Trimble and Nikon Sign Definitive Agreement 3.28.03
Trimble and Nikon Corporation have reached a definitive agreement to form a 50-50 joint venture in Japan, Nikon-Trimble Co., Ltd., to address the survey instruments market. Financially, Nikon will contribute 1.2 billion yen (approximately U.S.$10 million) in cash, while Trimble will contribute 500 million yen (approximately U.S.$4.2 million) in cash and 700 million yen (approximately U.S.$5.8 million) in its common stock. Nikon-Trimble Co., Ltd. will purchase assets from Nikon Geotecs Co., Ltd. and Trimble Japan KK and is expected to begin operations during the second quarter of 2003.
Under the terms of the agreement, Trimble will acquire a 50 percent ownership stake in Nikon-Trimble Co., Ltd., which will assume the operations of Nikon Geotecs Co., Ltd. in Japan. The new entity will focus on the design and manufacture of surveying instruments including mechanical total stations and related products. In Japan, the joint venture will distribute Nikon's survey products as well as Trimble's survey products including Global Positioning System (GPS) and robotic total stations. Outside of Japan, Trimble will become the exclusive distributor of Nikon survey and construction products.
Trimble expects the joint venture to enhance its market position in survey instruments through geographic expansion and market penetration. The Nikon instruments will broaden Trimble's survey and construction product portfolio and enable the company to better access emerging markets in Russia, Eastern Europe, India and China. It will provide Trimble with the ability to sell its GPS and robotic technology to existing Nikon customers around the world. Additionally, the new company is expected to improve Trimble's market position in Japan, which remains a major market for survey instruments.
"The joint venture with Nikon reinforces our strategy of providing users with a broad portfolio of position-centric information solutions," said Steven W. Berglund, president and chief executive officer of Trimble. "Nikon's product quality and its strong brand complement our GPS and robotic survey products, and also give us a new platform that can increase penetration into construction applications. Additionally, the distribution arrangements will expand our capabilities both inside Japan and worldwide. Finally, Nikon Corporation represents an outstanding, high-quality partner that should bring additional stature and competency to our efforts."
"The combination of Nikon, a leading manufacturer of optical total stations, and Trimble, a world leader in GPS and robotic total stations serves to address the varied market requirements for high performance survey products," said Yoshida Shoichiro, chairman and CEO of Nikon. "The integration of both companies' product lines will enable each to achieve more effective sales activities through Nikon's sales network in Japan and Trimble's outside Japan."
At this time, Trimble does not expect to consolidate revenue from its 50 percent stake in the joint venture in Japan, but will report 50 percent of its net income or loss under the "Investment in Affiliates" line in the "Other Non-operating Income and Expense" part of its income statement. Trimble will recognize 100 percent of the sale of Nikon products outside of Japan under its existing revenue recognition policies. The company also expects the venture to be neutral to earnings during the start-up phase.