TRIMBLE INC.
For the period ended Jan 3, 2025. Filed Apr 25, 2025.
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FY2025 · Filed Apr 25, 2025
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Reports of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Trimble Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Trimble Inc. (the Company) as of January 3, 2025 and December 29, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 3, 2025 and December 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 3, 2025, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated April 25, 2025 expressed an adverse opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Revenue Recognition – Stand-alone Selling Prices of Performance Obligations | |
| Description of the Matter | As described in Note 1 to the consolidated financial statements, the Company’s contracts with customers require management to make estimates and assumptions used in revenue recognition, including determining standalone selling prices of performance obligations (“SSP”).Auditing management’s determination of SSP was challenging and complex due to the disaggregation of the Company’s businesses and product offerings, including disparity in pricing and discounting among the various businesses. Because of the disaggregation and variation in pricing and discounting, the Company must apply judgment and consider all reasonably available information, including but not limited to, pricing practices in customer contracts with multiple goods and services and other observable inputs when estimating SSP. Additionally, auditing management’s estimates of SSP was complex as there were material weaknesses in internal controls over the information and judgments used in the estimation of SSP. |
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| How We Addressed the Matter in Our Audit | After consideration of the material weaknesses, our audit procedures included, among others, testing a sample of the Company’s estimated standalone selling prices for performance obligations throughout the Company’s disaggregated businesses and product and service offerings. For the sample tested, we evaluated the appropriateness of the Company’s estimates based on the Company’s available pricing and discounting information throughout the disaggregated businesses and product and service offerings and we tested the completeness and accuracy of the data used in management’s SSP methodology, including determination of pricing and discounting practices within the various sales channels. For the sample tested, we also evaluated the Company’s identification and consideration of available information and the use of such information in determining SSP and we tested the accuracy of the Company’s calculations of SSP. In addition, for a sample of transactions, we tested the Company’s allocation of the transaction price among performance obligations based on relative SSP. |
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| Divestitures – Goodwill allocation and underlying fair value assumptions | |
| Description of the Matter | During fiscal year 2024, the Company completed the divestiture of a portion of their Ag business in exchange for $1.9 billion of cash proceeds and a 15% ownership interest in the newly created joint venture, PTx Trimble, and recognized a pre-tax gain of $1.7 billion. The Company also entered into a definitive agreement to sell their Mobility business in exchange for an equity interest in Platform Science, Inc., and recorded a pre-tax loss of $32.9 million. These transactions are disclosed in Note 4 to the consolidated financial statements. Auditing the Company's accounting for these transactions was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of the corresponding reporting units used to determine the value of goodwill to be allocated to the respective disposal groups, as well as the fair value of the equity interest to be received in exchange for the disposal group for the Mobility divestiture. The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to the underlying assumptions regarding the future performance of the related businesses. The Company used valuation methods including discounted cash flow models in the determination of fair value. The significant assumptions used in the discounted cash flow model to estimate the fair values included certain assumptions that form the basis of the forecasted results, specifically, revenue, revenue growth rates, and discount rates. These significant assumptions are forward looking and could be affected by future economic and market conditions. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s determination of the fair value of the goodwill to be allocated to the disposal group as well as the valuation of the equity interests to be received in exchange for the disposal group for the Mobility divestiture. To test the estimated fair values of the reporting units and corresponding goodwill allocations as well as the fair value of the equity interest to be received in exchange for the disposal group for the Mobility divestiture, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions to current industry, market and economic trends and to the Company's budgets and forecasts, and historical operating results. We involved our valuation specialists to assist with our evaluation of the methodologies used by the Company and significant assumptions included in the fair value estimates. Our procedures also included, among others, developing a range of independent estimates for the discount rates used in the valuation models and comparing those to the discount rates used by management. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 1986.
San Jose, California
April 25, 2025
To the Stockholders and the Board of Directors of Trimble Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Trimble Inc.’s internal control over financial reporting as of January 3, 2025, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, Trimble Inc. (the Company) has not maintained effective internal control over financial reporting as of January 3, 2025, based on the COSO criteria.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s assessment. Management has identified material weaknesses in certain information technology controls related to certain systems that support the Company’s financial reporting processes. Management has also identified material weaknesses related to review controls and controls over the completeness and accuracy of information utilized in the performance of controls, which affected the Company’s controls over revenue and related accounts, income taxes, excess and obsolete inventory, and other controls as part of the Company’s reporting and disclosure process. Additionally, management identified a material weakness in controls over the evaluation of standalone selling prices of performance obligations utilized in the Company’s accounting for revenue.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 3, 2025 and December 29, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended January 3, 2025, and the related notes. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated April 25, 2025, which expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/Ernst & Young LLP
San Jose, California
April 25, 2025
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