)		(25.2		)
Total deferred tax assets	119.1				65.0
Total net deferred tax liabilities	$	(61.6	)		$	(27.6	)
Reported as:
Non-current deferred income tax assets	12.2				20.2
Non-current deferred income tax liabilities	(73.8		)		(47.8		)
Net deferred tax liabilities	$	(61.6	)		$	(27.6	)

• See Note 2 for a summary of adjustments

At the end of fiscal 2018, the Company has federal and foreign net operating loss carryforwards, or NOLs, of approximately $86.8 million and $83.8 million, respectively. The federal NOLs will begin to expire in 2021. There is, generally, no expiration for the foreign NOLs. Utilization of the Company’s federal and state NOLs is subject to annual limitations in accordance with the applicable tax code. The Company has determined that it is more likely than not that the Company will not realize a portion of the foreign NOLs and, accordingly, a valuation allowance has been established for such amount.

The Company has Federal and California research and development credit carryforwards after federal tax benefit of approximately $6.0 million and $22.4 million, respectively. The federal tax credit carryforwards will expire beginning 2026. The California research tax credits have an indefinite carryforward period. The Company believes that it is more likely than not that the Company will not realize a portion of the California research and development credit carryforwards and, accordingly, a valuation allowance has been established for such amount.

As a result of the Tax Act, the Company can repatriate foreign earnings back to the U.S. when needed with minimal U.S. income tax consequences, other than the transition tax. The Company reinvested a large portion of its undistributed foreign earnings in acquisitions and other investments and intends to bring back a portion of foreign cash which was subject to the transition tax and GILTI. During fiscal 2018, the Company repatriated $609.3 million of its foreign earning to the U.S.

The total amount of the unrecognized tax benefits at the end of fiscal 2018 was $69.1 million. A reconciliation of gross unrecognized tax benefit is as follows:

Fiscal Years	2018				2017				2016
(In millions)
Beginning gross balance	$	82.4			$	72.9			$	59.0
Increase (decrease) related to prior years' tax positions	4.5				(0.6		)		7.5
Increase related to current year tax positions	10.0				12.1				9.9
Lapse of statute of limitations	(18.9		)		(1.6		)		(1.4		)
Settlement with taxing authorities	(8.9		)		(0.4		)		(2.1		)
Ending gross balance	$	69.1			$	82.4			$	72.9

The Company's total unrecognized tax benefits that, if recognized, would affect its effective tax rate were $60.5 million and $68.5 million at the end of fiscal 2018 and 2017, respectively.

The Company and its subsidiaries are subject to U.S. federal, state, and foreign income taxes. The Company's tax years are substantially closed for all U.S. federal and state income taxes for audit purposes through 2014, except 2011 and 2012. Non-U.S. income tax matters have been concluded for years through 2007. The Company is currently in various stages of multiple year examinations by federal, state, and foreign (multiple jurisdictions) taxing authorities. While the Company generally believes it is more likely than not that its tax positions will be sustained, it is reasonably possible that future obligations related to these matters could arise. The Company believes that its reserves are adequate to cover any potential assessments that may result from the examinations and negotiations.

In the first quarter of fiscal 2015, the Company received a Notice of Proposed Adjustment from the IRS for the fiscal years 2010 and 2011. The proposed adjustments primarily relate to the valuations of intercompany transfers of acquired intellectual property. The assessments of tax and penalties for the years in question total $67.0 million. In January 2018, the Company and IRS reached agreement to settle certain aspects of the assessments constituting $15.8 million of the total $67.0 million assessment. The Company paid $8.6 million during 2018 to settle the $15.8 million assessment. The Company’s reserves were adequate to cover this agreement. On March 7, 2018 the Company received a formal Notice of Deficiency for fiscal year 2011, assessing tax and penalties totaling $51.2 million for the remainder of the assessment. The Company does not agree with the IRS position. Accordingly, on June 1, 2018, the Company filed a petition with the U.S. tax court relating to the Notice of Deficiency. On August 3, 2018, the IRS filed its response to the Company’s petition, with no changes to its position.

Although timing of the resolution and/or closure of audits is not certain, the Company does not believe that its gross unrecognized tax benefits would materially change in the next twelve months.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company’s liability for unrecognized tax benefits including interest and penalties was recorded in Other non-current liabilities in the accompanying Consolidated Balance Sheets. At the end of fiscal 2018 and 2017, the Company had accrued $11.0 million and $12.7 million, respectively, for payment of interest and penalties.

NOTE 14: ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss, net of related tax were as follows:

At the End of Fiscal Year	2018				2017
					* As Adjusted
(In millions)
Accumulated foreign currency translation adjustments	$	(183.4	)		$	(127.8	)
Net unrealized loss on short-term investments	—				(0.2		)
Net unrealized actuarial losses	(2.7		)		(3.4		)
Total accumulated other comprehensive loss	$	(186.1	)		$	(131.4	)

• See Note 2 for a summary of adjustments

NOTE 15: EMPLOYEE STOCK BENEFIT PLANS

2002 Stock Plan

Trimble’s 2002 Stock Plan provides for the granting of incentive and non-statutory stock options and RSUs for up to 74.6 million shares plus any shares currently reserved but unissued to employees and directors of Trimble. Grants of RSUs reduce the plan reserves by a 1.69 multiplier. As of the end of fiscal 2018, the number of shares available for grant under the 2002 stock plan was 12.7 million.

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the Company’s Consolidated Statements of Income for the periods indicated:

Fiscal Years	2018				2017				2016
(In millions)
Restricted stock units	$	68.9			$	53.3			$	35.9
Stock options	1.5				5.7				10.9
ESPP	6.5				5.8				5.8
Total stock-based compensation expense	$	76.9			$	64.8			$	52.6

At the end of fiscal 2018, total unamortized stock-based compensation expense was $129.1 million, with a weighted-average recognition period of 2.8 years.

Restricted Stock Units

Time-based RSUs generally vest over four years based on continued employment. Market-based RSUs and PRSUs, which are granted to executive officers and other senior employees, generally vest after two to three years.

PRSUs vest upon the achievement of specified performance goals, as well as continued employment, and the expense recognized is based upon the expected achievement of such goals.

Market-based RSUs vest based on the achievement of the Company’s relative total stockholder return ("TSR") of its common stock as compared to the TSR of the constituents of the S&P 500 at the start of the performance period.

The following table summarizes the Company’s RSU activity during fiscal 2018:

	Restricted Stock Units Outstanding
	Restricted Stock Units			Weighted Average Grant-Date Fair Value
(In millions, except for per share data)
Outstanding at the beginning of year	5.1			$	31.71
Granted (1)	2.7			$	37.43
Shares vested, net	(2.5	)		$	29.39
Cancelled and Forfeited	(0.4	)		$	34.89
Outstanding at the end of year	4.9			$	35.94

(1) During fiscal year 2018, the Company granted approximately 2.0 million time-based RSUs, 0.2 million PRSUs and 0.5 million market-based RSUs. As of fiscal year end 2018, the Company has 1.5 million market-based RSUs and PRSUs outstanding. 0.7 million were vested as of fiscal 2018 year end.

The weighted-average grant date fair value of RSUs granted during fiscal years 2018, 2017, and 2016 was $37.43, $40.19, and $26.13 per share, respectively. The fair value of all RSUs vested during fiscal years 2018, 2017, and 2016 was $73.9 million, $40.4 million, and $33.6 million, respectively.

Stock options

Employee stock options generally vest over four years with annual or monthly vesting and expire seven years from the date of grant. The following table summarizes information about stock options outstanding as of fiscal 2018 year end:

	Number Of Shares (in millions)			Weighted- Average Exercise Price per Share				Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Outstanding at the beginning of year	4.4			$	26.12
Options granted	0.1			34.94
Options exercised	(2.1	)		23.91
Outstanding at the end of year	2.4			28.26				1.94		$	10.3
Options exercisable	2.3			$	28.14			1.78		$	10.0

The total intrinsic value of options exercised during fiscal 2018, 2017, and 2016 was $30.0 million, $41.1 million, and $36.0 million, respectively.

Fair Value of Stock Options

The weighted-average grant date fair value per share of stock options granted during fiscal years 2018 and 2016 was $10.62, and $6.03, respectively. The fair value of all stock options vested during fiscal years 2018, 2017, and 2016 was $1.9 million, $6.5 million, and $14.6 million, respectively.

Employee Stock Purchase Plan

The Company has an ESPP under which the stockholders have approved an aggregate of 39.0 million shares of Common Stock for issuance to eligible employees. The plan permits eligible employees to purchase Common Stock through payroll deductions at 85% of the lower of the fair market value of the Common Stock at the beginning or at the end of each offering period, which is generally six months. Rights to purchase shares are granted during the first and third quarter of each fiscal year. The ESPP terminates on March 15, 2027. In fiscal 2018, 2017, and 2016, 0.8 million, 0.8 million, and 1.1 million shares were issued, respectively, representing $24.0 million, $20.4 million, and $19.1 million in cash received for the issuance of stock under the Purchase Plan. At the end of fiscal 2018, the number of shares reserved for future purchases was 8.2 million.

NOTE 16: COMMON STOCK REPURCHASE

In November 2014, the Company's Board of Directors approved a stock repurchase program ("2014 Stock Repurchase Program"), authorizing the Company to repurchase up to $300.0 million of Trimble’s common stock. In August 2015, the Company’s Board of Directors approved a stock repurchase program ("2015 Stock Repurchase Program"), authorizing the Company to repurchase up to $400.0 million of Trimble’s common stock, replacing the 2014 Stock Repurchase Program. In September 2015, the Company entered into an accelerated share repurchase agreement, or ASR, with an investment bank for $75.0 million. In November 2017, the Company’s Board of Directors approved a stock repurchase program ("2017 Stock Repurchase Program"), authorizing the Company to repurchase up to $600.0 million of Trimble’s common stock. The share repurchase authorization does not have an expiration date and replaces the 2015 Stock Repurchase Program, which was completed.

Under the share repurchase program, the Company may repurchase shares from time to time in open market transactions, privately negotiated transactions, accelerated share buyback programs, tender offers, or by other means. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. At the end of fiscal 2018, the 2017 Stock Repurchase Program had remaining authorized funds of $352.2 million.

During fiscal 2018, the Company repurchased approximately 2.4 million shares of common stock in open market purchases, at an average price of $37.23 per share, for a total of $90.0 million under the 2017 Stock Repurchase Programs.

During fiscal 2017, the Company repurchased approximately 7.4 million shares of common stock in open market purchases, at an average price of $39.18 per share, for a total of $288.3 million under the 2017 and 2015 Stock Repurchase Programs.

During fiscal 2016, the Company repurchased approximately 4.9 million shares of common stock in open market purchases, at an average price of $24.39 per share, for a total of $119.5 million under the 2015 Stock Repurchase Program.

Stock repurchases are reflected as a decrease to common stock based on par value and additional-paid-capital, based on the average book value per share for all outstanding shares calculated at the time of each individual repurchase transaction. The excess of the purchase price over this average for each repurchase was charged to retained earnings. As a result of the 2018 repurchases, retained earnings was reduced by $75.3 million in fiscal 2018. Common stock repurchases under the program were recorded based upon the trade date for accounting purposes.

NOTE 17: STATEMENT OF CASH FLOW DATA

Fiscal Years	2018				2017				2016
(In millions)
Supplemental disclosure of cash flow information:
Interest paid	$	69.3			$	28.4			$	27.3
Income taxes paid	$	62.3			$	46.6			$	57.4

NOTE 18: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Trimble has a 52-53 week fiscal year, ending on the Friday nearest to December 31. Both fiscal 2018 and 2017 were a 52-week year.

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Fiscal Period	2018				2018				2018				2018
(In millions, except per share data)
Revenue	$	742.2			$	785.5			$	795.2			$	785.5
Gross margin	396.2				422.7				426.9				435.2
Net income attributable to Trimble Inc.	58.5				64.1				73.7				86.5
Basic net income per share	0.24				0.26				0.29				0.34
Diluted net income per share	0.23				0.25				0.29				0.34

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Fiscal Period	2017				2017				2017				2017
	*As Adjusted				*As Adjusted				*As Adjusted				*As Adjusted
(In millions, except per share data)
Revenue	$	610.6			$	659.9			$	676.2			$	699.8
Gross margin	324.3				342.6				351.2				359.5
Net income (loss) attributable to Trimble Inc.	49.8				47.3				57.2				(35.9		)
Basic net income (loss) per share	0.20				0.19				0.23				(0.14		)
Diluted net income (loss) per share	0.19				0.18				0.22				(0.14		)

• See Note 2 for a summary of adjustments

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Trimble Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Trimble Inc. (the Company) as of December 28, 2018 and December 29, 2017, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 28, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 28, 2018 and December 29, 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 28, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2019 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue from contracts with customers, and incremental costs to obtain customer contracts in each period presented due to the adoption of ASU No. 2014‑09, Revenue from Contracts with Customers, as amended.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1986.

San Jose, California

February 21, 2019

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Trimble Inc.

Opinion on Internal Control over Financial Reporting

We have audited Trimble Inc.’s internal control over financial reporting as of December 28, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Trimble Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2018, based on the COSO criteria.

As indicated in the accompanying Management's Report on Internal Control over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of all current year acquisitions, which are included in the 2018 consolidated financial statements of the Company and constituted less than 2% of tangible assets and net assets, respectively, as of December 28, 2018, and approximately 5% and 7% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of all current year acquisitions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2018 and December 29, 2017, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 28, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 21, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

February 21, 2019