NOTE 4: BUSINESS COMBINATIONS

During fiscal 2011, 2010, and 2009 the Company acquired multiple businesses. The Consolidated Statements of Income include the operating results of the businesses from the date of acquisition. Each of the acquisitions were not material individually or in the aggregate to the Company's results, except for the acquisition of Tekla Corporation ("Tekla") in July 2011. Pro-forma result of operations are shown below for Tekla, but are not presented for the other immaterial acquisitions.

The Company determined the total consideration paid for each of its acquisitions as well as the fair value of the assets acquired and liabilities assumed as of the date of acquisition. For certain acquisitions completed in fiscal 2011, the fair value of the assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information, primarily related to adjustments for the true up of acquired net working capital in accordance with certain purchase agreements, and estimated values of certain net tangible assets and liabilities including tax balances, pending the completion of final studies and analyses. If there are adjustments made for these items the fair value of intangible asset and goodwill could be impacted. Thus the provisional measurements of fair value set forth below are subject to change. Such changes could be significant. The Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one-year from the acquisition date.

The following table summarizes the Company's business combinations completed during fiscal 2011, including Tekla:


(in thousands)	Tekla			Other Acquisitions			Total

Fair value of total purchase consideration	$	457,387		$	340,414		$	797,801

Fair value of net assets acquired		10,976			12,145			23,121
Identified intangible assets		207,674			167,254			374,928
Deferred taxes		(53,995	)		(42,335	)		(96,330	)

Goodwill	$	292,732		$	203,350		$	496,082

The following table summarizes the Company's business combinations completed during fiscal years 2010 and 2009 (in thousands):


Fiscal Years	2010			2009
(in thousands)
Fair value of total purchase consideration	$	133,415		$	41,639

Fair value of net assets acquired		26,385			1,187
Identified intangible assets		57,802			21,475
Deferred taxes		(7,877	)		(7,766	)
Noncontrolling interests		(7,804	)		—
Bargain purchase		(832	)		—


Goodwill	$	65,741		$	26,743

All of the business combinations in fiscal 2011, 2010 and 2009 were acquired with cash consideration. None of the amounts assigned to goodwill are expected to be deductible for tax purposes.

Certain acquisitions include additional earn-out cash payments based on future revenue or gross margin derived from existing products and other product milestones. These earn-outs are included in the initial purchase price at fair value and are remeasured to fair value at each balance sheet date with changes recorded to earnings. Prior to the current accounting guidance that became effective in 2009, earn-out payments were considered additional purchase price consideration when, and if, any contingencies, such as the achievement of certain earnings targets, were resolved. Earn-outs paid for pre-2009 acquisitions and changes in purchase price allocation estimates were recorded as purchase price adjustments and goodwill adjustments. Earn-out cash payments made for these pre-2009 acquisitions were $0.3 million, $0.4 million and $8.5 million in fiscal 2011, fiscal 2010 and fiscal 2009, respectively. Acquisitions made by the Company have additional potential earn-out cash payments in excess of that recorded on the Company's Consolidated Balance Sheet of $11.2 million.

Intangible Assets

The following tables present details of the Company's total intangible assets:


	At the End of Fiscal 2011
(in thousands)	Tekla Gross Carrying Amount		Tekla Accumulated Amortization			Other acquisitions Gross Carrying Amount		Other acquisitions Accumulated Amortization			Total Net Carrying Amount
Developed product technology	$	107,260	$	(5,731	)	$	329,837	$	(187,487	)	$	243,879
Trade names and trademarks		7,648		(409	)		26,915		(18,524	)		15,630
Customer relationships		83,929		(4,485	)		196,354		(90,088	)		185,710
Distribution rights and other intellectual properties		8,837		(472	)		54,661		(31,454	)		31,572

	$	207,674	$	(11,097	)	$	607,767	$	(327,553	)	$	476,791


	At the End of Fiscal 2010
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed product technology	$	247,575	$	(148,171	)	$	99,404
Trade names and trademarks		22,136		(16,449	)		5,687
Customer relationships		143,125		(68,104	)		75,021
Distribution rights and other intellectual properties		50,207		(25,371	)		24,836

	$	463,043	$	(258,095	)	$	204,948

The weighted-average amortization period is six years for developed product technology, seven years for trade names and trademarks, seven years for customer relationships, and seven years for distribution rights and other intellectual properties.

The following table presents details of the amortization expense of purchased and other intangible assets as reported in the Consolidated Statements of Income:


Fiscal Years	2011		2010		2009
(in thousands)
Reported as:
Cost of sales	$	36,455	$	24,900	$	22,337
Operating expenses		48,705		32,739		30,335

Total	$	85,160	$	57,639	$	52,672

The estimated future amortization expense of intangible assets at the end of fiscal 2011, is as follows (in thousands):


2012	$	107,172
2013		100,193
2014		78,120
2015		66,577
2016		52,328
Thereafter		72,401

Total	$	476,791

Goodwill

The changes in the carrying amount of goodwill for fiscal 2011 are as follows (in thousands):


	Engineering and Construction			Field Solutions			Mobile Solutions			Advanced Devices			Total

At the end of fiscal 2010	$	432,364		$	26,211		$	348,166		$	21,996		$	828,737
Additions due to Tekla acquisition		246,640			45,061			—			—			291,701
Purchase price adjustments due to Tekla acquisition		1,031			—			—			—			1,031
Additions due to other acquisitions		37,977			—			162,307			2,163			202,447
Purchase price adjustments due to other acquisitions		(577	)		—			(1,519	)		23			(2,073	)
Foreign currency translation adjustments		(20,198	)		(3,004	)		(694	)		(255	)		(24,151	)

At the end of fiscal 2011	$	697,237		$	68,268		$	508,260		$	23,927		$	1,297,692

Tekla Acquisition

On May 8, 2011, the Company and Tekla Corporation ("Tekla") entered into an agreement, pursuant to which the Company would acquire all of the outstanding shares of Tekla. Tekla is headquartered in Finland and is a provider of building information modeling software and other model driven solutions for customers in the infrastructure and energy industries.

The acquisition closed on July 8, 2011, whereby the Company acquired 99.46% of the outstanding shares of Tekla for $454.9 million in cash. The Company purchased the remaining shares of Tekla in February 2012 after completing compulsory redemption proceedings under the Finish Companies Act. The acquisition was funded through the use of approximately $54.9 million of the Company's existing cash, with the remainder funded through the Company's credit facilities. In connection with the acquisition, the Company incurred approximately $6.8 million in acquisition-related costs related primarily to investment banking, legal, accounting and other professional services. The acquisition costs were expensed as incurred and were included in General and administrative expenses in the Consolidated Statements of Income.

Tekla is a leading provider of information model based software for the building and construction and infrastructure and energy industries. The Company expects that the integration of Tekla's Building Information Modeling (BIM) software solutions with Trimble's building construction estimating, project management and BIM-to-field solutions will enable a compelling set of productivity solutions for contractors around the world. Tekla's infrastructure and energy solutions will complement Trimble's growing portfolio of utilities and municipalities solutions. Additionally, Trimble's significant global customer base will immediately extend Tekla's customer reach while Tekla's global presence in the building and construction market will bolster Trimble's own customer reach.

Tekla's results of operations from July 8, 2011 through December 30, 2011 have been included in the Company's Consolidated Statements of Income for fiscal 2011. Tekla's building and construction activities are included within the Company's Engineering and Construction business segment and Tekla's infrastructure and energy activities are included within the Company's Field Solutions business segment.

The fair value of identifiable assets acquired and liabilities assumed were determined under the acquisition method of accounting for business combinations. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on estimates and assumptions provided by management. The estimated fair values of assets acquired and liabilities assumed are considered preliminary and are based on the information that was available as of the date of the acquisition. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but it is waiting for additional information, primarily related to estimated values of certain net tangible assets and liabilities, including tax balances, pending the completion of final studies and analyses. If there are adjustments made for these items the fair value of intangible asset and goodwill could be impacted. Thus the provisional measurements of fair value set forth below are subject to change. Such changes could be significant. The Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one-year from the acquisition date.

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


	Estimated Fair Value
(Dollars in thousands)

Total purchase consideration*	$	457,387
Net tangible assets acquired		10,976
Intangible assets acquired:				Estimated Useful Life
Developed product technology		107,260		7 years
In-process research and development		7,591		Evaluated upon completion
Order backlog		1,246		6 months
Customer relationships		83,929		8 years
Trade name		7,648		8 years

Subtotal		207,674
Deferred tax liability		(53,995	)

Less fair value of all assets/liabilities acquired		164,655

Goodwill	$	292,732

Of the $457.4 million, $2.5 million was held in a cash account at the end of fiscal 2011 and represents the 0.54% of shares that were not yet acquired by the Company. In February, 2012 the Company purchased the remaining shares at the same per share price as was provided for the original 99.46% of shares obtained. Therefore, the non-controlling interest was valued based on that per-share price.

Details of the net tangible assets acquired are as follows:


	As of July 8, 2011
(Dollars in thousands)
Cash and cash equivalents	$	12,871
Account receivable		12,861
Other receivables		1,712
Other current assets		2,181
Property and equipment, net		4,066
Other non-current assets		5,113
Accounts payable		(1,329	)
Accrued liabilities		(12,190	)
Deferred revenue liability		(10,048	)
Other non-current liabilities		(4,261	)

Total net tangible assets acquired	$	10,976

The historical financial statements of Tekla were prepared in accordance with International Financial Reporting Standards ("IFRS"). Therefore, the Company adjusted the net tangible assets and liabilities in accordance with U.S. generally accepted accounting principles ("GAAP"). In addition, the Company recorded adjustments to align Tekla's accounting policies with that of the Company. The adjustments to measure the assets and liabilities assumed at fair value are described below:

Deferred revenue

The Company reduced Tekla's book value of deferred revenue by $8.1 million to adjust deferred revenue to the fair value of the direct cost to fulfill the obligations plus an operating margin which represents the expected required return of a market participant to provide the services. Tekla's deferred revenue balance is related to on-going maintenance agreements.

Intangible Assets

Developed product technology, which is comprised of products that have reached technological feasibility, includes products in Tekla's current product offerings. Tekla's technology includes BIM software technologies related to the Tekla Structures and Tekla Infrastructure and energy solutions products.

Order backlog relates to firm customer orders that generally are scheduled for delivery within the next year.

Customer relationships represent the value placed on Tekla's distribution channels and end users.

Trade names represent the value placed on the Tekla's brand and recognition in the building and construction, infrastructure and energy industries.

In-process research and development represents incomplete Tekla research and development projects that have not reached technological feasibility as of the consummation of the merger. Upon completion of the research and development projects, the assets will be amortized over the estimated future life of the product as indicated by its anticipated revenue streams evaluated upon completion.

Deferred tax liabilities

The Company recognized $54.0 million in net deferred tax liabilities for the tax effects of differences between fair values in the purchase price and the tax bases of assets acquired and liabilities assumed.

Goodwill

Goodwill represents the excess of the fair value of consideration paid over the fair value of the underlying net tangible and intangible assets acquired. Goodwill consisted of Tekla's highly skilled and valuable assembled workforce, a proven ability to generate new products and services to drive future revenue, and a premium paid by the Company for synergies unique to its business. The Company recorded $292.7 million of goodwill from this acquisition with $247.6 million assigned to the Engineering and Construction segment and $45.1 million assigned to the Field Solutions segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

During fiscal 2011, Tekla contributed $35.9 million of revenue and recorded $0.1 million of operating income. The following table presents pro forma results of operations of the Company and Tekla, as if the companies had been combined as of the beginning of the earliest period presented. The unaudited pro forma results of operations are not necessarily indicative of results that would have occurred had the acquisition taken place at the beginning of 2010, or of future results. Included in the pro forma results are fair value adjustments based on the fair values of assets acquired and liabilities assumed as of the acquisition date of July 8, 2011. Pro-forma results include amortization of intangible assets related to the acquisition, interest expense for debt used to purchase Tekla, and income tax effects, and for fiscal 2011 the pro forma results exclude a foreign currency transaction gain recognized on a hedge and acquisition related cost associated with the purchase of Tekla. The pro forma information for fiscal 2010 and 2011 is as follows:


Fiscal Years	2011		2010
(Dollars in thousands)
Total revenues	$	1,697,557	$	1,367,927
Net income		148,050		84,577
Net income attributable to Trimble Navigation Ltd.		149,895		84,624
Basic earnings per share	$	1.22	$	0.70
Diluted earnings per share	$	1.19	$	0.68