Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Index
			Page
Condensed Consolidated Balance Sheets			5
Condensed Consolidated Statements of Income			6
Condensed Consolidated Statements of Comprehensive Income			7
Condensed Consolidated Statements of Stockholders’ Equity			8
Condensed Consolidated Statements of Cash Flows			9
Notes to Condensed Consolidated Financial Statements (Unaudited):			10
Note 1. Overview and Accounting Policies			10
Note 2. Common Stock Repurchase			11
Note 3. Intangible Assets and Goodwill			12
Note 4. Inventories			12
Note 5. Segment Information			12
Note 6. Debt			14
Note 7. Fair Value Measurements			16
Note 8. Deferred Revenue and Remaining Performance Obligations			17
Note 9. Earnings per Share			17
Note 10. Income Taxes			17
Note 11. Commitments and Contingencies			18
Note 12. Subsequent Events			18

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TRIMBLE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

			As of						As of
			First Quarter of						Year End
			2023						2022
(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents			$	1,038.1					$	271.0
Accounts receivable, net			578.8						643.3
Inventories			409.4						402.5
Other current assets			212.6						201.4
Total current assets			2,238.9						1,518.2
Property and equipment, net			215.1						219.0
Operating lease right-of-use assets			113.2						121.2
Goodwill			4,176.6						4,137.9
Other purchased intangible assets, net			484.3						498.1
Deferred income tax assets			432.4						438.4
Other non-current assets			352.4						336.2
Total assets			$	8,012.9					$	7,269.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt			$	300.0					$	300.0
Accounts payable			166.5						175.5
Accrued compensation and benefits			130.8						159.4
Deferred revenue			659.3						639.1
Other current liabilities			224.3						188.1
Total current liabilities			1,480.9						1,462.1
Long-term debt			1,786.9						1,220.0
Deferred revenue, non-current			101.5						98.5
Deferred income tax liabilities			119.9						157.8
Income taxes payable			40.9						40.9
Operating lease liabilities			99.6						105.1
Other non-current liabilities			138.0						134.4
Total liabilities			3,767.7						3,218.8
Commitments and contingencies (Note 11)
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; 247.4 and 246.9 shares issued and outstanding at the end of the first quarter of 2023 and year end 2022			0.2						0.2
Additional paid-in-capital			2,107.5						2,054.9
Retained earnings			2,355.9						2,230.0
Accumulated other comprehensive loss			(218.4)						(234.9)
Total stockholders' equity			4,245.2						4,050.2
Total liabilities and stockholders' equity			$	8,012.9					$	7,269.0

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

			First Quarter of
(In millions, except per share amounts)			2023						2022
Revenue:
Product			$	434.4					$	566.8
Subscription and services			481.0						426.9
Total revenue			915.4						993.7
Cost of sales:
Product			216.2						306.9
Subscription and services			115.4						114.7
Amortization of purchased intangible assets			23.0						22.5
Total cost of sales			354.6						444.1
Gross margin			560.8						549.6
Operating expense:
Research and development			159.3						140.3
Sales and marketing			135.4						131.9
General and administrative			110.7						101.5
Restructuring			6.7						6.9
Amortization of purchased intangible assets			11.7						12.1
Total operating expense			423.8						392.7
Operating income			137.0						156.9
Non-operating income (expense), net:
Interest expense, net			(19.7)						(16.0)
Income from equity method investments, net			11.4						9.7
Other income (expense), net			31.9						(12.1)
Total non-operating income (expense), net			23.6						(18.4)
Income before taxes			160.6						138.5
Income tax provision			31.8						28.2
Net income			$	128.8					$	110.3
Earnings per share:
Basic			$	0.52					$	0.44
Diluted			$	0.52					$	0.44
Shares used in calculating earnings per share:
Basic			247.2						250.8
Diluted			248.7						252.8

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

			First Quarter of
			2023						2022
(In millions)
Net income			$	128.8					$	110.3
Foreign currency translation adjustments, net of tax			19.7						(2.2)
Net change related to derivatives and other, net of tax			(3.2)						—
Comprehensive income			$	145.3					$	108.1

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

			Common stock																		Retained Earnings						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
			Shares						Amount						Additional Paid-In Capital
(In millions)
Balance at the end of 2022			246.9						$	0.2					$	2,054.9					$	2,230.0					$	(234.9)					$	4,050.2
Net income			—						—						—						128.8						—						128.8
Other comprehensive income			—						—						—						—						16.5						16.5
Issuance of common stock under employee plans, net of tax withholdings			0.5						—						16.9						(2.9)						—						14.0
Stock-based compensation			—						—						35.7						—						—						35.7
Balance at the end of the first quarter of 2023			247.4						$	0.2					$	2,107.5					$	2,355.9					$	(218.4)					$	4,245.2

			Common stock																		Retained Earnings						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
			Shares						Amount						Additional Paid-In Capital
(In millions)
Balance at the end of 2021			250.9						$	0.3					$	1,935.6					$	2,170.5					$	(161.7)					$	3,944.7
Net income			—						—						—						110.3						—						110.3
Other comprehensive loss			—						—						—						—						(2.2)						(2.2)
Issuance of common stock under employee plans, net of tax withholdings			0.7						—						15.2						(17.6)						—						(2.4)
Stock repurchases			(1.5)						—						(11.8)						(92.9)						—						(104.7)
Stock-based compensation			—						—						42.2						—						—						42.2
Balance at the end of the first quarter of 2022			250.1						$	0.3					$	1,981.2					$	2,170.3					$	(163.9)					$	3,987.9

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

			First Quarter of
(In millions)			2023						2022
Cash flow from operating activities:
Net income			$	128.8					$	110.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			9.8						10.0
Amortization expense			34.7						34.6
Deferred income taxes			(33.8)						(16.8)
Stock-based compensation			33.5						28.3
Change in fair value of derivatives			(26.9)						(0.1)
Other, net			(0.9)						16.8
(Increase) decrease in assets:
Accounts receivable, net			62.1						(34.6)
Inventories			(11.1)						(42.7)
Other current and non-current assets			(6.2)						(14.6)
Increase (decrease) in liabilities:
Accounts payable			(9.1)						7.8
Accrued compensation and benefits			(26.5)						(75.6)
Deferred revenue			19.5						73.3
Other current and non-current liabilities			34.8						56.3
Net cash provided by operating activities			208.7						153.0
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired			(33.3)						—
Purchases of property and equipment			(6.4)						(14.5)
Other, net			12.0						1.1
Net cash used in investing activities			(27.7)						(13.4)
Cash flow from financing activities:
Issuance of common stock, net of tax withholdings			14.0						(2.4)
Repurchases of common stock			—						(104.7)
Proceeds from debt and revolving credit lines			1,097.1						118.8
Payments on debt and revolving credit lines			(523.4)						(118.8)
Other, net			(4.3)						(2.6)
Net cash provided by (used in) financing activities			583.4						(109.7)
Effect of exchange rate changes on cash and cash equivalents			2.7						1.6
Net increase in cash and cash equivalents			767.1						31.5
Cash and cash equivalents - beginning of period			271.0						325.7
Cash and cash equivalents - end of period			$	1,038.1					$	357.2

See accompanying Notes to the Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. OVERVIEW AND ACCOUNTING POLICIES

Basis of Presentation

The Condensed Consolidated Financial Statements include our results of our consolidated subsidiaries. Intercompany accounts and transactions have been eliminated.

We use a 52- to 53-week year ending on the Friday nearest to December 31. Both 2023 and 2022 are 52-week years. The first quarter of 2023 and 2022 ended on March 31, 2023 and April 1, 2022. Unless otherwise stated, all dates refer to these periods.

Use of Estimates

We prepared our interim Condensed Consolidated Financial Statements that accompany these notes in conformity with U.S. GAAP, consistent in all material respects with those applied in our Form 10-K filed with the U.S. Securities and Exchange Commission on February 17, 2023 (the “2022 Form 10-K”).

The interim financial information is unaudited, and reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This report should be read in conjunction with our 2022 Form 10-K that includes additional information about our significant accounting policies and the methods and assumptions used in our estimates.

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates and assumptions are used for revenue recognition, including determining the nature and timing of satisfaction of performance obligations and determining standalone selling price (“SSP”) of performance obligations, provision for credit losses, sales returns reserve, inventory valuation, warranty costs, investments, acquired intangibles, goodwill and intangible asset impairment analysis, other long-lived asset impairment analysis, stock-based compensation, and income taxes. We base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual results that we experience may differ materially from our estimates.

Change in Presentation

During the first quarter of 2023, we changed the presentation of revenue and cost of sales in the Condensed Consolidated Statements of Income. This change was made to better reflect our Connect and Scale strategy and business model evolution with a continued shift toward a more significant mix of recurring revenues, which includes subscription, maintenance and support, and term licenses. As such, we revised our presentation, including (a) the combination of subscription and services into one line item, and (b) moving term licenses from product to subscription and services. The subscription and services line item is more aligned with our performance measures, how we manage our business, and is helpful to investors and others to better understand our results.

Previously, we presented revenue and cost of sales on three lines as follows:

• product, which included hardware and software licenses (both perpetual and term licenses);

• service, which included hardware and software maintenance and support and professional services;

• subscription, which included Software as a Service (“SaaS”), data, and hosting services.

The revised categories are as follows:

• product, which includes hardware and perpetual software licenses;

• subscription and services, which includes SaaS, data, and hosting services, as well as term licenses, hardware and software maintenance and support, and professional services.

Prior period amounts have been revised to conform to the current period presentation. This change in presentation did not affect the total revenue or total cost of sales. The effect of the change on the Condensed Consolidated Statements of Income for the first quarter of 2022 was as follows:

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			First Quarter of 2022
(In millions)
			As Previously Reported						Effect of Change in Presentation						As Reported Herein
Revenue:
Product			$	621.6					$	(54.8)					$	566.8
Subscription and services			—						426.9						426.9
Service			161.1						(161.1)						—
Subscription			211.0						(211.0)						—
Total revenue			$	993.7					$	—					$	993.7
Cost of sales:
Product			$	308.4					$	(1.5)					$	306.9
Subscription and services			—						114.7						114.7
Service			63.3						(63.3)						—
Subscription			49.9						(49.9)						—
Amortization of purchased intangible assets			22.5						—						22.5
Total cost of sales			$	444.1					$	—					$	444.1

Recently issued Accounting Pronouncements not yet Adopted

There are no recently issued accounting pronouncements applicable to us not yet adopted.

Recently Adopted Accounting Pronouncements

There are no recently adopted accounting pronouncements.

NOTE 2. COMMON STOCK REPURCHASE

In August 2021, our Board of Directors approved a new stock repurchase program (“2021 Stock Repurchase Program”), authorizing up to $750.0 million in repurchases of our common stock. The 2021 Stock Repurchase Program’s authorization does not have an expiration date.

Under the 2021 Stock Repurchase Program, we may repurchase stock from time to time through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means. The timing and actual number of any stock repurchased will depend on a variety of factors, including market conditions, our stock price, other available uses of capital, applicable legal requirements, and other factors. The 2021 Stock Repurchase Program may be suspended, modified, or discontinued at any time at the Company’s discretion without notice. At the end of the first quarter of 2023, the 2021 Stock Repurchase Program had remaining authorized funds of $215.3 million.

During the first quarter of 2022, we repurchased approximately 1.5 million shares of common stock in open market purchases at an average price of $68.49 per share for a total of $104.7 million under the 2021 Stock Repurchase Program.

Because of the additional outstanding indebtedness we incurred in connection with the Transporeon acquisition, beginning in the fourth quarter of 2022, we have temporarily discontinued our stock repurchases. See Note 12 “Subsequent Events” of this report for information regarding our acquisition of Transporeon.

Stock repurchases are reflected as a decrease to common stock based on par value and additional-paid-in-capital, determined by the average book value per share of outstanding stock, 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. Common stock repurchases under the program were recorded based upon the trade date for accounting purposes.

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NOTE 3. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The following table presents a summary of our intangible assets:

			First Quarter of 2023																		Year End 2022
			Gross																		Gross
			Carrying						Accumulated						Net Carrying						Carrying						Accumulated						Net Carrying
(In millions)			Amount						Amortization						Amount						Amount						Amortization						Amount
Developed product technology			$	1,024.0					$	(745.4)					$	278.6					$	1,004.8					$	(722.7)					$	282.1
Customer relationships			638.8						(439.8)						199.0						654.1						(445.9)						208.2
Trade names and trademarks			39.0						(33.6)						5.4						39.5						(32.7)						6.8
Distribution rights and other intellectual property			6.4						(5.1)						1.3						8.0						(7.0)						1.0
			$	1,708.2					$	(1,223.9)					$	484.3					$	1,706.4					$	(1,208.3)					$	498.1

The estimated future amortization expense of intangible assets at the end of the first quarter of 2023 was as follows:

(In millions)
2023 (Remaining)			$	101.7
2024			111.8
2025			76.2
2026			70.0
2027			56.3
Thereafter			68.3
Total			$	484.3

Goodwill

The changes in the carrying amount of goodwill by segment for the first quarter of 2023 were as follows:

			Buildings and Infrastructure						Geospatial						Resources and Utilities						Transportation						Total
(In millions)
Balance as of year end 2022			$	2,300.1					$	382.1					$	471.8					$	983.9					$	4,137.9
Additions due to acquisitions			22.5						—						—						—						22.5
Foreign currency translation and other adjustments			6.6						2.2						6.2						1.2						16.2
Balance as of the end of the first quarter of 2023			$	2,329.2					$	384.3					$	478.0					$	985.1					$	4,176.6

NOTE 4. INVENTORIES

The components of inventory, net were as follows:

			First Quarter of						Year End
As of			2023						2022
(In millions)
Raw materials			$	149.0					$	154.9
Work-in-process			16.1						13.1
Finished goods			244.3						234.5
Total inventories			$	409.4					$	402.5

NOTE 5. SEGMENT INFORMATION

We determined our operating segments based on how our Chief Operating Decision Maker (“CODM”) views and evaluates operations. Our 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, and government.

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• 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 and freight shipper markets.

The following Reporting Segment tables reflect the results of our reportable operating segments under our management reporting system. These results are not necessarily in conformity with U.S. GAAP. This is consistent with the way the CODM evaluates each of the segment's performance and allocates resources.

			Reporting Segments
			Buildings and Infrastructure						Geospatial						Resources and Utilities						Transportation						Total
(In millions)
First Quarter of 2023
Segment revenue			$	399.5					$	152.4					$	208.6					$	154.9					$	915.4
Segment operating income			$	113.3					$	37.3					$	79.1					$	23.4					$	253.1
First Quarter of 2022
Segment revenue			$	397.6					$	207.5					$	229.9					$	158.7					$	993.7
Segment operating income			$	120.7					$	57.9					$	75.1					$	9.2					$	262.9

			Reporting Segments
			Buildings and Infrastructure						Geospatial						Resources and Utilities						Transportation						Total
(In millions)
As of the end of the First Quarter of 2023
Accounts receivable, net			$	231.9					$	126.8					$	89.7					$	130.4					$	578.8
Inventories			94.0						149.7						106.0						59.7						409.4
Goodwill			2,329.2						384.3						478.0						985.1						4,176.6
As of Year End 2022
Accounts receivable, net			$	305.1					$	137.2					$	79.2					$	121.8					$	643.3
Inventories			93.2						146.1						100.3						62.9						402.5
Goodwill			2,300.1						382.1						471.8						983.9						4,137.9

A reconciliation of our condensed consolidated segment operating income to condensed consolidated income before income taxes was as follows:

			First Quarter of
			2023						2022
(In millions)
Consolidated segment operating income			$	253.1					$	262.9
Unallocated general corporate expenses			(27.0)						(29.8)
Amortization of purchased intangible assets			(34.7)						(34.6)
Acquisition / divestiture items			(7.0)						(3.9)
Stock-based compensation / deferred compensation			(35.4)						(25.0)
Restructuring and other costs			(12.0)						(12.7)
Consolidated operating income			137.0						156.9
Total non-operating income (expense), net			23.6						(18.4)
Consolidated income before taxes			$	160.6					$	138.5

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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 is consistent with the Reporting Segment tables above.

			Reporting Segments
			Buildings and Infrastructure						Geospatial						Resources and Utilities						Transportation						Total
(In millions)
First Quarter of 2023
North America			$	249.8					$	57.7					$	54.9					$	119.4					$	481.8
Europe			94.2						52.2						99.1						22.3						267.8
Asia Pacific			48.1						32.4						16.0						6.6						103.1
Rest of World			7.4						10.1						38.6						6.6						62.7
Total segment revenue			$	399.5					$	152.4					$	208.6					$	154.9					$	915.4
First Quarter of 2022
North America			$	231.9					$	83.4					$	59.0					$	124.1					$	498.4
Europe			112.3						71.2						114.0						21.7						319.2
Asia Pacific			46.9						42.0						19.2						7.4						115.5
Rest of World			6.5						10.9						37.7						5.5						60.6
Total segment revenue			$	397.6					$	207.5					$	229.9					$	158.7					$	993.7

Total revenue in the United States as included in the Condensed Consolidated Statements of Income was $437.5 million and $447.0 million for the first quarter of 2023 and 2022. No single customer or country other than the United States accounted for 10% or more of our total revenue.

NOTE 6. DEBT

Debt consisted of the following:

												First Quarter of												Year End
Instrument						Date of Issuance						2023									2022
(In millions)												Effective interest rate
Senior Notes:
Senior Notes, 4.15%, due June 2023						June 2018						4.36%			$	300.0								$	300.0
Senior Notes, 4.75%, due December 2024						November 2014						4.95%			400.0									400.0
Senior Notes, 4.90%, due June 2028						June 2018						5.04%			600.0									600.0
Senior Notes, 6.10%, due March 2033						March 2023						6.13%			800.0									—
Credit Facilities:
2022 Revolving Credit Facility, due March 2027						September 2022						5.54%			—									225.0
Unamortized discount and issuance costs															(13.1)									(5.0)
Total debt															$	2,086.9								$	1,520.0
Less: Short-term debt															300.0									300.0
Long-term debt															$	1,786.9								$	1,220.0

Debt Maturities

At the end of the first quarter of 2023, our debt maturities based on outstanding principal were as follows (in millions):

Year Payable
2023 (Remaining)			$	300.0
2024			400.0
2025			—
2026			—
2027			—
Thereafter			1,400.0
Total			$	2,100.0

Senior Notes

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All of our senior notes are unsecured obligations. Interest on the senior notes is payable semi-annually in June and December of each year, except for the interest on the 2033 Senior Notes payable in March and September (as next described). Additional details are unchanged from the information disclosed in Note 7, “Debt” of the 2022 Form 10-K.

2033 Senior Notes

In March 2023, we issued an aggregate principal amount of $800.0 million in senior notes (the “2033 Senior Notes”) that will mature in March 2033 and bear interest at a fixed rate of 6.1% per annum. The interest is payable semi-annually in March and September of each year, commencing in September 2023. The interest rate is subject to adjustment from time to time upon a rating agency downgrade or upgrade of the credit rating assigned to the 2033 Senior Notes. The 2033 Senior Notes were sold at 99.843% of the aggregate principal amount. The 2033 Senior Notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.

Credit Facilities

Bridge Facility

On December 11, 2022, we entered into a bridge facility commitment letter (the “Bridge Facility”) in connection with the acquisition of Transporeon. Under the Bridge Facility, the lender committed to provide a term loan up to an aggregate amount of €1.88 billion. On December 27, 2022, the Bridge Facility was automatically reduced to €500 million upon entering into the 2022 Term Loan Agreement and the 2022 Credit Facility Amendment (as next described). On March 9, 2023, as a result of completing the issuance of the 2033 Senior Notes, the remaining €500 million was automatically terminated with no amounts having been drawn.

2022 Term Loan Credit Agreement

On December 27, 2022, we entered into a credit agreement (the “2022 Term Loan Credit Agreement”) providing for an unsecured delayed draw term loan facility in the aggregate principal amount of $1.0 billion, comprised of commitments for a 3-year tranche for $500.0 million and a 5-year tranche for $500.0 million.

The 2022 Term Loan Credit Agreement was entered into in connection with the acquisition of Transporeon. No amounts were drawn at the end of the first quarter of 2023. Additional details are unchanged from the information disclosed in Note 7, “Debt” of the 2022 Form 10-K.

2022 Credit Facility and Amendment

In March 2022, we entered into a credit agreement (the “2022 Credit Facility”) maturing in March 2027. The 2022 Credit Facility provides for a five-year, unsecured revolving credit facility in the aggregate principal amount of $1.25 billion, and permits us, subject to the satisfaction of certain conditions, to increase the commitments for revolving loans by an aggregate principal amount of up to $500.0 million. The interest rate and commitment fees are based on our current long-term, senior unsecured debt ratings, our leverage ratio, and certain specified sustainability targets. As of March 31, 2023, no amount was outstanding under the 2022 Credit Facility.

On December 27, 2022, we entered into an amendment to the 2022 Credit Facility (the “2022 Credit Facility Amendment”) that made $600.0 million of the existing commitments under the Credit Facility available for the acquisition of Transporeon and increased our maximum permitted leverage ratio following the closing of the acquisition.

For additional information related to debt issued in connection with the Transporeon acquisition on April 3, 2023, see Note 12 “Subsequent Events” of this report.

Uncommitted Facilities

At the end of the first quarter of 2023, we had two $75.0 million, one €100.0 million, and one £55.0 million revolving credit facilities, which are uncommitted (the “uncommitted facilities”). Generally, these uncommitted facilities may be redeemed upon demand. Borrowings under uncommitted facilities are classified as short-term debt in the Condensed Consolidated Balance Sheet. As of March 31, 2023, no amounts were outstanding under the uncommitted facilities.

Covenants

The 2022 Term Loan Credit Agreement and 2022 Credit Facility, as amended, contain customary covenants including, among other requirements, limitations that restrict the Company’s and its subsidiaries’ ability to create liens and enter into sale and leaseback transactions, and restrictions on the ability of the subsidiaries to incur indebtedness. Further, both debt agreements contain financial covenants that require the maintenance of maximum leverage and minimum interest coverage ratios. At the end of the first quarter of 2023, we were in compliance with the covenants for each of our debt agreements.

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NOTE 7. FAIR VALUE MEASUREMENTS

The following table summarizes the fair values of financial instruments at fair value on a recurring basis for the periods indicated and determined using the following inputs:

			Fair Values as of the end of the First Quarter of 2023																								Fair Values at the end of 2022
			Quoted prices in Active Markets for Identical Assets						Significant Other Observable Inputs						Significant Unobservable Inputs												Quoted prices in Active Markets for Identical Assets						Significant Other Observable Inputs						Significant Unobservable Inputs
(In millions)			(Level I)						(Level II)						(Level III)						Total						(Level I)						(Level II)						(Level III)						Total
Assets
Deferred compensation plan (1)			$	32.3					$	—					$	—					$	32.3					$	31.5					$	—					$	—					$	31.5
Derivatives (2)			—						38.3						—						38.3						—						18.0						—						18.0
Contingent consideration (3)			—						—						1.9						1.9						—						—						3.1						3.1
Total assets measured at fair value			$	32.3					$	38.3					$	1.9					$	72.5					$	31.5					$	18.0					$	3.1					$	52.6
Liabilities
Deferred compensation plan (1)			$	32.3					$	—					$	—					$	32.3					$	31.5					$	—					$	—					$	31.5
Derivatives (2)			—						0.9						—						0.9						—						0.2						—						0.2
Total liabilities measured at fair value			$	32.3					$	0.9					$	—					$	33.2					$	31.5					$	0.2					$	—					$	31.7

(1)Represents a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees included in Other non-current assets and Other non-current liabilities on our Condensed Consolidated Balance Sheets. The plan is invested in actively traded mutual funds and individual stocks valued using observable quoted prices in active markets.

(2)Represents forward currency exchange contracts, and for 2022, a treasury rate lock contract, all that are included in Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets.

(3)Represents arrangements to receive payments from buyers of our divested companies that are included in Other current and non-current assets on our Condensed Consolidated Balance Sheets. The fair values are estimated using scenario-based methods based upon estimated future milestones.

Derivative assets include foreign currency exchange contracts and a treasury rate lock contract, both related to the acquisition of Transporeon.

The foreign currency exchange contracts were economic hedges of the euro-denominated purchase price of Transporeon with gains recognized in other income (expense), net. The notional amounts were $2,021.3 million and $1,999.4 million, and the fair values were $38.0 million and $10.4 million at the end of the first quarter of 2023 and the end of 2022.

The treasury rate lock contract was a cash flow hedge settled during the first quarter of 2023 with net gains reported within other comprehensive income, which is being amortized to interest expense over the 10-year term of the associated debt. At the end of 2022, the notional amount was $400.0 million, and the fair value was $7.2 million.

Additional Fair Value Information

The total estimated fair value of all outstanding financial instruments that are not recorded at fair value on a recurring basis (debt) was approximately $2.1 billion and $1.5 billion at the end of the first quarter of 2023 and the end of 2022.

The fair value of the senior notes was determined based on observable market prices in less active markets and is categorized accordingly as Level II. The fair values do not indicate the amount we would currently have to pay to extinguish the debt.

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NOTE 8. DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

Deferred Revenue

Changes in our deferred revenue during the first quarter of 2023 and 2022 were as follows:

			First Quarter of
(In millions)			2023						2022
Beginning balance of the period			$	737.6					$	631.8
Revenue recognized from prior year-end			(293.5)						(234.6)
Billings net of revenue recognized from current year			316.7						306.7
Ending balance of the period			$	760.8					$	703.9

Remaining Performance Obligations

At the end of the first quarter of 2023, approximately $1.6 billion of revenue is expected to be recognized from remaining performance obligations for which goods or services have not been delivered, primarily subscription, software, and software maintenance, and to a lesser extent, hardware and professional services contracts. We expect to recognize $1.2 billion or 72% of our remaining performance obligations as revenue during the next 12 months and the remainder thereafter.

NOTE 9. EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period plus additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, restricted stock units, contingently issuable stock, and stock to be purchased under our employee stock purchase plan.

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

			First Quarter of
			2023						2022
(In millions, except per share amounts)
Numerator:
Net income			$	128.8					$	110.3
Denominator:
Weighted-average number of common shares used in basic earnings per share			247.2						250.8
Effect of dilutive securities			1.5						2.0
Weighted-average number of common shares and dilutive potential common shares used in diluted earnings per share			248.7						252.8
Basic earnings per share			$	0.52					$	0.44
Diluted earnings per share			$	0.52					$	0.44
Antidilutive weighted-average shares (1)			1.6						0.7

(1) Antidilutive stock-based awards are excluded from the calculation of diluted shares and diluted earnings per share because their impact would increase diluted earnings per share.

NOTE 10. INCOME TAXES

For the first quarter, our effective income tax rate was 19.8%, as compared to 20.4% in the corresponding period in 2022. The decrease was primarily due to an increase in tax benefits from foreign-derived intangible income, partially offset by a one-time tax benefit from a deferred tax liability write-off in 2022.

We and our subsidiaries are subject to U.S. federal, state, and foreign income taxes. Currently, we are in different stages of multiple year examinations by various state and foreign taxing authorities. While we believe our reserves are more likely than not to be adequate to cover final resolution of all open tax matters, it is reasonably possible that future obligations related to these matters could arise.

Unrecognized tax benefits of $52.3 million and $51.6 million at the end of the first quarter of 2023 and at the end of 2022, if recognized, would favorably affect the effective income tax rate in future periods. At the end of the first quarter of 2023 and at

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the end of 2022, we accrued interest and penalties of $9.8 million and $8.4 million. Although the timing of the resolution and/or closure of audits is not certain, we do not believe that our gross unrecognized tax benefits would materially change in the next twelve months.

NOTE 11. C****OMMITMENTS AND CONTINGENCIES

Commitments

At the end of the first quarter of 2023, we had unconditional purchase obligations of approximately $782.5 million. These unconditional purchase obligations primarily represent open non-cancellable purchase orders for material purchases with our vendors and investments in our platform associated with our Connect and Scale strategy.

Litigation

From time to time, we are involved in litigation arising in the ordinary course of our business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, that we or any of our subsidiaries is a party, or that any of our or our subsidiaries’ property is subject.

NOTE 12. SUBSEQUENT EVENTS

On April 3, 2023, we acquired all of the outstanding shares of Transporeon, in an all-cash transaction valued at approximately €1.9 billion or $2.1 billion. Transporeon, a Germany-based company, is a leading cloud-based transportation management software platform that connects key stakeholders across the industry lifecycle to positively impact the optimization of global supply chains, in alignment with our Connect and Scale strategy. We believe the acquisition will increase our international footprint and long-term Transportation opportunities. We also believe it will advance our sustainability strategy by reducing under-utilized carrier capacity and “empty miles”. Transporeon will be reported as part of our Transportation segment. We will include the financial results of Transporeon in our Consolidated Financial Statements beginning in the second quarter of 2023.

The purchase price has not yet been allocated to the underlying assets acquired and liabilities assumed. The allocation is pending third-party appraisals of intangible assets and the corresponding deferred taxes, as well as other asset and liability account balances. We anticipate that the majority of the purchase price will be allocated to goodwill and intangible assets.

The acquisition was funded through a combination of cash on hand and new debt as follow:

• In the first quarter, we issued $800.0 million of 2033 Senior Notes, which was used in part to fund the acquisition;

• Subsequent to the first quarter, on April 3, 2023, $1.2 billion of debt was drawn, including $1.0 billion of term loans under the 2022 Term Loan Credit Agreement and $225.0 million under the 2022 Credit Facility, as amended. The term loans include a 3-year tranche of $500.0 million and a 5-year tranche of $500.0 million.

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