Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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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 (Loss)			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. Acquisition			11
Note 4. Assets Held for Sale			13
Note 5 . Intangible Assets and Goodwill			14
Note 6 . Inventories			15
Note 7 . Segment Information			15
Note 8 . Debt			18
Note 9 . Fair Value Measurements			19
Note 10 . Deferred Revenue and Remaining Performance Obligations			20
Note 1 1 . Earnings per Share			20
Note 1 2 . Income Taxes			21
Note 1 3 . Commitments and Contingencies			21

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TRIMBLE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	As of		As of
	Third Quarter of		Year End
	2023		2022

(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	216.8	$	271.0

Accounts receivable, net	641.4		643.3

Inventories	257.2		402.5
Other current assets	196.4		201.4
Assets held for sale	378.7		—
Total current assets	1,690.5		1,518.2
Property and equipment, net	203.7		219.0
Operating lease right-of-use assets	114.5		121.2
Goodwill	5,279.7		4,137.9
Other purchased intangible assets, net	1,259.6		498.1
Deferred income tax assets	418.0		438.4
Other non-current assets	364.7		336.2
Total assets	$	9,330.7	$	7,269.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt	$	58.3	$	300.0
Accounts payable	179.5		175.5
Accrued compensation and benefits	169.9		159.4
Deferred revenue	594.2		639.1
Income taxes payable	104.9		23.7
Other current liabilities	184.3		164.4
Liabilities held for sale	46.9		—
Total current liabilities	1,338.0		1,462.1
Long-term debt	2,995.4		1,220.0
Deferred revenue, non-current	98.4		98.5
Deferred income tax liabilities	283.6		157.8

Operating lease liabilities	104.1		105.1
Other non-current liabilities	168.2		175.3
Total liabilities	4,987.7		3,218.8
Commitments and contingencies (Note 13)
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; 248.8 and 246.9 shares issued and outstanding at the end of the third quarter of 2023 and year end 2022	0.2		0.2
Additional paid-in-capital	2,201.5		2,054.9
Retained earnings	2,455.4		2,230.0
Accumulated other comprehensive loss	(314.1)		(234.9)


Total stockholders' equity	4,343.0		4,050.2
Total liabilities and stockholders' equity	$	9,330.7	$	7,269.0

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Third Quarter of				First Three Quarters of
(In millions, except per share amounts)	2023		2022		2023		2022

Revenue:
Product	$	444.0	$	472.5	$	1,368.9	$	1,570.3
Subscription and services	513.3		412.4		1,497.4		1,249.5
Total revenue	957.3		884.9		2,866.3		2,819.8
Cost of sales:
Product	215.6		239.8		665.7		815.5
Subscription and services	123.8		109.8		364.2		338.4
Amortization of purchased intangible assets	27.7		19.9		80.9		63.4
Total cost of sales	367.1		369.5		1,110.8		1,217.3
Gross margin	590.2		515.4		1,755.5		1,602.5
Operating expense:
Research and development	162.5		127.0		496.6		407.4
Sales and marketing	146.2		137.1		436.9		407.9
General and administrative	117.2		109.6		369.2		318.0
Restructuring	11.8		8.2		26.1		20.5
Amortization of purchased intangible assets	31.2		11.1		74.8		34.5
Total operating expense	468.9		393.0		1,403.6		1,188.3
Operating income	121.3		122.4		351.9		414.2
Non-operating income (expense), net:
Divestitures gain, net	5.5		6.0		10.6		103.1
Interest expense, net	(46.8)		(15.6)		(113.2)		(46.9)

Income from equity method investments, net	5.2		6.8		24.6		22.3
Other income (expense), net	(5.8)		(1.7)		23.6		(14.7)
Total non-operating income (expense), net	(41.9)		(4.5)		(54.4)		63.8
Income before taxes	79.4		117.9		297.5		478.0
Income tax provision	4.5		32.1		49.2		113.9
Net income	$	74.9	$	85.8	$	248.3	$	364.1


Earnings per share:
Basic	$	0.30	$	0.35	$	1.00	$	1.46
Diluted	$	0.30	$	0.34	$	1.00	$	1.45
Shares used in calculating earnings per share:
Basic	248.6		247.5		248.0		249.1
Diluted	249.7		248.9		249.1		250.8

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Third Quarter of				First Three Quarters of
	2023		2022		2023		2022

(In millions)
Net income	$	74.9	$	85.8	$	248.3	$	364.1
Foreign currency translation adjustments, net of tax	(119.7)		(95.6)		(75.6)		(173.0)
Net change related to derivatives and other, net of tax	(0.2)		—		(3.6)		—
Comprehensive (loss) income	$	(45.0)	$	(9.8)	$	169.1	$	191.1

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
Net income	—	—		—		44.6		—		44.6
Other comprehensive income	—	—		—		—		24.2		24.2
Issuance of common stock under employee plans, net of tax withholdings	0.9	—		(4.2)		(19.4)		—		(23.6)
Stock-based compensation	—	—		40.9		—		—		40.9
Balance at the end of the second quarter of 2023	248.3	$	0.2	$	2,144.2	$	2,381.1	$	(194.2)	$	4,331.3
Net income	—	—		—		74.9		—		74.9
Other comprehensive loss	—	—		—		—		(119.9)		(119.9)

Issuance of common stock under employee plans, net of tax withholdings	0.5	—		18.2		(0.6)		—		17.6

Stock-based compensation	—	—		39.1		—		—		39.1

Balance at the end of the third quarter of 2023	248.8	$	0.2	$	2,201.5	$	2,455.4	$	(314.1)	$	4,343.0


	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
Net income	—	—		—		168.0		—		168.0
Other comprehensive loss	—	—		—		—		(75.2)		(75.2)

Issuance of common stock under employee plans, net of tax withholdings	0.6	—		(2.3)		(17.1)		—		(19.4)
Stock repurchases	(3.1)	(0.1)		(24.4)		(175.5)		—		(200.0)
Stock-based compensation	—	—		33.2		—		—		33.2
Balance at the end of the second quarter of 2022	247.6	$	0.2	$	1,987.7	$	2,145.7	$	(239.1)	$	3,894.5
Net income	—	—		—		85.8		—		85.8
Other comprehensive loss	—	—		—		—		(95.6)		(95.6)

Issuance of common stock under employee plans, net of tax withholdings	0.4	—		17.9		(0.9)		—		17.0
Stock repurchases	(1.4)	—		(11.4)		(78.6)		—		(90.0)
Stock-based compensation	—	—		33.1		—		—		33.1
Balance at the end of the third quarter of 2022	246.6	$	0.2	$	2,027.3	$	2,152.0	$	(334.7)	$3,844.8

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TRIMBLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	First Three Quarters of
(In millions)	2023		2022
Cash flow from operating activities:
Net income	$	248.3	$	364.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	29.5		30.1
Amortization expense	155.7		97.9
Deferred income taxes	(104.0)		(41.3)
Stock-based compensation	112.5		93.2

Divestitures gain, net	(10.6)		(103.1)
Other, net	(5.9)		22.7
(Increase) decrease in assets:
Accounts receivable, net	24.0		13.2

Inventories	46.3		(99.5)
Other current and non-current assets	(35.5)		(31.7)
Increase (decrease) in liabilities:
Accounts payable	5.0		(3.8)
Accrued compensation and benefits	12.3		(52.9)
Deferred revenue	(39.7)		14.3
Income taxes payable	62.5		(16.6)
Other current and non-current liabilities	(2.2)		(1.5)
Net cash provided by operating activities	498.2		285.1
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired	(2,088.9)		(318.1)
Purchases of property and equipment	(32.2)		(36.6)





Net proceeds from divestitures	15.1		214.3

Other, net	41.6		(11.8)
Net cash used in investing activities	(2,064.4)		(152.2)
Cash flow from financing activities:
Issuance of common stock, net of tax withholdings	8.0		(4.8)
Repurchases of common stock	—		(394.7)
Proceeds from debt and revolving credit lines	3,398.8		529.3
Payments on debt and revolving credit lines	(1,856.8)		(235.9)
Other, net	(29.3)		(8.9)
Net cash provided by (used in) financing activities	1,520.7		(115.0)
Effect of exchange rate changes on cash and cash equivalents	(2.6)		(34.9)
Net decrease in cash and cash equivalents	(48.1)		(17.0)
Cash and cash equivalents - beginning of period	271.0		325.7
Cash and cash equivalents - end of period (1)	$	222.9	$	308.7

(1) Includes $6.1 million of cash and cash equivalents classified as held for sale as of September 29, 2023.

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 third quarter of 2023 and 2022 ended on September 29, 2023 and September 30, 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 revenue, which includes subscription, maintenance and support, recurring transactions, 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 changes on the Condensed Consolidated Statements of Income for the third quarter and first three quarters of 2022 were as follows:

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	Third Quarter of 2022						First Three Quarters of 2022
(In millions)
	As Previously Reported		Effect of Change in Presentation		As Reported Herein		As Previously Reported		Effect of Change in Presentation		As Reported Herein
Revenue:
Product	$	503.9	$	(31.4)	$	472.5	$	1,690.0	$	(119.7)	$	1,570.3
Subscription and services	—		412.4		412.4		—		1,249.5		1,249.5
Service	158.3		(158.3)		—		477.4		(477.4)		—
Subscription	222.7		(222.7)		—		652.4		(652.4)		—

Total revenue	$	884.9	$	—	$	884.9	$	2,819.8	$	—	$	2,819.8

Cost of sales:
Product	$	240.7	$	(0.9)	$	239.8	$	819.0	$	(3.5)	$	815.5
Subscription and services	—		109.8		109.8		—		338.4		338.4
Service	53.9		(53.9)		—		180.6		(180.6)		—
Subscription	55.0		(55.0)		—		154.3		(154.3)		—
Amortization of purchased intangible assets	19.9		—		19.9		63.4		—		63.4
Total cost of sales	$	369.5	$	—	$	369.5	$	1,217.3	$	—	$	1,217.3

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 third quarter of 2023, the 2021 Stock Repurchase Program had remaining authorized funds of $215.3 million.

In the fourth quarter of 2023, we plan to reinstate share repurchases, which were temporarily discontinued in the fourth quarter of 2022.

During the third quarter and first three quarters of 2022, we repurchased approximately 1.4 million and 6.0 million shares of common stock in open market purchases at an average price of $64.23 and $65.90 per share for a total of $90.0 million and $394.7 million under the 2021 Stock Repurchase Program.

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.

NOTE 3. ACQUISITION

On April 3, 2023, we acquired all of the issued and outstanding shares of TP Group Holding GmbH and Sixfold GmbH, which owned Transporeon, in an all-cash transaction. Transporeon is a Germany-based company and leading cloud-based transportation management software platform that connects key stakeholders across the industry lifecycle to positively impact the optimization of global supply chains, which aligns with our Connect and Scale strategy. Transporeon is reported as part of our Transportation segment.

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The total purchase consideration was €1.9 billion or $2.1 billion, which included the repayment of outstanding Transporeon debt of $339.6 million. The acquisition was funded through a combination of cash on hand and debt. See Note 8 “Debt” of this report for more information.

Purchase Price Allocation

The fair value of identifiable assets acquired and liabilities assumed was 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.

The following table summarizes the consideration transferred to acquire Transporeon and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed, as well as the estimated useful lives of the identifiable intangible assets as of the date of the acquisition. The allocation of the purchase price is still preliminary as we finalize deferred income taxes, certain tangible assets and liabilities acquired, and valuations of intangible assets. Preliminary estimates will be finalized within one year of the acquisition date.


	Fair Value as of the Acquisition Date		Estimated Useful Life
(In millions)
Total purchase consideration	$	2,082.6

Net tangible assets acquired:
Cash and cash equivalents	12.9
Accounts receivable, net	41.8
Other current assets	28.0
Non-current assets	24.7
Accounts payable	(4.1)
Accrued compensation and benefits	(9.7)
Deferred revenue	(16.5)
Other current liabilities	(47.2)
Non-current liabilities	(22.3)
Total net tangible assets acquired	7.6

Intangible assets acquired:
Customer relationships	759.5		11 years
Developed product technology	168.4		7 years
Trade name	11.9		1 year
Total intangible assets acquired	939.8

Deferred tax liability	(256.6)

Fair value of all assets/liabilities acquired	690.8

Goodwill	$	1,391.8

Goodwill consists of growth potential, synergies, and economies of scale expected from combining Transporeon’s operations with ours, together with the highly skilled and valuable assembled workforce. We do not expect the goodwill to be deductible for income tax purposes.

Financial Information

The following table presents the amounts of revenue and net loss included in the Condensed Consolidated Statements of Income resulting from Transporeon since the acquisition date, which includes the effects of purchase accounting, primarily amortization of intangible assets and other adjustments.

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	Third Quarter of		First Three Quarters of
	2023		2023
(In millions)
Total revenue	$	41.0	$	81.5
Net loss	(12.4)		(27.0)

Pro Forma Financial Information

The pro forma financial information presented in the following table was computed by combining the historical financial information of Trimble and Transporeon along with the effects from business combination accounting and the associated debt resulting from this acquisition as if the companies were combined on January 1, 2022. This information is presented for informational purposes only, and is not necessarily indicative of the operating results that would have occurred if the acquisition had been consummated as of that date. This information should not be used as a predictive measure of our future financial position, results of operations, or liquidity.


	Third Quarter of				First Three Quarters of
	2023		2022		2023		2022
(In millions)
Total revenue	$	957.3	$	922.7	$	2,906.8	$	2,936.3
Net income	74.9		56.7		210.0		252.2

NOTE 4. ASSETS HELD FOR SALE

On September 28, 2023, we executed a definitive agreement with AGCO that provides for the formation of a JV with AGCO in the mixed fleet precision agriculture market (the “Trimble Ag JV Transaction”). Under the terms of the agreement, we will contribute our precision agriculture business (“Trimble Ag”), excluding certain Global Navigation Satellite System (“GNSS”) and guidance technologies, and AGCO will contribute its JCA Technologies business to the JV. We will sell an interest in the JV to AGCO for $2.0 billion in pre-tax cash proceeds, subject to working capital adjustments. Immediately following the closing of the Trimble Ag JV Transaction, we will own 15% of the JV and AGCO will own 85% of the JV.

Additionally, we plan to enter into the following agreements with AGCO as part of the overall transaction:

a seven-year, renewable Supply Agreement through which we will provide key GNSS and guidance technologies to the JV for use in professional agriculture machines sold by AGCO, on an exclusive basis with limited exceptions;
a Technology Transfer and License Agreement to govern the licensing of certain non-divested intellectual property and technology for use by the JV in the agriculture field and, upon expiration of the Supply Agreement, to govern fixed and variable royalty payments made to us by the JV;
a Trademark License Agreement to govern the licensing of certain Trimble trademarks for use by the JV in the agriculture field;
a Positioning Services Agreement through which the JV will serve as our channel partner for the positioning services in the agriculture market; and
a Transition Services Agreement to provide contract manufacturing services for the divested products for two years following the closing of the transaction.

The transaction is expected to close in the first half of 2024 and is subject to customary closing conditions, including regulatory approvals. Trimble Ag is reported as a part of our Resources and Utilities segment.

Following the closing of the Trimble Ag JV Transaction, our 15% ownership interest in the JV is expected to be reported as an equity method investment.

The assets and liabilities of Trimble Ag that are subject to the transaction were classified as held for sale in the third quarter of 2023. The following table presents the carrying values of the major classes of assets and liabilities classified as held for sale in our Condensed Consolidated Balance Sheets at the end of the third quarter of 2023:

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	As of
	Third Quarter of
(In millions)	2023

Cash and cash equivalents	$	6.1
Accounts receivable, net	11.7
Inventories, net	85.8
Other current assets	3.0
Property and equipment, net	18.8
Other purchased intangible assets, net	19.3
Goodwill	231.1
Other non-current assets	2.9
Total Assets Held for Sale	$	378.7

Accounts payable	$	3.7
Deferred revenue, current	13.3
Other current liabilities	14.8
Deferred revenue, non-current	8.3
Long-term liabilities	6.8
Total Liabilities Held for Sale	$	46.9

NOTE 5. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The following table presents a summary of our intangible assets:


	Third 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	$	927.2	$	(554.1)	$	373.1	$	1,004.8	$	(722.7)	$	282.1
Customer relationships	1,347.1		(469.8)		877.3		654.1		(445.9)		208.2
Trade names and trademarks	44.8		(36.6)		8.2		39.5		(32.7)		6.8
Distribution rights and other intellectual property	4.4		(3.4)		1.0		8.0		(7.0)		1.0
	$	2,323.5	$	(1,063.9)	$	1,259.6	$	1,706.4	$	(1,208.3)	$	498.1

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


(In millions)
2023 (Remaining)	$	57.5
2024	200.1
2025	162.8
2026	157.7
2027	144.0
Thereafter	537.5
Total	$	1,259.6

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Goodwill

The changes in the carrying amount of goodwill by segment for the first three quarters 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	28.1		—		—		1,391.8		1,419.9

Assets held for sale	—		(1.7)		(229.4)		—		(231.1)
Foreign currency translation and other adjustments	(2.2)		(3.6)		2.0		(43.2)		(47.0)

Balance as of the end of the third quarter of 2023	$	2,326.0	$	376.8	$	244.4	$	2,332.5	$	5,279.7

NOTE 6. INVENTORIES

The components of inventory, net were as follows:


	Third Quarter of		Year End
As of	2023		2022
(In millions)
Raw materials	$	92.0	$	154.9
Work-in-process	9.8		13.1
Finished goods	155.4		234.5
Total inventories	$	257.2	$	402.5

NOTE 7. 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.
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.

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	Reporting Segments
	Buildings and Infrastructure		Geospatial		Resources and Utilities		Transportation		Total
(In millions)
Third Quarter of 2023
Segment revenue	$	395.1	$	180.7	$	184.9	$	196.6	$	957.3
Segment operating income	113.5		57.9		69.2		35.8		276.4

Third Quarter of 2022
Segment revenue	$	363.6	$	184.2	$	191.7	$	145.4	$	884.9
Segment operating income	96.7		61.5		64.2		16.0		238.4

First Three Quarters of 2023
Segment revenue	$	1,204.6	$	526.0	$	589.5	$	546.2	$	2,866.3
Segment operating income	332.6		162.3		209.6		90.0		794.5

First Three Quarters of 2022
Segment revenue	$	1,143.8	$	585.4	$	636.4	$	454.2	$	2,819.8
Segment operating income	318.8		177.2		212.3		37.0		745.3


	Reporting Segments
	Buildings and Infrastructure		Geospatial		Resources and Utilities		Transportation		Total
(In millions)
As of the end of the Third Quarter of 2023
Accounts receivable, net	$	255.9	$	133.0	$	78.8	$	173.7	$	641.4
Inventories	68.8		124.0		11.0		53.4		257.2
Goodwill	2,326.0		376.8		244.4		2,332.5		5,279.7
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:


	Third Quarter of				First Three Quarters of
	2023		2022		2023		2022
(In millions)
Consolidated segment operating income	$	276.4	$	238.4	$	794.5	$	745.3
Unallocated general corporate expenses	(25.4)		(28.5)		(86.4)		(91.6)
Amortization of purchased intangible assets	(58.9)		(31.0)		(155.7)		(97.9)
Acquisition / divestiture items	(22.0)		(9.1)		(55.5)		(20.3)
Stock-based compensation / deferred compensation	(37.9)		(31.7)		(115.4)		(82.9)
Restructuring and other costs	(10.9)		(15.7)		(29.6)		(38.4)
Consolidated operating income	121.3		122.4		351.9		414.2
Total non-operating income (expense), net	(41.9)		(4.5)		(54.4)		63.8
Consolidated income before taxes	$	79.4	$	117.9	$	297.5	$	478.0

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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)
Third Quarter of 2023
North America	$	256.1	$	85.8	$	55.1	$	121.4	$	518.4
Europe	78.3		51.2		74.6		56.6		260.7
Asia Pacific	51.3		33.2		12.1		9.3		105.9
Rest of World	9.4		10.5		43.1		9.3		72.3
Total segment revenue	$	395.1	$	180.7	$	184.9	$	196.6	$	957.3
Third Quarter of 2022
North America	$	235.8	$	84.1	$	55.5	$	113.0	$	488.4
Europe	67.6		52.9		79.6		18.1		218.2
Asia Pacific	52.8		33.8		8.6		7.1		102.3
Rest of World	7.4		13.4		48.0		7.2		76.0
Total segment revenue	$	363.6	$	184.2	$	191.7	$	145.4	$	884.9
First Three Quarters of 2023
North America	$	773.9	$	233.0	$	159.8	$	359.1	$	1,525.8
Europe	259.4		158.8		254.9		138.1		811.2
Asia Pacific	148.4		104.7		42.6		23.9		319.6
Rest of World	22.9		29.5		132.2		25.1		209.7
Total segment revenue	$	1,204.6	$	526.0	$	589.5	$	546.2	$	2,866.3
First Three Quarters of 2022
North America	$	710.6	$	255.4	$	178.8	$	354.9	$	1,499.7
Europe	263.9		185.4		291.3		58.2		798.8
Asia Pacific	149.6		108.6		41.3		22.1		321.6
Rest of World	19.7		36.0		125.0		19.0		199.7
Total segment revenue	$	1,143.8	$	585.4	$	636.4	$	454.2	$	2,819.8

Total revenue in the United States as included in the Condensed Consolidated Statements of Income was $478.6 million and $444.5 million for the third quarter of 2023 and 2022, and $1,401.2 million and $1,358.9 million for the first three quarters of 2023 and 2022. No single customer or country other than the United States accounted for 10% or more of our total revenue.

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NOTE 8. DEBT

Debt consisted of the following:


		Third 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		$	—		$	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	6.68%	210.0			225.0
Term Loan, due April 2026	April 2023	6.94%	500.0			—
Term Loan, due April 2028	April 2023	7.03%	500.0			—
Uncommitted Credit Facilities, floating rate		6.38%	58.3			—

Unamortized discount and issuance costs			(14.6)			(5.0)
Total debt			$	3,053.7		$	1,520.0
Less: Short-term debt			58.3			300.0
Long-term debt			$	2,995.4		$	1,220.0

Debt Maturities

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


Year Payable
2023 (Remaining)	$	58.3
2024	400.0
2025	—
2026	518.8
2027	253.7
Thereafter	1,837.5
Total	$	3,068.3

Senior Notes

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. Additional details are unchanged from the information disclosed in Note 7 “Debt” of the 2022 Form 10-K.

During the second quarter of 2023, the $300 million senior notes due June 2023 matured and were repaid in full.

2033 Senior Notes

In March 2023, we issued an aggregate principal amount of $800.0 million in senior notes that will mature in March 2033. The proceeds were partly used to finance our acquisition of Transporeon. The interest is payable semi-annually in March and September of each year, commencing in September 2023.

Credit Facilities

2022 Term Loan Credit Agreement

On December 27, 2022, we entered into a $1.0 billion unsecured, delayed draw term loan credit agreement comprised of commitments for a 3-year tranche of $500.0 million and a 5-year tranche of $500.0 million. On April 3, 2023, both variable-rate term loans were drawn to fund the acquisition of Transporeon.

Prepayments are allowed without penalty and cannot be reborrowed.

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2022 Credit Facility and Amendment

In March 2022, we entered into a credit agreement maturing in March 2027. The 2022 credit facility provides for a five-year, unsecured revolving credit facility in an 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 variable interest rate and commitment fees are based on our current long-term, senior unsecured debt ratings, our leverage ratio, and certain specified sustainability targets.

On December 27, 2022, we entered into an amendment to the 2022 credit facility that made available up to $600.0 million of the existing commitments for the acquisition of Transporeon and increased our maximum permitted leverage ratio following the closing of the acquisition. On April 3, 2023, we borrowed $225.0 million as part of the proceeds to finance the acquisition. For additional information related to the Transporeon acquisition, see Note 3 “Acquisition” of this report.

Uncommitted Facilities

At the end of the third quarter of 2023, we had two $75.0 million, one €100.0 million, and one £55.0 million revolving credit facilities, which are uncommitted. Generally, these variable-rate uncommitted facilities may be redeemed upon demand. Borrowings under the uncommitted facilities are classified as short-term debt in the Condensed Consolidated Balance Sheet.

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 third quarter of 2023, we were in compliance with the covenants for each of our debt agreements.

NOTE 9. 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 at the end of the third 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)	$	29.2	$	—	$	—	$	29.2	$	31.5	$	—	$	—	$	31.5
Derivatives (2)	—		0.1		—		0.1		—		18.0		—		18.0
Contingent consideration (3)	—		—		1.0		1.0		—		—		3.1		3.1
Total assets measured at fair value	$	29.2	$	0.1	$	1.0	$	30.3	$	31.5	$	18.0	$	3.1	$	52.6

Liabilities
Deferred compensation plan (1)	$	29.2	$	—	$	—	$	29.2	$	31.5	$	—	$	—	$	31.5
Derivatives (2)	—		0.4		—		0.4		—		0.2		—		0.2

Total liabilities measured at fair value	$	29.2	$	0.4	$	—	$	29.6	$	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 assets on our Condensed Consolidated Balance Sheets. The fair values are estimated using scenario-based methods based upon estimated future milestones.

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At the end of 2022, derivative assets included foreign currency exchange contracts and a treasury rate lock contract, both related to the acquisition of Transporeon and associated debt and were settled in the first two quarters of 2023. See Note 10 “Fair Value Measurements” of the 2022 Form 10-K for additional details.

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 $3.0 billion and $1.5 billion at the end of the third 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.

NOTE 10. DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

Deferred Revenue

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



	Third Quarter of				First Three Quarters of
(In millions)	2023		2022		2023		2022
Beginning balance of the period	$	745.6	$	685.2	$	737.6	$	631.8
Revenue recognized from prior year-end	(107.8)		(92.0)		(543.0)		(453.8)
Billings net of revenue recognized from current year and other	54.8		43.6		498.0		458.8
Ending balance of the period	$	692.6	$	636.8	$	692.6	$	636.8

Remaining Performance Obligations

At the end of the third quarter of 2023, approximately $1.5 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 $1.1 billion or 70% of our remaining performance obligations as revenue during the next 12 months and the remainder thereafter. The remaining performance obligations exclude $43.5 million related to the pending Trimble Ag JV Transaction.

NOTE 11. 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:


	Third Quarter of				First Three Quarters of
	2023		2022		2023		2022
(In millions, except per share amounts)
Numerator:
Net income	$	74.9	$	85.8	$	248.3	$	364.1
Denominator:
Weighted-average number of common shares used in basic earnings per share	248.6		247.5		248.0		249.1
Effect of dilutive securities	1.1		1.4		1.1		1.7
Weighted-average number of common shares and dilutive potential common shares used in diluted earnings per share	249.7		248.9		249.1		250.8

Basic earnings per share	$	0.30	$	0.35	$	1.00	$	1.46
Diluted earnings per share	$	0.30	$	0.34	$	1.00	$	1.45

Antidilutive weighted-average shares (1)	1.3		1.7		1.7		1.5

(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.

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NOTE 12. INCOME TAXES

For the third quarter, our effective income tax rate was 5.7%, as compared to 27.2% in the corresponding period in 2022. The decrease was primarily due to increases in tax benefit from U.S. federal R&D credit and foreign-derived intangible income in 2023, favorable geographic mix of earnings, and a tax charge associated with prior year divestiture gains. For the first three quarters, our effective income tax rate was 16.5%, as compared to 23.8% in the prior year. The decrease was primarily due to the same factors in the third quarter, partially offset by lower stock-based compensation deductions in the current year.

Unrecognized tax benefits of $62.0 million and $51.6 million at the end of the third 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 third quarter of 2023 and at the end of 2022, we accrued interest and penalties of $10.9 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 13. COMMITMENTS AND CONTINGENCIES

Commitments

At the end of the third quarter of 2023, we had unconditional purchase obligations of approximately $683.1 million. These unconditional purchase obligations primarily represent (i) open non-cancellable purchase orders for material purchases with our inventory vendors, and (ii) various non-cancelable agreements with certain service providers with minimum or fixed commitments.

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.

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