TRIMBLE INC. [TRMB] Filings

10-Q 1 trmb-20220930.htm 10-Q trmb-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022
			or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____

Commission file number: 001-14845

TRIMBLE INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)						94-2802192 (I.R.S. Employer Identification Number)

10368 Westmoor Drive, Westminster, CO 80021

(Address of principal executive offices) (Zip Code)

(720) 887-6100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer	ý	Accelerated Filer	¨
Non-accelerated Filer	¨	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	TRMB	NASDAQ Global Select Market

As of October 28, 2022, there were 246,624,691 shares of Common Stock, par value $0.001 per share, outstanding.

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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are subject to the “safe harbor” created by those sections. These statements include, among other things:

•potential weakness and uncertainties in the US and global macroeconomic outlook, including slowing growth, inflationary pressures, and increases in interest rates, which may affect demand for our products and services and adversely affect our revenues and profitability;

•impact of supply chain shortages and disruptions, as well as inflationary pressures, on our costs and operations;

•potential impact of volatility and conflict in the political and economic environment, including the Russian invasion of Ukraine and its direct and indirect impact on our business;

•our expectation that hardware bookings and sales will be lower for the remainder of 2022 and the causes for that decrease, and our belief that inflationary cost pressures will diminish over time as supply chain conditions continue to normalize;

•impact of the COVID-19 pandemic, including upon global or local macroeconomic conditions, our supply chain, our results of operations, and estimates or judgments;

•the portion of our revenue expected to come from sales to customers located in countries outside of the U.S.;

•a continued shift in revenue towards a more significant mix of software and recurring revenue, including subscription, maintenance and support, and service revenue;

•our belief that increases in recurring revenue, including from our software and subscription solutions, will provide us with enhanced business visibility over time;

•our belief that our cash and cash equivalents, together with borrowings under the commitments for our credit facilities and senior notes, will be sufficient in the foreseeable future to meet our anticipated operating cash needs, debt service, and planned capital expenditures;

•any anticipated benefits to us from our acquisitions and our ability to successfully integrate the acquired businesses;

•fluctuations in interest rates and foreign currency exchange rates;

•our belief that our gross unrecognized tax benefits will not materially change in the next twelve months;

•our growth strategy, including our focus on historically underserved large markets, the relative importance of organic growth versus strategic acquisitions, and the reasons that we acquire businesses; and

•our discretion to conduct, suspend, or discontinue our stock repurchase program subject to the discretion of our management.

The forward-looking statements regarding future events and the future results of Trimble Inc. (“the Company” or “we” or “our” or “us”) are based on current expectations, estimates, forecasts, and projections about the industries in which we operate, our current tax structure, including where our assets are deemed to reside for tax purposes, and the beliefs and assumptions of our management. Discussions containing such forward-looking statements may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this report. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These forward-looking statements involve certain risks and uncertainties that could cause actual results, levels of activity, performance, achievements, and events to differ materially from those implied by such forward-looking statements, including but not limited to those discussed in this report under the section entitled “Risk Factors” and elsewhere, and in other reports we file with the Securities and Exchange Commission (“SEC”), specifically the most recent Form 10-K for 2021 (the “2021 Form 10-K”), our Quarterly Report on Form 10-Q for the quarterly period ended April 1, 2022, and in other reports we file with the SEC, each as it may be amended from time to time. These forward-looking statements are made as of the date of this report. We reserve the right to update these forward-looking statements for any reason, including the occurrence of material events, but assume no duty to update these statements to reflect subsequent events.

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TRIMBLE INC.

FORM 10-Q for the Quarter Ended September 30, 2022

TABLE OF CONTENTS


		Page
PART I.	Financial Information

ITEM 1.	Financial Statements (Unaudited)	4






	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	34

ITEM 4.	Controls and Procedures	34

PART II.	Other Information

ITEM 1.	Legal Proceedings	35

ITEM 1A.	Risk Factors	35

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 3.	Defaults Upon Senior Securities	35

ITEM 4.	Mine Safety Disclosures	35

ITEM 5.	Other Information	35

ITEM 6.	Exhibits	36

SIGNATURES		37

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PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		Page
PART I.
ITEM 1.	Financial Statements (Unaudited):
	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	10
	Notes to Condensed Consolidated Financial Statements (Unaudited):	11
	Note 1. Overview and Accounting Policies	11
	Note 2. Stockholders’ Equity	11
	Note 3. Acquisitions and Divestitures	12
	Note 4. Intangible Assets and Goodwill	13
	Note 5. Inventories	13
	Note 6. Segment Information	14
	Note 7. Debt	16
	Note 8. Fair Value Measurements	17
	Note 9. Deferred Revenue and Remaining Performance Obligations	18
	Note 10. Earnings per Share	18
	Note 11. Income Taxes	18
	Note 12. Commitments and Contingencies	19

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TRIMBLE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	As of		As of
	Third Quarter of		Year End
	2022		2021

(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	308.7	$	325.7

Accounts receivable, net	566.1		624.8

Inventories	391.1		363.3
Other current assets	169.4		136.8
Total current assets	1,435.3		1,450.6
Property and equipment, net	221.0		233.2
Operating lease right-of-use assets	122.3		141.0
Goodwill	4,037.1		3,981.5
Other purchased intangible assets, net	511.7		506.6
Deferred income tax assets	448.6		502.0
Other non-current assets	301.7		284.7
Total assets	$	7,077.7	$	7,099.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt	$	343.6	$	—
Accounts payable	194.8		207.3
Accrued compensation and benefits	156.7		231.0
Deferred revenue	544.5		548.8

Other current liabilities	205.4		201.5
Total current liabilities	1,445.0		1,188.6
Long-term debt	1,244.6		1,293.2
Deferred revenue, non-current	92.3		83.0
Deferred income tax liabilities	162.2		263.1
Income taxes payable	40.9		54.5
Operating lease liabilities	103.9		121.4
Other non-current liabilities	144.0		151.1
Total liabilities	3,232.9		3,154.9
Commitments and contingencies (Note 12)
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; 246.6 and 250.9 shares issued and outstanding at the end of the third quarter of 2022 and year end 2021	0.2		0.3
Additional paid-in-capital	2,027.3		1,935.6
Retained earnings	2,152.0		2,170.5
Accumulated other comprehensive loss	(334.7)		(161.7)


Total stockholders' equity	3,844.8		3,944.7
Total liabilities and stockholders' equity	$	7,077.7	$	7,099.6

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)	2022		2021		2022		2021

Revenue:
Product	$	503.9	$	551.2	$	1,690.0	$	1,685.5
Service	158.3		159.9		477.4		484.3
Subscription	222.7		190.3		652.4		563.3
Total revenue	884.9		901.4		2,819.8		2,733.1
Cost of sales:
Product	240.7		266.7		819.0		808.4
Service	53.9		55.5		180.6		173.1
Subscription	55.0		52.7		154.3		162.3
Amortization of purchased intangible assets	19.9		22.0		63.4		66.1
Total cost of sales	369.5		396.9		1,217.3		1,209.9
Gross margin	515.4		504.5		1,602.5		1,523.2
Operating expense:
Research and development	127.0		132.5		407.4		400.2
Sales and marketing	137.1		125.5		407.9		373.1
General and administrative	109.6		85.2		318.0		270.2
Restructuring	8.2		1.5		20.5		7.5
Amortization of purchased intangible assets	11.1		12.3		34.5		39.0
Total operating expense	393.0		357.0		1,188.3		1,090.0
Operating income	122.4		147.5		414.2		433.2
Non-operating income, net:
Divestitures gain, net	6.0		19.1		103.1		41.5
Interest expense, net	(15.6)		(15.9)		(46.9)		(49.4)

Income from equity method investments, net	6.8		8.5		22.3		30.3
Other income (expense), net	(1.7)		(2.5)		(14.7)		0.9
Total non-operating (expense) income, net	(4.5)		9.2		63.8		23.3
Income before taxes	117.9		156.7		478.0		456.5
Income tax provision	32.1		32.7		113.9		79.0
Net income	85.8		124.0		364.1		377.5
Net income attributable to noncontrolling interests	—		—		—		0.1
Net income attributable to Trimble Inc.	$	85.8	$	124.0	$	364.1	$	377.4
Earnings per share attributable to Trimble Inc.:
Basic	$	0.35	$	0.49	$	1.46	$	1.50
Diluted	$	0.34	$	0.49	$	1.45	$	1.48
Shares used in calculating earnings per share:
Basic	247.5		251.8		249.1		251.5
Diluted	248.9		254.5		250.8		254.3

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
	2022		2021		2022		2021

(In millions)
Net income	$	85.8	$	124.0	$	364.1	$	377.5
Foreign currency translation adjustments, net of tax	(95.6)		(28.7)		(173.0)		(42.1)

Comprehensive (loss) income	(9.8)		95.3		191.1		335.4
Comprehensive income attributable to noncontrolling interests	—		—		—		0.1
Comprehensive (loss) income attributable to Trimble Inc.	$	(9.8)	$	95.3	$	191.1	$	335.3

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		Noncontrolling Interest		Total
	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	$	—	$	3,944.7
Net income	—	—		—		110.3		—		110.3		—		110.3
Other comprehensive loss	—	—		—		—		(2.2)		(2.2)		—		(2.2)
Comprehensive income										108.1				108.1
Issuance of common stock under employee plans, net of tax withholdings	0.7	—		15.2		(17.6)		—		(2.4)		—		(2.4)
Stock repurchases	(1.5)	—		(11.8)		(92.9)		—		(104.7)		—		(104.7)
Stock-based compensation	—	—		42.2		—		—		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	$	—	$	3,987.9
Net income	—	—		—		168.0		—		168.0		—		168.0
Other comprehensive loss	—	—		—		—		(75.2)		(75.2)		—		(75.2)
Comprehensive income										92.8				92.8
Issuance of common stock under employee plans, net of tax withholdings	0.6	—		(2.3)		(17.1)		—		(19.4)		—		(19.4)
Stock repurchases	(3.1)	(0.1)		(24.4)		(175.5)		—		(200.0)		—		(200.0)
Stock-based compensation	—	—		33.2		—		—		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	$	—	$	3,894.5

Net income	—	—		—		85.8		—		85.8		—		85.8
Other comprehensive loss	—	—		—		—		(95.6)		(95.6)		—		(95.6)
Comprehensive loss										(9.8)				(9.8)
Issuance of common stock under employee plans, net of tax withholdings	0.4	—		17.9		(0.9)		—		17.0		—		17.0
Stock repurchases	(1.4)	—		(11.4)		(78.6)		—		(90.0)		—		(90.0)
Stock-based compensation	—	—		33.1		—		—		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	$	—	$	3,844.8

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	Common stock					Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total
	Shares	Amount		Additional Paid-In Capital
(In millions)
Balance at the end of 2020	250.8	$	0.3	$	1,801.7	$	1,893.4	$	(98.5)	$	3,596.9	$	1.7	$	3,598.6
Net income	—	—		—		114.5		—		114.5		0.1		114.6
Other comprehensive loss	—	—		—		—		(31.5)		(31.5)		—		(31.5)
Comprehensive income										83.0				83.1
Issuance of common stock under employee plans, net of tax withholdings	0.7	—		18.2		(10.2)		—		8.0		—		8.0
Stock repurchases	(0.6)	—		(4.1)		(35.9)		—		(40.0)		—		(40.0)
Stock-based compensation	—	—		25.1		—		—		25.1		—		25.1
Noncontrolling interest investment	—	—		0.6		—		—		0.6		(1.8)		(1.2)
Balance at the end of the first quarter of 2021	250.9	$	0.3	$	1,841.5	$	1,961.8	$	(130.0)	$	3,673.6	$	—	$	3,673.6
Net income	—	—		—		138.9		—		138.9		—		138.9
Other comprehensive income	—	—		—		—		18.1		18.1		—		18.1
Comprehensive income										157.0				157.0
Issuance of common stock under employee plans, net of tax withholdings	0.7	—		(1.8)		(23.5)		—		(25.3)		—		(25.3)
Stock-based compensation	—	—		33.3		—		—		33.3		—		33.3
Balance at the end of the second quarter of 2021	251.6	$	0.3	$	1,873.0	$	2,077.2	$	(111.9)	$	3,838.6	$	—	$	3,838.6
Net income	—	—		—		124.0		—		124.0		—		124.0
Other comprehensive loss	—	—		—		—		(28.7)		(28.7)		—		(28.7)
Comprehensive income										95.3				95.3
Issuance of common stock under employee plans, net of tax withholdings	0.4	—		20.0		(1.6)		—		18.4		—		18.4
Stock repurchases	(1.0)	—		(8.1)		(91.9)		—		(100.0)		—		(100.0)
Stock-based compensation	—	—		29.5		—		—		29.5		—		29.5
Balance at the end of the third quarter of 2021	251.0	$	0.3	$	1,914.4	$	2,107.7	$	(140.6)	$3,881.8		$	—	$	3,881.8

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)	2022		2021
Cash flow from operating activities:
Net income	$	364.1	$	377.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	30.1		30.9
Amortization expense	97.9		105.1

Deferred income taxes	(41.3)		(8.9)
Stock-based compensation	93.2		95.1
Divestitures gain, net	(103.1)		(43.6)
Other, net	22.7		5.7
(Increase) decrease in assets:
Accounts receivable, net	13.2		33.7

Inventories	(99.5)		(28.4)
Other current and non-current assets	(31.7)		(42.5)
Increase (decrease) in liabilities:
Accounts payable	(3.8)		50.8
Accrued compensation and benefits	(52.9)		25.1
Deferred revenue	14.3		(8.4)

Other current and non-current liabilities	(18.1)		3.1
Net cash provided by operating activities	285.1		595.2
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired	(318.1)		(1.2)
Purchases of property and equipment	(36.6)		(31.4)





Net proceeds from divestitures	214.3		67.3
Net proceeds from sale of property and equipment	0.1		20.7
Other, net	(11.9)		(4.4)
Net cash (used in) provided by investing activities	(152.2)		51.0
Cash flow from financing activities:
Issuance of common stock, net of tax withholdings	(4.8)		1.1
Repurchases of common stock	(394.7)		(140.0)
Proceeds from debt and revolving credit lines	529.3		198.9
Payments on debt and revolving credit lines	(235.9)		(421.7)
Other, net	(8.9)		(1.5)
Net cash used in financing activities	(115.0)		(363.2)
Effect of exchange rate changes on cash and cash equivalents	(34.9)		(7.5)
Net (decrease) increase in cash and cash equivalents	(17.0)		275.5
Cash and cash equivalents - beginning of period	325.7		237.7
Cash and cash equivalents - end of period	$	308.7	$	513.2

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. Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the net assets and results of operations of our consolidated subsidiaries.

We use a 52- to 53-week year ending on the Friday nearest to December 31. Both 2022 and 2021 are 52-week years. The third quarter of 2022 and 2021 ended on September 30, 2022 and October 1, 2021. 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 23, 2022 (the “2021 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 2021 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.

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. STOCKHOLDERS’ EQUITY

Stock Repurchase Activities

In August 2021, our Board of Directors approved a new share repurchase program (“2021 Stock Repurchase Program”), authorizing up to $750.0 million in repurchases of our common stock. Under the 2021 Stock Repurchase Program, the share repurchase authorization does not have an expiration date and supersedes and replaces the $600.0 million share repurchase authorization approved by our Board of Directors in November 2017 (“2017 Stock Repurchase Program”), of which $50.7 million was remaining and canceled.

Under the 2021 Stock Repurchase Program, we may repurchase shares 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 shares repurchased will depend on a variety of factors, including market conditions, our share 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.

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. At the end of the third quarter of 2022, the 2021 Stock Repurchase Program had remaining authorized funds of $215.3 million.

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During the third quarter and first three quarters of 2021, we repurchased approximately 1.0 million and 1.6 million shares of common stock in open market purchases at an average price of $92.74 and $85.38 per share for a total of $100.0 million and $140.0 million.

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

NOTE 3. ACQUISITIONS AND DIVESTITURES

Acquisition

In September 2022, we acquired Bid2Win Software, LLC (“B2W”) with total cash consideration of $322.1 million. B2W Software is a leading provider of estimating and operations solutions for the heavy civil construction industry and will be reported as part of our Buildings and Infrastructure segment. This acquisition will enable us to expand our already extensive civil infrastructure portfolio and Trimble Construction One, a purpose-built connected construction management platform. The Condensed Consolidated Statements of Income include the operating results of the acquired business from the date of acquisition. The acquisition contributed less than 1% to our total revenue during the first three quarters of fiscal 2022.

The preliminary allocation of the purchase price for B2W was based upon preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which could change within the measurement period as valuations are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired and certain tangible assets and liabilities acquired. We expect to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

There were no other acquisitions during the first three quarters of 2022.

Divestitures

In May 2022, we completed the sale of the Time and Frequency, LOADRITE, Spectra Precision Tools, and SECO accessories businesses to Precisional LLC, an affiliate of The Jordan Company (“TJC”), for $205.3 million in cash, which includes a working capital adjustment. These businesses were reported as part of our Buildings and Infrastructure and Geospatial segments. Upon the closing of the transaction and adjustment for working capital, we recognized a pre-tax gain of $106.9 million and wrote off $98.4 million of net assets primarily comprised of $40.6 million of inventory, $25.4 million of accounts receivable, and $30.8 million of goodwill.

In the third quarter of 2022, we completed the sale of Construction Telematics Solutions to MiX Telematics, and in the second quarter of 2022, we completed the sale of Beena Vision to Wabtec Corporation, which are both part of the Transportation segment. The proceeds for both divestitures were immaterial.

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NOTE 4. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The following table presents a summary of our intangible assets:


	Third Quarter of 2022						Year End 2021
	Gross						Gross
	Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
(In millions)	Amount		Amortization		Amount		Amount		Amortization		Amount
Developed product technology	$	1,010.6	$	(724.6)	$	286.0	$	1,011.9	$	(748.2)	$	263.7
Customer relationships	639.6		(422.5)		217.1		667.8		(428.9)		238.9
Trade names and trademarks	39.1		(31.5)		7.6		48.0		(45.0)		3.0
Distribution rights and other intellectual property	8.1		(7.1)		1.0		10.0		(9.0)		1.0
	$	1,697.4	$	(1,185.7)	$	511.7	$	1,737.7	$	(1,231.1)	$	506.6

The estimated future amortization expense of intangible assets at the end of the third quarter of 2022 was as follows:


(In millions)
2022 (Remaining)	$	33.2
2023	129.9
2024	105.5
2025	70.1
2026	64.0
Thereafter	109.0
Total	$	511.7

Goodwill

The changes in the carrying amount of goodwill by segment for the first three quarters of 2022 were as follows:


	Buildings and Infrastructure		Geospatial		Resources and Utilities		Transportation		Total
(In millions)
Balance as of year end 2021	$	2,141.4	$	403.6	$	440.8	$	995.7	$	3,981.5
Additions due to acquisitions	214.6		—		—		—		214.6
Decrease from divestitures	(23.9)		(6.9)		—		(6.9)		(37.7)
Foreign currency translation and other adjustments	(67.8)		(23.3)		(20.1)		(10.1)		(121.3)

Balance as of the end of the third quarter of 2022	$	2,264.3	$	373.4	$	420.7	$	978.7	$	4,037.1

NOTE 5. INVENTORIES

The components of inventory, net were as follows:


	Third Quarter of		Year End
As of	2022		2021
(In millions)
Raw materials	$	132.6	$	129.6
Work-in-process	11.2		12.4
Finished goods	247.3		221.3
Total inventories	$	391.1	$	363.3

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NOTE 6. 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.

Reporting Segments

Buildings and Infrastructure

Geospatial

Resources and Utilities

Transportation

Total

(In millions)

Third Quarter of 2022

Segment revenue

363.6

184.2