UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1996

                                       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 0-18645


                           TRIMBLE NAVIGATION LIMITED
             (Exact name of registrant as specified in its charter)


                        California                    94-2802192
              (State or other jurisdiction of      (I.R.S. Employer
              incorporation or organization)        identification No.)

645 North Mary Avenue, Sunnyvale, California             94088
(Address of Principal Executive Offices)               (Zip Code)

                                  (408)481-8000
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

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  periods that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
               Yes    X             No

As of September 30, 1996,  there were 22,074,100  shares of Common Stock (no par
value) outstanding.




                                       1

<PAGE>




                           TRIMBLE NAVIGATION LIMITED

This report 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.  Actual  results could differ  materially  from those  indicated in the
forward-looking  statements  as a result of the risk  factors  set forth in this
report. The Company has attempted to identify forward-looking statements in this
report  by  placing  an  asterisk  (*) in the  left-hand  margin  of  paragraphs
containing those statements.


                                      INDEX
                                                                           Page

PART I. FINANCIAL INFORMATION                                             Number




        Item 1.       Financial Statements


                      Condensed Consolidated Balance Sheets -
                      September 30, 1996 and December 31, 1995                3 
                                                                              
                      Condensed Consolidated Statements of Operations -
                      Three and Nine Months ended September 30, 1996
                      and 1995                                                4

                      Condensed Consolidated Statements of Cash Flows -
                      Nine Months ended September 30, 1996 and 1995           5

                      Notes to Condensed Consolidated Financial

                      Statements                                              6



        Item 2.       Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                     9




PART II.       OTHER INFORMATION



        Item 6.       Exhibits and Reports on Form 8-K                       17


SIGNATURES                                                                   18


                                       2

<PAGE>

                           TRIMBLE NAVIGATION LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                           September 30,  December 31,
                                                              1996            1995
- ----------------------------------------------------------------------------------------
(In thousands)                                            (Unaudited)        (Note)
ASSETS
<S>                                                             <C>              <C>
Current assets:
    Cash, cash equivalents and short term investments      $     81,181    $      97,162
    Accounts receivable, net                                     30,091           39,123
    Inventories                                                  41,645           31,201
    Deferred income taxes                                             -              722
    Other current assets                                          3,277            3,198
                                                          -------------   --------------
      Total current assets                                      156,194          171,406
                                                          -------------   --------------

Net property and equipment                                       22,094           19,751
Intangible assets                                                 4,679              870
Deferred income taxes                                               393              852
Other assets                                                      4,188            3,884
                                                          -------------   --------------
      Total assets                                         $   187,548     $     196,763
                                                          -------------   --------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt                      $         965  $        2,014
    Accounts payable                                              13,869          15,329
    Accrued compensation and benefits                              7,489           5,745
    Other accrued liabilities                                     10,616           8,340
    Customer advances                                                 -            1,080
    Income taxes payable                                            796            3,002
                                                          -------------   --------------
      Total current liabilities                                  33,735           35,510
                                                          -------------   --------------

Noncurrent liabilities:
    Noncurrent portion of long-term debt and other liabilities   30,970           31,316
                                                          -------------   --------------
      Total liabilities                                          64,705           66,826
                                                          -------------   --------------

Shareholders' equity:
    Common stock                                                127,370          121,149
    Retained earnings                                            (3,866)           8,699
    Treasury stock                                                 (799)               -
    Unrealized gain on short term investments                         8              102
    Foreign currency translation adjustment                         130              (13)
                                                          -------------   --------------
      Total shareholders' equity                                122,843          129,937
                                                          -------------   --------------
      Total liabilities and shareholders' equity           $    187,548     $    196,763
                                                          =============   ==============

</TABLE>


Note:  The balance sheet at December 31, 1995, has been derived from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

See accompanying notes to condensed consolidated financial statements.



                                       3

<PAGE>


                           TRIMBLE NAVIGATION LIMITED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                        Three Months Ended           Nine Months Ended
                                          September 30,               September 30,
                                     -------------------------  ---------------------------
                                        1996          1995         1996           1995
- -------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S>                                      <C>           <C>          <C>           <C>    
Total revenue                         $   54,086    $   62,826   $   169,410   $   171,735
                                     ------------  -----------  ------------  -------------

Operating expenses:
   Cost of sales                           27,457       27,536        80,506        71,155
   Research and development                 9,882        8,150        27,851        24,094
   Sales and marketing                     16,559       15,644        49,472        45,369
   General and administrative               6,608        6,779        23,075        18,166
   Restructuring charges                    2,046            -         2,046             -
                                     ------------  -----------  ------------  -------------
    Total operating expenses               62,552       58,109       182,950        158,784
                                     ------------  -----------  ------------  -------------

Operating income (loss)                    (8,466)       4,717       (13,540)        12,951
                                     ------------  -----------  ------------  -------------

Non operating income (expense):
   Interest income                          1,101        1,153         3,498          2,231
   Interest and other expenses             (1,089)        (971)       (2,984)        (3,074)
   Foreign exchange gain (loss)                20          119           (73)         1,084
                                     ------------  -----------  ------------  -------------
   Total non operating income                  32          301           441            241
                                     ------------  -----------  ------------  -------------

Income (loss) before income taxes          (8,434)       5,018       (13,099)        13,192
Income tax provision (benefit)                400          678          (534)         2,638
                                     ------------  -----------  ------------  -------------

Net income (loss)                     $    (8,834)  $    4,340   $   (12,565)  $     10,554
                                     ============  ===========  ============  =============
 
Net income (loss) per share           $     (0.40)  $     0.20   $     (0.58)  $       0.51
                                     ============  ===========  ============  =============

Weighted average common and
 dilutive common equivalent shares         22,029       21,975        21,833         20,863
                                     ============  ===========  ============  =============
</TABLE>


See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>

                           TRIMBLE NAVIGATION LIMITED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                             Nine Months Ended
                                                                September 30,
                                                      --------------------------
                                                         1996            1995
- --------------------------------------------------------------------------------
(In thousands)

Net cash provided (used) by operating activities         $  (8,157)   $   11,688
                                                         ----------  -----------

Cash flow from investing activities:
    Purchase of short term investments                    (59,338)      (96,357)
    Maturity of short term investments                      54,049        38,100
    Sales of short term investments                         15,212             -
    Acquisition of property and equipment                   (8,565)     (12,347)
    Capitalized patent expenditures                           (569)        (667)
                                                         ----------  -----------
      Net cash used in investing activities                     789     (71,271)
                                                         ----------  -----------
 
Cash flow from financing activities:
    Issuance of common stock                                 3,364         5,872
    Net proceeds from common stock offering                      -        57,298
    Purchase of treasury stock                                (799)            -
    Collection of notes receivable                               48           87
    Payment of long-term debt                               (1,303)      (1,186)
                                                         ----------  -----------
      Net cash provided by financing activities              1,310        62,071
                                                         ----------  -----------


Net increase/(decrease) in cash and cash equivalents        (6,058)        2,488

Cash and cash equivalents -- beginning of period            29,711        17,643
                                                         ----------  -----------
Cash and cash equivalents -- end of period               $   23,653   $   20,131
                                                         ==========  ===========

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
      Interest                                          $      808    $    2,867
      Income taxes, net of refunds                      $      487    $      677

Supplemental other non-cash investing and financing 
activities:
    Common stock issued in connection with acquisition
      of Terra Corporation                             $     2,857    $        -





See accompanying notes to condensed consolidated financial statements.



                                       5

<PAGE>




                           TRIMBLE NAVIGATION LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Basis of Presentation:

The condensed  consolidated  financial  statements  for the three and nine month
periods ended September 30, 1996, and 1995 presented in this Quarterly Report on
Form 10-Q are unaudited. In the opinion of management,  these statements include
all adjustments  (consisting only of normal recurring adjustments) necessary for
a fair statement of the results for the interim periods presented. The condensed
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report to Shareholders for the year ended December 31, 1995.

The  results of  operations  for the three  month and nine month  periods  ended
September 30, 1996,  are not  necessarily  indicative of the results that may be
expected for the year ending December 31, 1996.


NOTE 2 - Inventories:

Inventories consist of the following:

                                             September 30,    December 31,
                                                1996              1995
- ---------------------------------------------------------------------------
(In thousands)

Raw materials                                  $  20,933        $    15,892
Work-in-process                                    7,074              6,782
Finished goods                                    13,638              8,527
                                            ------------     --------------
                                               $  41,645        $    31,201
                                            ------------     --------------


NOTE 3 - Restructuring Charge:

During  the  quarter  ended   September  30,  1996,   the  Company   recorded  a
restructuring  charge  of  $2,046,000  of which  $597,000  had  been  paid as of
September 30,1996.  Components of this  restructuring  reserve included employee
severance  packages,  the costs of redundant  office space,  write downs of idle
assets and the costs of moving people.


NOTE 4 - Contingencies:

Shareholder Litigation

On December 6, 1995, two  shareholders  filed a class action lawsuit against the
Company and certain  directors  and officers of the Company.  Subsequent to that
date,  additional lawsuits were filed by other  shareholders.  The lawsuits were
subsequently  amended and  consolidated  into one  Complaint  which was filed on
April 5, 1996. The amended consolidated  Complaint seeks to bring an action as a


                                       6

<PAGE>

class action  consisting  of all persons who  purchased  the common stock of the
Company during the period April 18, 1995,  through  December 5, 1995 (the "Class
Period"). The plaintiffs allege that the defendants sought to induce the members
of the Class to purchase the  Company's  common stock during the Class Period at
artificially  inflated  prices.  The plaintiffs  seek recissory or  compensatory
damages  with  interest  thereon  as  well as  reasonable  attorneys'  fees  and
extraordinary  equitable and/or injunctive relief. The Company filed a motion to
dismiss which was heard by the Court on August 16, 1996.  The court rejected the
plaintiffs  lawsuit,  but  allowed  thirty days to resubmit  its  complaint.  On
September 24, 1996, the plaintiffs filed an amended complaint. The Company plans
to file a motion to  dismiss  the  amended  complaint  in the near  future.  The
Company  does not  believe  that it is  possible  to predict the outcome of this
litigation.


DAC Arbitration and Litigation

In February 1995, DAC International  Inc. ("DAC"),  then a distributor and sales
representative  of the Company,  terminated its sales  representative  agreement
with the Company and thereafter  filed an arbitration  claim against the Company
in Palo Alto, California,  seeking damages of approximately  $2,100,000. On July
15, 1996, the Arbitrator issued a Final Liability and Opinion Award which called
for the Company to pay a total of $1,021,000,  including interest,  all of which
has now been paid.

On March 26,  1996,  DAC filed a lawsuit  entitled  DAC  International,  Inc.  v
Trimble  Navigation  Ltd.,  Case No.  96-02032,  filed in the District  Court of
Travis  County,  Texas.  In April  1996,  the Company  removed  this case to the
Federal  District  Court for the Western  District of Texas.  On August 6, 1996,
Trimble  agreed to pay DAC  $500,000  which was  charged to income in the second
quarter  of 1996.  As a result of this  agreement  all  litigation  between  the
Company and DAC has been settled.

AMSC Litigation

In March 1995,  the Company signed a large contract for the supply of Galaxy/GPS
land mobile satellite terminals to American Mobile Satellite Corporation (AMSC),
a Reston,  Virginia,  based  company  that  provides a variety of voice and data
services via satellite.  AMSC  contracted  for delivery of product  beginning in
mid-1995 and continuing  through 1996. AMSC requested late in the fourth quarter
of 1995  that  the  Company  cease  delivery  in part  due to  delays  in  their
completion of software. Shipments under the original contract were halted in the
fourth  quarter  of 1995 and the  contract  was  modified.  Since  that time the
Company  has made  only  limited  shipments  to AMSC  and  does  not now  expect
shipments to recur.

In October 1996 the Company filed a complaint against AMSC in the Superior Court
of California in Santa Clara  County.  The complaint  alleges that AMSC breached
its March 1995  contract  with the  Company  by  refusing  to accept  additional
deliveries of Galaxy product.  The complaint also alleges that AMSC fraudulently
induced the Company to execute a modification  to the March 1995  contract.  The
complaint  seeks  unspecified  damages  including  lost  profits  and  exemplary
damages.  AMSC has acknowledged receipt of the complaint but has not yet filed a
responsive pleading.

Other Litigation

In July 1993, an individual  filed a Complaint  against the Company in which the
individual  alleges the Company has an obligation to him for commissions  earned
and  services  provided in an amount in excess of  $1,500,000.  In June 1995 the
Company's  motion for  summary  judgment on all claims was granted by the court.
The  individual  has filed an appeal for which no hearing date has yet been set.
The Company believes the Complaint is without merit and intends to defend itself
vigorously.


                                       7

<PAGE>


A former  shareholder has filed an action against the Company claiming rights to
shares that were previously  canceled on the Company's stock records pursuant to
lost stock certificate  indemnification agreements. The Company does not believe
that there will be any adverse  consequences  to the Company as a result of this
case.

In October 1995,  an employee who was  terminated by the Company in 1992 filed a
Complaint  against  the  Company  alleging  that  his  incentive  stock  options
continued to vest subsequent to his  termination.  He seeks damages in excess of
$1,000,000.  The  Company  believes  that the  complaint  is with out  merit and
intends to defend itself vigorously.


Note 5 - Line of Credit

In August 1995, the Company entered into a $30,000,000  unsecured line of credit
agreement  with two banks that expires in July 1997.  The agreement  enables the
Company to borrow up to  $30,000,000  provided that certain  financial and other
covenants  are met. The  agreement  provides for payment of a commitment  fee of
0.5% for the unused portion of the line of credit.  Borrowings  bear interest at
the higher of (i) one of the bank's annual prime rate and (ii) the federal funds
rate plus 0.5%. To date no  borrowings  have been made under the line of credit.
Under  the  current  line of  credit  the  Company  is  restricted  from  paying
dividends.

As of  September  30,  1996,  the Company  was not in  compliance  with  certain
covenants  of the line of  credit  agreement.  The  agreement  was  subsequently
amended and the Company is currently in compliance.

Note 6 - Acquisition:

On July 2,  1996,  the  Company  acquired  certain  assets and  assumed  certain
liabilities of Terra Corporation, a New Mexico aviation corporation, in exchange
for 140,860 shares of the Company's  common stock and options to purchase 12,000
shares of the Company's  common stock.  The  acquisition  has been accounted for
using  purchase  accounting.  The  Company  determined  the  value  of  the  net
liabilities  acquired  to  be  $332,000  which  resulted  in  the  recording  of
$3,189,000 of goodwill. The amounts of goodwill and net liabilities acquired are
the Company's  best  estimates at this time and are subject to  adjustment.  The
Company is amortizing this goodwill over its useful economic life which has been
estimated to be five years.

Note 7 - Offering of Common Stock:

In August  1995 the  Company  sold  2,100,000  shares of its Common  Stock in an
underwritten  public  offering for aggregate net proceeds of  $57,298,000  after
issuance costs.




                                       8

<PAGE>



                           TRIMBLE NAVIGATION LIMITED
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



RESULTS OF OPERATIONS


Revenues

Revenues for the three month and nine month  periods  ended  September 30, 1996,
were $54,086,000 and  $169,410,000,  respectively,  as compared with $62,826,000
and  $171,735,000  in the  corresponding  1995  periods.  The table  below shows
revenues  under the  Company's  new  operating  structure  that was  created  in
September  1996.  Prior  periods  have been  restated  in order to make  amounts
comparable.


<TABLE>
<CAPTION>

                                             Three Months Ended September 30,                  Nine Months Ended September 30,
                                  ---------------------------------------------    ----------------------------------------------
                                                                    Increase/                                         Increase/
                                       1996              1995      (Decrease)           1996               1995      (Decrease)
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                       <C>               <C>       <C>                  <C>               <C>         <C>

Commercial Systems                 $       35,528    $       43,986   (19%)         $       116,107     $     120,545    (4%)
Software & Component Technology             9,331            10,832   (14%)                  27,822            26,331     6%
Aerospace                                   9,227             8,008    15%                   25,481            24,859     3%
                                  ---------------   ---------------                ----------------   ---------------
 Total                             $       54,086    $       62,826   (14%)         $       169,410     $     171,735    (1%)
                                  ---------------   ---------------                ----------------   ---------------

</TABLE>



Commercial Systems

The Commercial Systems business unit consists of the previous Survey and Mapping
business unit, the Tracking portion of the Tracking and Communications  business
unit and the Marine portion of the Navigation business unit.

Commercial  systems  revenues for the three month and nine month  periods  ended
September 30, 1996, decreased primarily in the Land Survey and Tracking vertical
markets. The company believes that it has maintained its market share worldwide.

The decrease in Land Survey sales in the third  quarter of 1996  compared to the
third quarter of 1995 was due to a slowdown in sales in Europe and Japan. Europe
experienced a down turn in shipments due in part to construction spending in the
major economies of Europe being lower than traditional levels.  Shipments of the
higher end Real Time  Kinematic  (RTK) survey product in Japan has slowed due to
the  Japanese  governments  decision  to  evaluate  RTK  survey  methods  before
certifying  its use for official  surveys.  The Company has replaced this higher
price RTK product with the certified  lower average selling price product lines.
Shipments in the U.S., Latin America, and Asia-Pacific outside Japan were higher
than last year.


The decrease in Land Survey sales for the nine month period ending September 30,
1996 as  compared  to the same  period in 1995 was due to a slowdown in sales in
Europe and Japan in the second and third  quarters (see paragraph  above).  This


                                       9

<PAGE>

decrease was partially offset by an increase in revenues in the first quarter of
1996 as  compared  to the  first  quarter  of 1995  which  was due to  increased
acceptance  of the  Company's  products,  extension  of sales  efforts  into new
geographic territories and an increase in the number of field sales employees.

Tracking revenues are lower in both the three month and nine month periods ended
September 30, 1996,  primarily due to lower sales to American  Mobile  Satellite
Corporation (AMSC) - see paragraph below for more details.

In March 1995,  the Company signed a large contract for the supply of Galaxy/GPS
land mobile satellite terminals to AMSC, a Reston,  Virginia, based company that
provides a variety of voice and data services via satellite. AMSC contracted for
delivery of product  beginning in mid-1995 and  continuing  through  1996.  AMSC
requested  late in the fourth quarter of 1995 that the Company cease delivery in
part due to delays in their completion of software. Shipments under the original
contract were halted in the fourth quarter of 1995 and the contract was amended.
Revenue from shipments to AMSC under this contract  during 1995 were  $4,176,000
in the second  quarter,  and  $3,125,000  in the third  quarter.  $1,080,000  of
contract  renegotiation  fees were  recognized in the first quarter of 1996. The
amended contract between the Company and AMSC calls for production line shutdown
fees for the time that  Trimble is not  manufacturing  product  for  shipment to
AMSC. Due to the uncertainty  about AMSC's ability to pay, revenues for products
shipped and contractual  shutdown fees were not recognized  until collection was
considered  probable.  In the second  quarter of 1996,  the  Company  recognized
$1,700,000 in revenue from products  shipped in December 1995 and March 1996 and
$1,000,000 of shutdown fees all of which have been paid. In the third quarter of
1996,  the Company  recognized  $100,000 of shutdown fees all of which have been
paid.

In October 1996 the Company filed a complaint  against American Mobile Satellite
Corporation  ("AMSC") in the Superior  Court of California in Santa Clara County
(See Note 4 of the Notes to the Condensed  Consolidated Financial Statements for
more details).

In September  1996 the Company  entered into a contract  with  Caterpillar  Inc.
targeted  at the  construction  and mining  markets.  The  Company has agreed to
develop  its  equipment  starting  in the fourth  quarter of 1996 and to sell it
exclusively  to  Caterpillar  for use in this market.  Shipments are expected to
start in the first half of 1997.

Software and Component Technologies

This new  business  unit  consists  of the OEM  business  which  was  previously
included in Tracking and Communications.  In addition this business unit will be
responsible  for selling  licenses  and other rights for the use of GPS to third
parties.

Software and  Component  Technologies  decrease in the three month period ending
September  30, 1996,  as compared to the same period in 1995,  is due in part to
lower sales of in vehicle navigation GPS boards that were expected to be sold as
"after market" products. The Company believes that this slowdown was as a result
of a shift in demand from "after market" to new car sales.

Software  and  Component  Technologies  had a slight  increase in the nine month
period ending  September 30, 1996 as compared to the same period in 1995, due to
a very  strong  sales for the first  quarter of 1996 as compared to a weak first
quarter  for 1995  coupled  with a weak second and third  quarter for 1996,  but
strong quarters for the second and third quarter of 1995.


                                       10

<PAGE>
 
Aerospace

This new  business  unit  consists  of the  Avionics  portion of the  Navigation
business unit and the previous Military business unit.

Sales of  Aerospace  products  were higher in the 1996  periods,  as compared to
1995, due in part to sales of product acquired from Terra  Corporation (See Note
6  to  the  Condensed   Consolidated   Financial   Statements   for   additional
information).  The sale of the Terra  Corporation  products  will are  expect to
increase the Aerospace  revenue for the rest of the year. *The Company considers
its Aerospace products to be a long term growth  opportunity.  *It believes that
success in this area will be dependent  upon the success of a current  strategic
alliance with Honeywell.  The Company  received FAA  certification of the HT9100
product on September 18, 1996,  which allowed the production and installation to
begin late in the third quarter. This product accounted for most of the increase
in  Aerospace  revenues  for the third  quarter of 1996 as compared to the third
quarter of 1995.

Military sales are highly dependent on contracts which are subject to government
approval and are,  therefore,  expected to continue to fluctuate  from period to
period.  The  Company  believes  that  opportunities  in this  market  have been
substantially reduced by cutbacks in U.S. and foreign military spending.


Revenue outside the US

Sales  to  unaffiliated  customers  in  locations  outside  the  U.S.  comprised
approximately  46% of revenue in the first nine months of 1996 and approximately
54% in the first nine  months of 1995.  During  1996,  lower  revenues in Europe
affected many of the Company's  product lines, and in Japan revenues were lower,
which primarily  related to surveying  products.  The Company  anticipates  that
export revenue and sales made by its subsidiaries in locations  outside the U.S.
will continue to account for a significant portion of its revenue, and therefore
the  Company  is  subject  to the  risks  inherent  in  these  sales,  including
unexpected  changes in regulatory  requirements,  exchange  rates,  governmental
approval,  tariffs or other barriers.  Even though the U.S. Government announced
on March 29, 1996, that it would support and maintain the GPS system, as well as
eliminate  the use of Selective  Availability  (S/A) (a method of degrading  GPS
accuracy),  in certain  foreign  markets  there may be a reluctance  to purchase
products  based  on GPS  technology  given  the  control  of  GPS  by  the  U.S.
Government.  The Company's results of operations could be adversely  affected if
the Company were unable to continue to generate  significant  sales in locations
outside the U.S.


Gross Margin

Gross margin varies on a quarterly  basis due to a number of factors,  including
product mix, domestic versus international sales,  customer type, the effects of
production volumes and fixed  manufacturing  costs on unit product costs and new
product  start-up  costs.  Gross margin as a percentage of total product revenue
was 49% and 52% in the three month and nine month  periods  ended  September 30,
1996, as compared  with 56% and 59% in the  corresponding  1995  periods.  These
margins are enhanced by the positive impact of revenues recognized of $2,300,000
and  $1,080,000  in the second and first  quarters of 1996,  respectively.  (See
"Results of  Operations - Revenue" for more  details.) The Company has a history


                                       11

<PAGE>

of  recording  such  non-recurring  items in the  past,  including  revenues  of
$1,333,000 and $1,000,000  recorded in the third quarter and fourth  quarters of
1995,  respectively.  There can however be no assurance  that similar items will
recur in the  future.  The lower gross  margin  percentage  in the 1996  periods
primarily  reflects a shift in product mix from higher margin commercial systems
sales to lower  margin  avionics  and OEM sales  and  decreases  in the  margins
obtained on sales of commercial  systems  products.  There is no assurance  that
current  margins will be sustained  because of mix changes  within and among the
business units,  market  pressures on unit selling prices,  fluctuations in unit
manufacturing costs and other factors.

In the future the  Company  expects a higher  percentage  of its  business to be
conducted  through  alliances  with  strategic  partners,   e.g.  Honeywell  and
Caterpillar.  As a result  of  volume  pricing  and the  assumption  of  certain
operating costs by the partner,  margins on this business are likely to be lower
than sales directly to end users.


Operating Expenses

The  following  table shows  operating  expenses for the periods  indicated  and
should be read in conjunction with the narrative descriptions of those operating
expenses below:


<TABLE>
<CAPTION>

                                   Three Months Ended September 30,             Nine Months Ended September 30,
                                ---------------------------------------     --------------------------------------
                                                            Increase/                                   Increase/
                                    1996           1995     (Decrease)          1996           1995     (Decrease)
- ------------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                   <C>            <C>        <C>               <C>            <C>        <C>

Research and development         $      9,882   $      8,150     21%         $     27,851    $    24,094     16%
Sales and marketing                    16,559         15,644      6%               49,472         45,369      9%
General and administrative              6,608          6,779     (3%)              23,075         18,166     27%
Restructuring charges                   2,046              -     N/A                2,046              -     N/A
                                -------------  -------------                -------------  -------------
 Total                           $     35,095    $    30,573     15%         $    102,444    $    87,629     17%
                                -------------  -------------                -------------  -------------

</TABLE>



Research and Development

Research and  development  increased  for the three month and nine month periods
ended  September 30, 1996, as compared with the same periods in 1995,  primarily
due to an increase in  personnel  and the related  expenses  which  accompany an
increase in the number of employees. There was also an increase in the number of
specialized  engineering  consultants and temporary employees.  The increases in
research  and  development  is  part  of  the  Company's  continuing  aggressive
development of future products.

The Company expects that a significant  portion of future revenues will continue
to be  derived  from  sales  of newly  introduced  products.  Consequently,  the
Company's  future  success  depends on its  ability to  continue  to develop and
manufacture  new  competitive  products.  Advances  in product  technology  will
require continued substantial investment in research and development in order to
maintain and enhance the Company's market position and achieve high gross profit
margins.  Development and  manufacturing  schedules for technology  products are
difficult  to  predict,  and there can be no  assurance  that the  Company  will
achieve  timely  initial  customer   shipments  of  new  products.   The  timely


                                       12

<PAGE>

availability  of these products in volume and their  acceptance by customers are
important  to the future  success of the Company.  In  addition,  certain of the
Company's products are subject to governmental and similar certifications before
they can be sold. For example,  FAA  certification  is required for all aviation
products.  An inability or delay in obtaining such certifications  could have an
adverse effect on the Company's  operating results.  The Company has experienced
delays in obtaining appropriate  certifications for products acquired as part of
the Terra acquisition.


Sales and Marketing

The increased  expense in the three month and nine month periods ended September
30, 1996, as compared with the same periods for 1995, is a primary  result of an
increase in personnel and related expenses and an increase in advertising costs.
Selling and  marketing  expense is expected to decrease in future  quarters as a
result of the  restructuring  actions taken in September 1996.  Sales offices in
Egypt,  Italy and Poland were  closed and the size of certain  offices in the US
has been reduced.

The  Company's  future  growth  will  depend  upon the  timely  development  and
continued  viability of the markets in which the Company currently  competes and
upon the  Company's  ability to continue to identify and exploit new markets for
its products. In addition, the Company has encountered  significant  competition
in selected  markets,  and the Company expects such  competition to intensify as
the market for GPS applications  receives  acceptance.  Several of the Company's
competitors  are  major  corporations  with  substantially   greater  financial,
technical,  marketing and  manufacturing  resources.  Increased  competition  is
likely to result in reduced  market share and in price  reductions  of GPS-based
products, which could adversely affect the Company's revenues and profitability.
The increase in  competition  has also led to a longer sales cycle which has the
effect of reducing the ratio of revenues to sales and marketing expenses.


General and Administrative

The  decrease in general and  administrative  expense in the three month  period
ended  September 30, 1996, as compared with the same period for 1995,  primarily
reflects lower legal expenses as a result of reduced  litigation.  This decrease
was offset by an increase in the bad debt expense and  amortization  of goodwill
related  to the  Terra  acquisition  (See Note 6 to the  Condensed  Consolidated
Financial Statements for additional information).

The  increase in general and  administrative  expense for the nine month period
ended  September  30,  1996,  as  compared  with the same  period  for 1995,  is
primarily  as a result  of the  higher  litigation  and legal  settlement  costs
incurred in the first six months of the year,  as compared to the same period in
1995,  as well as an  increase  in the bad  debt  expense  and  amortization  of
goodwill  related  to  the  Terra  acquisition  (See  Note  6 to  the  Condensed
Consolidated Financial Statements for additional information).



Restructuring Charges

During  the  quarter  ended   September  30,  1996,   the  Company   recorded  a
restructuring  charge  of  $2,046,000  of which  $597,000  had  been  paid as of
September 30, 1996.  Components of this restructuring  reserve included employee
severance  packages,  the costs of redundant  office space,  write downs of idle


                                       13

<PAGE>

assets and the costs of moving people.  The Company took this action in order to
bring  operating  expenses into line with revenues and to  restructure  existing
operations in a more efficient  manner. As part of the restructuring the Company
reorganized itself into three business units - Commercial Systems,  Software and
Component  Technologies,  and  Aerospace.  There  can be no  guarantee  that the
results  of the  restructuring  will be  successful  and will have the  intended
effect.  If they are not successful then the Company will take further action to
achieve its aims.


Income Taxes

The Company recorded tax expense of $400,000 on the loss before income taxes for
the three months ended September 30,1996,  and a net tax benefit of $534,000 for
the nine  months  ended  September  30,1996.  The tax expense for the quarter is
primarily due to taxes paid in foreign jurisdictions.  The income tax rate of 4%
for the  first  nine  months  ended  September  30,1996,  is less  than  federal
statutory  rate  primarily  due to losses  with no  currently  recognizable  tax
benefit.  The income tax rate of 20% for the first nine months  ended  September
30,  1995,  is  less  than  the  federal  statutory  rate  primarily  due to the
realization  of  previously  reserved  deferred  tax  assets.  The 1996  rate is
different from the 1995 rate primarily due to the inability to recognize benefit
of current year operating losses.

Liquidity and Capital Resources

For the nine month period ended  September 30, 1996,  the cash used in operating
activities  was  $8,157,000 as compared to an inflow of  $11,688,000 in the same
period  in 1995.  Cash  provided  by sales of  common  stock in 1996  represents
proceeds from purchases made pursuant to the Company's stock option and employee
stock purchase plans and totaled  $3,364,000 for the nine months ended September
30, 1996.  During the last nine months the Company has relied  primarily on cash
provided by financing activities and net sales of short-term investments to fund
operations,  capital expenditures and other investing activities.  The Company's
ability to generate cash from operations will depend in a large part on revenues
and the rate of collections of accounts receivable. Management believes that its
cash, cash  equivalents and short-term  investment  balances,  with its existing
credit line, will be sufficient to meet its anticipated  cash needs for at least
one year. At September 30, 1996,  the Company had cash and cash  equivalents  of
$23,653,000 and short-term investments of $57,528,000.

In February  1996, the Company  announced  that it had approved a  discretionary
program where by up to 600,000  shares of its common stock may be repurchased to
offset  potential  dilutive  effects to earnings  per share from the issuance of
stock options.  The Company intends to use existing cash,  cash  equivalents and
short-term  investments to finance any stock repurchases under this program.  In
the nine months ended September 30, 1996, 50,000 shares were purchased at a cost
of  $799,000.  Subsequent  to  September  30,  1996,  the Company  purchased  an
additional 150,000 shares of its own stock.


Other Risk Factors

Revenue  has  tended to  fluctuate  on a  quarterly  basis due to the  timing of
shipments of products under  contracts,  the sale of license rights and seasonal
patterns favoring spring and summer for the surveying and mapping business. This
pattern was not  repeated in 1996 and the  Company can give no  assurances  that
there will be any  reversion  to the  seasonal  revenue  trends.  A  significant
portion of quarterly revenues occur from orders received and immediately shipped


                                       14

<PAGE>

to  customers  in the last few weeks and days of a  quarter.  If orders  are not
received,  or  shipments  were to be delayed a few days at the end of a quarter,
operating results would be significantly  adversely impacted. The visibility and
predictability  of future  revenues are difficult to predict and projections are
primarily  based  on  historical  models  which  are  not  necessarily  accurate
representations of the future.

A significant number of components used by the Company in the manufacture of its
products are  obtainable  only from sole  sources.  Furthermore,  in many cases,
despite the  availability of multiple  sources,  the Company may select a single
source  in  order  to  maintain  quality  control  and to  develop  a  strategic
relationship  with the supplier.  However,  if the Company is unable to obtain a
sufficient supply of these components from its current vendors, it is likely the
Company  could  experience  a delay in product  shipments  that would  adversely
affect the Company's  results of operations  and damage  customer  relationships
until an alternative source could be obtained.  In addition,  the Company has in
the past experienced  shortages of semiconductors and other components that have
impacted the Company's  ability to build inventory to ship on demand.  While the
previous  potential  problems could cause lower revenue than expected it is also
possible that due to difficulties in forecasting  these and other long lead time
parts the  Company  could be faced with an excess  supply of  certain  component
inventories.

The Company has a  relatively  fixed cost  structure  in the short term which is
determined by the business plans and strategies the Company intends to implement
in the markets it addresses.  As a result  percentage  increases or decreases in
revenues have a significantly  higher  percentage impact on net income or losses
and earnings per share than a company with a more variable cost structure.

A number of products that were previously  being  manufactured by Terra have yet
to be certified by the Federal Aviation  Authority.  Unless the Company receives
this  certification  revenues  from  sales of Terra  products  may be lower than
expected.

* In the longer  term the  Company  believes  that the  Software  and  Component
Technologies  business unit will comprise a significant portion of the Company's
business.  The  Software and  Component  Technologies  business  unit differs in
nature from most of the Company's  markets  because volumes are high and margins
relatively  low.  Software and  Component  Technologies  customers are extremely
price sensitive. As costs decrease through technological advances these advances
will be passed on to the  customer.  To compete in the  Software  and  Component
Technologies   market   requires  high  volume   production  and   manufacturing
techniques.  Customers expect high quality standards with very low defect rates.
The Company is relatively inexperienced compared to competitors with far greater
resources in such high volume manufacturing and associated support activities.

The  Company's  stock price is subject to  significant  volatility.  If revenues
and/or earnings fail to meet the expectations of the investment community, there
could  be an  immediate  and  significant  impact  on the  trading  price of the
Company's stock.

The  value of the  Company's  products  relies  substantially  on the  Company's
technical  innovation in fields in which there are many current patent  filings.
The  Company  recognizes  that as new  patents  are issued or are brought to the
Company's  attention by the holders of such patents, it may be necessary for the
Company to withdraw  products  from the market,  take a license from such patent
holders,  or redesign  its  products.  The  Company  does not believe any of its
products  infringe  patents or other  proprietary  rights of third parties,  but
cannot  be  certain  they  do  not do so.  In  addition,  the  legal  costs  and
engineering  time  required  to  safeguard  intellectual  property  or to defend


                                       15

<PAGE>

against litigation could become a significant expense of operations. Such events
could have a material adverse effect on the Company's revenues or profitability.

The Company is  continually  evaluating  alliances and external  investments  in
technologies  related to its business and has already entered into alliances and
made  relatively  small  investments  in  GPS  related   technology   companies.
Acquisitions  of companies,  divisions of  companies,  or products and alliances
entail  numerous  risks,  including (i) the potential  inability to successfully
integrate acquired operations and products or to realize anticipated  synergies,
economies of scale or other value, (ii) diversion of management's attention, and
(iii) loss of key employees of acquired operations. Any such problems could have
a material  adverse effect on the Company's  business,  financial  condition and
results of  operations.  No  assurances  can be given that the Company  will not
incur problems from current or future alliances,  acquisitions,  or investments.
Furthermore,  there can be no assurance that the Company will realize value from
any such alliances, acquisitions, or investments.

 The Company's  products rely on signals from the GPS Navstar  satellite  system
built and maintained by the U.S.  Department of Defense.  Navstar satellites and
their  ground  support  systems  are  complex   electronic  systems  subject  to
electronic  and  mechanical  failures  and possible  sabotage.  Some of these 24
satellites have exceeded their design lives of 7.5 years and are also subject to
damage by the hostile space environment in which they operate. Repair of damaged
or  malfunctioning   satellites  is  impossible.  If  a  significant  number  of
satellites were to become inoperable,  there could be a substantial delay before
they are replaced  with new  satellites.  A reduction in the number of operating
satellites  would impair the current utility of the GPS system and the growth of
current  and  additional  market  opportunities.  In  addition,  there can be no
assurance that the U.S.  Government  will remain  committed to the operation and
maintenance of GPS  satellites  over a long period of time, nor that policies of
the U.S.  Government  allowing  for the use of GPS  without  charge  will remain
unchanged. Because of ever increasing commercial applications of GPS, other U.S.
Government  agencies may become involved in the administration or the regulation
of the  use of GPS  signals.  Any of the  foregoing  factors  could  affect  the
willingness  of buyers of the  Company's  products to select  GPS-based  systems
instead of products  based on competing  technologies.  Any resulting  change in
market  demand for GPS  products  would have a  material  adverse  effect on the
Company's  financial  results.  Certain European  government  organizations have
expressed concern  regarding the  susceptibility of GPS equipment to intentional
or inadvertent  signal  interference.  Such concern could translate into reduced
demand for GPS products in certain geographic regions.




                                       16

<PAGE>




P
ART II.  OTHER INFORMATION



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

             A. Exhibits                                                   Page
                                                                          Number

                10.56 Revolving Credit Agreement - Third Amendment         19-20

                11.1   Computation of Earnings (Loss) Per Common Share        21

                27     Financial Data Schedule                                22

             B. Report on Form 8-K

                There were no reports on Form 8-K filed  during the
                quarter ended September 30, 1996.










                                       17

<PAGE>






                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.




TRIMBLE NAVIGATION LIMITED
(Registrant)



By:      /s/Dennis Ing                  
            Dennis Ing
            (Vice President Finance and
             Chief Financial Officer)



DATE:  November  13, 1996



                                       18

<PAGE>









                           TRIMBLE NAVIGATION LIMITED

                                 THIRD AMENDMENT
                                       to
                           REVOLVING CREDIT AGREEMENT


        This THIRD AMENDMENT (the  "Amendment"),  dated as of November 12, 1996,
is among Trimble Navigation Limited (the "Borrower"), The First National Bank of
Boston  ("FNBB"),  Mellon Bank,  N.A.  ("Mellon",  and together  with FNBB,  the
"Banks"),  and The First  National  Bank of Boston as agent for  itself  and the
other Banks (the "Agent").

        WHEREAS,  the  Borrower,  the Banks and the  Agent are  parties  to that
certain  Revolving Credit  Agreement,  dated as of August 4, 1995 (as amended by
the First Amendment to Revolving Credit  Agreement,  dated as of April 30, 1996,
and the Second  Amendment to Revolving  Credit  Agreement,  dated as of June 30,
1996, the "Credit  Agreement"),  pursuant to which the Banks, upon certain terms
and  conditions,  have made  loans to and may issue  letters  of credit  for the
benefit of the Borrower; and

        WHEREAS,  the Borrower had requested that the Banks agree, and the Banks
have agreed,  on the terms and subject to the  conditions  set forth herein,  to
make certain changes to the Credit Agreement;

        NOW, THEREFORE, the parties hereto hereby agree as follows:

        Section  1.  Defined  Terms.  Capitalized  terms  which are used  herein
without  definition and which are defined in the Credit Agreement
 shall have the
same meanings herein as in the Credit Agreement.

        Section 2. Amendment of Credit Agreement. The Credit Agreement is hereby
amended as follows:

        (a) Section  9.1 of the Credit  Agreement  is amended by  deleting  such
Section 9.1 and restating it in its entirety as follows:

               Section 9.1. Profitable Operations.  The Borrower will not permit
               Consolidated  Net Deficit or Consolidated  Net Operating  Deficit
               for any fiscal  quarter of the  Borrower to be greater  than five
               percent (5%) of Consolidated  Tangible Net Worth as of the end of
               the fiscal  quarter  immediately  preceding  the relevant date of
               determination.

        (b) Section  9.4 of the Credit  Agreement  is amended by  deleting  such
Section 9.4 and restating it in its entirety as follows:

               Section 9.4  Consolidated  Tangible Net Worth.  The Borrower will
               not  permit  Consolidated  Tangible  Net  Worth at the end of any
               fiscal quarter of the Borrower to be less than:

                      (i) for the fiscal  quarter ended  December 31, 1996,  the
               sum of $111,000,000,  plus eighty percent (80%) of any new equity
               issuance, plus, eighty percent (80%) of positive Consolidated Net
               Income for, in each case,  the fiscal  quarter  subsequent to the
               fiscal quarter ended September 30, 1996; and

                      (ii) for the fiscal  quarter ended March 30, 1997 and each
               fiscal quarter thereafter,  the sum of $105,000,000,  plus eighty
               percent (80%) of any new equity  issuance,  plus, on a cumulative
               basis,  eighty percent (80%) of positive  Consolidated Net Income
               for each fiscal  quarter  subsequent to the fiscal  quarter ended
               December 31, 1996.

        (c) Section 9 of the Credit  Agreement is further  amended by adding the
following new Section 9.6:

               Section 9.6.  Minimum Net Cash. The Borrower will not at any time
               permit the sum of cash, plus Cash  Equivalents,  plus Investments
               of the kind  described  in  paragraphs  (a),  (b), (c) and (g) of
               Section  8.3 that  mature  within  one (1) year  from the date of
               purchase  by  the  Borrower,  minus  the  outstanding  amount  of
               Revolving  Credit  Loans as of the date of  determination,  to be
               less than $50,000,000.

        Section 3. Affirmation and Acknowledgment of the Borrower.  The Borrower
hereby  ratifies and confirms all of its  Obligations  to the Banks,  including,
without  limitation the Revolving  Credit Loans, and the Borrower hereby affirms
its absolute and unconditional  promise to pay to the Banks the Revolving Credit
Loans and all other amounts due under the Credit Agreement as amended hereby.

        Section 4.    Representations  and  Warranties.  The Borrower  hereby 
represents  and warrants to the Banks as follows:

               (a) The execution and delivery by the Borrower of this  Amendment
        and the  performance by the Borrower of its  obligations  and agreements
        under this  Amendment and the Credit  Agreement as amended  hereby,  are
        within the corporate authority of the Borrower,  have been authorized by
        all necessary  corporate  proceedings on behalf of the Borrower,  and do
        not  and  will  not  contravene  any  provision  of  law  or  any of the
        Borrower's  charter,  other incorporation  papers,  by-laws or any stock
        provision  or any  amendment  thereof  or of any  indenture,  agreement,
        instrument or undertaking binding upon the Borrower.

               (b) This  Amendment  and the Credit  Agreement as amended  hereby
        constitute  legal,  valid  and  binding  obligations  of  the  Borrower,
        enforceable in accordance with their respective terms, except as limited
        by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
        relating to or affecting generally the enforcement of creditors' rights.

               (c) No approval or consent of, or filing with,  any  governmental
        agency or  authority  is required to make valid and legally  binding the
        execution,  delivery or performance by the Borrower of this Amendment or
        the Credit  Agreement  as amended  hereby,  or the  consummation  by the
        Borrower of the transactions among the parties  contemplated  hereby and
        thereby or referred to herein.

               (d) The representations and warranties  contained in Section 6 of
        the Credit Agreement were correct at and as of the date made.  Except to
        the extent that the facts upon which such representations and warranties
        were  based have  changed  in the  ordinary  course of  business  (which
        changes,  either singly or in the  aggregate,  have not been  materially
        adverse)  and  after  giving  effect  to  the  provisions  hereof,  such
        representations  and  warranties  also are correct at and as of the date
        hereof.

               (e) The  Borrower  has  performed  and  complied in all  material
        respects with all terms and conditions  herein  required to be performed
        or  complied  with by it prior to or at the time  hereof,  and as of the
        date hereof,  after giving effect to the provisions hereof, there exists
        no Event of Default or Default.

        Section 5.    Effectiveness.  The  effectiveness  of this  Amendment  
shall be subject to receipt by the Agent of this  Amendment  executed  by each 
of the  Borrower,  the Banks and the Agent.

        Section 6. Miscellaneous  Provisions.  (a) Except as otherwise expressly
provided by this Amendment,  all of the terms,  conditions and provisions of the
Credit Agreement shall remain the same. It is declared and agreed by each of the
parties hereto that the Credit Agreement,  as amended hereby,  shall continue in
full force and effect, and that this Amendment and the Credit Agreement shall be
read and construed as one instrument.

        (b) THIS AMENDMENT IS INTENDED TO TAKE EFFECT AS AN AGREEMENT UNDER SEAL
AND SHALL BE CONSTRUED ACCORDING TO AND GOVERNED BY THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS.

        (c) This  Amendment may be executed in any number of  counterparts,  but
all such counterparts  shall together  constitute but one instrument.  In making
proof of this Amendment it shall not be necessary to produce or account for more
than  one  counterpart  signed  by  each  party  hereto  by  and  against  which
enforcement hereof is sought.

        (d) Pursuant to Section 15 of the Credit Agreement,  the Borrower hereby
agrees to pay to the Agent, on demand by the Agent, all reasonable out-of-pocket
costs and expenses  incurred or sustained  by the Agent in  connection  with the
preparation of this Amendment (including reasonable legal fees).




                                       19

<PAGE>








        IN WITNESS  WHEREOF,  the parties hereto have executed this Amendment as
of the date first written above.

                                  TRIMBLE NAVIGATION LIMITED


                                  By: /s/ Dennis R. Ing
                                     Name:Dennis R. Ing
                                     Title: Vice President Finance and Chief
                                            Financial Officer


                                 THE FIRST NATIONAL BANK
                                 OF BOSTON, individually and
                                 as Agent


                                   By: /s/ Tena Lindenauer
                                      Name:Tena Lindenauer
                                      Title:Director



                                 MELLON BANK, N.A.



                                   By: /s/ Sean C. Gannon
                                      Name:Sean C. Gannon
                                      Title:Assistant Vice President





                                       20

<PAGE>







                           TRIMBLE NAVIGATION LIMITED
                                  EXHIBIT 11.1

                 Computation of Earnings (Loss) Per Common Share


<TABLE>
<CAPTION>
                                                          Three Months Ended           Nine Months Ended
                                                             September 30,               September 30,
                                                         1996           1995          1996          1995
- -------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)

PRIMARY EARNINGS (LOSS) PER COMMON SHARE
<S>                                                      <C>            <C>           <C>           <C>   
 Computation of common and common
   equivalent shares outstanding:
    Common stock outstanding                              22,029         20,338        21,833        19,425
    Common stock options                                       -          1,382             -         1,236
    Common stock warrants                                      -            255             -           202
                                                       ---------     ----------    ----------   -----------
 Total weighted average common
    and dilutive common equivalent shares outstanding     22,029         21,975        21,833        20,863
                                                       =========     ==========    ==========   ===========


 Net income (loss)                                     $  (8,834)    $    4,340     $  (12,565) $    10,554
                                                       ==========    ==========     ==========  ===========


 Primary earnings (loss) per share                     $    (0.40)    $    0.20     $   (0.58)  $      0.51
                                                       ==========    ==========     =========   ===========


FULLY DILUTED EARNINGS (LOSS) PER COMMON SHARE

 Computation of common and common
   equivalent shares outstanding:
    Common stock outstanding                              22,029         20,338       21,833         19,425
    Common stock options                                       -          1,428            -          1,278
    Common stock warrants                                      -            264            -            211
                                                      ----------     ----------   ----------    -----------
 Total weighted average common
    and dilutive common equivalent shares outstanding     22,029         22,030       21,833         20,914
                                                      ==========     ==========   ==========    ===========


 Net income (loss)                                    $   (8,834)    $    4,430   $  (12,565)    $    10,554
                                                      ==========     ==========   ==========     ===========


 Fully diluted earnings (loss) per share              $    (0.40)    $     0.20   $    (0.58)    $      0.50
                                                      ==========     ==========   ==========     ===========


</TABLE>


                                       21

<PAGE>





<TABLE> <S> <C>
                                    
<ARTICLE>                                5
<LEGEND>                             
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF
EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL 
STATEMENTS
</LEGEND>
<MULTIPLIER>                                    1,000
                                          
<S>                                        <C>
<PERIOD-TYPE>                            9-MOS
<FISCAL-YEAR-END>                        DEC-31-1996
<PERIOD-END>                             SEP-30-1996

<CASH>                                         23,653
<SECURITIES>                                   57,528
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</TABLE>