Good afternoon. My name is [Alisha] (ph), and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Year-End 2013 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Ms. Willa McManmon, you may begin your conference.

Thank you. Good afternoon. I'm here today with Steve Berglund, CEO; Francois Delepine, our new CFO; and Julie Shepard, Vice President of Finance. Before we begin, I'd like to remind you that the forward looking statements made in today's call and the subsequent Q&A period are subject to risks and uncertainties. Trimble's actual results may differ materially from those currently anticipated due to a number of factors detailed in the Company's Form 10-Ks and 10-Qs or other documents filed with the Securities and Exchange Commission. During this call, we will refer to a press release which is available along with additional financial information on our website at www.trimble.com. The non-GAAP measures discussed in the call are reconciled to GAAP measures in the tables to our press release. Let me turn the call over to Steve.

Good afternoon. Our results in the fourth quarter both reaffirmed the [indiscernible] we discussed after the third quarter and also tends to reinforce the growth outlook for 2014. However, that view does need to continue to be conditioned in inconsistent market conditions in multiple regions, deferrals of investments due to continuing economic uncertainty and continuing constraints around government funding sources. Year-over-year revenue growth of over 16% exceeded the range of expected outcomes we held at the beginning of the quarter. This overachievement resulted from better performance in the E&C, Field Solutions and Mobile Solutions segment. Positive market forces that lifted the quarter included to continuing strengthening of residential and commercial construction in the U.S., growth in survey instruments, and double-digit year-to-year growth in agriculture. In addition, when we established the expectations for the quarter, we identified three discrete effects that had the potential to positively move the needle for us if they were to fall within the quarter. As it turns out, only one of the three did occur. The other two effects will play out over 2014. The quality of the financial model also continues to improve with the year-over-year increases in both non-GAAP gross margin and operating margin. For the entire fiscal year 2013, non-GAAP gross margin increased by 1.9 points and non-GAAP operating margin by 1.2 points. These improvements reflect the evolution of the revenue mix towards [indiscernible] hardware-software and services. The E&C segment reflected relatively strong growth in a market that remains muted. The strongest single point of residence in the segment is U.S. residential and commercial construction market. For the civil, while continuing to grow is being challenged by the combined effects of Australian recession, the lack of European investment and the absence of a solution to U.S. Highway funding. Survey instruments, the other significant…

Thank you, Steven. Good afternoon, everyone. As Steve mentioned, I joined the Company five weeks ago on January 6. I'm now on a steep learning curve and I'm delighted to be a part of Trimble. I see a lot of potential and together with Steve's team, I'm eager to make the next stage of Trimble's growth happen. I also look forward to meeting many of you in the coming months. I'm pleased to kick off my first conference call following a solid quarter. At a high level, the key financial highlights of both the fourth quarter and 2013 are reflective of bigger trends within the Company. This includes the growth of revenue from integrated solutions, focus across the enterprise, whether it's the construction sites, the farm or the street. The solutions are increasingly hybrid and combine hardware, software and services and subscription. These hybrid solutions come with higher gross margins which have enabled us to increase our operating margins. Today I'll discuss the fourth quarter 2013 and our year-end results on a non-GAAP basis. The GAAP results as well as the reconciliation from GAAP to non-GAAP are available in our earnings press release along with financial data by segment. With that, let me first cover the fourth quarter 2013 results and then move on to the full year. Q4 total revenue was $599 million, up 16% year-over-year, representing an improvement from the first nine months of the year. Fourth quarter growth was driven primarily by broad-based strength in Engineering and Construction including revenue recognized from the discrete items that Steve mentioned. We're also pleased by our growth in the transportation and logistics business within Mobile Solutions. Field Solutions grew by 3% year-over-year with revenue from agriculture growing at a double-digit offset by weakness in GIS sales. By geography, 55% of…

(Operator Instructions) Our first question comes from Michael Cox.

Congrats on a nice quarter. My first question is on the gross margin, we have now two consecutive quarters above 53% on a GAAP basis and we have seen an uptick here in software and service, this bundled revenue strategy, is that run rate for gross margin something that we should start to expect going forward or is there something abnormal here in the back half of 2013 that caused it to spike up?

I think it leads to an order of approximation. I think our fundamental view is to have kind of the gross margins at this level that you're seeing, not necessarily tied to any particular quarter, but this higher run rate of gross margin, there is no structural reason why it should come down. I think maybe the fourth quarter for special reasons was maybe a little bit elevated but kind of blending the third and fourth quarter together, I think you start to get something close to what I would call the structural gross margin going forward. Again gross margin will be heavily dependent upon product mix, so it will bounce around a bit, but I think what you see is likely what you're going to get going forward. So I guess I would caution against assuming that the upward trend will continue but I think our view going forward is that gross margins around this level are relatively bankable going forward subject to kind of a change in mix of business.

Okay, that's very helpful. And I don't believe you specifically addressed the growth expectation in Ag for 2014 but correct me if I'm wrong, on the last call I know you said double-digit growth in Ag, but against the backdrop of weaker farm machinery volume, I think it would be helpful to me and I think a lot on the call here that if you could deconstruct how you get there within your guidance, either some color on geography or perhaps how some of the new products might contribute?

Yes, I think it's all of the above. So again nothing has changed from our view after the third quarter. We did deliver a number above 10% growth in the fourth quarter and our current expectation is that we should be able to do that in 2014. So I think a lot that we expressed last quarter is still valid and the relative elements of that. Yes, the macro economics here do matter to us, they do affect the markets throughout in California and much wider [indiscernible], all this also matters to us, but there are a number of bankers. So I think in terms of new product introductions we're sitting with a richer portfolio set, product portfolio set than we did a year ago. That tends to drive revenue. We have entered some new product categories. Maybe the most notable was irrigation. We believe particularly in a lot of portion of the year that gives us I hope quite a bit of revenue upside as we take the product and introduce it into our channel. I think geography does matter. We're aiming a number of markets that are not particularly penetrated and seeing rapid growth and I called out Europe in the script, particularly Eastern Europe, and I would take places like China are rapidly growing, at this moment in time anyway, not a whole lot of competitive pressures. And so I think it would be easier without a doubt to sell into a market with more equipment sales, it's just easier to sell into new equipment sales, but at the same time I think what we're seeing is that the emphasis on the U.S. is that the market for used equipment is actually quite strong and we are finding that we can retrofit onto the used equipment market reasonably well. So we are exposed to but not necessarily captive to the equipment market. So I think it's no one factor, it's a combination of factors and that's kind of a [indiscernible] get some stability on to the point where we think that we have a reasonable year ahead of us in Agriculture.

Your next question comes from the line of Richard Eastman.

Steve, a couple of things. Could you just speak to the mobile segment of the business just from two perspectives, one is the 20% growth, I mean by our estimation that was very little acquired growth in that number, so that's pretty close to core, it's clearly your best core growth rate of the year, and is there anything seasonal in there about in terms of deliveries of product or is that just good momentum heading into 2014?

So first of all I think there's probably more inorganic in the 20% maybe than you are calculating, so [indiscernible] inorganic element in that. Now part of this is just kind of some revenue recognition effects coming out of the acquisitions but I think it would be misleading you if I told you that the largest part of that 20% was organic. There are some seasonal elements in the business tied to the budgetary year, so I would say in general the fourth quarter will tend to be higher but not to any great extent. It's seasonal but not near to the extent that we've seen in construction and agriculture. So I think that we will see reasonable growth in this segment in the next year. In the script I talked to being consistent with the rest of the Company. So I think we are expecting double-digit growth in the segment in the year and that would be organic. And I think that we are looking later in the year I think there is a fair opportunity for us to make some innovation in this marketplace. We have acquired PeopleNet, we have acquired TMW, we have acquired LK in the transportation and logistics realm, and there is significant opportunity for us to bring those product solutions together to more tightly couple them and to create what would be a unique market offering to this market. And so I think we are seeing, we are anticipating both those effects later in the year and into 2015.

And is that, just given the op margin, just as a follow-up, the op margin there again ended the year at 14.6%, you did discuss a little bit about taking some of the incremental profitability, putting it back in the business but is it still reasonable to assume that in 2014 we can drive 200 basis points of improvement?

I wouldn't necessarily want to be that specific but I think that ultimately we think that from a structural standpoint we believe we are on our way to have 20% or so operating margin here. I think while you saw the quarterly number being up around 18% in the fourth quarter and so I think that that serves the benchmark. We don't anticipate moving backwards from that. There may be a quarter [indiscernible] then again it's in product mix with heavier hardware than it is software at any given quarter, but basically we think we've got a baseline here and that we'll continue to improve off of this baseline. I don't know that I necessarily want to commit to a number, [indiscernible].

Okay. All right, very good and very nice quarter.

Your next question comes from the line of Jonathan Ho. Jonathan Ho - William Blair & Company: Congratulations on the strong quarter. Just wanted to get a little bit more granularity from you behind some of the strength that you're seeing in E&C and whether we can sort of think about sustainability of growth in 2014 relative to the segment, I know you guys had talked about a rebound in sort of residential and non-res construction but can you maybe help us quantify or understand a little bit the sub-segment drivers there?

So I think part of this is just is the comparative exercise. So in the first half of 2013, we suffered in survey instruments where we actually saw year-over-year declines, and so some of this is definitely a result – [indiscernible] to the modest level that is not yet [indiscernible] what I would call the long-term secular growth rate but survey instruments is particularly in the first half of the year is going to just show better but it's against a weak baseline from the year before. Heavy civil is I think will be up year-to-year if nothing else, driven by product innovation but it's still what I would call a market that's still not conforming to the long-term trend. For example in U.S. the Highway Bill is still on the sidelines, in Europe [indiscernible], so I think heavy civil, we're not anticipating a blowout year, we're just a expecting a better year 2014 compared to 2013. I think the one point of relative robustness, although I'm not sure I want to use that word, but yes, is particularly in U.S. residential and commercial is up and it is certainly not back to the levels we saw back in 2006 and 2007 but it is up against recent years and that's creating enough [indiscernible] enthusiasm or interest in the future if the contractors are both open to investing in technology, increasingly have no alternative to invest in technology to stay competitive. The threshold value to the competitive and contracting business in both heavy civil and in a vertical construction and [indiscernible] construction is margins are tough and the only way to really compete is with technology. So what we're seeing here is coming into a [indiscernible] where there are projects, is effectively the penetration on new projects is probably getting…

Actually I might actually struggle to pick out one or two because I think what you're seeing is a relatively broader based phenomenon that's starting to occur across the Company. So in the major segments, E&C, Field Solutions and Mobile Solutions, there is a general trend towards more services content and so I think this is a general trend. So I don't know that if I could necessarily point to any given product that is driving it. Certainly these acquisitions that we have done in the last few years are pushing it up but I think it's more of a broader-based phenomenon within the Company across for us multiple segments.

The next question comes from the line of Andrea James. Andrea James - Dougherty & Company: Can you give us a sense of the U.S. regulatory landscape and the puts and takes I guess short and long-term and then particularly I'm thinking about the Farm Bill, the Affordable Care Act and any changes to the Minimum Wage and whether you see some changes in the channel from that?

I'll be comparatively benign here. So I think that, yes, I would say there are puts and takes. In terms of Affordable Care, I guess my comment is, I don't know, I'm not sure there are a lot of our partners, a lot of our customers have figured it out, so I think it's just a question mark that will get resolved at some point in the future. So I don't know that we are good enough to kind of figure out what the discrete effects of that are. But taking kind of the regulatory theme here and maybe expanding it a bit, so for example in transportation logistics, that is the Trimble business that probably is most directly getting affected, in this case [indiscernible] by increased regulation. So long haul truckers are increasingly regulated in terms of number of hours drivers can drive and a number of things, and so there is a very [great] (ph) swing towards both consolidation in the industry because small operators can simply not afford the regulatory load, but what it does require is more automation, is kind of drivers' logs of the old sort are no longer appropriate. And so as we [evolve] (ph), there's more automation that certainly is beneficial to Trimble because it kind of forces an investment in technology. And I think maybe then in general is the thing across a number of these businesses. What were the other…? Andrea James - Dougherty & Company: The Farm Bill?

The Farm Bill, I think the Farm Bill is it puts more money into farmer's pockets, therefore it's beneficial to Trimble as a backdrop. I don't know that it per se drives any specific behavior because we are selling some bases lower cost increased – or lower fertilizer cost, lower field cost and improved productivity, and I think the calculation is towards import reduction, not necessarily kind of discretionary income per se, but it's helpful in the backdrop simply because it puts more money into farmer's pockets. Andrea James - Dougherty & Company: Okay, and then it seems like there's this growing global trend towards government and city funded virtual reference stations. I don't know how significant that is and I was just wondering if it changes the dynamic of your business at all and the need for access to the Trimble base stations, and also maybe I don't know if it drives software sales sort of the opposite side of that?

Actually I don't know that it evolves. First of all it's not a new phenomenon. The phenomenon has been around for 10 or more years and it's been a productive business for us. So the leaders in terms of, let's call it kind of city or regional infrastructure, the leaders probably without a doubt – maybe the early leader was Japan then followed by China and obviously Germany as well. So we've been selling reference stations incrementally, we've been selling infrastructure into that market for 10 years, it has been a good market for us, we have relative competitive advantage in that marketplace. So if the trend continues, that is fine with us. Now one of our faster growing, more successful businesses has been providing the services ourselves. We have a business we call positioning services, and that is right now pretty much agriculturally centric if you will. The majority of the revenues to that come from farmers whereas city or regional systems tend to be pointed more towards surveyors and civil engineering projects and that sort of thing. So the two are not necessarily contradictory but from a company standpoint, we'd go either way as we sell equipment into a city-based solution or we will continue to expand our own positioning services and at the moment both are strong businesses, our own positioning services are actually going significantly faster than providing hardware equipment. So I think either way if you look at the historical constraints to centimeter level positioning from global navigation systems, there have really been two constraints because a fair question to ask us when you talk about some of these markets still being underpenetrated, a fair question to ask is, okay, why [haven't we] (ph) done better in penetrating them, and there's always been two constraints out there. One is one of convenience, being able to get centimeters by flipping switch as opposed to setting up a mobile infrastructure. So whether we're providing it, whether a city or region is providing it, it is an enabler to our overall market because of making centimeter level accuracy convenient just flipping a switch, sometimes free, sometimes not free. And the other constraint has been in effect, no offense to any particular group out there, but [indiscernible] down the instruments, so that it's a few buttons as opposed to a complicated procedure to get to centimetres, but you see this move towards providing more infrastructure. Again whether we are providing it or somebody else is providing it, it's enabling to the overall market.

Your next question comes from the line of Eli Lustgarten.

Very nice quarter. First can we talk a little about the E&C business some more, I mean the volume was good, you had some momentum going into this year, you said you have easy comparisons, can you talk a little bit about the profitability side of that business, we always thought you can get back to 20% gross operating margins, you are there now, you really have quite strong the rest of the quarters of the year, are we now at a point where you've gotten back to where you want to get and there's more investment in the business or are you going to look at margins continue to expand up moderately from current levels?

We talk being overly kind of predicted this but one I would say is the same trend listening elsewhere around the Company is definitely operative and E&C is, you look at the probable future list of business, it's going to trend towards more service content, it's going to trend towards more software content and we'll tend to bring along with, that business will tend to bring along a higher gross margin and of course discipline in terms of the cost structure below the gross margin. I would say that over time we should continue to elevate the operating margins within E&C. So I would say overall we are not done yet and that there will be [indiscernible] a secular trend towards higher operating margins in the segment.

The other question I have is a little bit difficult to ask because we know in Ag there was a very strong buy at the end of the year of equipment before the expiration of the Bonus Depreciation and especially section 179 which drove used equipment, you touched on that but it would seem to me that the farmer would be more interested in buying the actual equipment and getting it at the end of the year and you retrofit the stuff that you would predominantly we something for productivity that it would be doing in the first half of the year as opposed to seeing demand at the end of the year, is that a fair statement, we know there's a lot of [tax] (ph) buying and can you comment what are you seeing [tax] (ph) buying in other sectors?

Yes, I think that given the first of all seasonality in agriculture, I think it's hard to distinguish what's the tax driven effect from what is the normal seasonal effect as farmers tend to go back to either late in the year or more likely early in the year, [indiscernible] of the planting cycle, and again our stuff is not necessarily big dollar, so the calculation may not be [indiscernible] on the tax calculation. So I would say I think your hypothesis is fine. I think that again what's driving us – what drove us in the fourth quarter and what's driving us here in the first quarter I would say is stronger forces associated within just tax line but I think your hypothesis works fine for me.

Just one final question, Advanced Devices keeps standing up here in terms of your profitability. Is that really now in a steady state route or is it just been in place because there's some business in '14?

Again I think what you see is what we're able to get there. There are a couple of elements in there. There is what I call a couple of stable businesses that don't have a whole lot of growth potential kind of embedded board business which has been a Trimble business forever but it's an OEM business typically categorized by unit volumes going up and prices coming down, so you end up with the same kind of product [indiscernible] numbers every year, and so it will bounce around some but does not necessarily have a whole lot of growth potential. Same is true with a little bit of a difference for the timing modules that we sell into infrastructure, typically telecommunications infrastructure, that will tend to vary within a relatively wide range depending on who is building what project at any point in time. But overall obviously those two businesses don't have a whole lot of headroom to grow. Now within that segment there are a couple of interesting other elements. One is the RFID business we bought a few years ago, ThingMagic. They had a very, very strong double digit year in 2013. So it's a small base. So the number doesn't really move the company results but it's a very strong growth market and has the potential to – as we integrate that capability more and more into other Trimble solutions, presumably has even higher growth prospects. And the other growth element in the segment is Applanix which is a Canadian-based company which focuses on inertial systems often times integrated with GPS but with the advances in inertial over the last few years and the fact that kind of [indiscernible] technology has finally made it to the point of maturity, we again saw double-digit, not great double-digit but double-digit growth in Applanix for the year. So all of those things factored together in the segment but overall it's a pretty steady effect segment. I don't think there's a whole lot of downside to it but at the same time it's maybe a little – has fewer growth dynamics than the rest of the Company.

Your next question comes from the line of Ryan Connors.

A couple of additional questions on Agriculture, specifically I wondered if you could talk a little bit about the composition of your customer base in the Agriculture business and specifically do you have any numbers or color on what percent of your revenue is coming from actual growers, actual farmers versus the purchase being made by a trusted advisor to a farmer whether it's an ergonomic advisor or a machinery dealer or someone like that and the thesis being that those sales won't necessarily as closely tie to this farm income and cash flow, so any color you can give us there?

So I would like to say that the trusted advisor is a key element of the buying cycle at this point in time, that would probably be an [indiscernible] at this point in time. So I think that right now our sales through channel are typically to the farmer. Now I think you pick up on a trend for the future, I think that Ag is going to go through a reasonably significant transformation in the next five years or so as more and more sensor capabilities are added and more and more information capabilities are added to the marketplace. So I think that as you say the trust advisor becomes a bigger element in terms of the technology acquisition cycle but I would say at the moment it is still pretty conventional as we are selling through channel and the channel brings it to the farmer and the trusted advisor is not a significant impact in the buying decision.

Got it. And then the other question I had was on the issue pricing in the agriculture business and particularly on some of the new product innovation like the new TMX display, are you having success in getting paid for the additional value that those new products should bring into the table, in other words are they pricing at a premium at ASP and are they having success achieving that?

I think as a general statement the answer is, yes, we are getting premium pricing, but I would say that looking at it in terms of a strategic realm, market arbitrage pretty well and I think that if you look at Trimble over the last 10 years or maybe even longer, both construction and agriculture is I think the tendency [indiscernible] has done, okay, prices have been steady, remarkably steady in some cases but the amount functionality you're getting for the price is increasing. So Trimble has historically been able to put out a premium against the market rate and has usually been able to add a premium for functionality throughout the marketplace, but I think over the long cycle, or maybe the way to put it is I say the, not that I know the first right answer, but if you took flagship product in agriculture or survey or heavy civil, if you took the flagship product from 10 years ago and compared it to the flagship product pricing today, they probably will be [indiscernible], it's just that you're getting a whole lot more functionality today. So I would argue that over the long term it's more about price and maintaining the price as opposed to necessarily being able to ratchet up pricing over time but I think in the short-term, yes, we are seeing kind of the ability to [indiscernible] into the functionality.

And then one last one if I could, Steve, just [indiscernible] have been a big [indiscernible] just nationally and agriculture consists [indiscernible] as one of the presumed prominent applications and Trimble did formally introduce the drone product couple of weeks ago. So can you just give us your thoughts on how big that can become, obviously not this year but over the next few years, can that become a needle moving product for you?

It has that potential, we have to climb over some regulatory burdens in the meantime, so the FAA in the U.S. is still not being overly precise in terms of what's allowed and so in general it is difficult to fly a drone for commercial purposes in the U.S. unless you are a university or using it for personal use. So I think there are constraints if you are coming to a large market in the U.S. at this point in time, but I think that in general internationally I think with some maturity, right now there's a lot of ours but I think there are sensors, the sensors have to evolve, the AMOLED's capability has to evolve, [indiscernible] in mature applications but I think there is a long list of potential (audio gap) base in Belgium, it was primarily to use in survey type applications and geospatial applications but agriculture is likely to be the single largest application and that becomes available for the commercial drone. So we've got a position on the Ag side, we've got a position on the airplane side, so we would hope to be in something [indiscernible] position when the markets starts to develop.

Your next question comes from the line of Ian Ing.

I share my congratulations there. My first question is in GIS segment, been around for a while, so as we look forward, how much of the drivers are based on cyclical trends, the government spending or perhaps some secular shifts given the hardware competitive landscape and the shift to software?

So I think right now what we're seeing is cyclical more so than secular. I think over the next three, four years I think that – and this has been part of our strategy all along, is that GIS will become a less rich market in terms of being able to put out specialty handheld hardware whether it's a smartphone or some other device that will take more and more of the hardware sales and is a logical move on the market. I think what we're seeing at this point in time is just the fact that U.S. and Europe and even China, there has been a substantial reduction in the amount of flow from government. So for example typically in GIS our seasonal high quarter is the third quarter driven out U.S. When the federal government budget year is about to end, people tend to spend their budget on very enthusiastically in the month of September and historically it has been highly predictable that we get a major bump in September. It simply did not occur in 2013. And so right now I think we're probably cyclical not secular, but I think over the next three, four years, the business will shift.

And could you give us an update on some of the potential for large size deals as you look into the rest of this year and could sort of add to some lumpiness and how would you rate those expectations?

So Trimble is going through a general transition process a few years ago, you could characterize Trimble by a company that adds up thousands of transactions at the end of the quarter and that determines kind of the revenue flow of the quarter. With the addition of the position now in transportation and logistics, kind of Mobile Solutions in general as well as a move on the E&C side towards more key accounts, it is getting to be more – but still a baseline of [indiscernible] smaller deals, they are getting more large deals and that could in any given quarter kind of influence the results. So let's say there are large number of larger deals that would be in potential of $5 million or $10 million. The pipeline of those are quite long. How many will fall this year, how many will fall next year is hard to say but there will be some lumpiness that I would say is we're becoming large enough as hopefully kind of the portfolio effect with most of that.

If I could fit one more in tax rate, I guess we can make assumptions on reinstatement of R&D tax credit, how that plays out but then its contribution of U.S. revenues, this higher contribution, is this more of a transient issue based on product cycles or is it more of a sustained trend going forward?

Yes, so I think the relative U.S. performance is right now more based on the fact that U.S., albeit not at historical levels but is the one economy that's kind of growing reliably at this point. So I think in terms of where our earnings are, I think it kind of depends on Europe coming back or we're seeing more growth outside of the U.S. and so I think it will shift over time depending on kind of overall market condition. So I would not expect it to be necessarily – I [indiscernible] peg a number but I would say it's the general trend in the future of some recovery outside of U.S. is the roughly larger portion of earnings coming from outside.

At this time, there are no more questions. Thank you for joining the call.

Thank you. Talk to you next quarter.