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

                                    FORM 10-K

      (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                       EXCHANGE ACT OF 1934 (Fee Required)
                   For the fiscal year ended December 31, 1996
                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
           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 Identification No.)
incorporation or organization)               

     645 North Mary Avenue Sunnyvale, CA               94088
(Address of principal executive offices)             (Zip Code)

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

        Securities registered pursuant to Section 12(b) of the Act: NONE

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

                                  Common Stock
                                (Title of Class)

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

        Indicate by check mark if disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

     The  aggregate  market  value  of the  registrant's  Common  Stock  held by
non-affiliates of the registrant was approximately  $295,526,860 as of March 16,
1997,  based  upon the  closing  sale  price of the  common  stock on the Nasdaq
National Market for that date.

        There were 22,303,914  shares of the  registrant's  Common Stock issued
and outstanding as of March 16, 1997.

                       DOCUMENTS INCORPORATED BY REFERENCE


     Items 10, 11, 12 and 13 of Part III  incorporate  information  by reference
from the registrant's  Proxy Statement for the Annual Meeting of Shareholders to
be held  on May 15,  1997.  Except  with  respect  to  information  specifically
incorporated by reference into this Form 10-K, the Proxy Statement is not deemed
to be filed as a part here of.




<PAGE>
          
                                    

     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 or  incorporated  by  reference  into,  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 such material.

                                     PART I


Item 1.Business

General

     Trimble  Navigation  Limited,  a  California  corporation  (Trimble  or the
Company),  is a leader in the emerging markets for  satellite-based  navigation,
position and  communication  data products using the Global  Positioning  System
(GPS).  Trimble  designs,  manufactures  and markets  electronic  products which
determine precise geographic location.  The Company's principal products,  which
utilize substantial amounts of proprietary software and firmware, are integrated
systems  for  collecting,  analyzing  and  displaying  position  data  in  forms
optimized for specific end-user applications.

*    Trimble has defined and  currently  addresses a number of markets for its
GPS products:  surveying,  mapping, marine navigation,  mining and construction,
tracking  systems,  aviation,  military  systems,  OEM and  cellular  and mobile
computing  platforms.  The Company has  developed or is  developing  systems for
seismology,  geographic  information  systems,  delivery fleets,  buses,  ships,
airplanes,  automobiles and hand-held units. Trimble anticipates that additional
markets will emerge to make use of the highly accurate  position data obtainable
from GPS.

Background

*    Precise  determination of locations both on and above the earth's surface
is a fundamental  requirement for many human activities.  For example,  position
data isused for  navigation  on land,  sea, and air, and to conduct  surveys and
draw  maps.   Previous   technologies   have  limited   users  to   simultaneous
determination of only two dimensions--latitude and longitude--while altitude and
time required  separate  measurements with different  equipment.  GPS technology
provides users with all of these  measurements  using one  instrument.  GPS is a
system of 24  orbiting  Navstar  satellites  established  and funded by the U.S.
Government.  On  April  27,  1995,  GPS  was  declared  to  have  achieved  Full
Operational  Capability by the U.S. Air Force Space  Command.The  U.S.Government
intends  for GPS to  complement  or  replace  many  other  forms  of  electronic
navigation and position data systems.  GPS offers major  advantages in precision
and  accuracy  with  worldwide  coverage  in three  dimensions  (in  addition to
providing time and velocity measurement capabilities).

     GPS  positioning  is  based on a  triangulation  technique  that  precisely
measures  distances  from  three  or more  Navstar  satellites.  The  satellites
continuously  transmit  precisely timed radio signals using  extremely  accurate
atomic clocks. A GPS receiver  calculates  distances from the satellites in view
by determining  the travel time of the  satellites'  signals.  The receiver then
triangulates  its position using its known distance from various  satellites and
calculates  latitude,  longitude and  altitude.  Under normal  circumstances,  a
stand-alone  GPS  receiver  is able to  calculate  its  position at any point on
earth, in the earth's atmosphere, or in lower earth orbit, to within 100 meters,
24 hours a day.  When a GPS receiver is coupled with a known  precise  position,
accuracies of less than one centimeter are possible.  In addition,  GPS provides
highly accurate time measurement.

*    The  usefulness of GPS is dependent upon the  number and  locations of GPS
satellites which are above the horizon at any given time. The current deployment
of 24 satellites permits three-dimensional  worldwide coverage 24 hours per day.
However,  reception of GPS signals requires line-of-sight visibility between the
Navstar  satellites and the receiver,  which can be blocked by buildings,  hills
and dense foliage.  Each satellite must be above the horizon for the receiver to
collect a sufficient  signal,  and the receiver  must have a line of sight to at


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least three satellites to determine its location in two dimensions--latitude and
longitude--and  at least four  satellites  to  determine  its  location in three
dimensions--latitude,  longitude,  and altitude. The accuracy of GPS may also be
limited by  distortion  of GPS signals from  ionospheric  and other  atmospheric
conditions,  and  intentional or inadvertent  signal  interference  or Selective
Availability  (SA).  Selective  Availability,   the  largest  component  of  GPS
distortion,  is  controlled  by the  Department  of Defense  and is a  currently
activated,  intentional system-wide degradation of stand-alone GPS accuracy from
approximately 25 meters to approximately 100 meters.  Selective Availability may
be  implemented by the Department of Defense in order to deny hostile forces the
highly  accurate  position,  time and velocity  information  supplied by GPS. In
certain military applications,  classified devices are utilized to decode the SA
degradation and return accuracies to their original levels.

     By using a technique  called  "differential  GPS" involving two or more GPS
receivers,  accuracies  can currently be improved to  approximately  one to five
meters for navigation and one  centimeter for survey  applications,  even in the
presence of SA. This technique compensates for a number of potential measurement
distortions,  including  distortions caused by ionospheric and other atmospheric
conditions,  as well as distortions  intentionally introduced into the satellite
data itself,  such as SA.  Differential  GPS involves  placing one receiver at a
known location and continuously comparing its calculated location with its known
location to measure  distortions  in the signal  transmission  and errors in the
satellite  data.  At any one time such  distortions  and errors  are  reasonably
constant  over large  areas,  so that one or more remote GPS  receivers  can use
these  measurements  to correct  their own  position  calculations.  Measurement
corrections can be transmitted either in real-time over a suitable communication
link such as radio or telephone,  or integrated later with accumulated  data, as
is frequently the practice in survey applications.

     Each of  Trimble's  GPS  products is based on  proprietary  GPS  receivers.
Trimble's  GPS  receivers  are capable of tracking  all  satellites  in view and
automatically  selecting the optimum  combination of satellites.  Communications
and computational modules, such as databases, database management systems, radio
and other  communication  equipment  and various user  interfaces,  are added to
these receivers to create fully integrated application solutions.

     Navstar  satellites and their ground support systems are complex electronic
systems subject to electronic and mechanical failures and possible sabotage. The
satellites  have  design  lives of 7.5  years and are  subject  to damage by the
hostile  space  environment  in which  they  operate.  The  repair of damaged or
malfunctioning  satellites is impossible.  If a significant number of satellites
were to become  inoperable,  there could be  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,  or that  the  policies  of the  U.S.
Government 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.
Recently,  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.

Business Strategy

     The Company  sees GPS as an  information  utility.  In order to exploit the
wide range of  applications  made  possible  by this  information  utility,  the
Company has implemented the following strategies:

     Targeted markets. The Company targets specific markets for its GPS products
based  on  end-user   applications.   The  Company   believes   that  by  adding
application-specific  features and  functionality to its GPS technology,  it can
deliver value-added products into its targeted markets. To date, the Company has
targeted markets which it believes represent significant economic  opportunities


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due to the broad range of potential applications for accurate and cost-effective
position, velocity and time information.  The Company also continuously seeks to
identify new markets into which GPS products and systems can be introduced.  The
Company  believes  that its  continued  growth  will depend in large part on its
ability to identify and penetrate new markets for GPS applications.

     Differentiated  Product  Solutions.  The  Company  seeks to  establish  and
sustain  leadership  in its  targeted  markets  by  offering  products  that are
differentiated  through software,  firmware,  customized user interfaces and the
Company's  service  and  support.  The Company  emphasizes  application-specific
systems which solve specific sets of problems,  where  feasible,  in its various
markets.  The Company  believes that a  substantial  portion of the value of its
products  is derived  from the  firmware  which is  embedded  in the  product or
software provided along with the product for  post-processing  applications.  In
addition, the Company incorporates other technologies into some of its products,
such as  communications,  computational  capabilities  and  non-GPS  positioning
technologies in order to optimize product features for specific markets.

     Time-to-Market  Advantage. The modular design of Trimble's products enables
the Company to create and maintain a broad line of products without  necessarily
repeating  development  efforts or  requiring  extensive  redesigns  for product
upgrades. To facilitate fast product introduction while minimizing manufacturing
costs and  maximizing  quality,  the Company  has  acquired  advanced  automated
manufacturing  equipment  that allows  rapid  turnaround  of  prototypes  during
development  and rapid  changeovers  between  product  lines during  production.
Trimble  further  believes that its approach of providing many product  software
features enables the Company to respond quickly to the needs of rapidly evolving
markets through software upgrades.

*    Multichannel  Distribution.  The Company seeks direct  communication with
its customers in order to develop and modify its product designs as necessary to
maximize  utility and payback to the user.  Trimble has built a worldwide  sales
and service organization of Company employees, distributors and dealers for each
major  market it  addresses.  In  addition,  the Company  intends to continue to
develop new--and to strengthen  existing--alliances  and OEM relationships  with
established  foreign and domestic companies as part of its strategy to penetrate
certain  targeted  markets.  The Company has pursued such alliances with several
companies in various markets, including Philips Car Systems, Pioneer Electronics
Corporation,  Delco  Electronics  and  Xanavi  Informatics  Corporation  in  car
navigation, Honeywell Inc. in aviation and military, E-systems, Inc. in transit,
PRC Public Sector,  Inc. in public  safety,  Adobe Systems  Incorporated,  Intel
Corporation  in  the  emerging  consumer   applications  area,  American  Mobile
Satellite  Corporation in long-haul fleet management,  and Caterpillar,  Inc. in
mining and construction.

     Integration with Communication Technologies. GPS technology is increasingly
being integrated with wireless communication technologies, offering economic and
strategic  advantages in areas such as  navigation,  vehicle  fleet  management,
long-haul  trucking  and public  safety.  Accordingly,  the Company is currently
devoting  research  and  development  efforts to products  which  integrate  the
Company's proprietary GPS receivers with wireless communication technologies.

Markets

     Trimble  currently  addresses  multiple  markets for the application of GPS
technology,  which have been  divided  into  three  business  units:  Commercial
Systems,  Software and Component  Technologies  (including  OEM) and  Aerospace.
Although the Company believes that these markets have growth potential for sales
of GPS  products,  there can be no assurance  that such markets will continue to
develop,  particularly  given that GPS-based systems are still in an early stage
of adoption in some of these markets. The Company's future growth will depend on
the timely  development of the markets in which the Company currently  competes,
and on the Company's ability to continue to identify and exploit new markets for
its  products.  Each  business  unit  is  managed  by a vice  president  who has
responsibility for strategy, marketing,  manufacturing,  product development and
financial  performance.  The  business  units are  further  split into  vertical
markets which address specific product markets.


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Commercial Systems

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

     Surveying  involves the  establishment of precise points and boundaries for
legal and construction purposes,  while mapping involves more extensive but less
precise  location  and plotting of  geographical  and  man-made  features.  Both
surveying and mapping  consist  primarily of the  collection  and  processing of
position information.  Typically,  surveying accuracy is expected to be within a
centimeter.   Required   mapping   accuracies  are  typically  from  twenty-five
centimeters   to  three   meters.   The  Company   believes  that  its  products
substantially reduce the cost, time, and number of people required to obtain and
process  surveying  and  mapping  data  points  for a given  level of  accuracy,
compared to optical and laser products.

     Surveying. Applications which the Company addresses in the surveying market
include  control  surveying,   construction  and  engineering  surveying,  route
surveying  and geodetic  research.  GPS does not require  line-of-sight  between
land-based  reference  points  and is  not  affected  by  most  adverse  weather
conditions  (as  compared  to  traditional  methods  such as  optical  or  laser
measurements), providing advantages in many survey applications.

     The  Company's  GPS  surveying  products  dominate  the  control  surveying
instrumentation  market.  Control surveying is the precise  determination of the
location of local geodetic  reference  points from which further local surveying
can be based.  The GPS  technique has reduced the cost of  establishing  control
points,  compared  to  conventional  techniques,  and has become  the  preferred
technology for conducting control surveying.

     The Company's surveying products are also used in large-scale  construction
projects,  such as new housing  developments  or public works projects where the
position of a large number of points needs to be  cost-effectively  established.
The Company's products are particularly efficient for applications in areas with
ground-level  obstructions.  The Company also supplies route surveying  markets,
which  require a cost-and  time-effective  means of  precisely  locating a large
number of points and physical features along routes and  rights-of-way,  such as
roads,  pipelines,  and telephone and power lines.  The Company has introduced a
product with kinematic data collection features, which provides the capabilities
for surveying and mapping  applications  while the equipment is in motion.  This
kinematic  product is  targeted at the  engineering  and  topographic  surveying
markets,  which  represent  a major  portion of the  overall  surveying  market.
Through the use of the  kinematic  GPS  surveying  technique,  large  numbers of
points can be rapidly  measured  to  accuracies  approaching  those for  control
surveying.  The kinematic  product allows one surveyor,  on foot, to collect the
data to create a construction-grade topographic map.

     With conventional  post-processed GPS techniques, GPS satellite signal data
are collected at the point, but the point coordinates aren't actually determined
until  later,  back  in the  office  on a  personal  computer  with  specialized
software.   In  1993  the   Company   introduced   "real-time"   GPS   surveying
instrumentation.  With  real-time  GPS  surveying,  the  point  coordinates  are
generated  virtually  instantaneously  as the surveyor surveys or "occupies" the
point.   Real-time  GPS  surveying  offers  surveyors  very  large  productivity
advantages.   Compared  to   traditional   post-processed   GPS   surveying  and
conventional  optical-based  land surveying  techniques  (that can also generate
centimeter level coordinates as the point is surveyed),  real-time GPS surveying
allows  surveyors to enjoy the many field  logistics  advantages of GPS, such as
saving time by  eliminating  the data  processing  step in the  office.  The net
results are cost savings of as much as 50% or more, versus conventional  methods
for everyday surveying.

     In addition to serving the commercial  surveying  market,  GPS has become a
standard  technique for geodetic research.  Research  geodesists have found that
long  baseline  accuracies  using  GPS  are  significantly  greater  than  those
obtainable  with  optical  and  electronic  distance-measuring  equipment.  This
capability has led to programs to remeasure  previous geodetic control points to
sharply increase precision and eliminate errors.  High accuracy has also created
a significant  market for GPS in seismic  research where earth movements of less
than one centimeter are measured and monitored.

     In the surveying market,  the Company faces growing  competition from other
GPS  vendors,  such as Ashtech,  Inc.;  and NovAtel  Inc.;  and from  vendors of
traditional  surveying  products,  such as Leica AG; Sokkia Company,  Ltd.; Karl


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Zeiss;  Topcon  Instrument  Corp. (a subsidiary of Tokyo Optical Co., Ltd.); and
Geotronics A.B. (a subsidiary of  Spectra-Physics)  who have all entered the GPS
surveying market and who are introducing GPS products of their own.

     Mapping. For mapping applications,  large amounts of position and attribute
data (such as color,  size and  condition of object)  must be obtained.  Mapping
applications  include  large-scale  mapping of geographic and man-made features,
data  collection for Geographic  Information  Systems (GIS)  databases,  natural
resource management and ground contour mapping.

     Currently,   large-scale   accurate  mapping  is  usually  accomplished  by
photogrammetric  analysis  of  aerial  photographs,   a  complex  and  expensive
technique.  The Company supplies the mapping market with its products,  enabling
the user to capture  position data while in aircraft,  or traversing  terrain on
foot or in a vehicle. The Company is also developing additional products for the
mapping market.  The Company  believes that these products can lower the cost of
map production.

     GIS databases are used by federal,  state, county, and city governments and
by  utility  companies  for  a  variety  of  applications   requiring   accurate
information on the location of natural  resources and municipal  infrastructure,
such as utilities and transport  networks.  Currently,  building such a database
requires  time-consuming  compilation  of data from  numerous  existing maps and
digitized photographs and costly physical surveys. The Company's products,  used
in  connection  with  commercially  available  databases,  has the  potential to
substantially  reduce the cost of  constructing  GIS  databases  and to increase
their accuracy.

     In the mapping market,  the Company faces  competition from Ashtech,  Inc.;
NovAtel Inc.; CMT, Inc.; Garmin Corporation;  Magellan Corporation (a subsidiary
of Orbital Sciences  Corporation);  Motorola,  Inc.;  Sokkia Company,  Ltd.; and
others.  Competition  in the mapping  market has increased as  competitors  have
introduced new products.

     Tracking  Systems.  The  Company  has become a leader in vehicle  tracking,
combining  GPS  technology  with  communications,  software  and  firmware,  and
integration  capabilities.  In the public  sector,  the  Company's  products are
installed  in a variety of fleets,  such as transit  buses,  police  cars,  fire
trucks,  and  ambulances.  Other  products are used for  long-haul  trucking and
marine markets. More recently,  the Company's products have been introduced into
smaller commercial fleets for security applications.

     In some instances the Company  markets its products  directly to end-users,
but the large majority of its products are sold through resellers.  Direct sales
to  end-users  are  focused on  opportunities  in which the  Company's  standard
product  offering  closely  matches the customer's  requirements.  Public sector
sales often require  significant  customization,  and the Company uses strategic
partners,  such as E-Systems and PRC Public Sector,  Inc., to interface directly
with the end-user.  Other tracking and  communication  products are sold through
OEM integrators,  and value-added resellers,  some of whom address international
markets.

     The public sector customers are highly dependent on government  funding for
fleet  modernization.  Capital  equipment  funding for public transit  operators
comes primarily from congressional  appropriations  under the Intermodal Surface
Transportation Efficiency Act. Public safety organizations are dependent largely
on local government  funding.  Failure of the funding authorities to appropriate
funds for these purposes could have  substantial  impact on the Company's future
revenue.

     Since the availability of GPS is still new, its use and subsequent benefits
are not clearly  understood in the sense of a broad vehicle tracking market. The
Company must therefore devote  considerable  resources to communicate  these GPS
benefits  and  educate  the market.  This  requirement  can result in a delay in
market development.

     Since the Company is involved in these  market  segments at the  component,
subsystem,  and system  level,  other  companies,  such as Motorola and QUALCOMM
Incorporated,  have at various times been both  customers and  competitors.  The
Company  believes that its GPS technology is superior to that of its competitors
in these market segments.  The Company intends to leverage its GPS technology to
continue to supply these market segments at the component,  subsystem and system
levels.  However,  there is significant  competition,  and since the markets and
products are in the early phases of their maturity,  with  competition  that has
far greater  resources and is well  established  in these  markets,  there is no
assurance that the Company will be successful in its effort.


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     In the  Tracking  market,  the  Company  faces  competition  from  Rockwell
International  Corp.;  AutoTrac;   Thrane  &  Thrane;   Motorola,   Inc.;  Coded
Communication; QUALCOMM Incorporated; Orbital Sciences Corporation; and others.

     Marine GPS.  Trimble is an active leader in the marine  navigation,  marine
survey and marine  construction  markets.  The Company has pioneered many marine
markets.

     Marine-Navigation.  Trimble's  GPS  receivers  are  used  on  recreational,
commercial,  research,  and  military  vessels  to provide  real-time  latitude,
longitude,  time,  course and speed  information.  This data may be displayed on
digital  readouts or graphic  displays and may be integrated with other on-board
electronic  mapping  databases to indicate vessel position and performance in an
easily understood manner. The Company's  navigation products conform to the NMEA
0183 standard,  which makes them capable of providing navigation  information to
other on-board equipment such as radars and autopilots.

     Traditionally,  marine navigation has relied on celestial navigation,  dead
reckoning, and electronic systems other than GPS. Currently, the two most widely
used electronic  systems for marine  navigation are LORAN C and SATNAV.  LORAN C
depends  on  proximity  to  established  chains of LORAN C  transmitters  and is
susceptible  to  interference  from  electrical  storms  and a wide  variety  of
man-made  interference  sources.  SATNAV is a non-continuous  navigation system,
providing  periodic  position updates and relying on dead reckoning between such
updates. By contrast,  GPS effectively  provides continuous  worldwide coverage,
much greater accuracy,  and freedom from electrical  interference.  As a result,
GPS may provide greater safety, fuel efficiency,  and equipment utilization when
compared to other less accurate or localized marine navigation techniques.  When
combined with radio or other communications links, GPS systems provide the basis
for  worldwide  monitoring  and  tracking  systems  by  governmental  and harbor
authorities, and shipping companies.

     The Company faces  competition in the GPS  recreational  marine  navigation
market from  manufacturers  such as Furuno U.S.A.,  Inc. (a subsidiary of Furuno
Electric Co., Ltd.), Garmin Corporation,  Magellan  Corporation (a subsidiary of
Orbital  Sciences  Corporation),  and Raytheon  Company;  in the GPS  commercial
fishing market from Furuno, and Raytheon Company;  and in the GPS commercial and
governmental  navigation  markets from  Magnavox  Advanced  Products and Systems
Company (a subsidiary of North American Philips Corp.).

     Marine-Survey.  Marine  survey,  which is concerned  with precise,  dynamic
positioning includes such activities as oil exploration,  hydrographic  surveys,
environmental  surveys,  marine construction,  cable and pipe laying,  dredging,
barge  positioning,  ship trialing and much more. The Company provides  complete
software  solutions  which utilize its GPS  sensors--often  in conjunction  with
other  equipment--for  many  of  these  applications.  Trimble's  marine  survey
activities also include the design and marketing of MSK Radiobeacon Differential
GPS (DGPS)  reference  stations,  and equipment to monitor the integrity of DGPS
broadcasts.

     In  marine  survey   applications,   the  Company  faces  competition  from
Communication Systems International Inc, Dassault-Sercel NP, Leica, Ashtech Inc.
and Coastal Oceanographics, Inc.

Software and Component Technologies

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

     The Company's Component  Technologies group has built a leadership position
in the  worldwide  market  for  embedded  GPS  products.  With two  million  R&D
person-hours invested in GPS technology, Component Technologies products provide
full-function, high-performance embedded engines for system integrators. The GPS
products are used in a diverse range of applications such as vehicle navigation,
vehicle   and   high-value   cargo   tracking,    precision   agriculture,   and
synchronization of communications networks.

*    The vehicle navigation market is expected to grow to 15 million units per
year by 2000.  Trimble  supplies  GPS engines to some of the leading  automotive
electronics  suppliers,  including Delco  Electronics  Corporation,  Philips Car


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Systems,   Pioneer   Electronics,   Magneti  Marelli,   and  Xanavi  Informatics
Corporation.  GPS  functionality  is integrated  with electronic maps to provide
sophisticated navigation systems.

     Trimble's  Component  Technologies  has a reputation  for  high-performance
products,  high-level technical support and custom product engineering.  Trimble
continues to maintain  leadership  in the embedded GPS board market for tracking
applications,   securing  a  strong  position  through   partnerships  with  key
customers.  In the  tracking  market,  new  applications  such as  safety,  loss
prevention,  and emergency assistance systems,  continue to emerge. The end-user
is typically the owner or manager of a fleet of vehicles, and needs to track his
vehicles.  In some cases,  the end-user  may be an  individual  subscriber  to a
service provider which can offer emergency assistance or can help locate lost or
stolen   property.   Trimble  GPS  provides  the  key   technology   into  these
applications.

     With the expansion of data and wireless communication  networks, the demand
for GPS  timing  products  has  increased  significantly.  Trimble's  GPS  smart
antennas are popular with system integrators who require precise synchronization
of wireless network infrastructures. By accessing the cesium clocks on board the
GPS  satellites,  a GPS receiver can provide atomic clock accuracy at a fraction
of the cost of competing  technologies.  Trimble's Component  Technologies is at
the forefront of this rapidly growing market,  providing  superior,  technically
advanced timing  products.  By offering the first smart antenna  directly to the
timing  market,  Trimble  gained  a  reputation  for  leading-edge   technology,
excellent support, high performance and superior quality products.

     In the  embedded  GPS board  market,  the Company  faces  competition  from
Motorola, Inc.; Rockwell International Corporation; Japan Radio Corporation; and
others.

Aerospace

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

     Aviation.  During 1994, the Federal Aviation Administration (FAA) adopted a
policy  establishing  GPS as the future  standard  for aviation  navigation  and
initiated the Wide Area Augmented  System (WAAS) Program to allow the use of GPS
for primary  navigation  and  precision  approaches  by 1998.  This followed the
December 1992 FAA publication of  certification  procedures that allow GPS to be
used as a supplemental  source of navigation  information for aircraft operating
under Instrument  Flight Rules (IFR). In 1995, the FAA published  procedures for
approving GPS as a primary means of navigation for oceanic flights.

     The Company was the first to certify its equipment under these regulations.
The Company also has certified  equipment that is used in conjunction with other
FAA certified navigation systems incorporating Omega and LORAN C. Currently, the
Company believes it has received FAA  Certification  for the Technical  Standard
Order C-129 covering more products than any competitor.

     The Company  believes GPS has  significant  advantages in terms of accuracy
and coverage over current primary and supplemental systems.  However, because of
foreign   government   concern   over  U.S.   government   control  of  the  GPS
constellation, there can be no assurance that GPS will be globally accepted as a
cost-effective,  reliable  solution in the aviation  navigation  market.  During
1994, the U.S.  Government issued statements to the International Civil Aviation
Organization  (ICAO)  guaranteeing  the GPS signal for a minimum of 10 years. In
addition,  GPS technology  faces  competition  from more mature and  established
technologies  that  are  currently  in  widespread  use and  have in  place  the
infrastructure required to administer these systems.

*    Currently,  the primary FAA  required  navigation  system is VOR/DME,  a
ground-based  transmitter network.  Over the long term, the Company believes GPS
has the  potential  to replace  VOR/DME  as the  primary  FAA and  ICAO-required
navigation system. Range for VOR/DME is only 50 to 150 miles, line of sight from
a  transmitter,  leaving large areas of the world  uncovered;  even in the U.S.,
significant parts of the airspace are not covered.  Although VOR/DME accuracy is
adequate for  two-dimensional  navigation,  GPS provides  greater accuracy while
also providing time information.

     Aviation  navigation  also utilizes  supplemental  technologies  to VOR/DME
consisting of LORAN C, Omega,  Inertial  Navigation System (INS) and GPS. Of the
supplemental technologies, LORAN C is less accurate than GPS and currently lacks


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<PAGE>

coverage  when the  aircraft  is more than  1,000  miles from a LORAN C chain of
stations.  Omega  provides  worldwide  coverage,  but its  potential  for  large
position  errors   necessitates   wide  air  lanes  and  can  require  in-course
corrections.  Both LORAN C and Omega are scheduled to be  decommissioned  within
the next ten years.  INS units are useable  anywhere  in the world,  but cost as
much as $150,000  per unit and often  require  multiple  units.  GPS can provide
greater accuracy than LORAN C and Omega, and will give information  which is not
available from any other  radio-frequency-based  aviation navigation system. GPS
provides worldwide  coverage,  which is not available from LORAN C, and is lower
in cost than either Omega or INS. In addition,  the GPS infrastructure has lower
maintenance  costs  than  existing  navigation  aids  and can be used in  remote
regions of the globe  without  additional  investment.  The net result is an air
traffic control system with lower operating costs and greater capacity.

     The  Company has  recognized  the  potential  of GPS for  aviation  and, in
addition to airborne  navigation and flight  management  units, is also pursuing
GPS technology in flight trajectory truth systems, tracking systems, sensors and
other  aviation  applications.  During 1995 the Company  began an alliance  with
Honeywell  Corporation,  a major  supplier  of  aviation  equipment,  to produce
GPS-based equipment to the air carrier and business aviation markets.

     The Company is modifying its previous  strategy of concentrating  solely on
higher-end  avionics  products.  In 1996,  Trimble  acquired the assets of Terra
Corporation,  a New  Mexico  aviation  corporation.  "Terra  by  Trimble"  is an
advanced avionics equipment product line that gives Trimble the ability to serve
a range of avionics  customers from sport aviation  through the general aviation
market.

     Competition in the airborne market comes from manufacturers of GPS products
and traditional navigation and flight management system manufacturers. Competing
manufacturers of GPS products include Rockwell Collins,  AlliedSignal  Aerospace
(through  its  General  Aviation  Avionics   Division),   Universal   Navigation
Corporation,  Canadian  Marconi  Company (a subsidiary  of the General  Electric
Company   plc),   Interstate   Electronic   Systems  (a   subsidiary  of  Figgie
International), Garmin Corporation, Northstar Avionics (a subsidiary of Canadian
Marconi), IIMorrow, Inc. (a division of United Parcel Service of America, Inc.),
Magellan  Corporation (a subsidiary of Orbital Sciences  Corporation) and Litton
Industries.  Traditional  navigation and flight management system  manufacturers
include  Honeywell,  AlliedSignal  Aerospace (through its Air Transport Avionics
Division) and Smiths  Industries.  Competition  in the flight  trajectory  truth
system is from Ashtech; and in the fligh tracking system, from ARNAV.

     Military  Systems.  The  Company  has been  developing  GPS  receivers  for
aerospace and military  applications  since 1986. The approach to the market has
been as a  commercial  manufacturer  of GPS  electronics  that has  tailored its
designs for military use. The Aerospace  business unit designs and  manufactures
GPS equipment  capable of processing  the civilian C/A code, as well as the P(Y)
code reserved for users  authorized by the United States  Department of Defense.
These Precise  Positioning Service (PPS) receivers provide authorized users with
GPS  equipment  that  removes the effects of  Selective  Availability  (allowing
higher accuracy),  as well as providing  antispoofing  protection and additional
immunity from jamming  signals.  The Company sells equipment to the United Sates
Department  of  Defense,  Aerospace  prime  contractors,  and  foreign  military
organizations.

     Applications  of GPS in  aerospace  and  military  markets  include  ground
vehicles, handheld units for dismounted personnel,  aircraft, missiles, unmanned
air vehicles,  and navy vessels.  Military GPS  equipment  efficiently  provides
accurate  position,  velocity,  and time  information  to and  from  battlefield
management  systems that  coordinate and control the deployment of equipment and
personnel.

     In  the  military  market,  Trimble  faces  competition  from a  number  of
companies  most of which have  substantially  greater  financial  and  marketing
resources,  and many of which have substantial  experience and resources devoted
to sales to military organizations. Interstate Electronics, Magnavox (subsidiary
of Hughes)  Ratheon,  and Rockwell  International  Corp., as well as a number of
European  companies,   manufacture  products  which  are  competitive  with  the
Company's military products.

*    Military sales are subject to various uncertainties, including the timing
and  availability  of funding for U.S. and foreign  military  contracts  and the
competitive nature of government contracting generally. The Company expects that


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future sales of its current GPS products to U.S.  military  organizations may be
significantly   limited,   based  on  future   requirements  of  new  government
specifications.  There is no  assurance  that the Company will be able to modify
existing  product to develop new product to meet these  military  specifications
or,  if it is able to do so,  that  the  Company  will be  awarded  future  U.S.
military contracts.

     The Company continues to sell to foreign military  organizations.  However,
sales  to  such   organizations  are  subject  to  significant   risks,   timing
uncertainties  and budget  constraints.  In addition,  the U.S.  government  may
impose  additional  restrictions on the sale of GPS products to foreign military
organizations,  and foreign  governments may require  military  organizations to
purchase GPS products only from indigenous suppliers.

Products

     The following is a list of the Company's principal  products,  organized by
its strategic markets:

Surveying and Mapping Products

     4000 Series.  The 4000 series  products are GPS  instruments  which, in the
survey mode, provide position information that is accurate down to a centimeter.
The Company's 4000 SSE product,  introduced in 1992, utilizes dual frequency, as
well as P(Y) code (a military code), and provides accurate position information.
In the fall of 1993, the Company  introduced the Site Surveyor System, the first
real-time  kinematic  system for surveying.  Based on the 4000 series  receiver,
this system  provides  centimeter  accuracy  positions in  real-time.  With this
real-time  accuracy,  GPS  applications  have been  extended  into  construction
stake-out. In 1996, the Company introduced the 4400 Real Time Kinematic System
and the 4600 Single Frequecny product for the survey and construction markets.

     GPS Total Station  Surveying  System.  In 1994 Trimble  introduced  the GPS
Total Station surveying system.  This complete  surveying system consists of two
or more survey grade GPS receivers (4000SSE's),  GPS antennas, a handheld Survey
Controller  for managing  real-time GPS survey and  collecting  coordinates as a
land survey is conducted,  plus radio modems for  transmitting  data between the
GPS receivers. The system incorporates advanced features that make real-time GPS
surveying  more  practical  as an everyday  surveying  technique.  The GPS Total
Station is the next generation up from the Site Surveyor System,  which required
a post processing computer.

     TRIMVEC,  GPSurvey and TRIMMAP.  TRIMVEC and GPSurvey are software programs
for post-processing survey data obtained with the Company's GPS survey products.
TRIMVEC Plus is an enhanced  version of TRIMVEC that provides  software  support
for several phases of a survey operation, from project planning and baseline and
coordinating  computations,  to  database  management  and  network  adjustment.
GPSurvey is a "Microsoft Windows" based enhancement of the product line. TRIMMAP
is an optional mapping software package which can generate detailed contour maps
automatically.  These  software  programs are  generally  sold as part of survey
product systems.

     GPS  Pathfinder.  The GPS  Pathfinder  series is a portable  position  data
collection system for the Mapping/GIS  market. The collected  information can be
entered  into  a  personal  computer  or  workstation  to  generate   geographic
information such as rough survey data or topographical maps. Output from the GPS
Pathfinder  can be  downloaded  into most GIS  databases  or can be processed by
Trimble's  PC-compatible  software  that  performs a wide variety of display and
plotting routines.  The Geo Explorer is a lower cost product for the GIS market,
where it is used for natural resource management.

     Hydrographic  Systems.  The  Company's  hydrographic  systems  combine  the
Company's differential location products, a communications  capability,  and the
Company's  proprietary HYDRO software into a product used in dredging operations
and other  offshore  surveying.  With this product,  a dredging  vessel can more
accurately navigate the dredging area and measure material removed.

Tracking Systems Products

     The Company offers a line of products designed to meet many of the needs of
customers desiring to track assets using wireless communications. These products
include GPS receivers, and GPS receivers integrated with other technologies such
as dead  reckoning,  industry  specific  applications  processors,  mobile radio
modems,  cellular  telephones,  mobile data  terminals,  communications  control
software, and automatic vehicle location (AVL) display software.


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<PAGE>

     GPS Receivers.  The Company's tracking product line includes the Placer GPS
400, a stand-alone  receiver,  and the Placer 450 family, a receiver  integrated
with a gyroscope and an odometer interface.

     Integrated  GPS and Modem  Products.  The Company offers the Starfinder GPS
Intelligent  Vehicle Logic unit targeted at the mass transit  market and the PSC
200 targeted at the police, fire and ambulance markets.

     Integrated  GPS and Cellular Phone  Products.  The Company offers a line of
GPS/cellular products known as GPS Cellular Messenger,  targeted at small fleets
and transportation of high-value cargo.

     Communications  Control  Software.  The Company  offers a software  program
designed  to  manage  communications  between  its  Intelligent   Communications
Controller mobile units and a customer's command center.

     AVL  Display  Software.  The  Company  offers  three  levels of AVL display
software.  AVL Manager  displays  the  locations  of  vehicles in tabular  form.
FleetVision  displays vehicle locations for small fleets  graphically on scanned
maps.  StarView  displays  large  fleets  on  vector  maps and  offers  advanced
AVL-oriented functionality.

     Galaxy  Inmarsat-C/GPS.  Galaxy is the first  system to combine  Inmarsat-C
with GPS to provide  rapid  digital  global  communication  with precise  global
positioning.  Inmarsat-C  provides  worldwide,  two-way  store-and-forward  text
communication  via  Packet  Switched  Data  Network  (PSDN) or  Public  Switched
Telephone Network, and fax delivery of inbound messages.  Galaxy is designed for
use by truck,  rail and other  land  applications,  as well as  merchant  ships,
commercial  fishing  boats,  yachts and other vessels  requiring  cost-effective
two-way  communication  links plus precise  position  information for emergency,
safety, navigation and tracking needs.

Marine Products

     NT Series.  This is a series of three marine GPS navigation  products which
provide position and graphical  steering  information on a  high-resolution  LCD
display. The models in the NT Series provide a range of price and performance to
satisfy the needs of a wide range of  customers.  The  high-end  version of this
product  includes  a  built-in  differential  receiver.  The  NT  200D  receives
international  standard differential  corrections broadcast on the marine beacon
band and greatly  improves the  accuracy of the position and velocity  solution.
The NT  Series  GPS is sold  to  recreational  boaters,  coast  guards,  navies,
workboat operators, shipping lines, and operators of commercial fishing fleets.

     NavGraphicXL   GPS.  The  NavGraphicXL  GPS  integrates  a  high-resolution
graphics display,  a compact disk system  containing  navigational  charts,  and
Trimble's  basic  GPS  receiver  into  a  single  navigation   instrument.   The
NavGraphicXL GPS displays  position  information,  including  present  location,
speed,   heading,  and  drift,  on  standard  National  Oceanic  and  Atmosphere
Administration  and other available  government  navigation  charts.  A graphics
processor  is  included to permit  zooming  (enlarging  the current  display and
providing a higher resolution chart) and panning (for following movement off the
current display). The NavGraphicXL GPS is sold to high-end recreational boaters,
marine  researchers,  commercial  shipping  companies,  operators of  commercial
fishing fleets, and various Government organizations and coast guards worldwide.

     Acutis DGPS.  Acutis DGPS is a marine  navigation  product  consisting of a
differentially-capable GPS receiver and antenna in a marine-quality housing. The
system is sold as an add-on product for the recreational and fishing markets.

Marine Survey Products

     7400RSi/DSi.  The  marine  versions  of  the  7400  series  products  bring
centimeter level accuracy to the marine environment for the first time. The 7400
series  products  utilize  Trimble's  Real-Time  Kinematic/On  The Fly (RTK/OTF)
technology  to  achieve  high  accuracy  even in the  dynamic  and fluid  marine
environment  by removing  the need for static  calibration  stations.  Excellent
dynamic performance is achieved by the 7400 RSi/DSi GPS sensors for applications
such as the control and docking of high-speed ferries,  the positioning of large
marine  structures such as bridge spans,  and much more. See Target:  Structures
below for more information.


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<PAGE>

     4000RSi/DSi.  The 4000 series products provide  sub-meter  accuracy and are
well suited to marine survey  applications  which do not require the performance
of the 7400 series products described above. The 4000 series GPS sensors address
a broad segment of the marine survey market and provide  customers with a choice
of price and performance in GPS sensors. The 4000 series products also integrate
well  with  total  solutions,  such as Hydro  and  Target:  Structures  products
discussed below.

     The 4000 series  products also form the basis of Trimble's  DGPS  Reference
Station and Integrity  Monitoring  offerings,  which comply with internationally
accepted  Radio  Technical  Committee  Marine (RTCM)  standards for broadcast on
radio beacon  frequencies.  Trimble  equipment  is in use in over 20  countries,
broadcasting DGPS corrections and monitoring their integrity.

     DSM. These products are GPS sensors and reference  stations targeted mainly
to value added resellers. They provide a source of accurate GPS data in the form
of a "black box." The DSM allows for comprehensive custom solutions developed by
third parties.

     Hydro.  This  software  program  provides  total  solutions for many marine
survey applications.  It incorporates the best of Trimble designed and built GPS
sensors with additional equipment,  such as depth sounders, to provide customers
with  highly  customizable  solutions  to a wide  range  of  marine  survey  and
construction challenges.

     Target:  Structures.  This Windows and WindowsNT based program provides for
precise positioning of large mobile offshore structures or platforms.  Utilizing
real-time  GPS  receivers  such as the  7400Rsi  and  7400Dsi,  this  innovative
software enables barge and crane operators to efficiently and safely guide large
structures to any target location.

Software & Component Technologies Products

     Component   Technologies  Board  Products.  The  newest  board  product  is
Lassen-SK8,  based  on  Trimble's  new  Sierra  GPS  technology  and used in the
in-vehicle  navigation  market.  Two-thirds  the size of a business  card,  this
miniature  8-channel GPS board provides high  performance,  fast acquisition and
reacquisition  time, low power consumption,  and two-meter  accuracy.  

     SVeeSix   is  a  family  of  GPS  boards  and   assemblies   designed   for
high-performance  embedded GPS  applications  for tracking.  The family includes
SVeeSix,  SVeeSix-CM3,  Trimble's  third  generation  core  modules for embedded
applications, and SVeeSix-Timing module, designed specifically for incorporation
in precise time/frequency standards, which are also known as station clocks.

     Component  Technologies Smart Antenna Products.  Trimble revolutionized GPS
integration  with the introduction of the first GPS smart  antenna--the  Acutis,
mainly used in the Marine market.  Smart antennas  combine a GPS receiver and an
antenna  in one  package.  This  provides  OEMs and  system  integrators  with a
"plug-in" GPS module,  allowing them to quickly and easily add GPS capability to
their product lines.

     Since the introduction of the Acutis,  Trimble has developed and introduced
the Acutime and AcutimeII  smart  antennas to address the timing  market.  These
smart antennas are easily  integrated  standalone GPS time sources  offering one
micro-second-level  accuracy  at a fraction  of the cost of other  time  sources
offering similar performance.

     Trimble's latest timing product is the Palisade smart antenna.  Palisade is
designed to provide accurate  synchronization  and frequency control required by
wireless  voice and data  networks.  Based on Trimble's  Sierra GPS  technology,
Palisade has an 8-channel  architecture  that the Company believes offers timing
performance superior to that of competing products.

     OEM Starter Kits.  Trimble  offers  Starter Kits for developers who want to
evaluate  and  integrate  GPS  receivers  and  antennas.  The kits  contain  all
components required to evaluate the receiver's features and to begin integration
into the  user's  application.  Generally,  a  starter  kit will  include  a GPS
receiver, a GPS antenna, documentation and required cables and software.

Consumer Products

     Scout  and  Scoutmaster.  The  Scout  family  consists  of  the  Scout  and
ScoutMaster,  which are handheld GPS  receivers  designed  exclusively  for land
users to provide an affordable GPS solution in a broad range of professional and


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<PAGE>

recreational  applications.  Scout  and  ScoutMaster  include  several  patented
features.  The Over and Up feature  enables users to pinpoint  their location on
any topographical map and to calculate  specific map locations without having to
interpolate  latitude/longitude  coordinates. Scout and ScoutMaster can store up
to 250 locations and display navigation information in familiar terms, real-time
instructions for point-to-point  travel, in addition to current speed, direction
and estimated time of arrival.  Scout and  ScoutMaster can also tell users where
the sun and moon will be at any time of any day, relative to any point on Earth,
and when they will rise and set.  Scout and  ScoutMaster  use four AA batteries,
providing  five to eight hours of continuous  use.  ScoutMaster  is a real-time,
differential-capable receiver which offers the ability to upload, download, log,
and map field data, and features a unique  combination of data gathering and map
capabilities.

Aviation Products

     Trimble  1000DC.  This  product is a Visual  Flight  Rules  (VFR)  aviation
navigation  system that provides GPS position,  velocity and course data for the
general aviation market and  incorporates an embedded or replaceable  navigation
database. The system is capable of limited interface with other aircraft systems
to receive or send data.

     Trimble  2000 A and 2000  Approach.  This  product  family  is an  aviation
navigation system available in VFR or IFR FAA Certified Technical Standard Order
C-129 A1, which allows  nonprecision  IFR approaches.  Both versions provide GPS
position,  velocity  and  course  data for the  general  aviation  and lower end
commercial  markets,  and  incorporate a replaceable  navigation  database.  The
system is capable of limited interface with other aircraft systems to receive or
send data.

     Trimble 2101 and 2101 I/O. This product family is an IFR certified C-129 A1
aviation  navigation system; it provides GPS position,  velocity and course data
for  the  general  aviation,  helicopter  and  middle  commercial  markets,  and
incorporates a replaceable  navigation database.  The Trimble 2101 is capable of
limited  interface with other aircraft  systems to receive or send data or, with
expanded  interface  capability,  to  drive  flight  instruments.  The  2101 I/O
provides  extensive  interfacing  to other  aircraft  systems  to  drive  flight
instruments and other aircraft systems in integrated  digital and analog cockpit
settings. A version utilizing P(Y) code is available to U.S. Government approved
customers.

     Trimble 8100.  This product  family is an IFR  certified  C-129 A1 aviation
navigation  system and  provides  GPS  position,  velocity  and course data plus
flight management  information for the commercial and air transport markets.  It
incorporates an electronically  replaceable  navigation database.  The system is
capable of extensive  interface with other compatible  aircraft systems to drive
flight and other  instruments.  The Trimble 8100 is approved for Primary Oceanic
Navigation and nonprecision IFR Approaches.

     Cargo Utility GPS Receiver  (CUGR).  This product is a Druz-mount  P(Y) GPS
navigational system for world wide military aviation operations. It will provide
U.S. military helicopter pilots Precise Positioning Service (PPS) GPS navigation
and capabilities  similar to Trimble's FAA certified 2101 I/O Approach and meets
the  performance  standards  for  Instrument  Flight  Rules  (IFR) for  enroute,
terminal and nonprecision approach phases of flight.

     Honeywell/Trimble  HT9100.  This product enables air transport customers to
upgrade existing analog flight instruments to today's  state-of-the-art  digital
systems.  It allows  the  customer  to  operate  in any  existing  or future air
navigation environment safely and efficiently.

     Terra by Trimble.  This product  brand is a sport and general  avionics GPS
product  line  featuring  a  performance-proven  line of audio  panels,  radios,
altimeters, and navigational devices.

     Other  aviation  products.  These include the Flightmate  handheld  product
family.  Trimble also offers  optional  software  packages for flight  planning,
search and rescue, and custom applications.

Military Systems Products

     TRIMPACK.  The  TRIMPACK is a  four-pound,  portable,  ruggedized  product,
approximately  the size of a pair of  binoculars  (120 cubic  inches).  Position
information  is displayed on a  four-line,  20-character-per-line,  back-lit LCD
screen.  Troops  deployed  in  Operation  Desert  Storm used  TRIMPACK  units to
determine their location in the featureless desert.


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     CENTURION. The CENTURION is a precision positioning version of the Trimpack
developed for vehicle  applications.  The sale and  distribution  of this set is
restricted to the U.S. Forces and selected allies.

     MUGR.  MUGR  (Military  Underwater  GPS  Receiver)  is a  handheld  product
developed under contract to the U.S. Navy. It is marketed primarily for Navy and
Marine special forces activities.  The receiver is reduced in size and sealed so
that it can be carried by shallow water divers.

     TANS Series. The Trimble Advanced  Navigation System (TANS) series includes
a ruggedized  sensor  consisting  of the basic GPS receiver,  an antenna,  and a
digital  interface to transmit  GPS  information  to various  other  devices;  a
further ruggedized version with enhanced tolerance for vibration;  and a version
which is  upgradable  to PPS.  The TANS  series  has been  sold to the  military
primarily  for  vehicles  piloted  from a remote  station,  and was  designed to
replace Omega systems currently used in such vehicles. Its primary purpose is to
add GPS to other systems.

     TASMAN.  A PPS  version  of  the  TANS  III,  TASMAN  is  used  where  high
anti-jamming and spoof  requirements  exist. It is sold primarily to U.S. forces
and selected allies.

Sales and Marketing

     The Company recognizes that selling,  marketing,  and product  distribution
are critical to its future success.  In 1996, the Company  expanded by adding an
office in Mexico.  Also, in 1996 the Company closed  offices in Beijing,  Egypt,
and Poland as a result of the restructuring actions taken in September 1996. The
Company  currently has eight regional sales offices in the United States and six
in Europe,  plus  offices in  Australia,  Canada,  New Zealand,  Japan,  Russia,
Singapore,  Brazil and Mexico. The Company has developed its sales and marketing
capabilities  to anticipate  and respond to customer  needs as they arise in its
multiple markets.  Each market requires  specific  attention to the needs of its
sales and distribution  channels,  which are rapidly changing.  The Company must
continue to manage its future growth  effectively,  otherwise,  customer support
and operating results may be adversely affected.

     Domestic.  The Company  sells its products in the United  States  primarily
through dealers,  distributors and authorized representatives,  supplemented and
supported by the  Company's  direct  sales  force.  The Company has also pursued
alliances and OEM relationships with established  foreign and domestic companies
to assist it in penetrating certain markets.

     International.  Trimble markets to end-users  through a network of over 150
dealers and  distributors in more than 85 countries.  Distributors  carry one or
more product lines and are generally limited to selling either in one country or
in a portion of a  country.  Trimble  occasionally  grants  exclusive  rights to
market certain products within specified countries.

     Sales  to   unaffiliated   customers   in   foreign   locations   comprised
approximately 47%, 53%, and 51% of Trimble's total revenue in fiscal 1996, 1995,
and 1994, respectively. Sales to unaffiliated customers from shipments to Europe
represented  21%,  23%,  and 22% of net  revenue in such  periods,  and sales to
unaffiliated  customers from shipments to the Far East represented 19%, 23%, and
22% of total revenue in such periods.  See Note 2 to the Consolidated  Financial
Statements.

     Support.  The  Company's  general  terms  and  conditions  for  sale of its
products include a one-year warranty.  Aviation  navigation  products,  however,
generally  are sold with  three-year  warranty  periods,  except  for the HT9100
product,  which has a  five-year  warranty  period.  The  Company  supports  its
products on a board  replacement  level from  locations  in the United  Kingdom,
Singapore,   Japan,  and  Sunnyvale,   California.  The  Company's  dealers  and
distributors also provide  factory-trained  third-party  maintenance,  including
warranty  and  nonwarranty   repairs.   The  Company   reimburses   dealers  and
distributors for all authorized warranty repairs they perform.  The Company does
not derive a significant portion of its revenues from support activities.

Competition

     In the markets  currently  being  addressed by the Company,  competition is
intense.  Within  each  of its  markets,  the  Company  has  encountered  direct
competition   from  both  foreign  and  domestic  GPS  suppliers,   and  expects
competition  to  continue  to  intensify.  Specific  competitors  in each of the


                                       13

<PAGE>

markets the Company currently  addresses are mentioned in the section "Markets."
Due to competitive  pressure,  prices of certain of the Company's  products have
declined  substantially since their introduction,  and increased  competition is
likely to result in further  price  reduction  and loss of market  share,  which
could adversely affect the Company's net revenue.

     A  number  of  these   markets  are  also  served   primarily   by  non-GPS
technologies,  many of which are currently more accepted and less expensive than
GPS-based  systems.  The success of GPS-based  systems  against these  competing
technologies  depends  in part on  whether  GPS  systems  can offer  significant
improvements in  productivity,  accuracy,  and  reliability in a  cost-effective
manner.

     The  principal  competitive  factors  in  the  markets  which  the  Company
addresses include ease of use, physical characteristics (including size, weight,
and power consumption),  product features (including  differential GPS), product
reliability,  price,  size of installed  base,  vendor  reputation and financial
resources.  The Company believes that its products  currently  compete favorably
with other products on most of the foregoing factors,  although they may be at a
competitive  disadvantage  against companies with greater financial,  marketing,
service and support resources.

*    The  Company  believes  that its ability to compete  successfully  in the
future against  existing and additional  competitors  will depend largely on its
ability  to  execute  its  strategy  to  provide  systems  and  products  having
significantly  differentiated  features more responsive to customer needs. There
can be no  assurances  that the Company will be able to implement  this strategy
successfully,   nor  that  the   Company's   competitors,   many  of  whom  have
substantially greater resources than the Company, will not apply those resources
to compete  successfully against the Company on the basis of systems and product
features.

Research and Development

     The  Company's  leadership  position in  commercial  GPS  technology is the
result, in large part, of its strong commitment to research and development. The
Company invests  heavily in developing GPS  technology,  including the design of
proprietary  software and integrated  circuits for GPS receivers,  and has spent
$36,705,000,  $31,895,000 and $24,763,000 in 1996, 1995 and 1994,  respectively,
on research and  development.  Moreover,  Trimble develops  substantial  systems
expertise and user interfaces for a variety of applications.

     Often a new product is initially  developed for an individual  customer who
is willing to purchase development stage products. The Company has used feedback
from such initial  customers as a primary source of information in designing and
refining its products, and in defining,  with greater precision,  customer needs
in emerging market areas.  During 1996, the company created Trimble Labs,  where
it devotes a portion of its corporate  research and development  expenditures to
advance core GPS technology and its integration  into  synergistic  technologies
such as communications, sensors, and computing technologies. These technological
advances  are  often  financially  supported  through  strategic  alliances  and
partnerships.

     The Company  expects that a significant  portion of future revenues will 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  with  timely  market  introduction.  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  sales of new products.  The
timely  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.  Unless the Company receives
this  certification,  revenues  from sales of Terra  products  may be lower than
expected.


                                       14

<PAGE>

Manufacturing

     The  Company  seeks to be a  low-cost  producer  and to serve the growth in
demand for  GPS-based  products  and  systems  through  flexible  automation  of
assembly lines, semiconductor  integration,  and the design of products around a
common core of receivers.

*    The Company's manufacturing  operations consist primarily of assembly and
testing of products, material and procurement management,  quality assurance and
manufacturing  engineering.  The  Company  first  installed  the  surface  mount
technology  (SMT)  assembly  equipment  in a dedicated  facility  in 1991.  This
facility was upgraded in 1995,  increasing its capacity by thirty  percent.  The
Company's  experience with SMT has allowed it not only to reduce the reliance on
independent  third  parties  for  printed  circuit  board  assembly  but also to
significantly  reduce the turnaround time to produce  prototype  printed circuit
board assemblies.  The Company has developed  relationships with certain outside
contract  manufacturers through which it expects to complement its manufacturing
capacity in the future. There are no assurances that these manufacturers will be
able to perform in a timely or economical manner to meet the Company's needs.

     The  Company  maintains  quality  control   procedures  for  its  products,
including  testing  during  design,  prototype,  and pilot stages of production,
inspection of incoming raw materials and subassemblies,  and testing of finished
products using automated test equipment in strife chambers.

     The Company has historically  manufactured its products in relatively small
quantities.  However,  the Company must  successfully  manage the  transition to
higher volume manufacturing, including the establishment of adequate facilities,
the  control of  overhead  expenses  and  inventories,  and the  management  and
training of its employee base. Although the Company has substantially  increased
the number of its senior manufacturing  personnel and significantly expanded its
manufacturing  capacity,  there can be no  assurance  that the Company  will not
experience  manufacturing  or other  delays  which  could  adversely  affect the
Company's operating results.

     The  Company  takes a modular  and  upgradable  approach  to its  products,
building  around a common core of GPS  receivers  with  customized  software and
hardware  systems to analyze and  present  position  data.  The  Company's  core
receiver  technology has evolved since the development of its first GPS receiver
product in 1984,  as the  Company has worked to reduce the size,  weight,  power
consumption,  and cost of the basic GPS receiver.  In this process,  the Company
has  designed its own  semi-custom,  single-chip  GPS  processor.  However,  the
Company  attempts to utilize  standard parts and  components  that are available
from multiple vendors, including RAM and ROM devices.

     The Company  believes there are a number of acceptable  vendors for most of
the parts and components used in its products.  However, a significant number of
components  are available  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.  Components for which the Company currently does
not have  multiple  sources  include  application-specific  integrated  circuits
manufactured to the Company's  proprietary  design by Lucent  Technologies,  and
Motorola Inc.; displays manufactured by Optrex Corporation,  Kyocera Corporation
and Hosiden  Corporation;  and filters  supplied by Murata  Electronics of North
America, Inc.; Tokyo America,  Inc.; Transtech,  Inc.; and Motorola. The Company
is  reviewing   steps  required  to  qualify   alternative   sources  for  these
microprocessors and other single-source  components.  However, if the Company is
unable to obtain a sufficient  supply of such  microprocessors  or other sole or
single-source  components  from its  current  vendors,  it is likely the Company
could  experience  a delay or  interruption  in product  shipments  which  would
adversely   affect  the  Company's   operating   results  and  damage   customer
relationships  until  an  alternative  source  could  be  obtained.  Further,  a
significant  increase  in the  price  of one or more of these  components  could
adversely affect the Company's  operating  results.  In the past the Company has
also experienced  delays in production caused by insufficient  supply of certain
components, but to date, such delays have not caused significant adverse effects
on the Company's operating results.

     The  Company has  experienced  problems  with the  quality of certain  high
volume electronic components that have required modification of products both in
manufacturing and in the field. Although the Company has instituted vendor audit
programs, there can be no assurance that the Company will not in the future face


                                       15

<PAGE>

problems with the quality of components that could result in delays in supplies,
interrupt  shipments and require  modification  of products  already sold by the
Company, any of which could adversely affect the Company's operating results.

Backlog

     The Company  believes that backlog is not a meaningful  indicator of future
business   prospects  due  to  the  volume  of  products  delivered  from  shelf
inventories and the shortening of product  delivery  schedules.  Therefore,  the
Company believes that backlog information is not material to an understanding of
its business.

Patents, Trademarks, and Licenses

     The Company  currently  holds 102 patents and 13 related  foreign  patents,
that expire at various  dates no earlier than 2005,  and has  numerous  U.S. and
foreign patent  applications  pending.  The Company  currently  licenses certain
peripheral aspects of its technology from the U.S. Navy and Spectrum Information
Technologies.

     Although  the Company  believes  that its patents and  trademarks  may have
value,  there can be no assurance that the Company's patents and trademarks,  or
any additional  patents and trademarks that may be obtained in the future,  will
provide meaningful protection from competition. The Company believes its success
will depend primarily on the experience,  creative skills,  technical expertise,
and marketing and sales ability of its personnel.

     The Company does not believe that any of its  products  infringe  patent or
other  proprietary  rights of third parties,  but cannot be certain that they do
not do so. (See Note 13 to Consolidated  Financial  Statements.) If infringement
is alleged,  legal defense costs could be material and there can be no assurance
that the necessary  licenses could be obtained on terms or conditions that would
not have a material adverse effect on the Company.

     In 1992,  the Company  entered  into a  Memorandum  of  Understanding  with
Pioneer Electronic Corporation (Pioneer), pursuant to which the Company licensed
certain  of the  technology  contained  in its TANS  product  for  inclusion  in
in-vehicle  navigation  products sold in Japan to entities that  integrate  such
products  into other  products  sold  within or  outside  Japan  under  Japanese
trademarks.  In the  third  quarter  of 1995,  a  $1,333,000  licensing  fee was
received from Pioneer  Electronics  Corporation in connection  with expansion of
the original 1992 license for in-vehicle navigation technology.

     The Company has also granted a license to DMT Marinetechnik  GmbH, formerly
AEG  Aktiengesellschaft,  to design,  manufacture,  sell,  and  repair  products
incorporating an improved version of the Company's TANS technology.  The license
is exclusive as to such  activities in Germany,  and is  nonexclusive in Austria
and  Switzerland.  The  license  terminates  automatically  (except  as  to  the
licensee's right to replace,  repair,  and service existing  products) after the
production  of 10,000  units of such  products,  and may also be  terminated  by
either party upon six months  prior  notice,  effective  December 31 of any year
after December 31, 1994.

     In 1993,  the Company  entered  into a contract  with Space  Systems/Loral,
pursuant  to which the Company  licensed  certain  technology  based on its TANS
product.  The license is  irrevocable,  exclusive  and limited to certain  space
flight market applications.

     The  Company  expects  that  it  will  continue  to  enter  into  licensing
arrangements relating to its technologies.

     Trimble  with  the  sextant   logo,   "TrimbleNavigation,"   "GeoExplorer,"
"Flightmate,"  "GPS Total  Station,"  "Scout GPS," and "Aspen" are trademarks of
Trimble Navigation Limited, registered in the United States and other countries.
Other  trademarks  are pending.  Trimble  Navigation  Limited  acknowledges  the
trademarks  of other  organizations  for their  respective  products or services
mentioned in this document.

Employees

     As of  December  31,  1996,  the Company  employed  1,094  persons:  299 in
research  and  product  development,   344  in  sales  and  marketing,   320  in
manufacturing,  and 131 in administration and finance. Of these, 69 were located


                                       16

<PAGE>

in Europe, 136 in New Zealand, 20 in Japan, 8 in Singapore, 4 in Australia,  and
857 in the U.S.  The Company  also  currently  employs  temporary  and  contract
personnel.  Usage of such personnel has increased over the last three years, and
are not  included in the above  headcount  numbers.  Competition  in  recruiting
personnel is intense. The Company believes that its continued ability to attract
and retain highly  skilled  management,  marketing,  and technical  personnel is
essential to its future growth and success.  None of the Company's  employees is
represented by a labor union, and the Company has experienced no work stoppages.

     The  Company's  future  success  depends in large  part upon the  continued
availability and  participation  of Charles R. Trimble,  its President and Chief
Executive Officer.  Mr. Trimble founded the Company and continues to be the only
executive with full responsibility for all aspects of the Company's  operations,
including  marketing and manufacturing  strategies and resource allocation among
the Company's strategic business units. The loss of Mr. Trimble, for any reason,
could have a material adverse effect on the Company.

     The  Company's  success also depends upon the  continued  contribution  and
long-term  effectiveness  of its other  executive  officers  and key  technical,
sales,  marketing,  support,  research  and  development,   manufacturing,   and
administrative personnel, many of whom would be difficult to replace.

Executive Officers of the Registrant

     The names,  ages, and positions of the Company's  executive officers are as
follows:

Name                                 Age           Position
- ----                                 ---           --------
Charles R. Trimble.................. 55        President, Chief Executive 
                                               Office, and Director
Dennis R. Ing....................... 49        Vice President, Finance,
                                               and Chief Financial Officer
Charles E. Armiger, Jr. ............ 42        Vice President, Sales
Ralph F. Eschenbach................. 51        Vice President, Chief Technical
                                               Officer
Michael P. Gagliardi................ 39        Vice President, General Manager, 
                                               Aerospace
David M. Hall....................... 48        Vice President, General Manager,
                                               Software & Component Technologies
James L. Sorden..................... 59        Executive Vice President, General
                                               Manager, Commercial Systems
David E. Vaughn .................... 51        Executive Vice President, 
                                               Business Development

     All officers serve at the  discretion of the Board of Directors.  There are
no family relationships between any of the directors or officers of the Company.

     Charles R.  Trimble  as  President,  Chief  Executive  Officer,  one of the
Company's  founders,  and a director  of the  Company  since  November  1978 has
strategically  guided  Trimble  to its  dominant  role  in the  GPS  information
technology  market.  Prior to founding the Company,  Mr.  Trimble was Manager of
Integrated  Circuit  Research and  Development at Hewlett  Packard's Santa Clara
division. Mr. Trimble holds four patents in signal processing and one in GPS and
is currently  serving as the Chairman of the United States GPS Industry  Council
(USGIC).  He received his B.S. degree in Engineering Physics with honors in 1963
and an M.S.  degree  in  Electrical  Engineering  in 1964  from  the  California
Institute of Technology.

     Dennis  R. Ing  joined  Trimble  in May 1996 as Vice  President,  Corporate
Controller.  In September 1996 he was appointed  Vice President of Finance,  and
Chief  Financial  Officer.  Prior to  Trimble,  Mr. Ing was  employed  by Amdahl
Corporation,  a high  technology  company based in Sunnyvale,  California,  most
recently serving as Director of Alliances and  Acquisitions.  Prior to that, Mr.
Ing served as Chief Financial Officer of Open Enterprise Systems, a $200 million
division  of  Amdahl.  Mr. Ing also  served as Vice  President  of  Finance  and
Administration  for both Amdahl Canada  Limited and Amdahl  Communications  Inc.
Before joining Amdahl  Corporation in 1979, Mr. Ing worked at Touche Ross & Co.,
Chicago & NorthWestern  Transportation,  and the Chicago  Hospital  Council.  He
currently serves on the Board of Directors of Lexa Software Corporation. Mr. Ing
received his MBA from DePaul  University in 1977 and a B.S. in Engineering  from
the University of Illinois in 1972.


                                       17

<PAGE>

     Charles E  Armiger,  Jr.  joined  Trimble  in  January of 1989 as Sales and
Marketing Manager for aviation products.  From January 1991 to December 1993, he
served as Director of U.S. Domestic Sales. Mr. Armiger held the post of Director
of Sales for North  American  West from January 1993 to November  1994.  Then in
December 1994, he moved to Trimble's European office in Hook,  England, to serve
as Director of Sales for Europe,  the Middle East and Africa.  In  September  of
1996, he was appointed to serve as Vice President for Commercial  Systems Sales.
Prior to joining  Trimble,  Mr.  Armiger was Director of Sales and Marketing for
ARNAV Systems, Inc. He received a B.S. degree in Business from the University of
the State of New York, Regents College in 1996.

     Ralph F.  Eschenbach  joined  Trimble as Vice  President  of  Research  and
Development  in 1983.  From  November  1989 to February  1993, he served as Vice
President of Avionics and Sensor  Products.  From February 1993 to July 1994, he
served as Vice President of Navigation  Products.  In July 1994, Mr.  Eschenbach
was appointed to the position of Vice President of Business  Development,  where
he was responsible for defining and developing business  opportunities to create
new  solutions  for the GPS  market in areas not  covered by  Trimble's  current
product lines. In September 1996 he was appointed to the post of Vice President,
Chief Technology  Officer.  Prior to joining the Company, he was an engineer and
an engineering manager with Hewlett-Packard Company from June 1968, where he was
responsible  for the  development  of a  low-cost  GPS  receiver.  In 1997,  Mr.
Eschenbach  was  appointed  Chairman  of the Federal  Aviation  Administration's
Research,  Engineering and Development (R,E,&D) Advisory Committee. He is also a
member of NASA's  Research &  Development  Advisory  Committee.  Mr.  Eschenbach
currently serves on the Boards of Directors of ProShot Golf, Inc.; Pinpoint Golf
Advertising;   and  Powerstream  Techologies.  He  received  a  B.S.  degree  in
Electrical Engineering from the University of California at Berkeley in 1968 and
an M.S. degree in Electrical Engineering from Stanford University in 1970.

     Michael P. Gagliardi  joined Trimble as Vice President and General  Manager
of the Aerospace  business  unit based in Austin,  Texas,  in January 1997.  Mr.
Gagliardi  joined Trimble from  BFGoodrich  Company,a  diversified  consumer and
industrial  products  company,  where he served as Group Vice  President  of the
Water Systems and Services Group; President of Arrowhead Industrial Water, Inc.;
and  President of  FlightSystems,  Inc.  Prior to his tenure at  BFGoodrich,  he
worked  for 11 years at The  General  Electric  Company  in  several  management
positions,  including  technical  engineering  assignments,  progressing through
critical marketing roles, and on to general management and executive  positions.
Mr.  Gagliardi  received  his BS  degree  in  Electrical  Engineering  from  the
University of Pittsburgh  in 1979, an MS degree in Electrical  Engineering  from
Southern Methodist University in 1981, and an MBA from Duke University in 1989.

     David M. Hall joined  Trimble in February  1994 as Managing  Director,  OEM
products.  In November 1996 he was appointed Vice President and General  Manager
of the Software and Component  Technologies  business unit. He previously worked
for Raychem Corporation, a diversified electronics company, for twenty-one years
in a variety of  positions  and  divisions.  He served as  Director of Sales and
Marketing for the Automotive  Division,  National  Distribution  Manager for the
Electronics  Sector,  and Director of Marketing and Product  Management  for the
Interconnect  Systems  Division,  as well as District Sales Manager,  Area Sales
Manager, and Operations Manager. Mr. Hall received his B.S. degree in Industrial
Technology  in 1971  and his MBA in  Marketing  and  Finance  in 1973  from  the
California Polytechnic State University in San Luis Obispo, Ca.

     James L. Sorden joined Trimble as Vice President of Product  Development in
May 1987.  From February 1993 to 1994, he served as Vice  President of Surveying
and  Mapping.  In November  1994,  Mr.  Sorden was  appointed to the position of
Executive   Vice   President  of   Surveying,   Mapping,   Military  and  Marine
Instrumentation  Systems.  In September  1996, he was appointed  Executive  Vice
President of  Commercial  Systems,  which  consolidates  Surveying & Mapping and
Tracking  &  Communications.  Prior to joining  Trimble,  Mr.  Sorden  worked in
various  engineering,  marketing  and  management  positions at  Hewlett-Packard
between  1964 and 1987.  He holds  U.S.  and  foreign  patents  in the fields of
electronic  measurement,  surveying  instrumentation,  and vehicle  safety.  Mr.
Sorden currently serves on the Board of Directors of Datacom Software  Research,
New Zealand,  and Aquila Mining Systems Ltd,  Canada.  He received his BSEE from
the University of Wisconsin in 1962 and undertook  engineering  graduate studies
at Wisconsin and Stanford.


                                       18

<PAGE>

     David E. Vaughn joined Trimble as Vice President of Operations in May 1991.
From  1993 to  1994,  he  served  as Vice  President  of  Tracking  Systems  and
Communications.  In November 1994 he became Executive Vice President of Tracking
Systems and  Communications.  In September  1996 he was appointed to the post of
Executive Vice President of Business Development, which includes Trimble's newly
formed  Trimble  Labs.  Prior to joining  Trimble,  Mr. Vaughn was President and
Chief Executive Officer of Magnesys, a manufacturer of integrated circuits, from
1987 to 1991. From 1985 to 1987 he was Vice President of Manufacturing for Asyst
Technologies,  a manufacturer of clean room material  handling robots.  Prior to
1985, he worked in  manufacturing  management  positions with Apple Computer and
Hewlett-Packard.  Mr. Vaughn received his B.S. degree in Electronics in 1971 and
an M.B.A.  in  Operations  Research in 1973 from  California  Polytechnic  State
University.


I
tem 2. Properties

     The Company  currently  leases and  occupies  13  buildings  in  Sunnyvale,
California,  totaling  approximately  350,000  square feet.  The leases on these
buildings  expire at various dates through 2001. The Company leases and occupies
three  buildings  in  Austin,  Texas,   approximately  50,600  square  feet,  to
manufacture  GPS-based  aviation  products;  the leases  expire at various dates
through  2001.  The  Company  also  leases  a  47,000  square-foot  facility  in
Christchurch,   New  Zealand,   for  software   development.   The  two  largest
international sales offices are those in the United Kingdom (13,400 square feet)
and Japan  (5,900  square  feet).  The  Company  also  leases  sales  offices in
Australia,  France, Germany, Italy, Spain, Singapore, Russia, and Mexico, and in
various cities throughout the United States. The Company's  international office
leases expire at various dates through 2005.  Certain of the leases have renewal
options.  The Company  believes that its  facilities are adequate to support its
current and anticipated future operations.


Item 3. Legal Proceedings

     The  information in respect to legal  proceedings  required by this item is
included  in Part II,  Item 8,  Note 13 of the Notes to  Consolidated  Financial
Statements, hereof under the caption "Pending Matters."


Item 4. Submission of Matters to a Vote of Security Holders

     Not applicable.


                                       19

<PAGE>


                                     PART II



Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

     The Company's  Common Stock is traded on the Nasdaq  National  Market under
the symbol TRMB. The following table sets forth, for the quarter indicated,  the
range of high and low closing sales prices for the Company's Common Stock on the
Nasdaq National Market:

                                   High          Low

       1995:
        First                    19 3/4        15 1/2
        Second                   30 3/4        15 1/2
        Third                    35 3/8        24 1/2
        Fourth                   25 1/2        14 1/2

       1996:
        First                    24            15 3/4
        Second                   26 1/4        18 3/8
        Third                    21 3/8        14 3/4
        Fourth                   16 5/8        10 7/8


     The Company had 1,760 shareholders of record as of March 16, 1997.

     The Company's stock price is subject to significant volatility. If revenues
or earnings fail to meet the  expectations  of the investment  community,  there
could be an  immediate  and  significant  impact  on the  trading  price for the
Company's  stock.  Due to stock  market  forces  that are beyond  the  Company's
control,  and the  nature of the  Company's  business,  such  shortfalls  can be
sudden.


     The Company has never paid cash dividends on its Common Stock.  The Company
presently intends to retain earnings to finance the development of the Company's
business  and does not  presently  intend to declare any cash  dividends  in the
foreseeable future.  Under the Company's current  $30,000,000  revolving line of
credit  agreement,  the Company is restricted from paying dividends  without the
lender's consent.  Under the Company's  Subordinated  Promissory Notes Agreement
pursuaint to which the Company issued $30,000,000 of its subordinated promissory
notes in June 1994, the Company is also  restricted from paying  dividends.  See
Notes 4 and 7 of Notes to Consolidated Financial Statements contained in Item 8.


                                       20

<PAGE>


Item 6. Selected Financial Data



 HISTORICAL FINANCIAL REVIEW

 Summary Consolidated Statements of Operations Data

<TABLE>
<CAPTION>

 Years ended December 31,                              1996        1995         1994        1993         1992
- ----------------------------------------------------------------------------------------------------------------
 (In thousands, except per share data)
<S>                                                  <C>          <C>          <C>         <C>          <C>    
 
 Revenue ........................................   $ 233,660    $ 235,360    $ 175,694   $ 149,491    $ 127,550
                                                   ----------   ----------   ----------  ----------   ----------

 Operating expenses:
    Cost of sales ..............................      112,596      102,666       69,294      67,814       69,007
    Research and development ...................       36,705       31,895       24,763      23,070       28,546
    Sales and marketing ........................       64,391       62,672       51,621      37,409       32,946
    General and administrative .................       30,142       24,824       14,735      13,414       12,120
    Restructuring charges ......................        2,134           --           --          --        6,861
                                                   ----------   ----------   ----------  ----------   ----------

          Total operating expenses .............      245,968      222,057      160,413      141,707     149,480
                                                   ----------   ----------   ----------   ----------  ----------

 Operating income (loss) ........................     (12,308)      13,303       15,281        7,784     (21,930)
 Nonoperating income (expense), net .............         706          773       (3,057)      (3,580)     (1,774)
                                                   ----------   ----------   ----------   ----------  ----------
 Income (loss) before income taxes and cumulative
  effect of accounting change ..................      (11,602)      14,076       12,224        4,204     (23,704)
 Income tax provision (benefit) .................        (300)       2,815        2,200          755        (712)
                                                   ----------   ----------   ----------   ----------  ----------
 Income (loss) before cumulative effect of
   accounting change ...........................      (11,302)      11,261       10,024        3,449     (22,992)
 Cumulative effect of accounting change (i) .....          --           --           --           --      (2,277)
                                                   ----------   ----------   ----------   ----------  ----------   
 Net income (loss) ..............................  $  (11,302)  $   11,261   $   10,024   $    3,449  $  (25,269)
                                                   ==========   ==========   ==========   ==========  ==========

 Net income (loss) per share:
     Income (loss) before cumulative effect of
     accounting change .........................   $    (0.51)  $     0.53   $     0.53   $     0.19  $    (1.37)
     Cumulative effect of accounting change (i)            --           --           --           --       (0.14)
                                                   ----------   ----------   ----------   ----------  ----------
     Net income (loss) .........................   $    (0.51)  $     0.53   $     0.53   $     0.19  $    (1.51)
                                                   ==========   ==========   ==========   ==========  ==========
 Weighted average common and dilutive
     common equivalent shares ..................       22,005       21,306       19,062       18,444      16,726
                                                   ==========   ==========   ==========   ==========  ==========
 Cash dividends per share .......................  $       --   $       --   $       --   $      --   $       --
                                                   ==========   ==========   ==========   ==========  ==========
</TABLE>


     (i) Effective January 1, 1992, the Company changed its method of accounting
for income taxes from the deferred  method to the liability  method required by
Statement  of Financial Accounting  Standard  No. 109,  "Accounting  for Income
Taxes" (FAS 109).  The  cumulative  effect of adopting  FAS 109 as of January 1,
1992, was to increase the 1992 net loss by $2,277,000 or $0.14 per share.
 Selected Balance Sheet Data

<TABLE>
<CAPTION>

As of December 31,                        1996       1995      1994      1993      1992
- --------------------------------------------------------------------------------------------
 (In thousands)
<S>                                    <C>        <C>        <C>        <C>      <C>    
Working capital ....................  $ 124,545  $ 135,896   $ 70,207  $ 29,251 $ 20,670
Total assets .......................    189,841    196,763    109,363    67,647   69,548
Bank borrowings ....................         --         --         --     1,311    9,500
Noncurrent portion of long-term debt     29,507     29,739     31,736     4,539    5,853
Shareholders' equity ...............  $ 124,045  $ 129,937   $ 53,574  $ 38,890 $ 29,483

</TABLE>




                                       21

<PAGE>




Item 7. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

     In 1996, the Company's annual revenues  decreased by less than 1% to $233.7
million.  In 1996 the  Company  had a net loss of $11.3  million,  or $0.51  per
share, compared to net income of $11.3 million, or $0.53 per share, in 1995.

     In  September  1996,  the Company  implemented  a work force  reduction  of
approximately  10%  and  consolidated  certain   manufacturing   facilities  and
services. These actions reduced sales and general and administrative expenses by
approximately 10% in the fourth quarter, compared to the third quarter of 1996.

RESULTS OF OPERATIONS

     The following table sets forth for the periods  indicated certain financial
data as a percentage of total revenue:


Years ended December 31           1996         1995         1994         1993
- -------------------------------------------------------------------------------



 Revenue                            100 %        100 %        100 %       100 %
                                 ----------------------------------------------

Operating expenses:
    Cost of sales                    48           44           39          45
    Research and development         16           13           14          15
    Sales and marketing              27           27           30          25
    General and administrative       13           10            8           9
    Restructuring charges             1            0            0           0
                                  ----------------------------------------------
 
    Total operating expenses        105           94           91          94
                                  ----------------------------------------------

Operating income (loss)              (5)           6            9           6

Nonoperating income (expense), net    0            0           (2)         (2)
                                  ----------------------------------------------
Income (loss) before income taxes    (5)           6            7           8

Income tax provision (benefit)        0            1            1           1

                                 ----------------------------------------------
Net income (loss)                    (5)%          5 %          6 %         7 %
                                 ==============================================
 
     Revenue.  In 1996,  total revenue  decreased to $233.7  million from $235.4
million in 1995, which  represents a percentage  decrease of less than 1%. Total
revenue  increased in 1995 to $235.4 million from $175.7 million in 1994,  which
represents a percentage  increase of 34%. The table below shows  revenues  under
the Company's new operating  structure that was created in September 1996. Prior
periods revenues have been reclassified in order to make amounts comparable.

     

<TABLE>
<CAPTION>


                                                               Years Ended December 31,
                                         ----------------------------------------------------------------------------------
                                                         % Total                     % Total                      % Total
                                               1996       Revenue          1995       Revenue           1994       Revenue
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands)
  <S>                                        <C>             <C>         <C>              <C>         <C>             <C>
   
   Commercial Systems                      $  158,273          68%     $  162,393           69%     $  127,817          73%
   Software & Component Technologies           38,054          16%         35,416           15%         18,809          11%
   Aerospace                                   37,333          16%         37,551           16%         29,068          16%
                                           ------------   ----------   ------------   -----------   -----------    ----------
    Total revenue                          $  233,660         100%     $  235,360          100%     $  175,694         100%
                                           ------------   ----------   ------------   -----------   ------------   ----------

</TABLE>

  

                                       22

<PAGE>

Commercial Systems

     The  Commercial  Systems  business unit revenues  decreased 3% in 1996 from
1995 and had a growth  rate of 27% in 1995 over 1994.  The  decrease  in 1996 as
compared to 1995 is primarily in the Land Survey and Tracking vertical markets.

     The  decrease  in Land Survey  sales in 1996  compared to 1995 was due to a
slowdown  in sales in  Europe  and  Japan.  Europe  experienced  a  downturn  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
Government's  decision to evaluate RTK survey methods before  certifying its use
for  official  surveys.  The  Company is now  selling at the low cost end of the
market as opposed  to the high cost end of the  market.  Shipments  in the U.S.,
Latin America, and Asia-Pacific outside Japan were higher than last year.

     This  decrease  in Land  Survey  was  partially  offset by an  increase  in
revenues in the first  quarter of 1996,  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 1996  compared to 1995,  primarily  due to
lower sales to American Mobile Satellite  Corporation (AMSC). 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. Late in the fourth
quarter of 1995, AMSC requested that the Company cease delivery,  in part due to
delays in AMSC's  completion of software.  Shipments under the original contract
were halted in the fourth quarter of 1995 and the contract was amended. Revenues
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.  Contract renegotiation fees
of $1,080,000 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
the fourth  quarter of 1996, the Company  recognized  $300,000 of shutdown fees,
all of which have been paid.  On February  20,  1997,  an  agreement  was signed
between Trimble and AMSC to resume shipments of its Galaxy/GPS  terminals at the
rate of 500  units  per  month,  beginning  in March  1997.  As a result of this
agreement  the Company has dropped a complaint  which was filed in October  1996
against AMSC in the Superior  Court of California  in Santa Clara  County.  (See
Note 13 of the Notes to the Consolidated Financial Statements for more details.)


*    In September 1996, the Company  entered into a contract with  Caterpillar
Inc. to develop and market products for the construction and mining markets. The
Company agreed to develop,  without funding from  Caterpillar  Inc.,  customized
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.  The  Company  also  expects  average  selling  prices will likely
decline  with  increased  competition.  In  addition  to the markets the Company
currently  addresses in the surveying and mapping arena (primarily land survey),
the Company is addressing  new markets,  including  the mining and  construction
market.  If the Company  cannot  adequately  compete in new markets  through the
development  and  manufacture  of new products,  there can be no assurance  that
growth will continue.

     In 1995,  Commercial  Systems  revenue  was  supplemented  by $1.0  million
received  under a contract  with a customer  whereby the  Company  agreed not to
compete, and sold exclusive distribution rights.

Software and Component Technologies

     The Software and Component  Technologies  business unit revenues have grown
7% in 1996 from 1995 and 88% in 1995 over 1994.  The  increase in 1996 from 1995
was due to a slight  increase in demand.  The increase in 1995 from 1994 was due
to alliances  with  Philips Car System and Xanavi  Informatics  Corporation  for
in-vehicle  navigation  and  Glenayre  Technologies  in the timing  market.  The
Software and Component  Technologies  market consists of OEM (original equipment
manufacture) and consumer products.

                                       23

<PAGE>


     In 1995,  Software & Component  Technologies  revenue was  supplemented  by
technology licenses of $1.3 million.

Aerospace

     * Aerospace  product sales slight  decrease from 1995 to 1996 reflects weak
sales for military products in 1996,  compared to a strong sales for 1995. These
sales were offset by strong sales for aviation  products in 1996,  compared with
weak  aviation  product  sales for 1995.  On  September  18,  1996,  the Company
received  FAA  certification  of the  HT9100  product  allowing  production  and
installation to begin late in the third quarter. This product accounted for most
of the increase in Aerospace  revenues for the second half of 1996,  compared to
the second half of 1995. Aslo,  Aviation product sales were higher in the second
half of 1996, as compared to 1995, due in part to sales of product acquired from
Terra  Corporation  (See Note 5 to the  Consolidated  Financial  Statements  for
additional  information).  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.

     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.

     Export sales from domestic  operations,  as a percentage of total  revenue,
were 25% in 1996, 21% in 1995 and 28% in 1994.  Sales to unaffiliated  customers
in foreign locations,  as a percentage of total revenue, was 47% in 1996, 53% in
1995, and 51% in 1994. (See Note 2 to the  Consolidated  Financial  Statements.)
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.

     No  single  customer,  including  the  U.S.  Government  and its  agencies,
accounted  for 10% or  more of  total  revenue  in  1996,  1995 or  1994.  It is
possible,  however,  that in future  periods  the  failure  of one or more large
customers  to purchase  products in  quantities  anticipated  by the Company may
adversely affect results of operations.

     Gross  Margin.  Gross margin  varies 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.  In 1996, the gross margin  percentage on product sales
was  52%,  compared  with 56% in 1995 and 61% in  1994.  The  1996  margins  are
enhanced by the positive impact of non-product  revenues recognized from AMSC of
$2.48 million in 1996. (See "Results of  Operations-Revenue"  for more details.)
The Company has a history of  recording  such  non-recurring  items in the past,
including  revenues  of $2.3  million in 1995.  There can be no  assurance  that
similar  items  will  recur in the  future.  The  decrease  in the gross  margin
percentages  primarily  reflects  a shift  in  product  mix from  higher  margin
Commercial  Systems  sales  to  lower  margin  Avionics  and OEM  products,  and
decreases in the margins obtained on sales of Commercial  Systems  products.  In
addition,  because of mix changes  within and among the business  units,  market
pressures on unit selling prices,  fluctuations in unit manufacturing  costs and
other  factors,  there is no assurance  that current  margins will be sustained.
While  Commercial  Systems  products  have the highest  gross margins of all the
Company's  products,  their margins have decreased  primarily due to the need to
lower prices in response to  competition.  The Company  expects  competition  to
increase  in its  Commercial  Systems  markets and it is  therefore  likely that
further  price  erosion  will  occur,   with  consequent   lower  gross  margins
percentages.

*    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,  for example.  As a result of volume  pricing and the assumption of
certain operating costs by the partner,  margins for this business are likely to
be lower than sales directly to end-users.


                                       24

<PAGE>


     Operating  Expense.  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:



                                         Years Ended December 31,
                                -------------------------------------------

                                   1996            1995           1994
- ---------------------------------------------------------------------------
(In thousands)

Research and development         $   36,705       $  31,895      $  24,763
Sales and marketing                  64,391          62,672         51,621
General and administrative           30,142          24,824         14,735
Restructuring charges                 2,134               -              -
                                ------------    ------------   ------------
 Total                            $ 133,372        $119,391      $  91,119
                                ------------    ------------   ------------


     Research and  Development.  Research  and  development  spending  increased
during 1996,  representing  16% of revenue as compared with 14% in both 1995 and
1994.  The  increase  from  1995 to  1996 is due  primarily  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 increase in research and development is
part of the Company's continuing aggressive development of future products.

*    Sales and Marketing.  Sales and marketing expenses increased during 1996,
representing  28% of revenue,  27% in 1995,  and 29% in 1994. The primary reason
for the dollar  increases in expenses since 1994 is an increase in personnel and
advertising costs.  Other less significant  reasons for the increases are higher
marketing  related  and field  service  support  costs.  Selling  and  marketing
expenses are expected to decrease in the future as a percentage of revenue, as a
result of the  restructuring  actions taken in September 1996.  Sales offices in
China,  Egypt, Italy and Poland were closed, and the sizes of certain offices in
the US has been reduced.

     The  Company's  future  growth  will depend on 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.

     General and Administrative.  General and administrative  expenses increased
in 1996  over 1995  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.  The Company expects
legal  fees  to  continue  to be  high,  due to  the  Company's  involvement  in
litigation matters. (See Note 13 to the Consolidated  Financial Statements.) The
increase in 1995 over 1994 was due to increased legal fees,  information systems
support  costs,  an  increase  in  the  provision  for  uncollectible   accounts
receivable,  as well as an  increase  in  administrative  costs in the  business
units.

     Restructuring  Charges.  During the quarter ended  September 30, 1996,  the
Company recorded a restructuring charge of $2,046,000. An additional $88,000 was
added in the fourth  quarter of 1996.  As of December  31, 1996,  $1,345,000  of
restructuring  costs had been paid.  Components  of this  restructuring  reserve
included employee severance  packages,  the costs of redundant office space, and
write-downs  of idle  assets.  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.



                                       25

<PAGE>

     Nonoperating income (expense),  net.  Nonoperating  income (expense),  net,
includes  interest  income and  expense,  as well as gains and losses on foreign
currency transactions and, in 1994, a royalty arbitration settlement charge.

     Foreign  exchange losses were $4,000 in 1996,  compared with a gain of $1.1
million in 1995. In the second  quarter of 1995 the Company  adopted a policy of
hedging its exposure to foreign currency  transactions to minimize the effect of
changes  in  foreign  currency   exchange  rates  on  consolidated   results  of
operations.  Gains and losses arising from foreign  currency  forward  contracts
offset gains and losses resulting from the underlying hedged transactions.  Most
of the  foreign  exchange  gains  recorded  in 1995 were  incurred in the period
before this policy was in place.

     Interest income increased in 1996 due to higher interest income received on
cash and short term  investments  in the first half of 1996,  compared  with the
first half of 1995,  primarily from the Company's  public  offering  proceeds in
August  1995.  Interest  income  increased in 1995 over 1994,  primarily  due to
higher  interest  income  received  on  higher  levels  of cash and  short  term
investments resulting primarily from the Company's public offering proceeds.

     Interest  expense  increased  slightly in 1996 due to higher fees on unused
lines of credit. Interest expense includes interest on a $30 million note issued
in August 1995,  and fees on unused  lines of credit.  (See Notes 4 and 7 to the
Consolidated  Financial  Statements  for details of long-term  debt and lines of
credit.)

     During  1994,  the Company  recorded a charge of $1.4 million to reflect an
unfavorable  court decision  related to a dispute  between the Company and Avion
Systems Inc. as to certain  technology the Company  licensed from Avion in 1991.
(See Notes 13 to the Consolidated Financial Statements.)

     Income Tax Provision.  The Company's  combined  federal,  foreign and state
effective  income tax benefit of 3% in 1996 is less than the  federal  statutory
tax rate of 35%,  primarily due to  limitations  on the  utilization of the 1996
operating loss. The income tax provision of 20% in 1995, and 18% in 1994 is less
than the statutory  rate,  primarily due to realization  of previously  reserved
deferred tax assets.  The 1995 rate is higher than the 1994 rate,  primarily due
to higher foreign taxes.

     Inflation.  The effects of inflation upon the Company's  financial  results
have not been significant to date.

LITIGATION

*    The  Company is  involved  in a number of legal  matters  that  occupy an
increasing  amount of management time and expense.  These matters are more fully
discussed in Note 13 to the Consolidated Financial Statements. While the Company
does not expect to suffer significant  adverse effects from this litigation,  or
unasserted claims,  the nature of litigation is unpredictable,  and there can be
no assurance that it will not do so.

LIQUIDITY AND CAPITAL RESOURCES

*    In 1996 the cash used in  operating  activities  was $3.9  million.  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 $5.8 million.  During 1996 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 large part on revenues
and the rate of collections of accounts receivable.

     In 1995 operating  activities  provided cash flows of $11.4  million.  Cash
flow from  financing  activities  consisted  primarily of $57.2 million from the
sale of 2.1 million shares of Common Stock in an underwritten  public  offering,
and $7.3  million from  issuances  under  various  employee  stock plans.  These
sources  of cash flow were used  primarily  to pay down  long-term  debt of $1.6
million and purchase property and equipment of $14.6 million. The remaining cash
flow was used to increase cash, cash equivalents and short-term investments.

     In August 1995, the Company entered into a $30.0 million  unsecured line of
credit agreement with two banks; it expires in July 1997. The agreement  enables
the Company to borrow up to $30.0 million  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


                                       26

<PAGE>

funds rate plus 0.5%. In August 1995 the Company  terminated a prior $15 million
line of credit agreement  originally entered into in January 1993. No borrowings
were made under either the old or new lines of credit during 1996 and 1995.

*    In  February  1996,  the  Company  announced  that  it  had  approved  a
discretionary  program  whereby 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 1996, 250,000 shares were purchased at a cost of $3,545,000 and
the  Company  intends  to  continue  repurchasing  its common  stock  under this
program.

*    The  Company   presently   expects  1997  capital   expenditures  to  be
approximately  $14.0  million,  primarily  for  production  equipment,  computer
equipment,   software,  and  leasehold  improvements  associated  with  business
expansion.

*    At December 31, 1996, the Company had cash and cash  equivalents of $22.7
million and $59.9 million in short term  investments.  The  Company's  long-term
debt consisted primarily of a $30.0 million note obligation due in 2001, and the
Company had no debt outstanding  under its line of credit.  The Company believes
that its current cash  balances,  available bank  financing,  and cash flow from
operations  will be  sufficient  to  meet  its  anticipated  cash  needs  in the
foreseeable future.

CERTAIN 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 licensee rights, and seasonal
patterns  favoring  spring and  summer for  Commercial  Systems  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  occurs from  orders  received  and  immediately
shipped to customers in the last few weeks and days of a quarter.  If orders are
not  received,  or if  shipments  were to be  delayed a few days at the end of a
quarter,  the  operating  results  and  reported  earnings  per  share  could be
significantly   impacted.   Future  revenues  are  difficult  to  predict,   and
projections are based  primarily on historical  models which are not necessarily
accurate representations of the future.

*    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.  This  effective  leveraging  means that
increases or decreases in revenues have more than a  proportional  impact on net
income or losses.  The Company  estimates that a change in product revenue of $1
million would change earnings per share by 2 to 3 cents.

     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 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 that they do not. (See Note 13 to the  Consolidated  Financial


                                       27

<PAGE>

Statements.)  In  addition,  the legal costs and  engineering  time  required to
safeguard  intellectual  property or to defend 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.

     Information  with  respect to GPS Navstar  satellite  system is included in

P
art I hereof under the caption "Background" paragraph number 6.

NEW ACCOUNTING STANDARDS

     In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities."  This  statement is effective  for  transfers and servicing of
financial assets and extinguishment of liabilities  occurring after December 31,
1996. At December 31, 1996,  the Company was  contingently  liable to a Japanese
bank for $4,146,000,  at year end exchange rates arising from  customers'  notes
receivable which the Company sold with recourse to the bank. The  implementation
of  the  new  accounting  standard,  if  adopted  early,  would  have  increased
liabilities  and  accounts  receivable  by  this  amount.  (See  Note  4 to  the
Consolidated  Financial  Statements.)  The  Company  will adopt this  accounting
standard on January 1, 1997, as required.



                                       28

<PAGE>




Item 8.     Financial Statements

CONSOLIDATED BALANCE SHEETS

December 31,                                                   1996         1995
- --------------------------------------------------------------------------------

ASSETS

Current assets:
    Cash and cash equivalents                            $    22,671   $  29,711
    Short-term investments                                    59,867      67,451
    Accounts receivable, less allowance for doubtful
       accounts of $2,393 and $1,074                          34,374      39,123
    Inventories                                               38,858      31,201
    Deferred income taxes                                          -         722
    Other current assets                                       3,633       3,198
                                                           ----------  ---------
                                                                           
       Total current assets                                   159,403    171,406

Property and equipment, at cost less accumulated
   depreciation                                                21,504     19,751
Intangible assets less accumulated amortization                 4,493        870
Deferred income taxes                                             383        852
Other assets                                                    4,058      3,884
                                                            ----------  --------
                                                                           
       Total assets                                       $   189,841  $ 196,763
                                                            ========== =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt                      $      316   $  2,014
    Accounts payable                                           13,763     15,329
    Accrued compensation and benefits                           6,552      5,745
    Customer advances                                           3,000      1,080
    Accrued liabilities                                        10,358      8,340
    Income taxes payable                                          869      3,002
                                                            ----------  --------
                                                                           
       Total current liabilities                               34,858     35,510

Noncurrent portion of long-term debt and other liabilities     30,938     31,316
                                                            ---------- ---------
       Total liabilities                                       65,796     66,826
                                                            ---------- ---------

Commitments and contingencies

Shareholders' equity:
    Preferred stock, no par value; 3,000 shares
       authorized; none outstanding                                -           -
    Common stock, no par value; 40,000 shares
       authorized; 22,063 and 21,642 outstanding, 
       respectively                                           125,535    120,449
    Common stock warrants                                         700        700
    Retained earnings (deficit)                                (2,603)     8,699
    Unrealized gain (loss) on short-term investments               20        102
    Foreign currency translation adjustment                       393       (13)
                                                             ---------- --------
                                                                           
       Total shareholders' equity                             124,045    129,937
 
                                                            ---------- ---------
       Total liabilities and shareholders' equity           $ 189,841  $ 196,763
                                                            ========== =========

See accompanying notes to consolidated financial statements.





                                       29

<PAGE>
  


CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31,                        1996          1995         1994
- --------------------------------------------------------------------------------
 (In thousands, except per share data)


Revenue                                   $   233,660   $   235,360  $   175,694
                                          -----------   -----------  -----------


Operating expenses:
    Cost of sales                             112,596       102,666       69,294
    Research and development                   36,705        31,895       24,763
    Sales and marketing                        64,391        62,672       51,621
    General and administrative                 30,142        24,824       14,735
    Restructuring charges                       2,134             -            -
                                           -----------  -----------  -----------
                                                            
       Total operating expenses                245,968      222,057      160,413

                                           -----------  -----------  -----------
    Operating income (loss)                    (12,308)      13,303       15,281

Nonoperating income (expense):
    Interest and investment income               4,635        3,594          965
    Interest  and other expense                 (3,925)      (3,909)     (2,825)
    Foreign exchange gain (loss)                    (4)       1,088         203
    Arbitration settlement and royalty charge        -            -      (1,400)
                                            -----------  -----------  ----------
      Total nonoperating income (expense)           706         773      (3,057)
                                            -----------  -----------  ----------
Income (loss) before income taxes               (11,602)      14,07       12,224
Income tax provision (benefit)                     (300)      2,815        2,200
                                            -----------  -----------  ----------
Net income (loss)                           $   (11,302)  $  11,261   $   10,024
                                            ===========   ===========  =========


Net income (loss) per share                 $     (0.51)  $    0.53    $    0.53
                                            ===========   ===========  =========

Weighted average common and dilutive common
     equivalent shares                           22,005       21,306      19,062
                                            ===========   ===========  =========

See accompanying notes to consolidated financial statements



                                       30

<PAGE>



 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY


<TABLE>
<CAPTION>

                                                                         Notes                  Unrealized    Foreign

                                                   Common stock       receivable   Retained      loss on     currency      Total
                                                   and warrants          from      earnings    short term   translation shareholders
                                                 ---------------------
                                                   Shares     Amount  shareholders (deficit)   investments  adjustment     equity
- ------------------------------------------------------------------------------------------------------------------------------------
 (In thousands)     
<S>                                                <C>         <C>         <C>       <C>           <C>           <C>     <C>

Balance at December 31, 1993 ...................    18,068   $  52,036    $(215)    $(12,586)    $   --      $    (345)  $ 38,890
Issuance of stock ..............................       663       3,722      --          --           --            --       3,722
Issuance of warrant ............................      --           700      --          --           --            --         700
Net income .....................................      --          --     (10,024)       --           --            --      10,024
Translation adjustments ........................      --          --        --          --           --            309        309
Unrealized loss on short term investments ......      --          --        --          --           (71)          --        (71)
                                                   --------  ---------   ---------  ---------   ---------    ---------    --------
Balance at December 31, 1994 ...................    18,731      56,458     (215)       (2,562)       (71)          (36)     53,574
Issuances of stock under employee plans ........       811       7,283      --          --            --            --       7,283
Issuance of stock under common stock offering ..     2,100      57,248      --          --            --            --      57,248
Tax benefit from stock option exercises ........      --           160      --          --            --            --         160
Collection of notes receivable .................      --          --        215         --            --            --         215
Net income .....................................      --          --        --        (11,261)        --            --      11,261
Translation adjustments ........................      --          --        --          --            --            23          23
Unrealized gain (loss) on short term investments      --          --        --          --            173           --         173
                                                  --------   ---------   ---------  ---------    ---------    ---------   --------
Balance at December 31, 1995 ...................    21,642     121,149      --          8,699         102          (13)    129,937
Issuances of stock under employee plans ........       530       5,774      --           --            --           --       5,774
Issuance of stock in connection with acquisition       141       2,857      --           --            --           --       2,857
Repurchases of common stock ....................      (250)     (3,545)     --           --            --           --     (3,545)
Net income .....................................      --          --        --        (11,302)         --           --    (11,302)
Translation adjustments ........................      --          --        --           --            --           406        406
Unrealized gain (loss) on short term investments      --          --        --           --           (82)          --        (82)
                                                  ========  ==========   =========  =========    =========    =========   ========
Balance at December 31, 1996 ...................    22,063  $ 126,235    $  --      $  (2,603)   $     20     $     393   $124,045
                                                  ========  ==========   =========  =========    =========    =========   ========
</TABLE>



See accompanying notes to consolidated financial statements


                                       31

<PAGE>



 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


 Years ended December 31                               1996        1995          1994
 (In thousands)
 <S>                                                 <C>          <C>          <C>    
 Cash flow from operating activities:
  Net income (loss) ............................   ($ 11,302)   $  11,261    $  10,024
  Adjustments to reconcile net income (loss)
  to cash flows from operating activities:
     Depreciation and amortization expense .....      10,140        8,042        7,692
     Deferred revenue amortization .............          --          (79)        (237)
      Rental inducement receipts ...............          --         (111)         720
     Other .....................................         178          673           63
  Decrease (increase) in assets:
     Accounts receivable, net ..................       5,501      (10,519)      (2,178)
     Inventories ...............................      (7,073)      (7,618)        (242)
     Other current and noncurrent assets .......      (2,603)      (3,020)          58
     Deferred income taxes .....................       1,191          248       (1,822)
  Increase (decrease) in liabilities:
     Accounts payable ..........................      (2,102)       5,180       (2,383)
     Accrued compensation and benefits .........         807        1,909          269
     Customer advances .........................       1,920        1,080          --
     Accrued liabilities .......................       1,608        2,777        1,110
     Income taxes payable ......................      (2,133)       1,561        1,015
                                                  ----------    ---------    ---------
Net cash provided (used) by operating activities      (3,868)      11,384       14,089
                                                  ----------    ---------    ---------
Cash flow from investing activities:
  Acquisition of property and equipment ........     (10,359)     (14,553)      (7,869)
  Costs of capitalized patents .................        (762)        (915)        (217)
  Purchase of short-term investments ...........     (75,663)    (115,527)     (26,524)
  Maturities of short-term investments .........      83,247       68,600        6,000
                                                  ----------    ---------    ---------
Net cash used by investing activities ..........      (3,537)     (62,395)     (28,610)
                                                  ----------    ---------    ---------
Cash flow from financing activities:
  Issuance of common stock .....................       5,774        7,283        3,722
  Net proceeds from common stock offering ......          --       57,248           --
  Repurchase of common stock ...................      (3,545)          --           --
  Collection of notes receivable ...............          66          145           --
  Bank loan repayments .........................          --           --       (1,311)
  Proceeds from issuance of note ...............          --           --       29,348
  Payment of long-term debt ....................      (1,930)      (1,597)      (1,466)
                                                  ----------    ---------    ---------
Net cash provided by financing activities ......         365       63,079       30,293
                                                  ----------    ---------    ---------
Increase (decrease) in cash and cash equivalents      (7,040)      12,068       15,772
Cash and cash equivalents, beginning of period .      29,711       17,643        1,871
                                                  ----------    ---------    ---------
Cash and cash equivalents, end of period .......   $  22,671    $  29,711    $  17,643
                                                  ==========    =========    =========
</TABLE>


 See accompanying notes to consolidated financial statements


                                       32

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -- Summary of significant accounting policies:

     Use of estimates.  The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Due  to  the  inherent  nature  of  those
estimates, actual results could differ from expectations.

     Principles of consolidation.  The consolidated financial statements include
the accounts of Trimble  Navigation  Limited (the Company) and its  wholly-owned
subsidiaries  after  elimination  of  all  material  intercompany  balances  and
transactions.

     Foreign  currency  translation.  Assets and  liabilities  of the  Company's
foreign subsidiaries are translated into U.S. dollars at year-end exchange rates
and revenues and expenses are translated at average rates prevailing  during the
year.  Local  currencies are considered to be the functional  currencies for the
Company's  non-U.S.  subsidiaries.  Translation  adjustments  are  deferred in a
separate component of shareholders'  equity.  Foreign currency transaction gains
and losses are included in results of operations as incurred.

     Forward foreign currency exchange contracts. In the second quarter of 1995,
the  Company  adopted a policy of  hedging  its  exposure  to  foreign  currency
transactions  to  minimize  the effect of changes in foreign  currency  exchange
rates on  consolidated  results of operations.  To date, the Company has entered
into  forward  foreign  currency  exchange  contracts  to offset the  effects of
changes  in  exchange  rates on  foreign-denominated  intercompany  receivables.
Realized  and  unrealized  gains and losses on the  contracts  are  included  in
results of  operations.  At December 31, 1996,  the Company had forward  foreign
currency exchange contracts to sell $7,895,000 of Japanese Yen and $1,290,000 of
German Marks, and to buy $2,380,000 of New Zealand dollars,  at contracted rates
which mature over the next five months.

     Cash and cash equivalents.  Cash and cash equivalents  include all cash and
highly liquid investments with original  maturities of three months or less. The
carrying amount of cash and cash equivalents  approximates fair value because of
the short maturity of those instruments.

     Short-term  investments.  The Company  has  classified  all its  short-term
investments as "available for sale."  Available-for-sale  securities are carried
at fair value, with the unrealized holding gains and losses, net of tax effects,
reported in a separate component of shareholders' equity. Fair value is based on
quoted market  prices.  The cost of debt  securities in this  classification  is
adjusted for  amortization  of premiums and  accretion of discounts to maturity.
Such  amortization,  as well as  interest,  dividends,  and  realized  gains and
losses,  is included in interest and investment  income.  The cost of securities
sold is based on the specific identification method.

     At December 31, 1996,  the Company's  short-term  investments  consisted of
U.S.  Treasury  securities  totaling  $59,867,000 at cost,  which had unrealized
gains of $20,000 and had original maturities of less than one year from the date
of purchase. At December 31, 1995, the Company's short-term  investments in U.S.
Treasury  securities and Federal  Government  Agencies had a cost of $67,323,000
and had unrealized gains of $128,000.

     Concentration  of credit risk.  In entering into forward  foreign  exchange
contracts,  the Company has assumed the risk which might arise from the possible
inability  of  counterparties  to  meet  the  terms  of  their  contracts.   The
counterparties to these contracts are major multinational  commercial banks, and
the Company does not expect any losses as a result of counterparty defaults. The
Company performs ongoing credit  evaluations of its customers and generally does
not require  collateral.  The expenses recorded for doubtful accounts receivable
were  $1,159,000  in 1996,  and  $352,000 in 1995,  and a credit of $272,000 was
recorded in 1994.

     Inventories.  Inventories  are  stated  at the  lower of  standard  cost or
market. Standard costs approximate average actual costs.

     In December 1995,  the Company  announced  that it had  temporarily  halted
shipments of certain tracking and  communications  products  deliverable under a
large  contract  with a  single  customer.  Inventories  included  approximately
$3,348,000  of materials at December 31, 1996,  and  $5,400,000  of materials at
December 31, 1995, that had been received in anticipation of making shipments to
the customer.  Shipments under this contract are expected to resume in the first
half of 1997 and, accordingly, the Company has not provided any reserves against
the products included in inventory.  However, there can be no assurance that the


                                       33

<PAGE>

shipments  under this contract will be resumed.  If shipments under the contract
are not resumed,  related inventories would represent more than two years' sales
to other customers of the products.

     Revenue  recognition.  The Company recognizes revenue from product sales at
the time of  shipment,  except as to  revenue  deferred  for  extended  warranty
obligations.  Substantially  all technology  licenses and research  revenue have
consisted  of initial  license  fees and  royalties,  and were  recognized  when
earned.

     Product warranty.  The Company provides for estimated warranty costs at the
time of sale.  The  warranty  period  is  generally  for one year  from  date of
shipment except for aviation  products,  for which the period is generally three
years and for the HT9100 product for  Honeywell,  which has a five year warranty
period.

     Advertising Costs. The Company expenses the production costs of advertising
as incurred. Advertising expenses were $7,587,000, $7,683,000, and $7,136,000 in
1996, 1995, and 1994, respectively.

     Stock  Compensation.  In  accordance  with the  provisions  of Statement of
Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for  Stock-Based
Compensation," the Company applies  Accounting  Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related  Interpretations
in accounting for its stock option plans and stock  purchase plan.  Accordingly,
it does not recognize  compensation  cost for stock options granted at or above.
Note 11 to the Consolidated Financial Statements describes the plans operated by
the Company  and  contains a summary of the pro forma  effects to  reported  net
income and  earnings  per share for 1996 and 1995 if the  Company had elected to
recognize  compensation  cost based on the fair value of the options  granted at
grant date as prescribed by SFAS No. 123.

     Depreciation and amortization. Depreciation of property and equipment owned
or under capitalized leases is computed using the straight-line  method over the
shorter of the  estimated  useful lives or the lease  terms.  Useful lives range
from three years for  machinery  and  equipment to five years for  furniture and
fixtures. Amortization of intangibles is computed using the straight-line method
over periods of four years or less.

     Interest.  All  interest  costs  incurred  have been  charged  to  interest
expense.

     Net income (loss) per share.  Per share data is computed using the weighted
average  number of  shares  of common  stock  outstanding  and  dilutive  common
equivalent  shares  arising  from the  assumed  exercise  of stock  options  and
warrants using the treasury stock method.

Note 2 -- The Company, industry segment, geographic, and customer information:

     The Company  operates in a single industry segment as a leading supplier of
products that determine  precise  geographic  location and time using the Global
Positioning  System (GPS).  The Company  develops,  manufactures and markets its
products for applications in surveying and mapping, tracking and communications,
OEM,  avionics and military  markets.  The Company sells its products  through a
direct sales force located in twelve  countries,  as well as through a worldwide
network of dealers,  distributors and authorized  representatives.  Research and
development  activities are conducted at the Company's  facilities in Sunnyvale,
California;  Austin,  Texas;  and  Christchurch,  New Zealand.  Manufacturing is
performed primarily in Sunnyvale,  California, and to a lesser extent in Austin,
Texas.

     The following table sets forth revenue by market. Revenues in 1994 and 1995
have been reclassified to conform with the Company's  organization  structure in
1996.
        


                                          1996         1995        1994
                                                  (In thousands)

   Commercial Systems                   $158,273     $162,393    $127,817
   Software & Component Technologies      38,054       35,416      18,809
   Aerospace                              37,333       37,551      29,068
                                        --------     --------    --------
    Total revenue                       $233,660     $235,360    $175,694



                                       34

<PAGE>



     Information regarding geographic areas is as follows:

       

<TABLE>
<CAPTION>


                                               Geographic Area
                                    --------------------------------------
                                                 Europe /     Pac. Rim, Asia
                                     Domestic    Middle East  and Japan    Eliminations  Total
- -------------------------------------------------------------------------------------------------
(In thousands)
<S>                                   <C>           <C>            <C>         <C>         <C>   

1996                                                                                                                          
  Sales to unaffiliated customers   $  164,663    $  47,972     $   21,025   $     --     $ 233,660
  Intergeographic transfers             70,366           --          1,474     (71,840)   $      --
                                    ----------   -----------    ----------   ---------    ---------   
Total revenue ..........            $  235,029   $   47,972     $   22,499   $ (71,840)   $ 233,660
                                    ----------   -----------    ----------   ---------    ---------  
  Operating income (loss)           $  (18,670)  $   14,917     $   (8,382)  $    (173)   $ (12,308)
  Identifiable assets ....          $  166,405   $   14,355     $   10,037   $    (956)   $ 189,841

1996                                                                                                                    
  Sales to unaffiliated customers   $  158,800   $    51,040    $   25,520   $      --    $ 235,360
  Intergeographic transfers             42,621            --         1,361     (43,982)   $      --
                                    ----------   -----------    ----------   ---------    ---------  
Total revenue ..........            $  201,421   $    51,040    $   26,881   $ (43,982)   $ 235,360
                                    ----------   -----------    ----------   ---------    --------- 
  Operating income (loss)           $    3,902   $    19,000     $  (8,858)  $    (741)   $  13,303
  Identifiable assets ....          $  170,390   $    14,112     $  13,105   $    (844)   $ 196,763

1994                                                                                                                        
  Sales to unaffiliated customers   $  134,112   $     38,439    $   3,143   $     --     $ 175,694
  Intergeographic transfers             16,480              5          860     (17,345)         --
                                    ----------   ------------    ---------   ---------    ---------   
Total revenue ..........            $  150,592   $     38,444    $   4,003   $ (17,345)   $ 175,694
                                    ----------   ------------    ---------   ---------    ---------   
  Operating income (loss)           $    7,279   $     14,917    $  (6,841)  $     (74)   $  15,281
  Identifiable assets ....          $   92,109   $     12,762    $   4,540   $     (48)   $ 109,363

</TABLE>


     Transfers between domestic and foreign  geographic areas are made at prices
based on total costs and  contributions  of the supplying  geographic  area. The
Company's  subsidiaries  in the Pacific Rim, Asia and Japan have derived revenue
from  commissions  from domestic  operations  in each of the periods  presented.
These  commission  revenues and expenses  are  excluded  from total  revenue and
operating  income (loss) in the table above.  Commencing in April 1995, sales to
unaffiliated  customers in Japan were made by the Company's Japanese subsidiary.
Previously, such sales were treated as domestic export sales.

     Export  revenue  (defined  as sales to  unaffiliated  customers  in foreign
countries  made by the Company's  domestic  operations) as a percentage of total
revenue was as follows:

                                   1996         1995         1994
- ---------------------------------------------------------------------

 Europe/Middle East                      2 %         2 %          1 %
 Pacific Rim, Asia and Japan            13          12           20
 Other                                  10           7            7
                                  ---------    --------    ---------
                                        25 %        21 %         28 % 

     No single  customer  accounted  for 10% or more of total  revenues in 1996,
1995 or 1994.

     The geographic  distribution of sales to unaffiliated customers by customer
location as a percentage of total revenue was as follows:



                                    1996        1995         1994
- ----------------------------------------------------------------------

 United States                           53 %         47 %        49 % 
 Europe/Middle East                      21           23          22
 Pacific Rim, Asia and Japan             19           23          22
 Other                                    7            7           7
                                  ----------  -----------  ----------
                                        100 %        100 %       100 %


                                       35

<PAGE>


Note 3 -- Balance sheet components:



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

Inventories
     Raw materials ...............   $24,145   $15,892
     Work-in-process .............     5,174     6,782
     Finished goods ..............     9,539     8,527
                                     -------   -------
                                     $38,858   $31,201
                                     =======   =======

Property and equipment
     Machinery and equipment .....   $52,277   $45,516
     Furniture and fixtures ......     4,758     4,113
     Leasehold improvements ......     6,231     5,483
                                     -------   -------
                                      63,266    55,112
     Less accumulated depreciation    41,762    35,361
                                     -------   -------
                                     $21,504   $19,751
                                     =======   =======

Note 4 -- Bank 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%.  No  borrowings  were made under the line of credit during
1996 and 1995.  Under the line of credit the Company is  restricted  from paying
dividends.

     At December 31,  1996,  the Company was  contingently  liable to a Japanese
bank for  $4,146,000 at year end exchange  rates arising from  customers'  notes
receivable which the Company sold with recourse to the bank. The  implementation
of a new accounting standard, if adopted early, would have increased liabilities
and accounts  receivable by this amount.  The Company will adopt this accounting
standard on January 1, 1997, as required.

Note 5 -- Acquisition

     On July 2, 1996, the Company  purchased  certain assets and assumed certain
liabilities  of  Terra  Corporation  (Terra),  a New  Mexico  corporation  which
manufactured  components for the aviation market, 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 Company's results of operations  include the results
of  operations  of Terra  Corporation  from July 2, 1996.  The Company  recorded
$3,189,000  of  goodwill on the  acquisition.  The  Company is  amortizing  this
goodwill  over five years.  As of December  31,  1996,  the Company had recorded
accumulated amortization of $318,900.

     Prior to its  acquition  by the  Company,  Terra had limited  revenues  and
operated  at  loss.  As  of  July  2,  1996,  Terra  had  cumulative  losses  of
approximately  $255,000. The amount of the loss is not determinable with respect
to individual periods. If the acquisition had occurred at January 1, 1995, based
on the purchase price recorded,  the Company would have recorded amortization of
goodwill and a reduction  of net income  before taxes of $637,800 in 1995 or $0.
03 per share and addtional  amortization of goodwill and an increase in net loss
before income taxes of $318,900 in 1996 or $ 0. 01 per share.

Note 6 -- Restructuring:

     During 1996, the Company recorded  restructuring charges of $2,134,000.  As
of  December  31,  1996,  $1,345,000  of  restructuring  costs  had  been  paid.
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.


                                       36

<PAGE>


Note 7 -- Long-term debt and other noncurrent liabilities:


Long-term debt consists of the following:

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

Subordinated notes ............   $29,507   $29,423
Capitalized leases (Note 8) ...      --         631
Equipment financing obligations       316     1,699
Other .........................     1,431     1,577
                                  -------   -------
                                   31,254    33,330
Less-current portion ..........       316     2,014
                                  -------   -------
Noncurrent portion ............   $30,938   $31,316
                                  =======   =======

     Scheduled  payments of equipment loan obligations are as follows:  $316,000
in 1997.

     During June 1994, the Company issued $30 million of subordinated promissory
notes bearing  interest at an annual rate of 10% and with  principal due on June
15,  2001.  Interest  payments  are  due  monthly  in  arrears.  The  notes  are
subordinated to the Company's  senior debt, which is defined as all pre-existing
indebtedness  for borrowed  money and certain future  indebtedness  for borrowed
money (including,  subject to certain restrictions,  secured bank borrowings and
borrowed money for the acquisition of property and capital  equipment) and trade
debt  incurred in the ordinary  course of business.  If the Company  prepays any
portion of the  principal,  it is  required  to pay  additional  amounts if U.S.
Treasury  obligations of a similar maturity exceed a specified yield.  Under the
agreement the Company is restricted from paying dividends.

     The  issuance  of the notes also  included  warrants  entitling  holders to
purchase  400,000  shares of common  stock at a price of $10.95 per share at any
time through June 15, 2001. The warrants are included in shareholders' equity at
their appraised fair value of $700,000 at the time of issue. The net proceeds of
the notes were $29,348,000 after issuance costs of $652,000. The notes are shown
under  noncurrent  liabilities,  net of appraised  fair value  attributed to the
warrants.  The value of the warrants and the issuance costs are being  amortized
and included in interest expense using the interest rate method over the term of
the  subordinated  promissory  notes.  The effective annual interest rate on the
notes is 11.5%.  Under the terms of the note,  the Company is required to, among
other things, meet certain specified amounts of tangible net worth.

     Equipment  financing  obligations are payable over 60 month terms ending no
later than 1997, bear interest at annual rates ranging from  approximately 10 to
11%, and are secured by the equipment financed.  At December 31, 1996, equipment
financing obligations outstanding were $316,000, of which all is included in the
current portion of long-term debt.

     Other  long-term debt primarily  represents  deferred rent  obligations and
rental  inducements  on certain of the Company's  leased  facilities.  The lease
agreements  provide for scheduled  increases in lease payments over the terms of
the leases.

Note 8 -- Lease obligations and commitments:

     The  Company's  principal  facilities in the United States are leased under
noncancelable  operating  leases which expire at various dates from 1998 through
2001.  The  Company has options to renew  these  leases for an  additional  five
years.  The  Company's  United  Kingdom  subsidiary  leases a facility  under an
operating lease which expires in 2015.


                                       37

<PAGE>

     At  December  31,  1996,  the Company had no  outstanding  equipment  lease
obligations.

 Future minimum payments required under noncancelable operating leases
 are as follows:
                                               Operating
                                                Leases
- --------------------------------------------------------
 (In thousands)

      1997                                      $ 5,340
      1998                                        5,220
      1999                                        3,738
      2000                                        3,308
      2001                                          781
Thereafter                                        1,882
                                                =======
Total                                           $20,269
                                                =======

Rent expense on operating leases was $6,004,800 in 1996, $5,577,000 in 1995
and $3,933,000 in 1994.

Note 9 -- Fair value of financial instruments:

     Statement of Financial Accounting Standard No. 107, "Disclosures about Fair
Value  of  Financial   Instruments,"   requires   disclosure  of  the  following
information about the fair value of certain  financial  instruments for which it
is practicable  to estimate that value.  None of the financial  instruments  are
held or issued for trading purposes. The carrying amounts and fair values of the
Company's financial instruments are as follows:


                                                  Carrying          Fair
                                                   Amount          Value
                                                ------------    ------------
 December 31,                                               1996
- ----------------------------------------------------------------------------
 (In thousands)

Assets:
Cash and cash equivalents (Note 1) ........   $   22,671         $ 22,671
Short-term investments (Note 1) ...........       59,867           59,867
Forward foreign exchange contracts (Note 1)          429               76

Liabilities:
Subordinated notes (Note 7) ...............       29,507           30,838
Equipment financing obligations (Note 7) ..          316              318


     The fair  value of the  subordinated  notes  has  been  estimated  using an
estimate of interest rate the Company would have had to pay on issuance of notes
with a similar  maturity,  and discounting the cash flows at that rate. The fair
value of  equipment  loans have been  estimated  in a similar  manner.  The fair
values do not give an  indication  of the amount that the Company  would have to
pay to extinguish any of this debt.

     The fair value of forward foreign exchange  contracts is estimated based on
quoted market prices of comparable contracts.  The difference between fair value
and carrying amount primarily reflects the difference between the exchange rates
in effect when  contracts  were entered into and the exchange rates in effect at
December 31, 1996.


                                       38

<PAGE>


Note 10 -- Income taxes:

     The income tax provision (benefit) consists of the following:


 Years ended December 31,           1996      1995       1994
- ---------------------------------------------------------------
 (In thousands)
Federal:
    Current ...................   $(2,557)   $1,380     $2,307
    Deferred ..................     1,208       389     (1,597)
                                  -------    ------    -------
                                   (1,349)    1,769        710
                                  -------    ------    -------
State:
    Current ...................         5         4        303
    Deferred ..................        --        --         --
                                  -------    ------    -------
                                        5         4        303
                                  -------    ------    -------
Foreign:
    Current ...................     1,060     1,183      1,412
    Deferred ..................       (16)     (141)      (225)
                                  -------    ------    -------
                                    1,044     1,042      1,187
                                  -------    ------    -------
 Income tax  provision (benefit)    $(300)   $2,815     $2,200
                                  =======    ======    =======


     The domestic income (loss) before taxes  (including  royalty income subject
to foreign withholding taxes) was approximately ($13,300,000),  $12,800,000, and
$8,800,000 in 1996, 1995 and 1994.

     The income tax  provision  (benefit)  differs  from the amount  computed by
applying the  statutory  federal  income tax rate to income  before  taxes.  The
sources and tax effects of the differences are as follows:



 Years ended December 31,                     1996        1995       1994
- ---------------------------------------------------------------------------
 (In thousands)

Expected tax at 35% in all years ........   $(4,061)    $4,926      $4,278
Tax account valuation adjustments .......    (1,630)    (2,464)     (2,419)
Operating loss not utilized .............     4,577         --          --
Foreign withholding taxes ...............       170        242          --
Foreign tax rate differential ...........       277        356          (7)
State income taxes ......................         5          4         303
Benefit of Foreign Sales Corporation, net        --       (312)         --
Other ...................................       362         63          45
                                             ------     ------      ------
Income tax provision (benefit) ..........     $(300)    $2,815      $2,200
                                             ======     ======      ======
   Effective tax rate ...................       (3%)       20%         18%


                                       39

<PAGE>

 
     The components of deferred taxes consist of the following:

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

 Deferred tax liabilities:
     Goodwill ...........................................$  1,139    $    --
     Individually immaterial items ......................     229        650
                                                          -------    -------
     Total deferred tax liabilities .....................   1,368        650
                                                          -------    -------

 Deferred tax assets:
     Inventory valuation differences ....................   6,645      4,437
     Federal credit carryforwards .......................   5,793      5,575
     State credit carryforwards .........................   1,626        662
     Federal net operating loss (NOL) carryforward.......   1,410         --
     Deferred revenue ...................................   1,371         --
     Other individually immaterial items ................   4,847      4,152
                                                          -------    -------
     Total deferred tax assets ..........................  21,692     14,826

     Valuation allowance ................................ (19,941)   (12,602)
                                                          -------    -------
     Total deferred tax assets ..........................   1,751      2,224
                                                          -------    -------

 Total net deferred tax assets ..........................$    383    $ 1,574
                                                          =======    =======


     The NOL and  credit  carryforwards  listed  above  expire in the years 1999
through 2011.

     The valuation allowances  increased by $1.3 million in 1995.  Approximately
$5.5 million of the valuation  allowance at December 31, 1996 relates to the tax
benefits  of stock  option  deductions  which will be  credited  to equity  when
realized.

Note 11 -- Shareholders' equity:

     Employees  and others have been granted  options to purchase  common shares
under stock option plans adopted in 1990, 1992 and 1993. Details of these plans,
the 1988 Employee Stock Purchase Plan and similar compensation plans are set out
below.

     1993 Stock Option Plan In 1992,  the Company's  Board of Directors  adopted
the 1993 Stock Option Plan to replace the 1983 Stock  Option Plan which  expired
in January  1993.  The 1993 Stock  Option  Plan  provides  for the  granting  of
incentive and  nonstatutory  stock options for up to 2,000,000  shares of Common
Stock to employees,  consultants  and directors of the Company.  Incentive stock
options  may be granted for  exercise  prices that are not less than 100% of the
fair market value of Common Stock on the date of grant. All options granted have
63 month terms and vest at a rate of 20% at the first  anniversary  of grant and
monthly  thereafter at an annual rate of 20%, with full vesting occurring at the
fifth  anniversary of grant.  The exercise price of  nonstatutory  stock options
must be at least 85% of the fair  market  value of  Common  Stock on the date of
grant. As of December 31, 1996, options on 1,919,481 shares were outstanding and
393,439 shares were available for future grant under the 1993 Stock Option Plan.
Options outstanding under the 1983 Stock Option Plan were for 455,265 shares.

     1990 Director  Stock Option Plan In December  1990,  the Company  adopted a
Director  Stock Option Plan under which the Company has reserved  280,000 shares
of Common Stock for options to be granted to nonemployee directors.  At December
31, 1996,  options were  outstanding  on 158,333  shares and 175,833 shares were
available for future grants under the Director Stock Option Plan.

     1992  Management  Discount Stock Option Plan In 1992 the Company's Board of
Directors and  shareholders  approved the 1992 Management  Discount Stock Option
Plan ("Discount  Plan").  Under the Discount Plan,  300,000  nonstatutory  stock
options were reserved for grant to management  employees at exercise prices that
are  significantly  discounted from the fair market value of Common Stock on the
dates of grant.  Options are generally  exercisable  six months from the date of


                                       40

<PAGE>

grant. As of December 31, 1996, 129,974 shares were available for future grants.
For accounting  purposes,  compensation  cost is measured by the excess over the
discounted exercise prices of the fair market value of Common Stock on the dates
of option grant.  Noncash compensation cost related to options exercised in 1996
amounted to $48,744.  Accrued  compensation  and  benefits at December 31, 1996,
include $305,000 of compensation cost relating to outstanding  options on 44,804
shares.

     1988 Employee  Stock  Purchase  Plan In 1988,  the Company  established  an
employee stock purchase plan under which  1,700,000  shares of common stock were
reserved for issuance.  The plan permits full-time  employees to purchase Common
Stock through payroll deductions at 85% of the lower of the fair market value of
the  Common  Stock at the  beginning  or at the end of each  six-month  offering
period.  In 1996,  194,323  shares  were  issued  under  the plan for  aggregate
proceeds of $2,387,400.  At December 31, 1996, the number of shares reserved for
future purchases was 305,779.

     As stated in Note 1, the  Company  has elected to follow APB 25 and related
Interpretations  in accounting for its employee stock options and stock purchase
plans.  The  alternative  fair  value  accounting  provided  for under  SFAS 123
requires use of option pricing models that were not developed for use in valuing
employee  stock  options.  Under  APB 25,  because  the  exercise  price  of the
Company's employee stock options equals the market price of the underlying stock
on date of grant, no compensation expense is recognized.

     Pro forma  information  regarding  net  income  and  earnings  per share is
required by SFAS 123 and has been determined as if the Company had accounted for
its employee stock options and purchases  under the Employee Stock Purchase Plan
using the fair value method of that Statement.  The fair value for these options
was estimated at the date of grant using a  Black-Scholes  option  pricing model
with the following weighted-average assumptions for 1995 and 1996:

                                               1996       1995
                                             -------    -------
Expected dividend yield ..............       $   --     $   --
Expected stock price volatility ......        58.76%     59.48%
Risk-free interest rate ..............         6.29%      6.79%
Expected life of options after vesting         0.77       0.77



     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded  options which have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly  different from those of traded options and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of its employee stock options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the options' vesting period.  The estimated
fair value of purchases  under the Employee  Stock  Purchase Plan is expensed in
the year of purchase.  The Company's pro forma  information (in thousands except
for per share data) is as follows:

                                          1996                   1995
                                     ----------------     ----------------

Net income - as reported              $      (11,302)      $        11,261

Net income - pro forma                $      (15,806)      $         9,166

Earnings per share - as reported      $        (0.51)      $          0.53

Earnings per share - pro forma        $        (0.72)      $          0.44



     Because  the fair  value  method  is  applicable  only to  options  granted
subsequent to December 31, pro forma effects will not be fully  reflected  until
1997.  Accordingly,  these  figures  are  unlikely to be  representative  of the
effects on reported net income for future years.


                                       41

<PAGE>

     Exercise prices for options outstanding as of December 31, 1996 ranged from
$5.00 to $29.625.  The  weighted  average  remaining  contractual  life of those
options is 3.63 years. In view of the wide range of exercise prices, the Company
considers it  appropriate  to provide the following  additional  information  in
respect of options outstanding:


<TABLE>
<CAPTION>

                                           Total                                           Currently exercisable
                        Number        Weighted-average        Weighted- average          Number       Weighted- average
      Range          (in thousands)    exercise price      remaining contractul life  (in thousands)   exercise price
- -------------------  --------------  --------------------  -------------------------  --------------  ------------------
<S>                       <C>                  <C>                         <C>              <C>                <C>    

$5.0000-$8.6250              560                $8.02                       1.25             480                $7.98

$8.8750-$12.2500             447                $9.90                       2.88             244                $9.90

$12.5000-$13.1250            201               $13.09                       3.18              87               $13.04

$15.3750-$15.3750          1,080               $15.38                       4.95              --                  $--

$16.8750-$23.0000            285               $18.96                       4.78              79               $18.81

$29.6250-$29.6250              3               $29.63                       3.58               1               $29.63
- -------------------  --------------  --------------------  ------------------------  --------------  ------------------
$5.0000-$29.6250           2,576              $13.06                        3.63             891                $9.99

</TABLE>


     The fair value of each  option  granted is  estimated  on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:

     Activity  during  1996,  1995 and 1994  under  the  combined  plans  was as
follows:


IN THOUSANDS, EXCEPT FOR PER SHARE DATA

<TABLE>
<CAPTION>
                                                       1996                         1995                      1994
                                                           Weighted average           Weighted average          Weighted average
                                               Options      exercise price    Options  exercise price   Options  exercise price
- --------------------------------------------------------   ----------------   -------  ---------------   ------  ----------------
<S>                                              <C>               <C>         <C>           <C>         <C>             <C>
          

Outstanding at beginning of year ...............  2,525            $13.49       2,392          $8.98      2,339           $7.46
     Granted ...................................   1,522           $16.57         907         $21.19        667          $11.17
     Exercised .................................    (316)           $9.35        (663)         $7.49       (470)          $4.54
     Canceled ..................................  (1,154)          $19.61        (111)        $14.80       (144)          $8.90

Outstanding at end of year .....................   2,577           $13.06       2,525         $13.49       2,392          $8.98

Exercisable at end of year .....................     886            $9.99         764          $9.13         938          $7.70

Weighted-average fair value of options
    granted during year ........................                    $5.24                     $10.21

</TABLE>


     During  1996,  under a  program  approved  by the Board of  Directors  (the
"Board"),  all  employees,  with the  exception  of  officers,  were  offered an
exchange option to replace the stock options  previously issued to them with new
stock options (at an exchange ratio of 1 to 1, with a vesting period  commencing
on the date of exchange) at a new lower  price.  Options on 825,456  shares were
canceled  (reported  above as  cancellations)  and replaced  (reported  above as
options granted).

     401(k) Plan Under the Company's 401(k) Plan, U.S. employee participants may
direct the  investment of  contributions  to their accounts among certain mutual
funds and the Trimble  Navigation  Limited Common Stock Fund. The Fund purchased
33,981 shares of Common stock for an aggregate of $582,000 in 1996. The Company,
at its discretion,  matches individual  employee 401(k) Plan contributions up to
$100  per  month.  Company  matching  contributions  to  the  401(k)  Plan  were
$1,031,000 in 1996, $827,000 in 1995 and $665,000 in 1994.


                                       42

<PAGE>

     Profit  Sharing Plan In 1995,  the Company  introduced  an employee  profit
sharing plan in which all employees, excluding executives, participate. The plan
distributes  approximately  5% of quarterly  income  before taxes to  employees.
Payments under the plan during 1996 were $43,000, and during 1995 were $722,000.

     Common shares  reserved for future  issuances As of December 31, 1996,  the
Company has  reserved  3,581,908  common  shares for issuance  upon  exercise of
options  outstanding  and  options  available  for grant under the 1983 and 1993
Stock Option,  1990 Director Stock Option,  and 1992  Management  Discount Stock
Option plans and available for issuance  under the 1988 Employee  Stock Purchase
plan.

Note 12 -- Statement of cash flows data:

<TABLE>
<CAPTION>

Years ended December 31,                               1996          1995          1994
- -------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                      <C>         <C>             <C>    

 Supplemental schedule of noncash financing activities:

 Warrants issued with subordinated promissory notes   $     --     $      --    $       700
                                                     ----------   -----------   -----------
 Tax benefit from stock options exercises             $     --     $     160    $        --
                                                     ----------   -----------   -----------


 Supplemental schedule of noncash investing activities:

 Common stock issued for Terra Corporation            $   2,857    $      --    $        --
                                                     ----------   -----------   -----------

 Supplemental disclosure of cash flow information:

 Interest paid                                        $   3,457    $   3,678     $    2,753
                                                     ----------   -----------   -----------
 Income taxes paid                                    $     483    $   1,032     $    3,586
                                                     ----------   -----------   -----------
</TABLE>


Note 13 -- Litigation:

     Settled Matters In July 1994, a Federal judge held that the Company had not
adequately  complied  with the terms of the July 1993  arbitration  decision  in
connection with an arbitration case related to a dispute between the Company and
Avion Systems,  Inc. as to certain technology the Company licensed from Avion in
1991. On October 3, 1994, the Company entered into a settlement with Avion under
which Avion acknowledged  Trimble's full satisfaction of a July 1993 arbitration
award. Under the October 1994 settlement agreement Trimble paid Avion a total of
$1,400,000. Trimble and Avion have also executed a mutual release of claims.

     In  November  1994,  the  Company  was  named as a  defendant  in an action
commenced in the United States  District Court for the District of Rhode Island,
NovAtel Communication Ltd. v. Trimble Navigation Limited, C.A. No. 94-0498 (ML).
Plaintiff   NovAtel  sought   preliminary  and  permanent   injunctive   relief,
unspecified  damages and interest thereon,  costs and  disbursements,  including
reasonable  attorneys'  fees, based upon the Company's  alleged  infringement of
U.S. Patent No. 5,101,416 (the `416 patent).

     On April 21, 1995, the Company filed suit against NovAtel for  infringement
of the  Company's  U.S.  Patent No.  4,754,465  (the `465  patent) in the United
States  District  Court,  Northern  District of  California,  San Jose Division,
Trimble  Navigation  v. NovAtel  Communications  Ltd,  C.A. No.  C95-2405 SI. On
February  27,  1996,   Trimble  filed  a  Complaint   against   NovAtel  at  the
International  Trade Commission in Washington,  D.C. alleging unfair acts in the
importation of goods,  namely,  infringement  of its `465 patent,  and seeking a
permanent  exclusion  order to  interdict  the  importation  by or on  behalf of
NovAtel into this country of infringing GPS receivers  manufactured  and sold by
NovAtel.

     On July 16,  1996,  the  Company  and  NovAtel  entered  into an  agreement
resolving all matters in dispute and cross-licensing  certain technologies.  The
agreement ends all litigation between the parties.


                                       43

<PAGE>

     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  titled 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.

     Pending Matters 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 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. On
February  28, 1997,  a hearing was held by the Court,  which took the  Company's
motion to dismiss the second amended complaint under submission and indicated an
order would be issued in the near  future.  The Company does not believe that it
is possible to predict the outcome of this 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 due in part 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.

     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.  On February  20,  1997,  the Company and AMSC
signed an agreement to resume  shipments of product to AMSC,  and as a result of
this agreement the complaint has been dropped by the Company.

     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  filed an appeal with the California Court of Appeals for
the Sixth District.  On November 26, 1996, the summary  judgment was affirmed by
the California Court of Appeals for the Sixth District.  On January 8, 1997, the
individual petitioned for review by the Supreme Court of California. The Company
believes the Complaint is without merit and intends to defend itself vigorously.

     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 has filed a general  denial in answer to the Complaint,


                                       44

<PAGE>

and a trial date has been set for May 12,  1997.  The  Company  does not believe
that the Complaint will be successful.

     The Company is also a party to other  disputes  incidental to its business.
The Company  believes the ultimate  liability of the Company as a result of such
disputes,  if any,  would not be  material to its  overall  financial  position,
results of operations, or liquidity.

Note 14 -- Selected quarterly financial data (unaudited):

<TABLE>
<CAPTION>

                                          First       Second      Third      Fourth
                                          Quarter     Quarter     Quarter    Quarter
                                                                                                             
(In thousands, except per share data)
<S>                                       <C>         <C>         <C>        <C>    

1996
 Total revenue ........................   $56,722     $58,602     $54,086    $64,250
 Gross margin .........................   $30,707     $31,565     $26,632    $32,160
 Operating income (loss) ..............   $(1,594)    $(3,480)    $(8,466)   $ 1,232
 Net income (loss) ....................   $(1,146)    $(2,585)    $(8,834)   $ 1,263

 Net income (loss) per share ..........   $ (0.05)    $ (0.12)    $ (0.40)   $  0.06
                                        =========    ========   =========   ========   
1995
 Total revenue ........................   $49,897     $59,012     $62,826    $63,625
 Gross margin .........................   $29,815     $35,475     $35,290    $32,114
 Operating income .....................   $ 2,755     $ 5,480     $ 4,717    $  351
 Net income ...........................   $ 1,927     $ 4,287     $ 4,340    $  707

 Net income per share .................   $  0.10     $ 0.21      $0.2       $ 0.03
                                        =========   ========    =========   ========

</TABLE>



     Significant  quarterly  items  include the  following:  (i) revenues in the
fourth  quarter of 1995 were  supplemented  by proceeds  from a covenant  not to
compete,  and the sale of exclusive  distribution rights of $1,000,000;  (ii) in
the third  quarter of 1995 the Company  recorded  revenue of  $1,333,000  from a
technology  license;  (iii) in the first  quarter of 1996 the  Company  recorded
revenue of $1,080,000 from AMSC related to contract  renegotation  fees; (iv) in
the second quarter of 1996 the Company recorded  $1,000,000 from AMSC related to
contractual shutdown fees. (v) in the third quarter of 1996 the Company recorded
$2,046,000 of  restructuring  charges and recorded an additional  $88,000 in the
fourth quarter of 1996.



                                       45

<PAGE>



                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

       The Board of Directors and Shareholders Trimble Navigation Limited

     We have audited the  accompanying  consolidated  balance  sheets of Trimble
Navigation   Limited  as  of  December  31,  1996  and  1995,  and  the  related
consolidated statements of operations,  shareholders' equity, and cash flows for
each of the three years in the period ended  December 31, 1996.  Our audits also
included the  financial  statement  schedule  listed in the index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial  statements  and schedule  referred to above
present fairly, in all material respects, the consolidated financial position of
Trimble  Navigation  Limited at December 31, 1996 and 1995, and the consolidated
results of its  operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.




                                             ERNST & YOUNG LLP

Palo Alto, California
January 28, 1997





                                       46

<PAGE>






I
tem 9.   Changes in and Disagreements with Accountants on Accounting Financial 
          Disclosure

     Not applicable.



                                    PART III


Item 10. Directors and Executive Officers of the Registrant

     The  section  titled  "Nominees"  and the  section  titled  "Section  16(a)
Benefical Ownership  Reporting  Compliance" in the Company's Proxy Statement for
its 1997 annual  meeting of  shareholders  ("Proxy  Statement")  with respect to
directors of the Company and compliance of the directors and executive  officers
of the Company with Section  16(a) of the Exchange Act required by this item are
incorporated herein by reference.

     The  information  with  respect to the  executive  officers  of the Company
required by this item is included in Part I hereof under the caption  "Executive
Officers of the Registrant."


Item 11. Executive Compensation

     The following  sections in the Proxy Statement are  incorporated  herein by
reference:  "Compensation of Executive  Officers";  "Compensation of Directors";
"Compensation Committee Interlocks and Insider Participation"; and "Compensation
Committee Report."


Item 12. Security Ownership of Certain Beneficial Owners and Management

     The section titled  "Security  Ownership of Certain  Beneficial  Owners and
Management" in the Proxy Statement is incorporated herein by reference.


Item 13. Certain Relationships and Related Transactions

     The section titled "Certain Relantionships and Related Transactions" in the
Proxy Statement is incorporated herein by reference.


                                       47

<PAGE>




                                     PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)1. Financial Statements

     The following  consolidated  financial statements required by this item are
included in Part II Item 8 hereof under the caption  "Financial  Statements  and
Supplementary Data."

                                                            Page In This
                                                            Annual Report
                                                            On Form 10-K
                                                                                

     Consolidated Balance Sheets at December 31,
     1996 and December 31, 1995................                       37

     Consolidated Statements of Operations for
     each of the three years in the period
     ended December 31, 1996....................                      38

     Consolidated Statement of Shareholders'
     Equity for the three years
     ended December 31, 1996....................                      39

     Consolidated Statements of Cash Flows for
     each of the three years in the period
     ended December 31, 1996....................                      40

     Notes to Consolidated Financial Statements                    41-56

2. Financial Statement Schedules

     The following financial statement schedule is filed as part of this report:

                                                                Page In This
                                                                Annual Report
                                                                On Form 10-K

     Schedule II - Valuation and Qualifying  Accounts.......        S-1

     All other  schedules  have been  omitted as they are either not required or
not  applicable,  or the  required  information  is  included  in the  financial
statements or notes thereto.



                                       48

<PAGE>


3. Exhibits

Exhibit
Number

3.1 Restated Articles of Incorporation of the Company filed June 25, 1986.(1)

3.2 Certificate of Amendment of Articles of Incorporation of the Company filed 
    October 6, 1988. (1)

3.3 Certificate of Amendment of Articles of Incorporation of the Company filed 
    July 17,  1990. (1)

3.4 Bylaws of the Company, as amended. (1)

3.5 Certificate of Amendment of Bylaws of the Company dated December 19,1990.(2)

3.6 Certificate of Amendment of Bylaws of the Company dated November 25,1991.(5)

4.1 Specimen copy of certificate for shares of Common Stock of the Company. (1)

10.1(a)+ 1983 Stock Option Plan. (4)

10.1(b)+ Forms of Incentive and Nonstatutory Stock Option Agreements under the
         1983 Stock Option Plan. (8)

10.2+ 1988 Employee Stock Purchase Plan, as amended, and form of Subscription 
           Agreement. (8)

10.3 Form of Employee Restricted Stock Purchase Agreement. (1)

10.4 Form of Indemnification Agreement between the Company and its officers and
     directors. (1)

10.5 Loan Agreement dated December 21, 1984, between the Company and certain 
     lenders. (1)

10.6 Note Purchase Agreement dated July 7, 1986, between the Company and certain
     purchasers.(1)

10.7 Form of Common Stock Purchase Agreement dated March 1989 between the 
     Company and certain investors. (1)

10.8* Memorandum of Understanding dated March 11, 1988, and License Agreement
      dated September 5, 1988, between the  Company and AEG  Aktiengesellschaft,
      with Amendments  No. 1, No. 2, and No. 3 thereto, and Letter  Agreement  
      dated December 22, 1989,  between Trimble and Telefunken Systemtechnik 
      GmbH. (1)

10.9 Note Purchase Agreement dated December 6, 1988, between the Company and AEG
     Aktiengesellschaft. (1)

10.10 Master Equipment Lease Agreement dated April 26, 1990, between the Company
      and MATSCO Financial Corporation, and schedule of  lease extensions. (1)

10.11* Agreement dated February 6, 1989, between the Company and Pioneer 
       Electronic Corporation. (1)

10.15 International OEM Agreement dated May 30, 1989, between the Company and 
      Geotronics AB. (1)

10.16 Patent License Agreement dated January 18, 1990, between the Company and
      the United States Navy. (1)

10.18 Asset Purchase Agreement dated April 19, 1990, between the Company; TR
      Navigation Corporation,a subsidiary of the Company; and  Tracor Aerospace,
      Inc. (1)

10.19 Promissory Note dated April 20, 1990, for the principal amount of $400,000
      issued by TR Navigation Corporation to DAC  International, Inc. (1)

10.20 Guarantee dated April 20, 1990, between the Company and DAC International,


                                       49

<PAGE>


10.21 Indemnification Agreement dated April 20, 1990, between the Company; TR 
      Navigation Corporation, a subsidiary  of the Company;  DAC  International,
      Inc.; and Banner Industries, Inc. (1)

10.22 Distributor Agreement dated April 20, 1990, between TR Navigation 
      Corporation, a subsidiary of the Company, and DAC International, Inc. (1)

10.23 Distributor Agreement dated December 6, 1989, between the Company and DAC
      International, Inc. (1)

10.24 Lease Agreement dated April 26, 1990, between the Company and NCNB Texas 
      National Bank, Trustee for the Company's offices located at 2105 Donley  
      Drive, Austin, Texas. (1)

10.32 1990 Director Stock Option Plan, as amended, and form of Outside Director
      Non statutory Stock Option Agreement. (8)

10.35 Sublease Agreement dated January 2, 1991, between the Company, Aetna 
      Insurance Company, and Poqet Computer Corporation for property  located at
      650 North  Mary  Avenue, Sunnyvale, California. (2)

10.36 Lease Agreement dated February 20, 1991, between the Company, John 
      Arrillaga Separate Property Trust , and Richard T. Peery Separate Property
      Trust for property  located at 880 West  Maude, Sunnyvale, California. (2)

10.37 Share and Asset Purchase Agreement dated February 22, 1991, among the 
      Company and Datacom Group Limited and Datacom Software  Research Limited. 
      (3)

10.38 License Agreement dated June 29, 1991 between the Company and Avion 
      Systems, Inc. (3)

10.40 Industrial Lease Agreement dated December 3, 1991 between the Company 
      and Aetna Life Insurance Company for property located at 585 North Mary
      Avenue, Sunnyvale, California. (5)

10.41 Industrial Lease Agreement dated December 3, 1991 between the Company and
      Aetna Life Insurance Company for property located at 570 Maude Court, 
      Sunnyvale, California. (5)

10.42 Industrial Lease Agreement dated December 3, 1991 between the Company and 
      Aetna Life Insurance Company for property located at 580 Maude Court, 
      Sunnyvale, California. (5)

10.43 Industrial Lease Agreement dated December 3, 1991 between the Company and
      Aetna Life Insurance Company for property located at 490 Potrero Avenue, 
      Sunnyvale, California. (5)

10.44 Master Lease Agreement dated September 18, 1991 between the Company and 
      United States Leasing Corporation. (5)

10.45 Equipment Financing Agreement dated May 15, 1991 between the Company and 
      Corestates Bank, N.A. (5)

10.46+ 1992 Management Discount Stock Option and form of Nonstatutory Stock 
       Option Agreement (5).

10.48 Equipment Financing Agreement dated April 27, 1992 with AT&T Systems
      Leasing Corporation. (7)

10.49** Memorandum of Understanding dated December 24, 1992 between the Company
        and Pioneer Electronic Corporation. (7)

10.50+ 1993 Stock Option Plan, as amended, and Forms of Incentive and 
       Nonstatutory Stock Option Agreements. (14)

10.51 Revolving Credit Agreement for $15,000,000 dated January 27, 1993 with 
      Barclays Business Credit, Inc. (7)

10.52 $30,000,000 Note and Warrant Purchase Agreement dated June 13, 1994 with 
      John Hancock Life Insurance Company. (9)

10.53 Revolving Credit Agreement for $20,000,000 and $10,000,000, dated August 
     4, 1995, with The First National Bank of Boston and Mellon Bank N.A., 
     respectively.  (11)

10.54 Revolving Credit Agreement - First Amendment (12)


                                       50

<PAGE>

10.55 Revolving Credit Agreement - Second Amendment (12)

10.56 Revolving Credit Agreement - Third Amendment (13)

11.1 Statement of computation of earnings per share. (14)

21.1 Subsidiaries of the Company. (14)

23.1 Consent of Ernst & Young LLP, Independent Auditors (see page 59).

24.1 Power of Attorney (included on page 53).

27 Financial Data Schedule (14)

* Confidential treatment has been previously granted for certain
  portions of this exhibit pursuant to an order dated July 11, 1990.

** Confidential treatment has been previously granted for certain
   portions of this exhibit pursuant to an order dated March 2, 1995.

+ Management contract or compensatory plan or arrangement required to be
  filed as an exhibit to this  Annual  Report on Form 10-K  pursuant to Item 
  14(c) thereof.

(1) Incorporated by reference to identically numbered exhibits filed in
    response to Item 16(a),  "Exhibits," of the registrant's  Registration
    Statement on Form S-1, as amended (File No.  33-35333),  which became  
    effective  July 19, 1990.

(2) Incorporated by reference to identically numbered exhibits filed in
    response to Item 14(a),  "Exhibits," of the registrant's Report on Form 
    10-K for the fiscal year ended December 31, 1990.

(3) Incorporated by reference to identically numbered exhibits filed in
    response to Item 16,  "Exhibits  and Forms 8-K," of the  registrant's  
    Report on 10-Q for the  quarter  ended  September  30,  1991,  as  amended 
    on Form 8 filed February 11, 1992.

(4) Incorporated by reference to Exhibit No. 4.1 filed in response to Item 8, 
    "Exhibits," of the registrant's Registration Statement on Form S-8 
    (File No. 33-45167), which became effective January 21, 1992.

(5) Incorporated by reference to identically numbered exhibits filed in
    response to Item 16(a) "Exhibits," of the registrant's Registration 
    Statement on Form S-1(File No. 33-45990), which was filed February 18, 1992.

(6) Incorporated by reference to Exhibits 4.1, 4.2 and 4.3 filed in
    response to Item 8,  "Exhibits," of the Registrant's  Registration  
    Statement on Form S-8 (File No. 33-57522), which was filed on 
    January 28, 1993.

(7) Incorporated by reference to identically numbered exhibits filed in
    response to Item 14(a),  "Exhibits," of the Registrant's Report on Form 
    10-K for the fiscal year ended December 31, 1992.

(8) Incorporated by reference to identically numbered exhibits filed in
    response to Item 14(a),  "Exhibits," of the registrant's Report on Form 
    10-K for the fiscal year ended December 31, 1993.

(9) Incorporated by reference to identically numbered exhibits filed in
    response to Item 6A, "Exhibits," of the registrant's Report on Form 10-Q 
    for the quarter ended June 30, 1994.

(10) Incorporated by reference to identically numbered exhibits filed in
     response to Item 14(a),  "Exhibits," of the Registrant's Report on Form 
     10-K for the fiscal year ended December 31, 1994.

(11) Incorporated by reference to identically numbered exhibits filed in
     response to Item 14(a),  "Exhibits," of the Registrant's Report on Form 
     10-K for the fiscal year ended December 31, 1995.

(12) Incorporated by reference to identically numbered exhibits filed in
     response to Item 6A, "Exhibits," of the registrant's Report on Form 10-Q 
     for the quarter ended June 30, 1996.

(13) Incorporated by reference to identically numbered exhibits filed in
     response to Item 6A, "Exhibits," of the registrant's Report on Form 10-Q 
     for the quarter ended September 30, 1996.


                                       51

<PAGE>

(14) Filed herewith.

(b) Reports on Form 8-K

     No reports on Form 8-K were filed by the registrant during the fourth
     quarter ended December 31, 1996.



                                       52

<PAGE>




                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.


                           TRIMBLE NAVIGATION LIMITED



                            By:/s/ Charles R. Trimble
                               Charles R. Trimble,
                               President and Chief
                                Executive Officer


                                 March 24, 1997



                               POWER OF ATTORNEY

     Know all  persons  by these  presents,  that each  person  whose  signature
appears   below   constitutes   and   appoints   Charles   R.   Trimble  as  his
attorney-in-fact,  with  the  power  of  substitution,  for  him in any  and all
capacities,  to sign any amendments to this Report on Form 10-K, and to file the
same, with exhibits  thereto and other documents in connection  therewith,  with
the Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact,  or his substitute or substitutes,  may do or cause to be
done by virtue hereof.



                                       53

<PAGE>



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report on Form 10-K has been signed below by the following  persons on behalf of
the registrant and in the capacities and on the dates indicated:



Signature                     Capacity in which Signed                Date

                             President, Chief Executive          March 24, 1997
/s/  Charles R. Trimble      Officer (principal executive
                             officer) and Director

                             Vice President, Finance and         March 24, 1997
/s/  Dennis R. Ing           Chief Financial Officer
                             (principal financial and principal
                             accounting officer)

                                                    
/s/  Robert S. Cooper         Director                           March 17, 1997


                             
/s/  John B. Goodrich          Director                          March 24, 1997 

                              
/s   William Hart              Director                          March 17, 1997


                              
/s/  Bradford W. Parkinson     Director                          March 16, 1997




                                       54

<PAGE>





                                                          SCHEDULE II





   
                           TRIMBLE NAVIGATION LIMITED
                       VALUATION AND QUALIFIYING ACCOUNTS
                            (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>
                                     Balance at                               Balance at
                                     beginning of (Reductions)                   end of
Allowance for doubtful accounts:      period       Additions     Write-Offs *    period
                                     ----------   -------------  ------------  -----------
  <S>                                    <C>            <C>              <C>        <C>       
   Year ended December 31, 1994       $   2,005    $       (272)   $      641    $   1,092
   Year ended December 31, 1995           1,092             165           183        1,074
   Year ended December 31, 1996           1,074           1,595           276        2,393

</TABLE>

 

<TABLE>
<CAPTION>


                                     Balance at                               Balance at
                                     beginning of (Reductions)                   end of
Inventory Reserves:                   period       Additions     Write-Offs *    period
                                     ----------   -------------  ------------  -----------
  <S>                                    <C>             <C>           <C>          <C>   
   Year ended December 31, 1994       $   5,980   $       1,324   $     2,173   $    5,131
   Year ended December 31, 1995           5,131           1,126           688        5,569
   Year ended December 31, 1996           5,569           6,189         1,876        9,882

- -------------------------------------
* Net of recoveries

</TABLE>





                                       S-1



                                       55

<PAGE>



                                INDEX TO EXHIBITS


                                                                 SEQUENTIALLY
        EXHIBIT                                                    NUMBERED
        NUMBER          EXHIBIT                                       PAGE


        10.50         1993 Stock Option Plan
                       (amended as of March 19, 1997)                 57-66

        11.1          Statement of computation of earnings (loss)
                      per share                                          67

        21.1          Subsidiaries of the Company                        68

        23            Consent of  Ernst & Young LLP,
                      Independent Auditors                               69

        27            Financial Data Schedule                            70






                                       56

<PAGE>





                           TRIMBLE NAVIGATION LIMITED
                                 EXHIBIT 10.50
                             1993 STOCK OPTION PLAN
                         (amended as of March 19, 1997)

     I.  Purposes  of the Plan.  The  purposes of this Stock  Option Plan are to
attract and retain the best  available  personnel for  positions of  substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.

     Options  granted  hereunder  may  be  either  Incentive  Stock  Options  or
Nonstatutory  Stock Options,  at the discretion of the Board and as reflected in
the terms of the written option agreement.

     I. Definitions. As used herein, the following definitions shall apply:

     A.  "Administrator"  means  the  Board or any of its  Committees  appointed
pursuant to Section 4 of the Plan.

     A. "Board"  shall mean the  Committee,  if one has been  appointed,  or the
Board of Directors of the Company, if no Committee is appointed.

     A. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     A. "Committee" shall mean the Committee appointed by the Board of Directors
in accordance with paragraph (a) of Section 4 of the Plan, if one is appointed.

     A. "Common Stock" shall mean the Common Stock of the Company.

     A.  "Company"  shall  mean  Trimble   Navigation   Limited,   a  California
corporation.


     A. "Consultant"  shall mean any person who is engaged by the Company or any
Parent or Subsidiary to render  consulting  services and is compensated for such
consulting  services,  and any director of the Company  whether  compensated for
such  services  or not,  provided  that the term  Consultant  shall not  include
directors  who are  not  compensated  for  their  services  or are  paid  only a
director's fee by the Company.

     A. "Continuous Status as an Employee or Consultant"  shall mean the absence
of any  interruption  or  termination  of service as an Employee or  Consultant.
Continuous  Status  as  an  Employee  or  Consultant  shall  not  be  considered
interrupted  in the case of sick leave,  military  leave,  or any other leave of
absence  approved by the  Company or any Parent or  Subsidiary  of the  Company;
provided  that  such  leave  is for a  period  of  not  more  than  90  days  or
reemployment  upon the  expiration  of such leave is  guaranteed  by contract or
statute.


                                       57

<PAGE>

     A.  "Employee"  shall mean any person,  including  officers and  directors,
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a  director's  fee by the  Company  shall  not be  sufficient  to  constitute
"employment" by the Company.

     A. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     A. "Fair Market  Value"  means,  as of any date,  the value of Common Stock
determined as follows:

     1. If the Common  Stock is listed on any  established  stock  exchange or a
national market system including  without  limitation the National Market System
of the National  Association of Securities  Dealers,  Inc.  Automated  Quotation
("NASDAQ")  System,  its Fair Market Value shall be the closing  sales price for
such stock (or the  closing  bid, if no sales were  reported,  as quoted on such
system  or  exchange  for the  last  market  trading  day  prior  to the time of
determination)  as reported in the Wall Street  Journal or such other  source as
the Administrator deems reliable;

     1. If the  Common  Stock is quoted  on the  NASDAQ  System  (but not on the
National Market System thereof) or regularly  quoted by a recognized  securities
dealer but selling  prices are not reported,  its Fair Market Value shall be the
mean between the high and low asked prices for the Common Stock or;

     1. In the absence of an established  market for the Common Stock,  the Fair
Market Value thereof shall be determined in good faith by the Administrator.

     A. "Incentive  Stock Option" shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

     A. "Nonstatutory Stock Option" shall mean an Option not intended to qualify
as an Incentive Stock Option.

     A. "Option" shall mean a stock option granted pursuant to the Plan.

     A. "Optioned Stock" shall mean the Common Stock subject to an Option.

     A. "Optionee" shall mean an Employee or Consultant who receives an Option.

     A.  "Parent"  shall mean a "parent  corporation",  whether now or hereafter
existing, as defined in Section 424(e) of the Code.

     A. "Plan" shall mean this 1993 Stock Option Plan.

                                       58

<PAGE>


     A.  "Share"  shall  mean a  share  of the  Common  Stock,  as  adjusted  in
accordance with Section 11 of the Plan.
     B.  "Subsidiary"  shall mean a  "subsidiary  corporation",  whether  now or
hereafter existing, as defined in Section 424(f) of the Code.

     I.  Stock Subject to the Plan.  Subject to the  provisions of Section 11 of
the Plan, the maximum  aggregate number of shares which may be optioned and sold
under  the  Plan  is  3,200,000  shares  of  Common  Stock.  The  Shares  may be
authorized, but unissued, or reacquired Common Stock.

     If an Option should expire or become  unexercisable  for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall,  unless the Plan shall have been terminated,  become available for future
grant under the Plan.  Notwithstanding  any other provision of the Plan,  shares
issued  under the Plan and later  repurchased  by the  Company  shall not become
available for future grant or sale under the Plan.

     I. Administration of the Plan.

     A. Procedure.

     1.  Multiple  Administrative  Bodies.  The  Plan  may  be  administered  by
different   Committees  with  respect  to  different  groups  of  Employees  and
Consultants.

     1. Section 162(m). To the extent that the Administrator determines it to be
desirable  to  qualify   Options   granted   hereunder   as   "performance-based
compensation"  within the meaning of Section  162(m) of the Code, the Plan shall
be  administered  by a Committee of two or more "outside  directors"  within the
meaning of Section 162(m) of the Code.

     1. Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt  under Rule  16b-3,  the  transactions  contemplated  hereunder  shall be
structured to satisfy the requirements for exemption under Rule 16b-3.

     A.  Powers of the Administrator.  Subject to the provisions of the Plan and
in the case of a Committee,  the specific duties  delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

     1. to determine  the Fair Market Value of the Common  Stock,  in accordance
with Section 2(k) of the Plan;

     1. to select the  officers,  Consultants  and Employees to whom Options may
from time to time be granted hereunder;

                                       59

<PAGE>

     1. to determine whether and to what extent Options are granted hereunder;

     1. to determine  the number of shares of Common Stock to be covered by each
such award granted hereunder;

     2. to approve forms of agreement for use under the Plan;

     1. to determine the terms and conditions,  not inconsistent  with the terms
of the Plan, of any award granted hereunder (including,  but not limited to, the
share price and any  restriction or limitation,  or any vesting  acceleration or
waiver of  forfeiture  restrictions  regarding  any Option  and/or the shares of
Common  Stock  relating  thereto,  based  in each  case on such  factors  as the
Administrator shall determine, in its sole discretion);

     1. to  determine  whether  and under  what  circumstances  an Option may be
settled in cash under subsection 9(e) instead of Common Stock;

     1. to determine whether, to what extent and under what circumstances Common
Stock and other  amounts  payable with respect to an award under this Plan shall
be  deferred  either  automatically  or  at  the  election  of  the  participant
(including  providing  for and  determining  the  amount,  if any, of any deemed
earnings on any deferred amount during any deferral period);

     1. to reduce  the  exercise  price of any Option to the then  current  Fair
Market Value if the Fair Market Value of the Common Stock covered by such Option
shall have declined since the date the Option was granted; and

     A.  Effect of Administrator's Decision.  All decisions,  determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.

     A. Grant Limits. The following limitations shall apply to grants of Options
under the Plan:

     1. No employee shall be granted, in any fiscal year of the Company, Options
under the Plan to purchase more than 100,000  Shares,  provided that the Company
may make an additional  one-time  grant of up to 250,000  Shares to  newly-hired
Employees.

     1.  The  foregoing   limitations  shall  be  adjusted   proportionately  in
connection  with any change in the  Company's  capitalization  as  described  in
Section 11.

     1. If an Option is cancelled  (other than in connection  with a transaction
described in  Section 11),  the  cancelled  Option shall be counted  against the
limits set forth in Section 4(d)(i).  For this purpose, if the exercise price of
an Option is reduced,  the transaction  will be treated as a cancellation of the
Option and the grant of a new Option.

                                       60

<PAGE>

     I. Eligibility.

     A. Nonstatutory Stock Options may be granted only to Employees,  Directors,
and  Consultants.  Incentive Stock Options may be granted only to Employees.  An
Employee,  Director,  or Consultant who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.

     A. Each Option  shall be  designated  in the written  option  agreement  as
either an  Incentive  Stock  Option or a  Nonstatutory  Stock  Option.  However,
notwithstanding such designations,  to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options  designated as Incentive Stock
Options are  exercisable  for the first time by any Optionee during any calendar
year  (under  all plans of the  Company  or any  Parent or  Subsidiary)  exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.

     A. For purposes of  Section 5(b),  Incentive  Stock  Options shall be taken
into account in the order in which they were granted,  and the Fair Market Value
of the Shares shall be determined as of the time the Option with respect to such
Shares is granted.

     A. The Plan shall not confer upon any  Optionee  any right with  respect to
continuation  of  employment or consulting  relationship  with the Company,  nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.

     I. Term of Plan.  The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 18 of the Plan. It shall  continue in effect
for a term of ten (10) years unless  sooner  terminated  under Section 14 of the
Plan.

     I. Term of Option. The term of each Option shall be ten (10) years from the
date of grant  thereof or such  shorter  term as may be  provided  in the Option
Agreement.  However,  in the case of an  Incentive  Stock  Option  granted to an
Optionee who, at the time the Option is granted,  owns stock  representing  more
than ten  percent  (10%) of the  voting  power  of all  classes  of stock of the
Company or any Parent or  Subsidiary,  the term of the Option  shall be five (5)
years from the date of grant  thereof or such shorter term as may be provided in
the Option Agreement.

     I. Exercise Price and Consideration.

     A. The per Share  exercise  price for the Shares to be issued  pursuant  to
exercise of an Option  shall be such price as is  determined  by the Board,  but
shall be subject to the following:

     1. In the case of an Incentive Stock Option

                                       61

<PAGE>


     a) granted to an Employee  who, at the time of the grant of such  Incentive
Stock Option,  owns stock representing more than ten percent (10%) of the voting
power of all  classes of stock of the Company or any Parent or  Subsidiary,  the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.

     a) granted to any Employee,  the per Share  exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.

     1. In the case of a Nonstatutory Stock Option, the per Share exercise price
shall be determined by the  Administrator.  In the case of a Nonstatutory  Stock
Option  intended  to  qualify  as  "performance-based  compensation"  within the
meaning of Section  162(m) of the Code, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

     (iii)  Notwithstanding  the  foregoing,  Options may be granted  with a per
Share exercise price of less than 100% of the Fair Market Value per Share on the
date of grant pursuant to a merger or other corporate transaction.

     A. The  consideration  to be paid for the Shares to be issued upon exercise
of an  Option,  including  the method of  payment,  shall be  determined  by the
Administrator  and may consist entirely of (1) cash,  (2) check,  (3) promissory
note, (4)other Shares which (x) either have been owned by the Optionee for more
than six  months on the date of  surrender  or were not  acquired,  directly  or
indirectly,  from the  Company,  and (y) have a Fair Market Value on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise  equal to the exercise  price
for the total number of Shares as to which the Option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to promptly  deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price,  (7) delivery of an irrevocable subscription
agreement for the Shares which  irrevocably  obligates the option holder to take
and pay for the Shares not more than twelve months after the date of delivery of
the  subscription  agreement,  (8) any  combination of the foregoing  methods of
payment,  (9) or such other consideration and method of payment for the issuance
of  Shares  to the  extent  permitted  under  Applicable  Laws.  In  making  its
determination  as to the  type of  consideration  to  accept,  the  Board  shall
consider if  acceptance  of such  consideration  may be  reasonably  expected to
benefit the Company.

     I. Exercise of Option.

     A.  Procedure for Exercise;  Rights as a  Shareholder.  Any Option  granted
hereunder  shall be  exercisable  at such  times and under  such  conditions  as
determined  by the Board,  including  performance  criteria  with respect to the
Company and/or the Optionee,  and as shall be permissible under the terms of the
Plan.


                                       62

<PAGE>

     An Option may not be exercised for a fraction of a Share.

     An Option  shall be  deemed to be  exercised  when  written  notice of such
exercise  has been  given to the  Company  in  accordance  with the terms of the
Option by the person  entitled to exercise  the Option and full  payment for the
Shares with  respect to which the Option is exercised  has been  received by the
Company.  Full  payment  may,  as  authorized  by  the  Board,  consist  of  any
consideration  and method of payment  allowable under  Section 8(b) of the Plan.
Until the issuance (as  evidenced by the  appropriate  entry on the books of the
Company or of a duly  authorized  transfer  agent of the  Company)  of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a  shareholder  shall exist with respect to the Optioned  Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued)  such stock  certificate  promptly  upon  exercise of the Option.  No
adjustment  will be made for a dividend or other right for which the record date
is prior to the date the stock  certificate  is issued,  except as  provided  in
Section 11 of the Plan.

     Exercise  of an Option in any  manner  shall  result in a  decrease  in the
number of Shares which  thereafter  may be  available,  both for purposes of the
Plan and for sale  under  the  Option,  by the  number of Shares as to which the
Option is exercised.

     A.  Termination of Status  as an  Employee or Consultant.  In the  event of
termination of an Optionee's  Continuous Status as an Employee or Consultant (as
the case may be),  such  Optionee may, but only within thirty (30) days (or such
other period of time, not exceeding three (3) months in the case of an Incentive
Stock Option or six (6) months in the case of a Nonstatutory Stock Option, as is
determined  by the Board)  after the date of such  termination  (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option  Agreement),  exercise  his Option to the extent that he was  entitled to
exercise  it at the  date of such  termination.  To the  extent  that he was not
entitled to exercise the Option at the date of such  termination,  or if he does
not exercise  such Option  (which he was  entitled to exercise)  within the time
specified herein, the Option shall terminate.

     A. Disability of Optionee.  Notwithstanding  the provisions of Section 9(b)
above,  in the event of  termination  of an Optionee's  Continuous  Status as an
Employee or  Consultant as a result of his total and  permanent  disability  (as
defined in Section 22(e)(3) of the Code), he may, but only within six (6) months
(or such other period of time not exceeding  twelve (12) months as is determined
by the Board) from the date of such  termination (but in no event later than the
date of  expiration  of the  term of such  Option  as set  forth  in the  Option
Agreement),  exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that he was not entitled to exercise
the Option at the date of  termination,  or if he does not exercise  such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.

     A. Death of Optionee. In the event of the death of an Optionee:


                                       63

<PAGE>

     1.  during  the  term of the  Option  who is at the  time of his  death  an
Employee or  Consultant  of the  Company  and who shall have been in  Continuous
Status as an Employee or Consultant  since the date of grant of the Option,  the
Option may be  exercised,  at any time within  twelve (12) months  following the
date of death (but in no event later than the date of  expiration of the term of
such Option as set forth in the Option  Agreement),  by the Optionee's estate or
by a person  who  acquired  the  right to  exercise  the  Option by  bequest  or
inheritance,  but only to the  extent of the right to  exercise  that would have
accrued had the Optionee  continued living and remained in Continuous  Status as
an Employee or Consultant twelve (12) months after the date of death, subject to
the limitation set forth in Section 5(b); or 2. within thirty (30) days (or such
other  period of time not  exceeding  three (3) months as is  determined  by the
Board) after the termination of Continuous  Status as an Employee or Consultant,
the Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the date of  expiration of the term of
such Option as set forth in the Option  Agreement),  by the Optionee's estate or
by a person  who  acquired  the  right to  exercise  the  Option by  bequest  or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.

     A. Buyout  Provisions.  The  Administrator may at any time offer to buy out
for a payment in cash or Shares,  an Option  previously  granted,  based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     I.  Non-Transferability of Options.  Options  may  not  be  sold,  pledged,
assigned,  hypothecated,  transferred or disposed of in any manner other than by
will or by the laws of descent  and  distribution  or  pursuant  to a  qualified
domestic  relations  order as  defined  by the  Code or Title I of the  Employee
Retirement  Income Security Act, or the rules  thereunder.  The designation of a
beneficiary  by an Optionee  does not  constitute  a transfer.  An Option may be
exercised,  during the  lifetime  of the  Optionee,  only by the  Optionee  or a
transferee permitted by this Section 10.

     I.  Adjustments Upon Changes in Capitalization  or  Merger.  Subject to any
required  action by the  shareholders  of the  Company,  the number of shares of
Common Stock  covered by each  outstanding  Option,  and the number of shares of
Common Stock which have been  authorized  for issuance  under the Plan but as to
which no Options have yet been  granted or which have been  returned to the Plan
upon  cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding  Option,  shall be proportionately
adjusted for any  increase or decrease in the number of issued  shares of Common
Stock  resulting  from a stock  split,  reverse  stock  split,  stock  dividend,
combination or  reclassification  of the Common Stock,  or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of  consideration  by the Company;  provided,  however,  that  conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.


                                       64

<PAGE>

     In the event of the proposed dissolution or liquidation of the Company, the
Board  shall  notify  the  Optionee  at least  fifteen  (15) days  prior to such
proposed action. To the extent it has not been previously exercised,  the Option
will terminate immediately prior to the consummation of such proposed action. In
the event of a merger  of the  Company  with or into  another  corporation,  the
Option shall be assumed or an  equivalent  option shall be  substituted  by such
successor  corporation or a parent or subsidiary of such successor  corporation.
In the even the successor corporation does not agree to assume the option or the
substitute and equivalent option, the Board shall, in lieu of such assumption or
substitution, provide for the Optionee to have the right to vest in and exercise
the Option as to all of the  Optioned  Stock,  including  Shares as to which the
Option  would not  otherwise  be vested or  exercisable.  If the Board  makes an
Option fully vested and exercisable in lieu of assumption or substitution in the
event of a merger,  the Board shall notify the Optionee that the Option shall be
fully vested and  exercisable for a period of fifteen (15) days from the date of
such notice,  and the Option will  terminate upon the expiration of such period.
If,  in such a  merger,  the  Option  is  assumed  or an  equivalent  option  is
substituted  by such  successor  corporation  or a parent or  subsidiary of such
successor corporation,  and if during a one-year period after the effective date
of such merger, the Optionee's Continuous Status as an Employee or Consultant is
terminated  for any reason other than the  Optionee's  voluntary  termination of
such  relationship,  then the Optionee  shall have the right within  thirty days
thereafter  to exercise  the Option as to all of the Optioned  Stock,  including
Shares as to which the Option would not be otherwise  exercisable,  effective as
of the date of such termination.

     I.  Stock  Withholding  to  Satisfy  Withholding  Tax  Obligations.  At the
discretion of the Administrator,  Optionees may satisfy withholding  obligations
as  provided  in this  paragraph.  When an  Optionee  incurs  tax  liability  in
connection  with an Option,  which tax  liability is subject to tax  withholding
under  applicable  tax laws, and the Optionee is obligated to pay the Company an
amount  required to be withheld  under  applicable  tax laws,  the  Optionee may
satisfy the withholding tax obligation by electing to have the Company  withhold
from the Shares to be issued upon exercise of the Option, if any, that number of
Shares  having a Fair Market Value equal to the amount  required to be withheld.
The Fair Market Value of the Shares to be withheld  shall be  determined  on the
date that the amount of tax to be withheld is to be determined.

     I. Time of Granting Options.  The date of grant of an Option shall, for all
purposes,  be the date on which the Board makes the determination  granting such
Option.  Notice  of the  determination  shall  be  given  to  each  Employee  or
Consultant  to whom an Option is so granted  within a reasonable  time after the
date of such grant.

     I. Amendment and Termination of the Plan.

     A.  Amendment  and  Termination.  The Board may at any time  amend,  alter,
suspend or  discontinue  the Plan, but no amendment,  alteration,  suspension or
discontinuation  shall be made which  would  impair  the rights of any  Optionee
under any grant theretofore made,  without his or her consent.  In addition,  to


                                       65

<PAGE>

the extent  necessary  and  desirable to comply with Section 422 of the Code (or
any other  applicable law or regulation,  including the requirements of the NASD
or an established stock exchange), the Company shall obtain shareholder approval
of any Plan amendment in such a manner and to such a degree as required.

     A. Effect of Amendment or Termination. Any such amendment or termination of
the Plan shall not affect Options  already granted and such Options shall remain
in full  force and effect as if this Plan had not been  amended  or  terminated,
unless  mutually  agreed  otherwise  between the Optionee  and the Board,  which
agreement must be in writing and signed by the Optionee and the Company.

     I. Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and  delivery of such Shares  pursuant  thereto  shall  comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further  subject to the  approval of counsel  for the Company  with
respect to such compliance.

     As a condition  to the  exercise of an Option,  the Company may require the
person  exercising  such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present  intention  to sell or  distribute  such  Shares  if, in the  opinion of
counsel  for  the  Company,  such a  representation  is  required  by any of the
aforementioned relevant provisions of law.

     I.  Reservation of Shares.  The Company, during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     The inability of the Company to obtain  authority from any regulatory  body
having  jurisdiction,  which authority is deemed by the Company's  counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the  Company of any  liability  in respect of the  failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

     I.  Option  Agreement.   Options  shall  be  evidenced  by  written  option
agreements in such form as the Board shall approve.

     I.  Shareholder  Approval.  Continuance  of the Plan  shall be  subject  to
approval by the  shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws.


                                       66

<PAGE>




                           TRIMBLE NAVIGATION LIMITED
                                  EXHIBIT 11.1

                    Computation of Earnings (Loss) Per Share

<TABLE>
<CAPTION>


                                                              Years Ended December 31,
                                                      --------------------------------------

                                                            1996        1995      1994
- --------------------------------------------------------------------------------------------
(In thousands, except per share data)

PRIMARY EARNINGS (LOSS) PER SHARE
<S>                                                        <C>       <C>       <C>    

 Computation of common and common
   equivalent shares outstanding:
   Common stock outstanding ........................        22,005    19,949    18,340
   Common stock options ............................            --     1,159       689
   Common stock warrants ...........................            --       198        33
                                                       -----------   -------   -------
Total weighted average common
   and dilutive common equivalent shares outstanding        22,005    21,306    19,062
                                                       ===========   =======   =======


Net income (loss) ..................................   $   (11,302)  $11,261   $10,024
                                                       ===========   =======   =======


Primary earnings (loss) per share ..................   $     (0.51)  $  0.53   $  0.53
                                                       ===========   =======   =======


FULLY DILUTED EARNINGS (LOSS) PER SHARE

 Computation of common and common
   equivalent shares outstanding:
   Common stock outstanding ........................        22,005    19,949    18,340
   Common stock options ............................            --     1,193       728
   Common stock warrants ...........................            --       204        35
                                                       -----------   -------   -------
Total weighted average common
   and dilutive common equivalent shares outstanding        22,005    21,346    19,103
                                                       ===========   =======   =======


Net income (loss) ..................................   $   (11,302)  $11,261   $10,024
                                                       ===========   =======   =======


Fully diluted earnings (loss) per share ............   $     (0.51)  $  0.53   $  0.53
                                                       ===========   =======   =======

</TABLE>





                                       67

<PAGE>







                           TRIMBLE NAVIGATION LIMITED
                                  EXHIBIT 21.1
                       LIST OF SUBSIDIARIES OF REGISTRANT

TR Navigation Corporation 
(incorporated in California)

Trimble Specialty Products, Inc. 
(incorporated in California)

Trimble Navigation Europe Limited 
(organized under the laws of the United Kingdom)
        
Trimble Navigation International Foreign Sales Corporation
(organized under the laws of Barbados)

Trimble Navigation International Limited
(incorporated in California)

TNL Flight Services, Inc.
(incorporated in Texas)

Trimble Navigation New Zealand Limited
(organized under the laws of New Zealand)

DataCom Software Research Limited
(organized under the laws of New Zealand)

Trimble Navigation Italia s.r.l.
(organized under the laws of Italy)

Trimble Navigation Deutchland GmbH
(organized under the laws of Germany)

Trimble Navigation France S.A.
(organized under the laws of France)

Trimble Navigation Singapore PTE Limited
(organized under the laws of Singapore)

Trimble Navigation Iberica S.L.
(organized under the laws of Spain)

Trimble Navigation Australia Pty Limited
(organized under the laws of Australia)

Trimble Japan K.K.
(organized under the laws of Japan)

Trimble Export Limited
(incorporated in California)

Trimble Middle
 East WLL
(incorporated under the laws of Egypt)

Trimble Brasil Limitada
(incorporated under the laws of Brazil)

Trimble Mexico S. de R.L.
(incorporated under the laws of Mexico)


                                       68

<PAGE>



                           TRIMBLE NAVIGATION LIMITED
                                   EXHIBIT 23


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


     We consent to the use of our report  dated  January 28, 1997 in this Annual
Report(Form 10-K) of Trimble  Navigation Limited for the year ended December 31,
1996.


     We also  consent to the  incorporation  by  reference  in the  Registration
Statement  (Form S-8 Nos.  33-37384,  33-39647,  33-45167,  33-45604,  33-46719,
33-50944,  33-57522,  33-62078,  33-78502,  33-84362,  33-91858  and  333-04670)
pertaining  to the 1983 Stock Option Plan,  the Trimble  Navigation  Savings and
Retirement  Plan,  the 1990 Director Stock Option Plan, the "Position for Us for
Progress"  1992 Employee Stock Bonus Plan,  the 1992  Management  Discount Stock
Option Plan,  and the 1993 Stock Option Plan, and the related  Prospectuses,  of
our report  dated  January 28, 1997 with respect to the  consolidated  financial
statements  and schedule of Trimble  Navigation  Limited  included in the Annual
Report for the year ended December 31, 1996 (Form 10-K).



                                           /s/  Ernst & Young LLP


Palo Alto, California
March 21, 1997


                                       69

<PAGE>





WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.


<TABLE> <S> <C>
                                    
<ARTICLE>                                5
<LEGEND>                             
     THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
     CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS AND
     IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>                            
<MULTIPLIER>                                    1,000
                                          
<S>                                        <C>
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<FISCAL-YEAR-END>                        DEC-31-1996
<CASH>                                         22,671
<SECURITIES>                                   59,867
<RECEIVABLES>                                  34,374
<ALLOWANCES>                                        0
<INVENTORY>                                    38,858
<CURRENT-ASSETS>                              159,403
<PP&E>                                         21,504
<DEPRECIATION>                                      0
<TOTAL-ASSETS>                                189,841
<CURRENT-LIABILITIES>                          34,858
<BONDS>                                             0
<PREFERRED-MANDATORY>                               0
<PREFERRED>                                         0
<COMMON>                                      129,080
<OTHER-SE>                                     (5,035)
<TOTAL-LIABILITY-AND-EQUITY>                  189,841
<SALES>                                       233,660
<TOTAL-REVENUES>                              233,660
<CGS>                                         112,596
<TOTAL-COSTS>                                 112,596
<OTHER-EXPENSES>                              133,372
<LOSS-PROVISION>                                    0
<INTEREST-EXPENSE>                              3,925
<INCOME-PRETAX>                               (11,602)
<INCOME-TAX>                                     (300)
<INCOME-CONTINUING>                           (11,302)
<DISCONTINUED>                                      0
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<EPS-PRIMARY>                                      (0.51)
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