EMPLOYEE STOCK BENEFIT PLANS

The Company’s stock benefit plans include the employee stock purchase plan and stock plans adopted in 2002, 1993, 1992, 1990, as well as one stock plan assumed through an acquisition. Other than the employee stock purchase plan and the 2002 and 1992 stock plans described below, the other plans have no shares available for future grant. At the end of fiscal 2013, for the stock plan assumed through an acquisition, options to purchase 257,520 shares were outstanding.

Plans

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“Purchase Plan”) under which an aggregate of 39,100,000 shares of Common Stock have been reserved for sale to eligible employees as approved by the shareholders to date. 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. The Purchase Plan terminates on September 30, 2018. In fiscal 2013, 2012 and 2011, the shares issued under the Purchase Plan were 636,227 shares, 702,622, and 794,252, respectively. Compensation expense recognized during fiscal 2013, 2012 and 2011 related to shares granted under the Employee Stock Purchase Plan was $4.0 million, $3.9 million and $3.3 million, respectively. At the end of fiscal 2013, the number of shares reserved for future purchases by eligible employees was 5,973,148.

2002 Stock Plan

In 2002, Trimble’s board of directors adopted the 2002 Stock Plan (“2002 Plan”). The 2002 Plan, approved by the shareholders, provides for the granting of incentive and non-statutory stock options and restricted stock units for up to 62,570,248 shares plus any shares currently reserved but unissued to employees, consultants, and directors of Trimble. Incentive stock options may be granted at exercise prices that are not less than 100% of the fair market value of Common Stock on the date of grant. Employee stock options granted under the 2002 Plan generally have 84-120 month terms, and vest at a rate of 20% at the first anniversary of grant and monthly thereafter at an annual rate of 20%, with full vesting occurring at the fifth anniversary of the grant. In certain instances, grants vest at a rate of 40% at the second anniversary of grant and monthly thereafter at an annual rate of 20% with full vesting occurring at the fifth anniversary of the grant. Beginning 2013, employee stock options granted under the 2002 Plan vest at a rate of 25% at the first anniversary of grant and monthly thereafter at an annual rate of 25%, with full vesting occurring at the fourth anniversary of the grant. In certain instances, grants vest at a rate of 50% at the second anniversary of grant and monthly thereafter at an annual rate of 25% with full vesting occurring at the fourth anniversary of the grant. Non-employee director stock options granted under the 2002 Plan generally have 84-120 month terms, and vest at a rate of 1/12th per month, with full vesting occurring one year from the date of grant. The Company issues new shares for option exercises. The majority of the restricted share units granted under this plan vest 100% after three years. At the end of fiscal 2013, options to purchase 14,685,605 shares were outstanding, 1,966,175 restricted stock units were unvested, and 17,614,173 shares were available for future grant under the 2002 Plan.

1992 Employee Stock Bonus Plan

In 1992, Trimble’s board of directors approved the 1992 Employee Stock Bonus Plan (“Bonus Plan”). At the end of fiscal 2013, there were no options outstanding to purchase shares and 4,067 shares were available for future grant under the 1992 Employee Stock Bonus Plan.

Stock Option and Restricted Stock Unit Activity

Options Outstanding and Exercisable

Exercise prices for options outstanding at the end of fiscal 2013, ranged from $5.06 to $31.05. In view of the wide range of exercise prices, Trimble considers it appropriate to provide the following additional information with respect to options outstanding at the end of fiscal 2013:



	Options Outstanding				Options Exercisable
Range	Number Outstanding	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in years)	Number Exercisable	Weighted- Average Exercise Price per Share
(in thousands, except for per share data)
5.06 - 8.00	392	$	6.96	0.85	392	$	6.96
8.01 - 12.00	2,963	10.10		2.39	2,635	10.03
12.01 - 16.00	1,702	14.96		2.76	1,360	14.86
16.01 - 20.00	1,555	18.09		3.77	934	18.06
20.01 - 24.00	5,249	21.64		4.69	2,041	21.02
24.01 - 28.00	1,310	26.96		5.22	247	26.94
28.01 - 31.05	1,772	28.20		6.56	102	28.08
Total	14,943	$	19.08	4.09	7,711	$	15.39



	Number Of Shares (in thousands)	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Options outstanding	14,943	$	19.08	4.09	$	231,420
Options expected to vest	6,744	$	22.94	5.18	$	78,436
Options exercisable	7,711	$	15.39	3.04	$	147,920

Options expected to vest are adjusted for expected forfeitures. The aggregate intrinsic value is the total pretax intrinsic value based on the Company’s closing stock price of $34.57 at the end of fiscal 2013, which would have been received by the option holders had all option holders exercised their options as of that date.

At the end of fiscal 2013, the total unamortized stock option expense is $47.4 million with a weighted-average recognition period of 2.9 years.

Option Activity

Activity during fiscal 2013, under the combined plans was as follows:



	Options		Weighted average exercise price
(in thousands, except for per share data)
Outstanding at the beginning of year	16,966		$	16.93
Granted	1,814		28.19
Exercised	(3,192	)	12.62
Cancelled	(645	)	19.98
Outstanding at the end of year	14,943		$	19.08
Available for grant	17,618

The total intrinsic value of options exercised during fiscal 2013, 2012 and 2011 was $55.5 million, $89.3 million, and $64.7 million, respectively. Compensation expense recognized during fiscal 2013, 2012 and 2011 related to stock options was $20.2 million, $20.3 million, and $15.8 million, respectively.

Restricted Stock Unit Activity

Activity during fiscal 2013 was as follows:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value
(in thousands, except for per share data)
Unvested at the beginning of year	1,544		$	20.66
Granted	1,125		28.17
Vested	(601	)	16.63
Cancelled	(102	)	22.95
Unvested at the end of year	1,966		$	26.07

Compensation expense recognized during fiscal 2013, 2012 and 2011 related to restricted stock units was $12.2 million, $8.6 million, and $9.4 million, respectively. At the end of fiscal 2013, there was $39.2 million of unamortized restricted stock unit compensation expense related to unvested restricted stock units, with a weighted-average recognition period of 2.4 years.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense related to employee stock-based compensation (for all plans) included in the Consolidated Statements of Income.



Fiscal Years	2013		2012		2011
(in thousands)
Cost of sales	$	2,573	$	2,005	$	1,955
Research and development	5,039		5,319		4,624
Sales and marketing	7,329		7,017		6,672
General and administrative	21,501		18,319		15,200
Total operating expenses	33,869		30,655		26,496
Total stock-based compensation expense	$	36,442	$	32,660	$	28,451

Fair Value of Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, rights to purchase shares are generally granted during the second and fourth quarter of each year. The fair value of rights granted under the Employee Stock Purchase Plan was estimated at the date of grant using the Black-Scholes option-pricing model. The estimated weighted average value of rights granted under the Employee Stock Purchase Plan during fiscal years 2013, 2012 and 2011 was $8.05, $6.27 and $5.41, respectively. The fair value of rights granted during 2013, 2012 and 2011 was estimated at the date of grant using the following weighted-average assumptions:



Fiscal Years	2013		2012		2011
Expected dividend yield	—		—		—
Expected stock price volatility	31.5	%	37.9	%	34.0	%
Risk free interest rate	0.12	%	0.10	%	0.16	%
Expected life of purchase	6 months		6 months		6 months

Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Expected Stock Price Volatility—The Company’s computation of expected volatility is based on implied volatilities from traded options on the Company’s stock. The Company used implied volatility because it is representative of future stock price trends during the purchase period.

Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the purchase period.

Expected Life of Purchase—The Company’s expected life of the purchase is based on the term of the offering period of the purchase plan.

Fair value of Trimble Options

Stock option expense recognized in the Consolidated Statements of Income is based on the fair value of the portion of share-based payment awards that is expected to vest during the period and is net of estimated forfeitures. The Company’s compensation expense for stock options is recognized using the straight-line single option method. The fair value for stock options is estimated on the date of grant using the binomial valuation model. The binomial model takes into account variables such as volatility, dividend yield rate, and risk free interest rate. In addition, the binomial model incorporates actual option-pricing behavior and changes in volatility over the option’s contractual term.

Under the binomial model, the weighted average grant-date fair value of stock options granted during fiscal years 2013, 2012 and 2011 was $7.90, $7.51, and $7.62, respectively. For options granted during fiscal 2013, 2012 and 2011, the following weighted-average assumptions were used:



Fiscal Years	2013		2012		2011
Expected dividend yield	—		—		—
Expected stock price volatility	35	%	41	%	45	%
Risk free interest rate	0.69	%	0.62	%	1.13	%
Expected life of options	3.9 years		4.1 years		4.2 years

Expected Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Expected Stock Price Volatility—The Company’s computation of expected volatility is based on a combination of implied volatilities from traded options on the Company’s stock and historical volatility. The Company used implied and historical volatility as the combination was more representative of future stock price trends than historical volatility alone.

Expected Risk Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option.

Expected Life of Options—The Company’s expected term represents the period that the Company’s stock options are expected to be outstanding and was determined based on historical experience of similar stock options with consideration for the contractual terms of the stock options, vesting schedules and expectations of future employee behavior.

Fair value of Restricted Stock Units

Restricted stock units are converted into shares of Trimble common stock upon vesting on a one-for-one basis. Vesting of restricted stock units is subject to the employee’s continuing service to the Company. The compensation expense related to these awards was determined using the fair value of Trimble’s common stock on the date of grant, and the expense is recognized on a straight-line basis over the vesting period. Restricted stock units typically vest at the end of three years.