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
                    For the fiscal year ended January 1, 1999

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
           For the transition period from _____________ to ___________

                         Commission File Number: 0-18645

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

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

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

       Registrant's telephone number, including area 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. [X]

         The  aggregate  market value of the  registrant's  Common Stock held by
non-affiliates of the registrant was approximately  $180,915,000 as of March 15,
1999,  based upon the closing sale price of the common stock on the Nasdaq Stock
Market for that date.

         There were 22,266,475  shares of the  registrant's  Common Stock issued
and outstanding as March 15, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE


         Items  10,  11,  12 and  13 of  Part  III  incorporate  information  by
reference from the  registrant's  Proxy Statement for its 1999 Annual Meeting of
Shareholders  to be held on June 2, 1999.  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 hereof.

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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 designing and developing  innovative products enabled
by  GPS  technology.  The  Company  provides  end-user  and  Original  Equipment
Manufacture  solutions for diverse applications  including  surveying,  mapping,
marine  survey,  mining,  construction  and  agriculture,   mobile  positioning,
commercial  avionics,  military  systems,  automotive,  timing,  and  geographic
information  systems.  Trimble  designs,  manufactures  and  markets  electronic
products that 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.

     * The Company  has  developed  or is  developing  systems  for  seismology,
machine  control,  delivery fleets,  buses,  ships,  airplanes,  automobiles and
cellular  infrastructures.  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 is used 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 27  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 over previous
technologies  in  precision  and  accuracy,  with  worldwide  coverage  in three
dimensions,  and does so 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


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within 100  meters,  24 hours a day.  When a GPS  receiver  is  coupled  with a
reference  receiver  with 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  on the number and  locations of GPS
satellites that are above the horizon at any given time. The current  deployment
of 27 satellites  permits  three-dimensional  worldwide coverage 24 hours a 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.  For the  receiver  to  collect a  sufficient  signal,  each
satellite must be above the horizon,  and the receiver must have a line of sight
to at  least  three  satellites  in  order  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,  which  is 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  twenty-five  to  one  hundred  meters.  Selective
Availability  may be implemented  by the U.S.  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 with SA
activated.  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  necessary to
provide the most  accurate  set of  measurements  possible.  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. To repair damaged
or  malfunctioning  satellites is not  economically  feasible.  If a significant
number of  satellites  were to become  inoperable,  there could be a substantial
delay before they are replaced with new satellites. A reduction in the number of
operating  satellites would impair the current utility of the GPS system and the
growth of current and additional market opportunities. In addition, there can be
no assurance that the U.S. government will remain committed to the operation and
maintenance  of GPS satellites  over a long period,  or that the policies of the
U.S.  Government  for the  use of GPS  without  charge  will  remain  unchanged.
However,  the 1996 Presidential  Decision  Directive marks the first time in the
evolution of GPS that access for  consumer,  civilian and  commercial  use has a


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solid foundation in law. 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 could have a material adverse effect on
the  Company's   financial  results.   In  1995,  certain  European   government
organizations 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 in the
future.

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 a number of specific  markets for
its GPS products,  based on end-user applications.  (See Industry Segments below
for further discussion of the Company's segments).  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  identified  markets  that  it  believes  represent   significant   economic
opportunities 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
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.   Where  feasible,   the  Company   emphasizes
application-specific  systems  that  solve  specific  sets  of  problems  in its
markets.  The Company  believes that a  substantial  portion of the value of its
products  is  derived  from the  firmware  that is  embedded  in the  product or
software  provided to enable  superior  performance.  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 its two segments.

         Technology  Leverage.  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.  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  Original  Equipment
Manufacture  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 including VDO Car Systems, Pioneer
Electronics Corporation,  Delco Electronics,  Nortel, British Telecom,  American
Mobile Satellite Corporation, E-systems, PRC Public Sector, Honeywell, and Intel


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in the Mobile Timing and Technology segment; Caterpillar, Inc., Topcon, and Case
Corporation in the Precision Positioning segment.

         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,  public safety, and real-time  applications for
mining, surveying, and mapping.  Accordingly,  the Company is currently devoting
research  and  development  efforts to products  that  integrate  the  Company's
proprietary GPS receivers with wireless communication technologies.

INDUSTRY SEGMENTS

         The  Company  operates  in a single  industry  segment  as a leader  in
designing and developing  innovative  products  enabled by GPS  technology.  The
Company  provides  end-user and Original  Equipment  Manufacture  solutions  for
diverse  applications  including  surveying,  mapping,  marine  survey,  mining,
construction and agriculture, mobile positioning,  commercial avionics, military
systems,  automotive,  timing, and geographic information systems.  During 1998,
the Company  announced that it was  discontinuing  its  participation in General
Aviation. The Company sells its products through a direct-sales force located in
fifteen  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,  and
Christchurch, New Zealand.  Manufacturing is performed in Sunnyvale,  California
and Austin, Texas.

     The Company  manages its industry  segment within two Business  Units:  the
Precision  Positioning Group (PPG) and the Mobile and Timing  Technologies (MTT)
Group.

         The  industry  segment  is  managed  in two  Business  Units to achieve
different distribution,  marketing,  production,  and technology strategies. The
Precision  Positioning Group derives its revenues from GPS-based land surveying,
mining,  construction and agriculture,  geographic  information systems mapping,
and marine survey markets. The Mobile and Timing Technologies market derives its
revenues from GPS-based  automotive,  timing,  mobile positioning  technologies,
commercial  aviation,  and military  systems  markets,  and from  development of
software licenses and other rights for the use of GPS to third parties.

         Although the Company  believes  that these  Business  Units have growth
potential  for  sales of GPS  products,  there  can be no  assurance  that  such
Business  Units 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 industry
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 group vice president who has  responsibility  for strategy,
marketing, product development and financial performance.

Precision Positioning Group

         The  Precision  Positioning  Group focuses its efforts in markets where
the distribution chain uses independent  distributors or a direct sales force to
sell directly to the end users. The products are system solutions in a high-end,
value-added market.

         A key business strategy of PPG is interoperability,  which involves the
focus on, and  development  of systems that integrate  sensors  utilizing a wide
variety of  technologies  and  communications  with GPS.  This  interoperability
developed by the Company is an  extremely  important  advantage  over any of the


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competition. The emphasis is on providing solutions for applications rather than
just GPS  technology,  and results in a higher real value to the  customer.  The
concept of interoperability applies to electronic and mechanical  accommodations
of other technologies,  together with GPS, to solve a problem. Probably the most
important area of  interoperability,  and often the least recognizable until the
integrated solution is put into use, is in the area of data interchange.  In the
Land  Surveying  product line for example,  the Trimble Survey  Controller  data
collector  software and Trimble  Survey Office PC software  products  enable the
seamless  collection,  processing  and  use of  data  from  Trimble's  Real-time
Kinematic  (RTK)  GPS  surveying  products  and  conventional   (optomechanical)
instrument surveys using products of other manufactures.

         The  Precision   Positioning  Group  consists  of  four  product  lines
addressing the following markets: Land Surveying; Marine Surveying;  Mapping and
GIS Systems; and Mining, Construction and Agriculture.

         Land  Surveying.  Surveying  involves  establishing  precise points and
boundaries for legal, construction and mining purposes. It consists primarily of
collecting and processing position  information.  Surveying accuracy is expected
to be within a centimeter.  The Company believes that its GPS surveying products
substantially reduce the cost, time, and number of people required to survey and
process precise position information for a given level of accuracy.  Many of the
applications  which the  Company  addresses  in the  surveying  market  include,
control   surveying,   construction  and  engineering   surveying,   topographic
surveying,  property line surveying and geodetic research. The Company addresses
the  land  surveying   market  with  GPS  systems  and  a  recently   introduced
conventional (optomechanical) surveying instrument with reflectorless technology
and application software.  GPS does not require line-of-sight between land-based
reference  points and is  unaffected  by most  adverse  weather  conditions  (as
compared  to  traditional  methods  such  as  optical  or  laser  measurements),
providing  advantages  in many  survey  applications.  Reflectorless  technology
provides  the ability to survey in areas  where GPS  signals are  obstructed-for
example,  tunnels,  parking  garages,  and dense  forests,  as well as  building
facades or dam faces that are difficult or dangerous to reach. A key competitive
advantage of the land surveying product line is the seamless interchange between
GPS and conventional surveying tools and laser range-finders,  with full support
from the office and field software.  Additionally,  the land surveying  products
support  two-way data  exchange  with  third-party  CAD,  design and  Geographic
Information Systems (GIS) packages.

         For a number of years the Company's  GPS  surveying  products have been
one of the first choices for control surveying  applications.  Control surveying
is the precise  determination of the location of local geodetic reference points
from which further local surveying is based. The Company's GPS surveying systems
have reduced the cost of establishing  control points,  compared to conventional
techniques,  and have led to programs to  remeasure  previous  geodetic  control
points to sharply increase precision and eliminate errors. Additionally, GPS has
become a standard tool for geodetic  research.  Research  geodesists  have found
that long baseline  precisions  using GPS are  significantly  greater than those
obtainable with optical and electronic  distance-measuring  equipment. This high
degree of  precision  has also created a  significant  market for GPS in seismic
research  where earth  movements of less than one centimeter can now be measured
and  monitored.  Today GPS is the  preferred  technology  for both  control  and
geodetic surveying.

         The  Company's  GPS  surveying  products  are also used in  large-scale
construction projects in which 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  where   ground-level   obstructions  to
visibility prevent line-of-sight  conventional surveying techniques. The Company
also  supplies  route  surveying   applications,   which  provide  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.

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         Real-time    Kinematic   GPS   surveying   has   made   GPS   surveying
instrumentation a successful  alternative to conventional  surveying instruments
for a wide variety of  applications.  Today,  a significant  portion of the land
survey business is for applications  where  conventional  instruments could have
been  used.  This  is  possible  through  the  use of  Real-time  Kinematic  GPS
surveying.  The  Company  was the first to  introduce  RTK GPS in 1993.  RTK GPS
involves  the  computation  of  precise  positions  in  real  time,  instead  of
postprocessing the observed data. Vectors are computed between a precisely known
fixed base station and one or more roving GPS surveying systems. This is done by
transmitting  information  from the base  station to the  rovers,  using a radio
link. These rovers use the information to calculate a precise position. The data
collector  software  converts the position from the World  Geodetic  System 1984
(WGS-84,  the worldwide  coordinate  system used by GPS) to the local coordinate
system used for the area of the survey work.  This enables the productive use of
RTK GPS surveying systems by a single surveyor on foot, for construction layout,
topographic mapping, and demarcation and division of large tracts of land.

         In 1998 the Company  introduced  the TTS 500 optical total station with
reflectorless  technology  as an  extension  and  complementary  tool to GPS.  A
significant   competitive   advantage  of  the  TTS  500  is  the  reflectorless
technology,  which  allows  for the use of non  cooperative  target  technology.
Traditional conventional surveying instruments require a prism target for making
distance  measurements  in  order  to  precisely  survey  a site.  Reflectorless
technology  allows the user to point the  telescope  of the TTS 500 at virtually
any  target  within  a  250-meter  range  to  make  millimeter   level  distance
measurements.

         In the surveying  market,  the Company faces on going  competition from
other GPS  vendors,  such as Ashtech,  Inc.  (now part of  Magellan  via Orbital
Sciences Corp) and NovAtel Inc. The Company also faces  competition from vendors
of traditional optical surveying products,  such as Carl Zeiss; Leica AG; Sokkia
Company, Ltd.; Spectra Precision;  and Topcon Corporation.  All have entered the
GPS surveying market and are introducing GPS products of their own.

         Marine  Surveying.  Marine  surveying  is focused on  precise,  dynamic
positioning,  and precise  navigation in marine  environments.  The applications
cover offshore oil exploration,  hydrographic  surveys,  environmental  surveys,
marine construction, cable and pipe laying, dredging, barge positioning and many
others. The Company provides complete solutions that utilize its GPS sensors and
extensive  software  product  capabilities,  often  in  conjunction  with  other
equipment, for many of these applications. Trimble's marine surveying activities
also include the design and marketing of Differential GPS (DGPS) systems,  which
include reference  stations,  integrity  monitors and control stations,  used to
establish and monitor the integrity of DGPS and RTK broadcasts.

         In marine surveying and marine construction  applications,  the Company
faces competition from CSI, Sercel,  Leica,  Ashtech, Inc. (now part of Magellan
via Orbital Sciences Corp) and Coastal Engineering.

         Mapping and GIS Systems.  For mapping  applications,  large  amounts of
position and  attribute  data (such as color,  size and condition of the object)
must be obtained.  Compared to surveying,  mapping  involves more  extensive but
less  precise  location  and plotting of  geographical  and  man-made  features.
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.  Required accuracies are
typically from twenty-five centimeters to three meters.

         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 products  enabling the


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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
position and attribute data collection.

         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,  as well  as  costly  physical  surveys.  The  Company's
products,  used in connection with commercially  available  databases,  have the
potential to substantially  reduce the cost of constructing  GIS databases,  and
increasing their accuracy.

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

         Mining,  Construction &  Agriculture.  Trimble's GPS receivers and data
communications  products are used on machine-type  vehicles to provide real-time
positioning and other key information for the vehicle operator. This information
may be displayed on digital  readouts or graphic  displays and may be integrated
with other on board  electronic  information  systems  to guide and to  indicate
machine  position  and  performance  in an  easily  understood  manner.  As  the
availability  of  highly  accurate,  cost-effective  and  robust  real-time  GPS
solutions  has  increased,  numerous  potential  machine  guidance  and  control
applications  have been  identified.  Among the emerging  applications on large,
mobile  field  machines  are  precision  farming  equipment,  mining  equipment,
construction machinery and aerial spraying.

         Guidance and control of large,  mobile field machines has traditionally
been done by the machine  operator  without the aid of advanced  navigation  and
positioning  technology.  Lasers  have  been  used  for some  applications  on a
limited, though increasing,  basis. These traditional techniques have frequently
proven less than optimal  because they are limited to  positioning in elevation,
or have complex methods for horizontal  guidance.  Lasers, for example,  provide
good  vertical  height  information  but  are  not  inherently   well-suited  to
three-dimensional  position  information and rely on  line-of-sight  to function
effectively.  Because  field  machinery  is very  expensive  to own and operate,
maximizing  efficiency is paramount,  and even small productivity gains can have
significant  economic  returns.  GPS has the  potential to provide  accurate and
robust  positioning  information.  When this  information is used in conjunction
with other  critical  information  about the materials  being worked on, such as
location of target ores, overall operational efficiency can increase.

         Trimble's  products,  including  sensors and  systems,  are marketed to
Original Equipment  Manufacturers (OEMs),  systems integrators,  and directly to
end-users.  Because some mobile  machine  markets are  dominated by a relatively
small  number of OEMs,  success  can be  influenced  by the  ability to maintain
favorable relationships with selected OEMs. Currently, Trimble has established a
relationship  with  some of these  OEMs,  including  Caterpillar  Inc.  and Case
Corporation.

     * Since the  applicability  of GPS for these types of applications is still
new, its use and subsequent  benefits are not yet widely  understood or adopted.
The Company must, therefore,  devote significant efforts to educating the market
as to the advantages of GPS in these applications. This can result in a delay in
market development.

                                       8

<PAGE>

         The Company faces competition from traditional GPS  manufacturers  such
as Ashtech, Inc. (now part of Magellan via Orbital Sciences Corp), Leica AG, and
NovAtel  Inc.,  Topcon,   Spectra  Precision,   as  well  as  from  established,
laser-based integrated system providers.

Mobile and Timing Technologies

         The Mobile and Timing Technologies Group focuses its efforts in markets
where  the  majority  of its  products  are  sold  directly  to OEMs  or  system
integrators.   The  products  are  designed  to  support  system   solutions  in
high-volume applications.  In some instances the Business Unit's products are in
the form of  software  licenses  and  other  rights  for the use of GPS by third
parties. This Business Unit focuses on five product lines:  automotive,  timing,
mobile positioning, air transport systems, and military aerospace systems.

         Automotive.  The  Company's  Automotive  market has built a  leadership
position in the  worldwide  market for  embedded  GPS  products.  Already in its
seventh-generation  design,  MTT offers  products  that  provide  full-function,
high-performance  embedded GPS engines for systems  integrators.  The  extensive
range of GPS products is used in such diverse  applications  as car  navigation,
vehicle  and  high-value  cargo  tracking,  precision  agriculture,  and  mobile
computing.

         Trimble's   Automotive   market   has  a   reputation   for   providing
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,  thus  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
as a result  of the  increased  availability  of  smaller-size  and  lower-power
boards.   Trimble's  MTT  business  unit  provides  key   technology  for  these
applications.  Competitors are Motorola, Inc.; Japan Radio Corporation; Rockwell
International Corporation; and others.

         Trimble supplies GPS boards,  chipsets, and licenses technology to some
of the leading automotive electronics suppliers,  including Philips Car Systems,
Pioneer  Electronics,  Magneti Marelli, VDO Car Communication (a division of the
Mannesmann  Group),  and  Blaupunkt (a wholly owned  subsidiary  of Robert Bosch
GMBH).  Trimble is also part of the reference  design for Intel's  initiative to
develop  in-car  Pentium  processor-based  computing,  and  Microsoft's  Auto PC
platform.

         Timing.  The growth and  expansion of data and  wireless  communication
networks have increased the need for GPS timing  products.  Trimble's MTT market
provides technically advanced timing products to major infrastructure  providers
who require reliable, precise synchronization of wireless network infrastructure
in this market,  such as Nortel and other system  integrators.  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 traditional  methods  involving the
use of  rubidium.  Such  timing  products  range from smart  antennas  and a GPS
receiver  combined  with an antenna in one  enclosure,  to a time and  frequency
output device.

         In the Timing  market,  the  Company  faces  competition  from  Hewlett
Packard;  Datum;  Odetics; and others.  Trimble remains the cost and performance
leader in this market.

         Mobile  Positioning.  The Company is an established leader in providing
tracking and communications  products in the public safety,  long-haul trucking,
and fleet  management.  These  products  typically  include GPS,  combined  with
conventional  radios,  cellular,  or satellite  communications  and  application
software for use in the vehicles and at a base station.  The Company's  software
generally addresses the need for map displays,  communications control,  vehicle
monitoring,  and messaging. These products are used in a variety of fleets, such


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<PAGE>

as transit buses, police cars, fire trucks, ambulances,  trucking, and ships. In
some  instances,  the Company  provides  additional  services  such as training,
installation,  custom  features,  and program  management.  More  recently,  the
Company  has  introduced   similar  products  for  trunked  radio  and  cellular
communications-products  that are addressing  productivity and security needs in
the commercial fleet markets.

         In some instances,  Mobile Positioning 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 products closely match the customer's requirements. Public sector sales
often  require  significant  customization,  and  the  Company  uses  integrator
partners  such as  E-Systems,  IBM, and Motorola 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 the  international
market.

         The public sector customers are highly dependent on government  funding
for fleet  modernization.  Capital  equipment  funding for U.S.  public  transit
operators comes primarily from congressional appropriations under the Intermodal
Surface  Transportation  Efficiency  Act.  Public  safety  organizations  depend
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.

     * Because  the  availability  of GPS is still new,  its use and  subsequent
benefits  have not been  understood by the broad vehicle  tracking  market.  The
Company must therefore devote considerable  resources to communicating these GPS
benefits and to educating the market.  This market education  requirement  could
result in a delay in market development and growth.

         Air Transport  Systems.  The Company  believes that GPS has significant
advantages  in  terms  of  accuracy  and  coverage  over  current   primary  and
supplemental  systems for air  transportation.  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
for administering these systems.

         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  Incorporated,  a major  supplier  of aviation  equipment,  to produce
GPS-based equipment for the commercial air transport market.

         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 the use of GPS 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  the
regulations as discussed above. The Company also has certified equipment that is
used in conjunction with other FAA certified  navigation  systems  incorporating
Omega and LORAN-C capabilities.  Currently, the Company believes it has received
FAA Certification for the Technical Standard Order C-129, covering more products
than any competitor.

                                       10

<PAGE>

     *  Currently,  the primary  FAA-required  navigation  system is the VOR/DME
system,  a ground-based  transmitter  network.  The Company believes GPS has the
potential  to replace  VOR/DME as the primary FAA and  ICAO-required  navigation
system.  The range for VOR/DME is limited to fifty to one hundred  fifty  miles,
line  of  sight  from a  transmitter.  This  leaves  large  areas  of the  world
uncovered,  including  significant  portions of the  airspace  within the United
States. Though VOR/DME accuracy is adequate for two-dimensional  navigation, GPS
provides even greater accuracy while also providing precise timing information.

         Competition   in  the  Air   Transport   Systems   market   comes  from
manufacturers  of GPS products,  as well as  traditional  navigation  and flight
management system manufacturers. Competing manufacturers of GPS products include
Rockwell  Collins,  AlliedSignal  Aerospace  (through its Electronics & Avionics
Systems Division), Universal Navigation Corporation, Canadian Marconi Company (a
subsidiary  of  the  General  Electric  Company  plc),   Northstar  Avionics  (a
subsidiary of Canadian Marconi), and IIMorrow, Inc. (a division of United Parcel
Service of America,  Inc.).  Traditional navigation and flight management system
manufacturers include Honeywell  Incorporated,  AlliedSignal  Aerospace (through
its Air Transport Avionics  Division) and Smiths Industries.  Competition in the
flight  trajectory truth system is from Ashtech,  Inc. (now part of Magellan via
Orbital Sciences Corp), and in the tracking system from ARNAV.

         Military  Aerospace  Systems.  The  Company  has  been  developing  GPS
receivers for military  applications  since 1986. Its approach to the market has
been as a commercial manufacturer of GPS electronics,  modified and enhanced for
military use. The Military  Aerospace  industry market designs and  manufactures
GPS  equipment  capable of utilizing  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 receivers provide  authorized users with GPS
equipment that removes the effects of Selective  Availability  (allowing  higher
accuracy),  and includes  anti-spoofing  protection and additional immunity from
jamming signals.  The Company sells equipment to the United States Department of
Defense, aerospace prime contractors, and foreign military organizations.

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

         The Company's Military and Advanced Systems strategy is to build on its
advanced   position  in  GPS   technology  as  the   foundation  for  developing
partnerships  with major military  manufacturers  and to offer complete airborne
and  ground-based  time-and-positioning  solutions  for military  and  aerospace
applications.  In these markets,  Trimble competes,  partners,  and subcontracts
with a number of companies,  some of which have substantially  greater financial
and marketing resources, as well as substantial experience and resources devoted
to military sales.  Interstate Electronics (subsidiary of Figgie International),
Magnavox  (subsidiary  of Hughes),  Raytheon,  Litton  Industries,  and Rockwell
International  Corp.,  as well as a number of  European  companies,  manufacture
products that 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  in  general.  There  can be no
assurance that the Company will be awarded future U.S.  military  contracts.  In
addition,  the U.S.  government retains the right to impose  restrictions on the
sale of GPS products to foreign military organizations at any time.

                                       11

<PAGE>

Discontinued Market - General Aviation

         On October 2,  1998,  the  Company  adopted a plan to  discontinue  its
General  Aviation  division.  The decision to discontinue  the General  Aviation
division  was one of the  strategies  focused  on by the  Company  to return the
business to profitability.  Accordingly,  the General Aviation division is being
reported  as a  discontinued  operation  for  all  periods  presented  in  these
financial  statements.  Net assets of the  discontinued  operation at October 2,
1998, were written off and consisted primarily of inventory, property, plant and
equipment, and intangible assets.

         The Company plans to dispose of the discontinued  operations  through a
closure of the division. The assets of Terra Corporation, which were acquired in
1996 by Trimble, are included in the discontinued operation.

Business Unit Products

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

Precision Positioning Group

Land Surveying Products

         4000 Series.  Historically one of the Company's most successful product
lines,  the 4000 series GPS  receivers  and their  associated  GPS  antennas are
instruments  that provide  position  information with precisions as good as 5mm.
The  Company  offers  survey  grade 4000  series GPS  receivers  that use the L1
frequency (i.e., single frequency  receivers) and both the L1 and L2 frequencies
(i.e.,  dual  frequency  receivers)  broadcast by the Navstar  satellites.  Dual
frequency  receivers  offer  users  greater  productivity  and better  accuracy,
especially  over longer  distances.  The 4000 GPS  receiver is  available in two
configurations  for high-end  control and geodetic  research  applications.  The
products differ from one another in the specific functions that they provide the
user.  The  systems  can be used in  either  a  real-time  mode  (positions  are
generated virtually  instantaneously) or in a postprocessing mode (raw satellite
data are collected and stored for subsequent processing on a computer, utilizing
specialized software).

         GPS Total Station.  In 1994,  Trimble  introduced the GPS Total Station
surveying system.  This complete surveying system consists of two or more survey
grade GPS receivers,  GPS antennas,  radio modems for transmitting  data between
the GPS receivers,  a TSC1 data  collector  running  Trimble  Survey  Controller
software for managing the  real-time  GPS survey and storing  data,  plus office
processing  software.  One receiver is used as a base station and the other as a
"rover" that the user carries around in order to survey individual  points.  The
system  incorporates   advanced  features  that  make  Real-time  Kinematic  GPS
surveying  practical as an everyday surveying  technique.  The GPS Total Station
4800,  introduced in 1997, is a highly compact system that integrates all of its
rover components onto a single  lightweight pole,  thereby  eliminating the need
for a backpack and any cables  strung  between the surveyor and the survey pole.
The GPS Total Station 4700, introduced in 1998, is a small, lightweight, modular
system with  integrated  radio and separated GPS and radio antenna,  that offers
logistical  advantages over the fully integrated GPS Total Station 4800. The GPS
Total Station 4700 and 4800 are fully  compatible,  and customers  often mix the
systems for complete  versatility in the field. The system's  advanced  handheld
data collector, the TSC1, is designed and manufactured by the Company.

                                       12

<PAGE>

         TTS 500 Total Station.  In 1998,  Trimble  introduced the TTS 500 as an
extension to the GPS Total  Station.  The  revolutionary  TTS 500 total  station
consists of a single  optomechanical  surveying  instrument  with  reflectorless
technology and software. Unlike traditional surveying instruments, which require
a target,  the TTS 500  utilizes  reflectorless  technology  to make  millimeter
measurements  off  non-cooperative  targets.  This extends the user's ability to
survey in areas where GPS  signals  are  obstructed,  or in  locations  that are
difficult  or  dangerous  to  reach.   As  with  the  GPS  Total  Station,   the
reflectorless   technology  means  a  single  user  can  survey.   Reflectorless
technology removes the need for a second person to hold the prism target that is
required by traditional conventional surveying instruments.  In the field, users
can seamlessly interchange between the TTS 500 and the GPS Total Station 4700 or
4800, using the TSC1 data collector running Trimble Survey Controller software.

         GPSurvey, Trimble Survey Office and Trimble Survey Controller. GPSurvey
and Trimble  Survey  Office are  PC-based  office  software  suites that provide
surveyors with the tools they need for project  planning and processing of their
GPS surveying projects.  GPSurvey  postprocesses data collected in the field and
provides the user with  finished  data sets and reports.  GPSurvey also includes
network adjustment capabilities. Trimble Survey Office manages data collected by
real-time GPS and conventional optical survey methods, and reduces the data into
finished  data sets.  Both  Trimble  Survey  Office  and  GPSurvey  provide  the
functionality to export data to third-party CAD, design,  and GIS packages.  The
Trimble Survey Office software also imports and converts design data from design
packages  into a suitable  format for  transfer  to  Trimble  Survey  Controller
software  running  on the  TSC1.  This  data is used for  construction  and road
stakeout. Trimble Survey Controller software runs on the TSC1 data collector and
is used to control and manage  survey and  stakeout  tasks in the field.  All of
these  products are sold as part of the land survey  product  systems.  The TSC1
with  Trimble   Survey   Controller  is  also  available  as  a  controller  for
conventional surveying instruments from leading manufacturers.

         TRIMTALK and TRIMMARK Radios. These radio modems are used for real-time
GPS applications.  They provide broadcast and receive functions for VHF, UHF and
900 MHz  spread  spectrum  data  transmission,  and they  operate  at baud rates
sufficient to carry the data needed for real-time GPS survey applications. These
products are sold as part of survey product systems.

Marine Surveying Products

         NT300D.  This  product  combines the  graphics  display and  navigation
features of a marine GPS receiver  with the sub-meter  positioning  accuracy and
performance  of a marine  survey grade DGPS  receiver.  The unit features 12 GPS
channels and 2 MSK channels for  reception of DGPS  correction  data from Marine
Radiobeacons.  The  NT300D  is ideal  for many  marine  surveying  applications,
providing-in one product-the ability to both navigate and position.

         MS750.  This  product  brings the  latest in  Real-time  Kinematic  GPS
technology   to  the   marine   environment.   With  the  fast,   reliable   OTF
initializations  and rapid position  updates,  the product is ideally suited for
the control  and docking of  high-speed  ferries  and the  positioning  of large
marine structures, such as bridge spans for marine construction.

         4000RSi/DSi.  The 4000 series products provide  sub-meter  accuracy and
are suited to marine survey  applications that do not require the performance of
the MS750 series  products.  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.

         DSM.  These  products  are  combined  MSK beacon and  differential  GPS
sensors and reference  stations targeted mainly to value-added  resellers.  They


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<PAGE>

provide  sub-meter  GPS data in the form of a "black  box." The DSM  allows  for
comprehensive custom solutions developed by third parties.

         Hydro. This line of software programs provides total solutions for many
marine survey applications.  It provides the capability to integrate 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.  The newest program in this
line is HydroPro, which is a Windows 95 and Windows NT software suite.

         Target: Structures.  This Windows and Windows NT based program provides
for precise  positioning  of large  mobile  offshore  structures  or  platforms.
Utilizing  real-time GPS receivers such as the MS750,  this innovative  software
enables  barge and  crane  operators  to  efficiently  and  safely  guide  large
structures to any target location for marine construction.

         Beacon Control System. The 4000 series products form the hardware basis
of Trimble's  DGPS MSK  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 more than 30 countries,  broadcasting  DGPS corrections and monitoring
their integrity.  The Beacon Control Software is a Windows-based program that is
often  provided as part of the complete  system.  The software  allows  complete
control of all hardware components, providing updates and status information.

Mapping and GIS Products

         Geoexplorer II. The GeoExplorer II is a self-contained  handheld system
providing a few meters of accuracy for mapping and GPS/GIS data  collection at a
reduced cost.

         Pathfinder  Pro  Family.   The  GPS  Pathfinder  Pro  XR/XRS   system's
integrated  real-time  positioning  capabilities  allow  the  user  to  collect,
relocate and update  geographic  information with an accuracy of better than one
meter.   When  combined  with   Trimble's   handheld   Asset   Surveyor  or  pen
computer-based  ASPEN  software,  the Pro XR/XRS  offers a  complete  system for
real-time mapping and GPS/GIS data collection.

         Pathfinder  Office.  The  GPS  positions  and  descriptive  information
collected by each of these systems are  downloaded to a personal  computer using
Trimble's  Pathfinder  Office software,  where the information can be processed,
edited, and plotted-or output into standard GIS, CAD and database formats.

         Pathfinder  Card.  The GPS  Pathfinder  Card is a GPS  receiver,  in an
industry-standard  PC Card format,  that is capable of  collecting  data with an
accuracy of 1 to 3 meters.

         Pathfinder Tools Software  Development Kit. Trimble's  Pathfinder Tools
SDK is a powerful  software  development kit (SDK) designed to integrate Trimble
GPS receivers with custom mapping and GIS applications. It includes an extensive
library of software  components,  including  ActiveX  controls and  programmable
automation objects that can be integrated using standard  development  languages
such as Microsoft Visual Basic and Visual C++.

Mining, Construction & Agriculture Products

         MS750.  The rugged MS750 is designed  specifically  for dynamic machine
guidance  and  control  applications.   Centimeter-level  position  updates  are
computed twenty times per second,  ensuring the response and accuracy  necessary
for precise dynamic applications on moving equipment.

                                       14

<PAGE>

         Eurocard  DSM.  The  Eurocard  DSM  is  based  on  Trimble's   advanced
low-power,  low-noise,  high-accuracy  chip technology.  Advanced  carrier-aided
filtering  techniques  applied to exceptionally  low-noise C/A code measurements
are used to generate  real-time,  sub-meter  differential  (DGPS) positions at a
maximum rate of 10 Hz, even under challenging conditions.

         BenchGuide.  The Trimble  BenchGuide  system  provides  mining  machine
operators with precision GPS-based guidance in locating correct bench or terrain
elevations  without  using  survey  stakes.  It can be used with  Trimble  radio
modems,  and  it  provides  accurate,  low-latency  GPS  positions  in  a  local
coordinate system.  BenchGuide provides numerous benefits over traditional bench
elevation systems. It is  maintenance-free  and operates in bad weather or under
dusty conditions that limit the range of other systems.

         TRIMCOMM 900. The rugged  TRIMCOMM 900 is a high-speed  data radio link
for real-time  differential and Real-time Kinematic GPS solutions,  and is ideal
for machine guidance applications. It provides a versatile means of establishing
a wireless  broadcast  network,  supporting  up to four  repeaters  for extended
coverage.  A dual  port  TRIMCOMM  900 makes it  possible  to  maintain  two-way
communications throughout the coverage area, allowing real-time machine position
and office design information updates.

         TrimFlight.  TrimFlight is a sub-meter guidance,  logging,  and mapping
system for  aircraft  that  provides  assurance  of proper  application  of farm
chemicals when used in crop spraying.  TrimFlight  eliminates the need for human
flaggers, and it generates reports and maps providing flight information and the
exact  location  of  application.  TrimFlight's  computer  interface  allows for
integration to other  applications,  such as photogrammetry  and remote sensing.
TrimFlight data is compatible with most major GIS software packages.

         AgGPS 122. The AgGPS 122 is a combined MSK beacon and  differential GPS
receiver  for  sub-meter  agricultural  positioning  applications.   The  system
integrates with other devices such as harvest yield monitors.

         AgGPS 132. The AgGPS 132 is a combined MSK beacon and  differential GPS
receiver plus an L-band satellite  differential receiver, all in one system. The
system  integrates with other devices,  such as harvest yield monitors,  and can
provide sub-meter positions that can be output to yield monitors,  variable-rate
planters,  application  controllers  and field  computers.  A Parallel  Swathing
Option further enhances productivity,  especially in low-visibility  conditions,
and reduces operator fatigue.

Mobile and Timing Technologies Products

Automotive Products

         ACE II GPS Module. The newest miniature board product is the ACE II GPS
Module. This powerful 8-channel architecture,  with the popular Core Module form
factor, is designed for applications requiring high performance at low cost. ACE
II GPS delivers fast GPS signal acquisition and low power consumption, making it
ideal for mobile and battery-powered applications.

         Lassen-SK8.  The Lassen-SK8 board,  based on the Sierra GPS technology,
is used in the automotive and embedded  markets.  Just  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.

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<PAGE>

         Sierra GPS Chipset.  The Sierra GPS Chipset  features  state-of-the-art
performance,  small  size,  low  power  consumption  and low cost.  The  chipset
consists of two ASICs, fully developed software and unmatched technical support.
The two ASICs are  composed of Trimble's  GPS DSP ASIC and RF/IF  down-converter
chip.

         SveeSix.  SVeeSix is a family of GPS boards and assemblies designed for
high-performance  embedded GPS  applications  for tracking.  The family includes
SVeeSix and Sveesix-CM3.

Mobile Positioning Products

         The  Company  offers a line of  products  designed  to meet many of the
needs of customers  who need to monitor and track mobile  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,  satellite
communications,  mobile data terminals,  communications  control  software,  and
automatic vehicle location (AVL) display software.

         MTT  Antennas.  Trimble  offers a variety of miniature GPS antennas for
mobile or  vehicle  applications.  These  antennas  include  the  Miniature  GPS
Antenna, a compact,  active micropatch antenna with a 5-meter cable and magnetic
mount; the Hard-mount Antenna, a compact,  hard mount, active micropatch antenna
with  single-hole  0.75"  threaded  mount  and TNC  connector;  and the  Rooftop
Antenna,  consisting  of the Bullet II HE antenna  with  23-meter  cable and SMB
adapter.  These  antennas are widely used for vehicle  tracking,  car navigation
systems, and harsh timing environments.

         MTT 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.

         GPS  Receivers.  The  Company's  product  line  includes the Placer 450
family (receivers  configurable for fleet tracking  applications) and the Placer
455 a GPS receiver  integrated  with a gyroscope  and an odometer  interface for
precise position information.

         Integrated GPS and Cellular Phone  Products.  The Company offers a line
of GPS/cellular products known as GPS Cellular Messenger, targeted at high-value
cargo security, driver compliance, and fleet asset management applications.

         Public  Sector  Services.  In some public safety  sectors,  the Company
provides  certain  services   including   training,   equipment   installations,
integration of third-party radios, and computers and program  management.  Also,
the Company provides AVL subsystems,  consisting of in-vehicle hardware and base
station communications and display software.

         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.


                                       16

<PAGE>

Timing Products 

         MTT Timing  Products.  The  newest  generation  of GPS  synchronization
devices is the Company's  Thunderbolt GPS disciplined clock. This clock combines
an  8-channel  GPS  receiver,  control  circuitry  and a  high-quality  ovenized
oscillator  on a single  board.  This  level of  integration  provides  superior
performance   to   precise   timing   applications,   such  as   CDMA   wireless
infrastructure, Enhanced 911 (E911) positioning, and wireless local loop.

         Smart Antennas.  Trimble's family of smart antennas  includes  Palisade
and  AcutimeII.  Smart  antennas  combine a GPS  receiver  and an antenna in one
package.  They provide OEMs and system  integrators with a "plug-in" GPS module,
allowing them to quickly and easily add GPS  capability to their product  lines.
AcutimeII   offers   integrators  a   stand-alone   GPS  time  source  with  one
microsecond-level  accuracy at a fraction of the cost of other time sources with
similar performance.  Palisade, based on Trimble's Sierra GPS technology,  is an
8-channel  receiver  designed to provide accurate  synchronization  for wireless
voice and data networks.

Commercial Air Transport Products

         Trimble 8100. This product family is an IFR-certified  C129-A1 aviation
navigation  system and provides  GPS  position,  velocity and course data,  plus
flight  management  information  for the business,  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.

         Honeywell/Trimble  HT9100/HT9000.  These  products  are  developed  and
marketed  in  partnership  with  Honeywell  Incorporated  and are  true  GPS FMS
systems,  that enable air  transport  customers to upgrade  existing  analog air
transport and commercial aircraft to modern GPS navigation.  Used by many of the
world's leading  airlines,  these products are in continuous  service around the
world on a daily basis.  The HT9100 is uniquely  capable of  interfacing to both
analog and digital Flight  Instruments  and Autopilot  Systems.  The system also
meets the requirement of TSO C-129 for GPS  Navigation,  as well as, Oceanic and
Remote Primary Means Operations to FAA notice 8110.60.

Military Aerospace Systems Products

         ForceTM  GPS Module  Series.  The Force  series of GPS modules has been
developed for embedded integration into high-performance land, sea, aircraft and
missile  applications.  A variety  of  standard  and  custom  form  factors  are
available,  including VME and SEM. Both Standard  Positioning  Service (SPS) and
Precise  Positioning  Service  (PPS) models are  available,  with the PPS models
correcting for Selective  Availability (SA) and using Anti-Spoof (A-S) augmented
with  Receiver  Autonomous   Integrity  Monitoring  (RAIM)  to  protect  against
satellite or system  anomalies  and signal  spoofing.  The newest models in this
family are designed in accordance  with the GPS Joint  Program  Office (GPS JPO)
GPS  Receiver   Application  Module  (GRAM)  Guidelines  for  military  avionics
platforms.

         TA-1. This 12-channel,  all-in-view,  Precise Positioning Service (PPS)
receiver is currently under review by the Federal  Aviation  Administration  for
certification  under FAA TSO  C-129a.  It has  state-of-the-art  technology  and
shares a common  architecture  with other Trimble GPS PPS  receivers.  The TA-12
receiver was  designed  and  developed  for  military  and  commercial  aviation
applications  requiring a robust GPS receiver for  integration  with existing or
new Flight Management Systems that required IFR certified  operations and/or GPS
capabilities.

                                       17

<PAGE>

         Cargo Utility GPS Receiver (CUGR).  Introduced in 1997, this product is
a  Dzus-mount  (P)Y GPS  navigational  system for  worldwide  military  aviation
operations.  It provides U.S.  military  helicopter  pilots Precise  Positioning
Service GPS navigation  capabilities,  and meets the  performance  standards for
Instrument Flight Rules for en route, terminal and non-precision approach phases
of flight.

         TRIMPACK and Centurion.  These are portable,  ruggedized,  handheld GPS
products  that are  approximately  the size of a pair of  binoculars  (120 cubic
inches).    Position    information   is   displayed   on   a   four-line,    20
character-per-line,  backlit LCD screen.  Troops  deployed in  Operation  Desert
Storm used TRIMPACK units to determine their location in the featureless desert.
The  Centurion  is  an  upgraded  PPS  receiver  that  provides  full  Selective
Availability and Anti-Spoof performance.

         TANS Series.  The Trimble Advanced  Navigation  System (TANS) series of
products 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 that is upgradable to PPS. The TANS series has been sold  primarily to
the military as a remote mounted GPS navigation  sensor and for vehicles piloted
from a remote station.

Sales and Marketing

         The Company  currently  has nine  regional  sales offices in the United
States and six in Europe, as well as offices in Australia, Canada, China, Japan,
Mexico, New Zealand, Russia and Singapore. The Company has substantial variation
in the needs of its sales and distribution channels, which are rapidly changing.

         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 more
than 100 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  represented
approximately 46%, 46%, and 47% of Trimble's total revenue in fiscal years 1998,
1997  and  1996,  respectively.   Sales  to  unaffiliated  customers  in  Europe
represented  25%,  22%,  and 21% of net  revenue in such  periods,  and sales to
unaffiliated  customers in the Far East  represented  13%, 15%, and 19% of total
revenue in such periods, respectively.

         Support.  The Company's  general terms and  conditions  for sale of its
products  include a one-year  warranty.  Air Transport  products,  however,  are
generally  sold with a basic three year warranty  period with an additional  two
year warranty sold with some units,  while select military  programs may require
extended  warranty  periods.  The  Company  supports  its  products  on a  board
replacement  level from locations in the United Kingdom,  Singapore,  Japan, and
New  Zealand,  as well as  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.

                                       18

<PAGE>

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 that
competition will continue to intensify.  Indirect  competition is also beginning
to emerge, particularly from semiconductor and consumer electronic manufacturers
that are  anticipating  the  emergence of  high-volume  consumer-orientated  GPS
applications.  Specific competitors in each of the markets the Company currently
addresses are mentioned in the section  "Industry  Segments." 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, as well as continued market education about such products.

         The  principal  competitive  factors in the  markets  that the  Company
addresses include ease of use, physical characteristics (including size, weight,
and power consumption),  product features (including  differential GPS), product
performance,   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,  though the Company may be at a competitive  disadvantage against other
companies having 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 provide  systems and  products  having  significantly  differentiated
features and improved  cost-benefit  ratios over those provided by  competitors.
There can be no  assurances  that the  Company  will be able to  implement  this
strategy  successfully,  or 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 as well as cost-benefit ratios of their products.

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.  Moreover,
Trimble develops substantial systems expertise and user interfaces for a variety
of  applications.  Below is a table of  Trimble's  expenditures  on research and
development over the last three years.

                                       19

<PAGE>

                              January 1,        January 2,      December 31,
Years ended                      1999              1998             1996
- ------------------------------------------------------------------------------
(In thousands)

Research and development         $ 44,826          $ 37,097          $ 32,716


         Often a new product is developed  initially 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 established an
advanced  technology  laboratory  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 sometimes supported
financially 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 in part 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.

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  operates surface mount technolgy (SMT)
assembly equipment in its manufacturing facility.
 
     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.
  

                                       20

<PAGE>

     The Company has historically  manufactured its products in relatively small
quantities.  However, the Company must successfully  transition to higher volume
manufacturing.  The  Company  is  currently  negotiating  to  commence  contract
manufacturing with respect to certain of its products.

     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. When possible, though,
the Company attempts to utilize standard parts and components, including RAM and
ROM devices that are available from multiple vendors.
    
Backlog

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

Patents, Trademarks, and Licenses

         The Company  currently  holds 215 U.S.  patents and 18 related  foreign
patents that expire at various  dates no earlier than 2005. It also has over 180
U.S. and foreign patent  applications  pending.  The Company currently  licenses
certain  peripheral   aspects  of  its  technology  from  Spectrum   Information
Technologies and GeoResearch.

         Although the Company  believes that its patents and trademarks may have
value,  there can be no  assurance  that those  patents and  trademarks,  or any
additional  patents and  trademarks  that may be  obtained  in the future,  will
provide  meaningful  protection from competition.  The Company actively develops
and  protects  its  intellectual   property  through  a  program  of  patenting,
enforcement, and licensing.

         The Company does not believe that any of its products  infringe  patent
or other proprietary rights of third parties, but it cannot be certain that they
do  not  do  so.  (See  Note  15  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 the second  quarter of 1997,  the Company  expanded a prior  license
agreement  with Pioneer  Electronic  Corporation  for certain of the  technology
contained in its TANS product for  inclusion in in-vehicle  navigation  products
sold in Japan and received a $2,222,000  licensing fee in consideration  for the
expansion of the original license.

         The  Company   expects   that  it  will  enter  into  other   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.
Additional  trademarks are pending.  Trimble Navigation Limited acknowledges the
trademarks  of other  organizations  for their  respective  products or services
mentioned in this document.

                                       21

<PAGE>

Employees

         As of January 1, 1999,  the  Company  employed  1,291  persons:  346 in
research  and  product  development,   346  in  sales  and  marketing,   423  in
manufacturing,  and 176 in administration and finance. Of these, 73 were located
in Europe, 173 in New Zealand, 16 in Japan, 12 in Singapore, 2 in Australia, and
1,015 in the United  States.  The Company also currently  employs  temporary and
contract  personnel.  Use of temporary and contract personnel has decreased over
the last year, and is 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 success depends in part on 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.


                                       22

<PAGE>

Executive Officers of the Registrant

The names,  ages, and positions of the Company's  executive officers as of March
26, 1999 are as follows:

               Name                    Age   Position                
- -----------------------------------    ---   ----------------------------------

Steven W. Berglund...............      47    President, Chief Executive Officer
Bradford W. Parkinson............      64    Current Director, served as 
                                             President and Cheif Executive 
                                             Officer from August 1998 to March
                                             1999

Mary Ellen P. Genovese...........      39    Vice President, Finance, Chief 
                                             Financial Officer and Corporate 
                                             Controller
Charles E. Armiger, Jr...........      44    Vice President, Worldwide Sales
David M. Hall....................      50    Group Vice President, Mobile and  
                                             Timing  Technologies
Patrick J. Hehir.................      37    Senior Vice President, Chief 
                                             Manufacturing Officer
John E. Huey.....................      49    Treasurer
Ronald C. Hyatt..................      58    Group Vice President, 
                                             Precision Positioning
Bruce E. Peetz...................      47    Vice President, Advance Technology
                                             and Systems

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

 Steven W.  Berglund  joined  Trimble as President  and Chief  Executive
Officer in March 1999. Mr. Berglund has a diverse  background with experience in
engineering,  manufacturing,  finance  and  global  operations.  Most  recently,
Berglund was president of Spectra Precision, Inc. Spectra Precision, with global
sales  of  approximately  $200  million,  develops  and  manufactures  surveying
instruments,  laser based construction alignment  instruments,  and construction
machine control systems.  Spectra  Precision is a subsidiary of  Spectra-Physics
AB. During his fourteen years within Spectra-Physics, which was an early Silicon
Valley pioneer in the development of laser systems,  Mr. Berglund held a variety
of positions that included 4 years based in Europe.  Prior to Spectra Precision,
Mr. Berglund spent a number of years in the early 1980's at Varian Associates in
Palo Alto where he held a number of planning and manufacturing  roles. Varian is
a technology  company  specializing in microwave  communications,  semiconductor
manufacturing   equipment,   analytical  instruments,   and  medical  diagnostic
equipment.  Mr. Berglund began his career as a process engineer at Eastman Kodak
in  Rochester,  New York. He attended the  University of Oslo and  University of
Minnesota where he received a B.S. in chemical  engineering in 1974. He received
his MBA from the University of Rochester in 1977.

     Bradford W.  Parkinson  has been a member of  Trimble's  Board of Directors
since  1984 and has  served as a  consultant  to the  Company  since  1982.  Dr.
Parkinson is currently a professor at Stanford  University  and holds the Edward
C. Wells Endowed Chair in the Department of Aeronautics and Astronautics. He was
on leave of absence from Stanford  while serving as Trimble's  President and CEO
from August 1998 to March 1999. Prior to joining  Trimble,  Dr. Parkinson served


                                       23

<PAGE>

as an Air Force colonel. He created and ran the NavStar GPS Joint Program Office
from 1972 through  1978,  during  which time he received the Defense  Department
Superior Performance Award as the best program director in the Air Force. As the
program director, he led the definition,  development,  launch, and test of GPS,
including five types of user  equipment.  After retiring from the Air Force,  he
became a professor of mechanical  engineering  at Colorado  State  University in
1978 for one year.  Beginning in 1979,  Parkinson served as group vice president
for  Rockwell  International.  There  he  directed  business  development  and a
300-person advanced engineering  organization.  From 1980 to 1984 he was a group
vice  president  and general  manager for  Intermetrics,  where he directed five
divisions. He also was president of the industrial subsidiary,  Plantstar, which
sold  productivity  monitoring  equipment.  Dr.  Parkinson  is  a  distinguished
graduate of the U.S.  Naval Academy and has an M.S.  degree in  aeronautics  and
astronautics  from  Massachusetts  Institute of Technology  (MIT) and a Ph.D. in
aeronautics and  astronautics  from Stanford  University.  He is a distinguished
graduate  of  the  U.S.  Naval  War  College;  was  head  of the  department  of
astronautics  and  computer  science at the U.S. Air Force  Academy;  and was an
academic instructor for the USAF Test Pilot School.

          Mary Ellen P. Genovese  joined  Trimble as controller of manufacturing
operations  in  December  1992.  From 1994 to 1997 she served as  business  unit
controller  for software and  component  technologies,  and for the tracking and
communications  business unit. She was appointed corporate controller in October
1997 and vice  president of finance and corporate  controller in February  1998.
Currently, she is the interim chief financial officer. Prior to joining Trimble,
Mrs.  Genovese  was chief  financial  officer  and  president  for Minton Co., a
distributing  company to the commercial  building market,  from 1991 to 1992. In
her position as chief financial  officer she was responsible for the accounting,
management  reporting and bank and investor financing for the company.  In March
of 1992,  the board of  directors  asked her to assume the role of  president to
reorganize  the  company,   including  the  divestiture  of  the   manufacturing
operations.  Prior  to  1991,  she  worked  for 10  years  with  General  Signal
Corporation. She was appointed European financial controller in July 1990, where
she was responsible for the company's three European operations, Germany, France
and the United Kingdom.  From 1988 to 1990 she served as unit financial officer,
for General  Signal's  Semiconductor  Systems  Division.  She held several other
management  positions including  materials manager,  controller of manufacturing
operation and international  projects  controller for General Signal's Ultratech
Stepper  Division  from  1984 to  1988.  Mrs.  Genovese  is a  Certified  Public
Accountant  and received her B.S. in  accounting  from  Fairfield  University in
Connecticut in 1981.

     Charles  E.  Armiger,  Jr.  joined  Trimble  in  January  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 1996,
he was appointed to serve as Vice  President for Commercial  Systems  Sales.  In
September  1998, Mr.  Armiger was appointed  Vice President of Worldwide  Sales.
Prior to joining  Trimble,  he 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.

     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,  focusing  on
application and operating  system  software,  component board level, and chipset
volume aspects of the GPS business. In November 1998 he was appointed Group Vice
President of the Mobile and Timing  Technologies  business unit, managing mobile
positioning and communications,  timing,  automotive,  military,  and commercial
aviation  businesses.   Previously,   he  worked  for  Raychem  Corporation  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


                                       24

<PAGE>

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,
California.

         Patrick  J.  Hehir  joined  Trimble  in  February  1999 as senior  vice
president and chief manufacturing  officer.  Prior to Trimble,  Hehir worked for
Dovatron  International  where he held several  positions  during his eight year
tenure including,  quality/program  manager,  director of operations,  executive
director of operations  and vice  president of worldwide  business  development.
Dovatron,  a $1 billion  international  manufacturing  company  with  offices in
Ireland,  Mexico,  Asia,  Eastern  Europe and the U.S.,  serves  clients such as
Hewlett-Packard,  Hughes Corporation,  I.B.M., and Lucent Technologies. Prior to
Dovatron,  he  worked  for  Western  Digital  in  several  positions  including,
process/quality  engineer,  quality  improvement  process  coordinator,   senior
quality  engineer  and quality  manager.  Hehir also held  process  engineering,
production and quality  positions at Pulse  Engineering in Ireland.  Hehir has a
broad  range  of  educational   qualifications   from  technical   colleges  and
universities  in Ireland and the United  Kingdom.  He  graduated  from  Galway's
Institute of Technology with an electronic  engineering  certificate in 1981. He
received a quality assurance  post-graduate diploma from the Galway's University
College in 1984. In 1987, Hehir received a production and operations  management
certificate from the United Kingdom's Institute of Industrial Engineering, and a
post-graduate   diploma  in  health,  safety  and  social  welfare  from  Cork's
University College in 1993. Hehir also served on Ireland's  technical  committee
for the development of the environmental system standard,  ISO 14000,  published
by the International Standards Organization.

         John E. Huey joined  Trimble in 1993 as Director  Corporate  Credit and
Collections, promoted to Assistant Treasurer in 1995 and Treasurer in 1996. Past
experience includes two years with ENTEX Information  Services,  five years with
National Refractories & Minerals Corporation (formerly Kaiser Refractories), and
thirteen years with Kaiser Aluminum & Chemical Sales, Inc. He has held positions
in  Credit  Management,  Market  Research,  Inventory  Control,  Sales and as an
Assistant   Controller.   Mr.  Huey   received  his  B.A.   degree  in  Business
Administration in 1971 from Thiel College in Greenville, Pennsylvania and an MBA
in 1972 from West Virginia University in Morgantown, West Virginia.

     Ronald  C.  Hyatt   joined   Trimble  in  August   1983  as   Director   of
Instrumentation Products. In 1985, he was appointed Vice President for Surveying
and  Mapping   Products,   managing  the  marketing  and  application   software
development  aspects of the business  until  February  1993.  In January 1997 he
returned to the Company as Senior Vice  President of Trimble  Labs,  focusing on
next-generation  ASIC developments.  In November 1998, Mr. Hyatt was promoted to
Group Vice President of Precision  Positioning.  He is responsible  for managing
land survey, marine, marine survey, mapping/GIS, and mining,  construction,  and
agricultural  applications.  Prior to  joining  Trimble,  Mr.  Hyatt  worked for
Hewlett-Packard  from  1964  to  1983  in  various  engineering  and  management
positions,  focusing on precision frequency and time instrumentation.  Mr. Hyatt
received his B.S. degree in electrical engineering from Texas Tech University in
1962 and his M.S. degree in electrical  engineering from Stanford  University in
1963.

         Bruce E. Peetz joined  Trimble in June 1988 as Program  Manager for GPS
Systems.  From January 1990 to January 1994 he served as Development Manager for
commercial  dual-frequency  products,  and from January 1993 to December 1995 he
served as  Engineering  Manager for Surveying and Core  Engineering.  In January
1996 he was  appointed  General  Manager of the Land  Surveying  unit,  and from
February  1998  started the Advanced  Systems  division as General  Manager.  In
October  1998 he was named Vice  President of Advanced  Technology  and Systems,
consolidating  Systems and Trimble  Laboratories.  Prior to joining Trimble, Mr.
Peetz served in a variety of engineering and management  positions during eleven

                                       25

<PAGE>


years at Hewlett  Packard.  Mr. Peetz  received his BSEE from the  Massachusetts
Institute of Technology (MIT) in 1973, and did graduate work at UCLA.

                 

I
tem 2.  Properties

         The  Company   currently  leases  and  occupies  sixteen  buildings  in
Sunnyvale, California, totaling approximately 396,000 square feet. The leases on
these buildings  expire at various dates through 2003. In addition,  the Company
leases and occupies three  buildings in Austin,  Texas,  totaling  approximately
50,600 square feet,  to  manufacture  GPS-based  aviation  products;  the leases
expire  at  various   dates   through   2001.   The   Company   also   leases  a
45,000-square-foot   facility  in  Christchurch,   New  Zealand,   for  software
development.  The Company's two largest international sales offices are those in
the United  Kingdom  (13,700  square feet) and Japan  (5,900  square  feet).  In
addition, the Company leases sales offices in Australia,  Brazil, China, France,
Germany,  Mexico, Spain, Singapore, and Russia, 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
near-term future operations.


Item 3.  Legal Proceedings

         The information with respect to legal proceedings required by this item
is  included  in  Part  II,  Item  8,  Note  15 to  the  Consolidated  Financial
Statements, hereof under the caption "Pending Matters."



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

         Not applicable.

                                       26

<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  quarters
indicated,  the range of high and low  closing  sales  prices for the  Company's
Common Stock on the Nasdaq National Market:

                                    High             Low      

                  1998:
                      Fourth        10 1/4           7
                      Third         16 3/8           9 1/4
                      Second        19 13/16         13 7/8
                      First         24 3/8           17 1/4

                  1997:
                      Fourth        24 5/16          18 1/8
                      Third         21 5/8           16 1/2
                      Second        19               10 7/8
                      First         14 3/4           11 1/4


         The Company had 1,664 shareholders of record as of March 15, 1999.

         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 due also to 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  $50,000,000  revolving
line of credit  agreement,  the  Company is  restricted  from  paying  dividends
without the lender's  consent.  Under the  Company's  Note  Purchase  Agreement,
pursuant 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 5 and 7 to the Consolidated Financial Statements contained in Item 8.



                                       27

<PAGE>




 Item 6.  Selected Financial Data

 HISTORICAL FINANCIAL REVIEW

 Summary Consolidated Statements of Operations Data


<TABLE>
<CAPTION>
                                                     January 1,     January 2,    December 31,     December 31,   December 31,
 Years ended                                           1999            1998          1996             1995            1994
- -------------------------------------------------------------------------------------------------------------------------------
 (In thousands, except per share data)
<S>                                                    <C>            <C>        <C>              <C>               <C>    
 Revenue                                                $ 260,279      $ 258,894  $ 221,924        $ 221,236         $ 159,264
                                                     --------------------------------------------------------------------------

 Operating expenses
     Cost of sales                                        134,723        118,903    104,881           93,544            60,193
     Research and development                              44,826         37,097     32,716           29,869            22,772
     Sales and marketing                                   61,227         56,457     60,358           59,317            48,241
     General and administrative                            32,403         26,592     28,452           22,141            10,872
     Restructuring charges                                 10,280              -      2,134                -                 -
                                                     --------------------------------------------------------------------------

 Total operating expenses                                 283,459        239,049    228,541          204,871           142,078
                                                     --------------------------------------------------------------------------

 Operating income (loss) from continuing 
     operations                                           (23,180)        19,845     (6,617)          16,365            17,186
 Nonoperating income (expense), net                        (2,041)         1,172        706              773            (3,057)
                                                     --------------------------------------------------------------------------

 Income (loss) before income taxes from 
     continuing operations                                (25,221)        21,017     (5,911)          17,138            14,129
 Income tax provision (benefit)                             1,400          2,496       (300)           3,121             2,391
                                                     --------------------------------------------------------------------------
 Net income (loss) from continuing operations           $ (26,621)      $ 18,521   $ (5,611)        $ 14,017          $ 11,738
                                                     --------------------------------------------------------------------------

Loss from discontinued operations (net of tax)            ($6,911)       ($9,242)   ($5,691)         ($2,756)          ($1,714)
Estimated loss on disposal of discontinued operations
     (net of tax)                                        ($19,862)             -          -                -                 -
                                                     ==========================================================================
Net income (loss)                                       $ (53,394)       $ 9,279    (11,302)        $ 11,261          $ 10,024
                                                     ==========================================================================


Basic net income (loss) per share from 
     continuing operations                                $ (1.19)        $ 0.83    $ (0.25)          $ 0.70            $ 0.64
Basic net income (loss) per share from 
     discontinued operations                                (1.19)         (0.41)     (0.26)           (0.14)            (0.09)
                                                     ==========================================================================
Basic net income (loss) per share                         $ (2.38)        $ 0.42    $ (0.51)          $ 0.56            $ 0.55
                                                     ==========================================================================

Shares used in calculating basic earnings per share        22,470         22,293     22,005           19,949            18,340
                                                     ==========================================================================

Diluted net income (loss) per share from 
     continuing operations                                $ (1.19)        $ 0.80    $ (0.25)          $ 0.66            $ 0.62
Diluted net income (loss) per share from 
     discontinued operations                                (1.19)         (0.40)     (0.26)           (0.13)            (0.09)
                                                     ==========================================================================
Diluted net income (loss) per share                       $ (2.38)        $ 0.40    $ (0.51)          $ 0.53            $ 0.53
                                                     ==========================================================================

Shares used in calculating diluted earnings per share      22,470         22,947     22,005           21,318            19,053
                                                     ==========================================================================

 Cash dividends per share                                     $ -            $ -        $ -              $ -               $ -
                                                     ==========================================================================


 Selected Consolidated Balance Sheet Data
                                                     January 1,     January 2,    December 31,   December 31,    December 31,
As of                                                  1999            1998           1996           1995            1994
- -------------------------------------------------------------------------------------------------------------------------------
 (In thousands)

 Working capital                                         $ 81,956      $ 131,272   $ 121,026      $ 134,602          $ 68,486
 Total assets                                             156,279        207,663     189,841        196,763           109,363
 Noncurrent portion of long-term debt                      31,640         30,697      30,938         29,739            31,736
 Shareholders' equity                                    $ 74,691      $ 139,483   $ 124,045      $ 129,937          $ 53,574


</TABLE>


                                       28

<PAGE>



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

Management Changes and Subsequent Events

     Charles R. Trimble, the Company's founder,  resigned as President and Chief
Executive  Officer in August of 1998. Mr. Trimble remains on the Company's Board
of  Directors  and  serves as a  consultant  to the  Company.  Dr.  Bradford  W.
Parkinson, a member of the Board of Directors since 1984 and a consultant to the
Company  since  1982,  assumed the role of  President  and CEO while the Company
conducted a search for a permanent replacement. On March 17, 1999, subsequent to
the financial  statement date Steven W. Berglund joined the Company as President
and CEO. Dr.  Robert S.  Cooper,  a member of the  Company's  Board of Directors
since 1989,  was appointed to serve as the Chairman of the Board of Directors in
August of 1998.

         During  the third  quarter  of  fiscal  1998,  the  Board of  Directors
performed  an  intensive  investigation  and  review  of each of the  individual
business lines of the Company. Under the direction of Dr. Parkinson, the Company
has undertaken  actions that focus on the review,  restructuring and elimination
of unprofitable  businesses,  the implementation of stronger cost controls,  the
reorganization   of  business  units  and  the   improvement  of   manufacturing
efficiencies.  As  part  of  the  changes  taken  to  strengthen  the  Company's
competitive position in the marketplace,  a decision was made to discontinue the
Company's  General  Aviation  Division,  located in Austin,  Texas. In the third
quarter of 1998, the Company  incurred a charge of $19.9 million  related to the
discontinued operation. (See Note 3 of the Consolidated Financial Statements).

         In the third  quarter and  continuing  in the fourth  quarter of fiscal
1998,  Trimble  realigned  its  management  structure,   reduced  its  worldwide
workforce by  approximately  8 percent,  reduced its  facilities  and wrote down
certain  assets.  (See note 6 of the  Consolidated  Financial  Statements).  The
Company took steps to further strengthen and improve employee  relationships and
incentives by extending the period of exercisability for all current outstanding
employee stock options from five years and three months to ten years,  effective
as of  November  3, 1998.  The  Company is  evaluating  further  cost  reduction
programs to improve its overall cost structure.

         The  realignment of the management  structure is expected to strengthen
the  relationships  between the  Company's  businesses  and product lines and to
provide the Company  with a better  focus on the markets it serves.  The Company
realigned its Business Units,  consolidated its worldwide sales team and created
an international business development function.

         The Company's  restructuring  included renaming its Business Units. The
Commercial Systems Group has been renamed Precision Positioning Group (PPG). The
Software and  Component  Technologies  group has been renamed  Mobile and Timing
Technologies  (MTT). The Aerospace Group no longer exists as a separate unit and
the  General  Aviation  Division  has  been  discontinued.  (See  Note  3 of the
Consolidated  Financial  Statements).  Mobile  Positioning  products  previously
reported under the Commercial System Group are now managed by MTT. Air transport
systems and military systems products  previously managed by the Aerospace Group
are now managed by MTT. PPG continues to be  responsible  for the  management of
Land Surveying,  Mapping and GIS, Marine Surveying and Mining,  Construction and
Agriculture (previously referred to as Precise Positioning). MTT continues to be
responsible  for the  management  of  Automotive  and  Timing.  The  discussions
throughout  this document are based on the management  structure that existed at
the end of the year.

                                       29

<PAGE>
         
     The Board of Directors  has declared a dividend  distribution  of Preferred
shares Purchase Rights to shareholders of record on March 1, 1999.

     The Rights are designed to protect and maximize the value of your  interest
in the Company.  We believe that the Rights Plan, while not intending to prevent
a takeover,  will provide protection to you, our shareholders,  from the abusive
and coercive tactics that often occur in takeover attempts.

     The Rights contain  provisions to protect  shareholders  in the event of an
unsolicited  takeover attempt through such methods as a gradual  accumulation of
shares in of 15% or more of the outstanding  stock followed by a two-tier tender
offer or other tactics that do not treat all shareholders equally. These tactics
may  unfairly  pressure  shareholders,  deprive  them of the full value of their
shares,  or squeeze them out of their  investment  without  giving them any real
choice.  With over 2,000 companies  having  established  rights plans to protect
shareholders,  we  consider  the Rights Plan to be the best  available  means of
protecting  the  full  value  of  your  investment  in the  Company,  while  not
preventing a fair acquisition offer for the Company.

     The Rights will initially  trade with shares of the Company's  Common Stock
and have no  impact on the way in which you can  presently  trade the  Company's
shares. As explained in detail in the attached Summary of Rights, the Rights are
not exercisable until ten days after a person or group announces  acquisition of
15% or more of the Company's  outstanding  Common Stock or the commencement of a
tender  offer which would  result in  ownership of the person or group of 15% or
more of the outstanding stock.

         During fiscal year 1997,  and effective as of the Company's 1997 fiscal
year-end,  the Company  changed  from a calendar  fiscal  year-end and adopted a
52-53 week fiscal year ending on the Friday  nearest to December  31,  which for
fiscal 1998 was January 1, 1999.  The Company does not expect the effects of any
differences  due to the change of fiscal years to have a material  impact on the
Company's financial position,  results of operations, or cash flows. The Company
has not restated or adjusted its prior  financial  statements on this new fiscal
year basis. (See Note 1 of the Consolidated Financial Statements).

RESULTS OF CONTINUING OPERATIONS

         In 1998,  the  Company's  annual  revenues from  continuing  operations
increased  slightly to $260.3  million from $258.9 million in 1997. In 1998, the
Company had a net loss from continuing  operations of $26.6 million,  or ($1.18)
diluted loss per share,  compared to net income from  continuing  operations  of
$18.5 million,  or $0.81 diluted earnings per share, in 1997. The total net loss
for fiscal  1998,  including  discontinued  operations,  was $53.4  million,  or
($2.38) diluted loss per share.

                                       30

<PAGE>

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


<TABLE>
<CAPTION>
                                                                    January 1,      January 2,     December 31,
Years ended                                                           1999            1998            1996
- --------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>            <C>             <C>   
 Revenue                                                                  100%           100%            100%
                                                                   ------------    -----------    ------------

Operating expenses:
    Cost of sales                                                          52%            46%             47%
    Research and development                                               17%            14%             15%
    Sales and marketing                                                    24%            22%             27%
    General and administrative                                             12%            10%             13%
    Restructuring charges                                                   4%              -              1%
                                                                   ------------    -----------    ------------
           Total operating expenses                                        109%            92%            103%
                                                                   ------------    -----------    ------------

 Operating income (loss) from continuing operations                        (9%)            8%             (3%)

Nonoperating income (expense), net                                         (1%)             -               -
                                                                   ------------    -----------    ------------
 Income (loss) before income taxes from continuing operations             (10%)            8%             (3%)

Income tax provision                                                        1%             1%              0%
                                                                   ------------    -----------    ------------
 Net income (loss) from continuing operations                             (10%)            7%             (3%)
                                                                   ------------    -----------    ------------

Loss from discontinued operations (net of tax)                             (3%)           (4%)            (2%)
Estimated loss on disposal of discontiued operations (net of tax)          (8%)             -               -
                                                                   ============    ===========    ============
Net income (loss)                                                         (21%)            4%             (5%)
                                                                   ============    ===========    ============
</TABLE>


         Revenue. In 1998, total revenue increased to $260.3 million from $258.9
million in 1997, which  represents a percentage  increase of less than 1%. Total
revenue  increased in 1997 to $258.9 million from $221.9 million in 1996,  which
represents a  percentage  increase of 17%.  The  following  table breaks out the
Company's revenues by industry market:


<TABLE>
<CAPTION>
                                  January 1,       % Total       January 2,      % Total       December 31,        % Total
                                     1999          Revenue          1998         Revenue           1996            Revenue
- -----------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                 <C>                <C>         <C>               <C>            <C>                <C>
 Precision Positioning Group         $ 165,951           64%        $ 142,449          55%           $ 140,934           64%
 Mobile and Timing Technologies         94,328           36%          116,445          45%              80,990           36%
                                 --------------   -----------  ---------------  -----------  ------------------   -----------
          Total revenue              $ 260,279          100%        $ 258,894         100%           $ 221,924          100%
                                 --------------   -----------  ---------------  -----------  ------------------   -----------
</TABLE>


Precision Positioning Group

         The Precision  Positioning  Group  revenues had a growth rate of 16% in
1998 over 1997. The 1998 increase compared to 1997 is primarily from revenues in
the land  surveying,  marine  surveying,  mapping and GIS  systems,  and mining,
construction, and agriculture markets. The increase in land surveying was due to
the continued strong customer acceptance of the Company's GPS Total Station 4800
and 4700  products.  Also,  the increase in marine  survey,  mapping and GIS and
mining,  construction  and  agriculture  reflects  increased  demand  for  these
products.

         In the fourth  quarter of 1998,  the FCC  suspended  the  processing of
certain  Real-time  Kinematic  product  line  license   applications  pending  a
resolution of certain frequency  interference  issues which it has reviewed with
the Company.  The FCC has recently  reinstated  the  processing of these license
applications,  based upon the Company  providing certain upgrades at its cost to
purchasers of earlier products, making certain product modifications intended to
decrease  the  likelihood  of any radio  frequency  interference  and  providing

                                       31

<PAGE>


guidance to users of its equipment in avoiding the interference with these users
of the frequency  spectrum and the agreement to help teach  customers to be good
radio citizens.

         The  Precision  Positioning  Group  revenues had a growth rate of 1% in
1997 over 1996.  The 1997  increase,  compared to 1996, was primarily in mapping
and GIS systems, as well as mining,  agriculture and construction  markets.  The
increase  in  mapping  and GIS  systems  market  came from  strong  sales of the
Pathfinder  product line, and mining,  construction,  and  agriculture  products
continued to grow from 1996.

Mobile and Timing Technologies

         The Mobile and Timing Technologies  revenues decreased 19% in 1998 from
1997. The 1998 decrease is primarily in automotive, commercial air transport and
military aerospace systems. The softness in the automotive market was due to the
financial  difficulties  of  a  major  customer  and  a  delay  in  new  product
introductions.  The  commercial  air  transport  decrease  was due to less  than
anticipated demand from Honeywell and the military aerospace system decrease was
due to the large dollar  shipment on the CUGR contract in the fourth  quarter of
1997, which was not repeated in 1998.

     * Military sales are highly dependent on contracts that 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.

         The Mobile and Timing Technologies revenues had a growth rate of 44% in
1997 over 1996. The increase was primarily in the mobile positioning, commercial
air transport, and military aerospace systems.

         The Mobile and Timing  Technologies  increase in 1997 was due primarily
to the Company recognizing $1.8 million in revenues from a development agreement
in connection with an irrevocable  nonrefundable,  nonrecurring  engineering fee
recorded in the third quarter of 1997 and a  nonrecurring  one-time $2.2 million
technology  license  fee  recorded  in the second  quarter of 1997 from  Pioneer
Electronic  Corporation  in connection  with  expansion of its prior license for
in-car  navigation.  Mobile and Timing  Technologies  revenues also increased in
1997  compared to 1996 due to the  resumption  of  shipments in 1997 to American
Mobile Satellite Corporation (AMSC), a company based in Reston,  Virginia,  that
provides a variety of voice and data services via satellite.  In March 1995, the
Company  signed a large  contract  for the  supply  of  Galaxy/GPS  land  mobile
satellite terminals to AMSC. Late in 1995, AMSC requested that the Company cease

delivery,  due in part 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.  Mobile and Timing Technologies  revenues in 1997 included
$6,400,000 in sales to AMSC. A total of $4,200,000 for product revenues shutdown
fees and contract renegotiation fees was recognized in 1996.

         The increase in commercial air transport and military aerospace systems
in 1997 from 1996 was  primarily  due to shipments to the  government  under the
CUGR program, as well as strong sales for the Honeywell-Trimble product (HT9100)
and strong sales for military aerospace products.

                                       32

<PAGE>

Export Sales

     * Export sales from domestic operations,  as a percentage of total revenue,
were 34% in 1998, 28% in 1997, and 25% in 1996. Sales to unaffiliated  customers
in foreign locations, as a percentage of total revenue, were 46% in 1998, 46% in
1997,  and 47% in 1996.  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.  For this  reason,  the  Company is
subject to the risks inherent in these sales,  including  unexpected  changes in
regulatory requirements,  exchange rates,  governmental approval, and 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, there may be
a  reluctance  in certain  foreign  markets 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 the Company's total revenues in 1998, 1997 or 1996.
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 the 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 1998, the gross margin  percentage on product sales
was 48%,  compared  with 54% in 1997 and 53% in 1996.  The decrease in the gross
margin  percentages  primarily  reflects  increased labor costs from new product
introductions,  expediting  fees,  inventory  write-downs,  and unabsorbed fixed
overhead due to lower than expected  volumes.  The 1997 margins were enhanced by
the  positive  impact of  nonproduct  revenues of $2.2 million  recognized  from
Pioneer  Electronic  Corporation and from a development  agreement in connection
with an irrevocable nonrefundable, nonrecurring engineering fee of $1.8 million.
In 1996, the Company also recorded  nonrecurring fees from AMSC of $2.5 million;
however,  there can be no assurance that similar items will recur in the future.
In  addition,  because  of product  mix  changes  within and among the  industry
markets,  market  pressures  on  unit  selling  prices,   fluctuations  in  unit
manufacturing costs, and other factors,  positive future gross margins cannot be
assured.  While Precision  Positioning  segment  products have the highest gross
margins of all the Company's products,  their margins have decreased,  primarily
in response to competition.  The Company expects  competition to increase in its
Precision  Positioning  segment,  and it is therefore  likely that further price
erosion will occur, with consequent lower gross margin percentages.

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

                                       33

<PAGE>

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

                                January 1,         January 2,     December 31,
Years ended                       1999               1998             1996
- -----------------------------------------------------------------------------
(In thousands)

Research and development        $ 44,826          $ 37,097          $ 32,716
Sales and marketing               61,227            56,457            60,358
General and administrative        32,403            26,592            28,452
Restructuring charges             10,280                 -             2,134
                            -------------     -------------    --------------
 Total                         $ 148,736         $ 120,146         $ 123,660
                            -------------     -------------    --------------

         Research and Development.  Research and development  spending increased
in absolute dollars during 1998, representing 17% of revenue,  compared with 14%
in 1997 and 15% in 1996. The higher  research and  development  expenses in 1998
are due to the Company receiving fewer funds from cost reimbursement projects in
1998 as compared with 1997.

         The dollar  increase  from 1996 to 1997 is due primarily to an increase
in personnel  and the related  expenses that  accompany  such 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 1998,
representing  24% of  revenue,  compared  with 22% in 1997 and 27% in 1996.  The
primary reason for the dollar and percentage  increases in expenses from 1997 to
1998 is an increase  in  personnel  and  related  expenses,  that  accompany  an
increase  in the number of  employees.  In  addition,  the  Company  experienced
increases in expenses  related to trade shows,  advertising,  and demo equipment
expenses.

         The decrease in sales and  marketing  expense in 1997  compared to 1996
was due to a decrease in personnel  because of the Company's 1996  restructuring
activities and advertising costs.

     * The Company's future growth will depend in part on the timely development
and continued  viability 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. In addition, the Company has encountered  significant  competition
in selected markets, and 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 may result in reduced market
share and is likely to result 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 during 1998,  representing 12% of revenue,  compared with 10% in 1997;
they  remained  flat as a  percentage  of revenue  compared to 1996 at 12%.  The
increase  from 1997 to 1998 is due primarily to an increase in personnel and the


                                       34

<PAGE>

related  expenses,  that  accompany an increase in the number of  employees  and
consultants,  as well as an increase in outside  services  related to legal fees
associated with certain litigation matters during 1998.

         The 1997 decrease from 1996 in general and administrative  expenses was
due primarily to decreases in outside  services related to legal fees associated
with certain arbitration and litigation matters during 1996.

         Restructuring Charges. As noted in Note 6 to the Consolidated Financial
Statements  during  the year  ended  January 1,  1999,  the  Company  recorded a
restructuring  charge of $10.3 million classified in operating  expenses.  These
charges  are a  result  of the  Company's  reorganization  to  improve  business
processes and to decrease  organizational  redundancies,  to improve  management
accountability and to improve the Company's focus on profitable operations. As a
result  of  the  reorganization,  the  Company  has  downsized  its  operations,
including  reducing  headcount  and  facilities  space  usage,  and canceled its
enterprise wide information  system project and certain research and development
projects.  The  impact of these  decisions  is that  significant  amounts of the
Company's fixed assets,  prepaid  expenses,  and purchased  technology have been
impaired  and certain  liabilities  incurred.  The Company has written  down the
related  assets to their  net  realizable  values  and made  provisions  for the
estimated liabilities.

     The elements of the charges in 1998 and the amounts remaining at January 1,
1999, on the balance sheet are as follows (in thousands):


<TABLE>
<CAPTION>
                                                                           Remaining in
                                         Total         Amounts paid/     accrued liabilites
                                      charged to       written off            as of
                                        expense         in 1998          January 1, 1999
                                     ----------------  --------------  --------------------
<S>                                       <C>             <C>                    <C>    
Employee termination benefits              $ 2,864         $ (1,200)              $ 1,664
Facility space reductions                    1,061                -                 1,061
Enterprise wide information system 
     abandonment                             6,360           (4,895)                1,465
                                     ================= =============  ====================
     Subtotal                             $ 10,285         $ (6,095)              $ 4,190
                                     ================= =============  ====================
</TABLE>


         The cash  expenditures  associated with the remaining  obligations will
occur primarily in fiscal 1999.

         Nonoperating income (expense), net. Nonoperating income (expense), net,
includes  interest  income and  expense,  as well as gains and losses on foreign
currency transactions.

         Foreign exchange gains were $234,000 in 1998 and 1997,  compared with a
loss of $4,000 in 1996. The Company's policy is to hedge 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.

         Interest income  decreased both in 1998 from 1997 and in 1997 from 1996
because of lower interest income received on cash and short-term investments due
to lower average balances for the year over the prior year.

         Interest expense decreased slightly in 1998 due to lower fees on unused
lines of credit.  Interest  expense  includes  interest on a $30.0  million note
issued in August 1995, and fees on unused lines of credit. (See Notes 5 and 7 to
the Consolidated Financial Statements for details of long-term debt and lines of
credit).

                                       35

<PAGE>


         Income Tax Provision. The Company's effective tax rates from continuing
operations  for  fiscal  years  1998,  1997  and  1996  are  (6%),  12%  and 5%,
respectively.  The  1998 and 1996  income  tax  rates  differ  from the  federal
statutory  rate of 35% due to foreign  taxes and the  inability  to realize  the
benefits of the net operating losses.  The 1997 income tax rate is less than the
federal  statutory rate primarily due to the realization of previously  reserved
deferred tax assets.

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

LITIGATION

     * The Company is involved in a number of legal matters as discussed in Note
15 to the Consolidated  Financial Statements.  While the Company does not expect
to suffer  significant  adverse  effects from these  litigation  matters or from
unasserted claims, the nature of litigation is unpredictable and there can be no
assurance that it will not do so.

Liquidity and Capital Resources

     * At January 1, 1999,  the Company had cash and cash  equivalents  of $40.9
million and $16.3 million in short-term investments. The Company's cash and cash
equivalents  and short-term  investments  have been reduced from the prior year,
due  primarily  to  the  Company's  stock  repurchase  program  (see  additional
information  below)  and  acquisitions  of  capital  equipment.   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 $50,000,000  unsecured
line of  credit.  The  Company  has an amount of  $150,000  outstanding  under a
separate  $5,000,000  line of credit.  The Company has relied  primarily on cash
provided by  operating  and  financing  activities  and net sales of  short-term
investments to fund capital expenditures, the repurchase of the Company's common
stock  (see  further  explanation   below),  and  other  investing   activities.
Management  believes that its cash, cash  equivalents and short-term  investment
balances, together with its existing credit line, will be sufficient to meet its
anticipated cash needs for at least the next twelve months.

     * In 1998, the cash provided in operating  activities was $7.0 million,  as
compared to cash used of $2.1 million in the corresponding  period in 1997. Cash
provided  by  operating  activities  in 1998 arose from  decreases  in  accounts
receivable and  inventories and increases in accrued  liabilities  offset by the
Company's  net loss net of non-cash  charges.  Inventory  related to  continuing
operations  as of January  1,  1999,  decreased  by $5.2  million  from the 1997
year-end  levels,  primarily  due to a focused  effort by the  Company to reduce
inventory  by  supply  chain  synchronization;  reduce  lead  and  cycle  times;
simplifying  product lines; and  implementing  tighter control over the material
forecasting  process.  The  Company's  ability to continue to generate cash from
operations  will depend in large part on revenues,  the rate of  collections  of
accounts receivable, and management of inventory levels.

         Cash provided by sales of common stock in 1998  represents the proceeds
from  purchases  made pursuant to the  Company's  stock option plan and employee
stock  purchase  plan,  and totaled $5.0 million for the year ending  January 1,
1999.

         In August  1997,  the Company  entered  into a  three-year  $50,000,000
unsecured  revolving  credit facility with four banks (the "Credit  Agreement").
This credit facility replaced the previous two-year  $30,000,000  unsecured line
that expired in August 1997. The Credit Agreement  enables the Company to borrow
up to $50,000,000,  provided that certain financial and other covenants are met.
Under a separate  agreement,  the Company has an additional  $5,000,000  line of
credit provided only by the lead bank under the Credit  Agreement for "Letter of


                                       36

<PAGE>

Credit"  purposes,  and  this is  also  subject  to the  covenants  in the  main
facility. The Credit Agreement provides for payment of a commitment fee of 0.25%
and  borrowings  to bear  interest at 1% over LIBOR if the total  funded debt to
EBITDA is less than or equal to 1.00 times; 0.3% and borrowings to bear interest
at 1.25%  over  LIBOR if the ratio is  greater  than 1.00 times and less than or
equal to 2.00 times; or 0.4% and borrowings to bear interest at 1.75% over LIBOR
if the ratio is  greater  than 2.00  times.  In  addition  to  borrowing  at the
specified  LIBOR rate,  the Company has the right to borrow with interest at the
higher of (i) one of the bank's  annual  prime rate and (ii) the  federal  funds
rate plus 0.5%.  To date,  the  Company  has not made any  borrowings  under the
lines.  The Company is restricted  from paying  dividends under the terms of the
Credit Agreement.

         As of  October  27,  1998,  the Agent and  Lenders  of the  $50,000,000
unsecured  revolving  credit facility  granted a limited waiver of the Company's
compliance with various loan covenants as of October 2, 1998, until December 15,
1998. The Agent and Lenders granted a second limited waiver (an extension of the
first limited  waiver) for the Company's  compliance with various loan covenants
which extended from January 1, 1999, until February 16, 1999. As of February 16,
1999, the Company,  the Agent and the Lenders agreed to new covenants which will
be tested by a compliance  document as of April 2, 1999, and for the life of the
loan which expires in August of 2000. The $50,000,000  revolving credit facility
was  modified  to  include  the  $5,000,000  line of credit for Letter of Credit
purposes to simplify  the entire  arrangement,  as less than  $150,000 was being
utilized under the separate facility as of January 1, 1999. To date, the Company
has not made any borrowings under the $50,000,000 revolving credit facility.

         The  Company  announced  in  February  1996  that  it  had  approved  a
discretionary  program whereby up to 600,000 shares of its common stock could be
repurchased  on the open market by the Company to offset the potential  dilutive
effects to  earnings  (loss) per share from the  issuance  of  additional  stock
options.  In 1998,  the Company  approved the  repurchase of an  additional  1.6
million  shares  under the  discretionary  program.  The Company  intends to use
existing cash, cash  equivalents and short-term  investments to finance any such
stock repurchases under this program. During 1996, the Company purchased 250,000
shares at a cost of $3.5 million.  During 1997,  the Company  purchased  139,500
shares at a cost of $1.8  million.  During  1998,  the  Company  purchased  1.08
million shares at a cost of $16.1 million.

     *  The  Company   presently   expects  1999  capital   expenditures  to  be
approximately  $10.0 million,  primarily for computer equipment,  software,  and
leasehold improvements associated with business expansion.

         The Company is continually evaluating potential external investments in
technologies  related to its business and, to date,  has made  relatively  small
strategic investments in a number of GPS-related technology companies. There can
be no assurance  that any such  outside  investments  made to date,  or that any
potential future investments, will be successful.

         The Company has evaluated the issues raised by the  introduction of the
Single  European  Currency  (Euro) for initial  implementation  as of January 1,
1999, and during the transition period through January 1, 2002. The Company does
not  currently  believe that the  introduction  of the Euro will have a material
effect on the Company's foreign exchange and hedging activities. The Company has
also assessed the potential  impact the Euro  conversion  will have in regard to
its internal systems accommodating  Euro-denominated  transactions.  The Company
will continue to evaluate the impact of the Euro  introduction  over time, based
on currently available  information.  The Company does not currently  anticipate
any adverse impact of the Euro conversion on the Company.

                                       37

<PAGE>

YEAR 2000 and GPS WEEK NUMBER ROLLOVER ISSUES

         Computers and software,  as well as other equipment that relies on only
two digits to identify or represent a year, may be unable to accurately  process
or  display  certain  information  at or after the Year 2000.  This is  commonly
referred to as the "Year 2000 issue." The Year 2000 issue may materially affect,
Trimble's  vendors,  suppliers,  internal systems,  products and customers.  The
Company  continues to address the Year 2000 issue to avoid what might  otherwise
be a  material  and  adverse  effect  on the  Company's  consolidated  financial
position, results of operations, or cash flows.

         Another date-related issue, known as the "GPS Week Number Roll-Over" or
"WNRO" issue,  could also materially affect various Trimble  products.  The WNRO
issue is unrelated to the Year 2000 issue and is unique to GPS  technology.  All
GPS satellites, which are operated by the U.S. government, broadcast time in the
form of a "GPS week number" and a time offset into each "GPS week." Week numbers
range from 0 to 1023.  Week 0 started on January 6, 1980, and week 1023 will end
on August 21,  1999,  at which time the week number  broadcast  by all U.S.  GPS
satellites  will roll  over,  back to 0. Among  other  potential  effects,  this
rollover may cause GPS  receivers and software that process data obtained by GPS
receivers  to   erroneously   interpret   high-week-number,   pre-WNRO  data  as
post-dating  later  low-week-number,  post-WNRO  data.  This may cause satellite
positions to be miscalculated  and produce gross position fix errors.  Receivers
that process and display calendar dates based on "weeks since 1980" may generate
date  calculation  errors.  The Company  continues  to address the WNRO issue to
avoid what might  otherwise  be a material and adverse  effect on the  Company's
future consolidated financial position, results of operations, or cash flows.

         The Company  continues to assess the potential  impact of both the Year
2000 and WNRO issues on its vendors, suppliers,  internal systems, products, and
customers-and  has begun,  and in many cases  completed,  corrective  efforts in
these areas.

Year 2000 Remediation Plan 

         The Company's Board of Directors has adopted a comprehensive  Year 2000
Remediation Plan, the goal of which is to minimize business disruptions and risk
exposure  that  might  otherwise  arise  as a  consequence  of  moving  into the
twenty-first  century.  The plan focuses on achieving Year 2000 readiness across
the  Company's  entire  supply  chain,  and is  designed  to deal  with the most
critical systems first.  Additionally,  the Company's Year 2000 remediation plan
calls for the  development of  contingency  plans to address  potential  problem
areas with internal  systems,  and with  suppliers and other third  parties.  To
these ends, a Y2K Program  Management  Office has been established to manage and
coordinate  implementation  of the plan on a companywide  basis.  It is expected
that  assessment,  remediation,  and  contingency  planning  activities  will be
ongoing  throughout  1999,  with the  objective of  appropriately  resolving all
material Year 2000 issues before the 21st century rollover.

Information Technology and Other Systems 

     The Company continues to assess the potential impact of the Year 2000 issue
on its  internal  systems,  including  information  technology  (IT) and  non-IT
systems, and has begun corrective efforts in this area, as follows:

o        The Company has a plan to upgrade its existing MRP/ERP information 
         systems to be Year 2000 compliant.

                                       38

<PAGE>

o        Assessment  and   remediation   efforts  in  connection  with  the
         Company's  other IT and non-IT  systems will be undertaken as part
         of the Company's general Y2K Remediation Plan.

     *  The  Company  currently  plans  to  complete  renovation,   testing  and
implementation  of critical  systems,  or  successful  execution of  contingency
plans,  during the third quarter of 1999.  There can be no  assurance,  however,
that there will not be a delay in, or  increased  costs  associated  with,  such
renovation, testing, implementation or execution, and the Company's inability to
successfully  and timely  complete  these  tasks  could have a material  adverse
effect on future results of operations or financial condition.

Products

     * To address  and  minimize  the  anticipated  impact of both the Year 2000
issue and the WNRO issue on the  Company's  products,  the Company  continues to
assess the  anticipated  impact these issues may have on the  performance of its
products,  and to resolve  various related  performance  problems of its current
products.  In addition,  the Company has adopted a formal Year 2000 and GPS Week
Number Rollover Policy to:

o        Publish Year 2000- and WNRO-related product performance information 
         on the Company's public web site,

o        Respond to individual customer inquiries regarding the anticipated 
         performance of particular Company products,

o        Furnish upgrades to customers whose Trimble products are upgradable, 
         and

o        Provide information regarding available product alternatives to 
         customers with noncompliant products.

         Assessment of products,  resolution of certain  products' Year 2000 and
WNRO performance problems, and implementation of the Company's Year 2000 and GPS
Week Number Rollover  Policy,  are ongoing,  and as to many Company  products is
complete.

     * The Company does not  anticipate  that the Year 2000 and WNRO issues will
have a  material  adverse  effect  on sales of its  products.  The  Company  has
incurred-and  will  continue  to incur,  through  1999 and  thereafter-increased
expenses  associated  with Year 2000 and  WNRO-related  product  assessment  and
resolution  of  certain  products'  Year  2000  and WNRO  performance  problems,
implementation  of the Company's Year 2000 and GPS Week Number Rollover  Policy,
and  fulfillment  of Year 2000 and  WNRO-related  customer  support and warranty
obligations, in amounts that management believes has not had and will not have a
material  adverse  effect  on the  Company's  historical  or future  results  of
operations or financial condition.

Vendors and Suppliers

     * For its successful operation,  the Company materially relies on goods and
services  purchased  from certain  vendors.  If these vendors fail to adequately
address the Year 2000 issue such that their  delivery  of goods and  services to
the Company is materially  impaired,  it could have a material adverse impact on
the  Company's  operations  and financial  results.  The Company is preparing to
survey its principal  vendors to assess the effect the Year 2000 issue will have
on  their  ability  to  supply  their  goods  and  services   without   material
interruption,  and at this time the  Company  cannot  determine  or predict  the
outcome of this effort.  Contingency  plans will be developed  and executed with
respect to vendors who will not be Year 2000 ready in a timely manner where such
lack of readiness is expected to have a material adverse impact on the Company's


                                       39

<PAGE>

operations. However, because the Company cannot be certain that its vendors will
be able to supply goods and services without material interruption,  and because
the Company  cannot be certain that execution of its  contingency  plans will be
capable of  implementation or will result in a continuous and adequate supply of
such goods and  services,  the Company can give no assurance  that these matters
will not have a material  adverse  effect on the Company's  future  consolidated
financial position, results of operations, or cash flows.

Customers

     * The Company has material  relationships with certain customers.  If those
customers  fail to achieve an adequate state of Year 2000 readiness in their own
operations,  or  if  their  Year  2000  readiness  efforts  consume  significant
resources,  their  ability to purchase the  Company's  products may be impaired.
This could adversely  affect demand for the Company's  products and,  therefore,
the Company's future  revenues.  The Company plans to assess the effect the Year
2000  issue  will  have on its  principal  customers,  and at this  time  cannot
determine the impact it will have.

Related Costs to the Company

     *  The  Company  currently  expects  that  the  total  cost  of  Year  2000
remediation  efforts will not exceed  approximately $1 million.  The Company has
been-and will be-expensing these costs as incurred. The total cost estimate does
not include  potential costs related to any customer or other claims or the cost
of internal software and hardware replaced in the normal course of business. The
total cost estimate is based on the current  assessment of the projects,  and is
subject to change as the projects progress.

Overall Impact on the Company

     * At the present time, and subject to the cost estimates above,  management
does not believe that the Year 2000 issue and WNRO matters  discussed above will
have a material adverse impact on the Company's  financial  condition or overall
trends in results of  operation.  However,  it is  uncertain  to what extent the
Company may be affected by such  matters;  therefore,  there can be no assurance
that these  matters  will not have a material  adverse  effect on the  Company's
future consolidated financial position, results of operations, or cash flows.

CERTAIN OTHER RISK FACTORS

         The Company's  revenue has tended to fluctuate on a quarterly basis due
to the timing of shipments of products under contracts and the sale of licenses.
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 for that
quarter  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, and
it is determined by the business  plans and  strategies  the Company  intends to
implement in the two segments 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.

     * The Mobile and Timing  Technologies  Business Unit relies on high volumes
and relatively low margin sales.  Mobile and Timing  Technologies  customers are
extremely  price-sensitive.  As costs decrease through  technological  advances,
these advances are typically passed on to the customer.  To compete,  Mobile and
Timing   Technologies   requires   high-volume   production  and   manufacturing
techniques.  Customers expect high quality standards with very low defect rates.
Compared to competitors,  which have far greater  resources in such  high-volume


                                      40

<PAGE>

manufacturing  and  associated  support  activities,  the Company is  relatively
inexperienced.

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

         The  value  of  the  Company's  products  relies  substantially  on its
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 that any of its
products infringe any valid claim of any patents or other proprietary  rights of
third  parties,  but cannot be certain that they do not do so. 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. (See Note 15 to the Consolidated Financial Statements).

         The  Company  is   continuously   evaluating   alliances  and  external
investments in  technologies  related to its business,  and has already  entered
into alliances and made relatively small  investments in a number of 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.

         Certain  risks are  inherent  in making  the types of changes in senior
management  that  occurred  during the third fiscal  quarter of 1998.  While the
Company  intends to name  permanent  replacements  for such positions as soon as
practicable,  there can be no assurance  that such changes in senior  management
and related  uncertainties will not adversely affect the Company's  consolidated
operating results and financial condition.

         The ability of the Company to maintain  its  competitive  technological
position will depend,  in a large part, on its ability to attract,  motivate and
retain highly qualified  development and managerial  personnel.  Competition for
qualified  employees in the Company's  industry is intense,  and there can be no
assurance  that the Company will be able to attract,  motivate and retain enough
qualified  employees  necessary  for the  future  continued  development  of the
Company's business and products.

         The Company has certain  products that are subject to governmental  and
similar  certifications  before they can be sold. For example, FAA certification
is required for all aviation  products.  Also,  the Company's  products that use
integrated  radio  communication   technology  require  an  end-user  to  obtain
licensing from The Federal  Communications  Commission (FCC) for  frequency-band
usage.  During the fourth  quarter of 1998,  the FCC  temporarily  suspended the
issuance of licenses for certain of the Company's  Real-time  Kinematic products
because of interference  with certain other users of similar radio  frequencies.
An  inability or delay in obtaining  such  certifications  or FCC's delays could
have an adverse  effect on the Company's  operating  results.  The Company's GPS
technology  is dependent on the use of radio  spectrums.  The  assignment of the
spectrums  is  controlled  by  a  worldwide   organization,   the  International


                                       41

<PAGE>

Telecomunications Union (ITU). Any reallocation of the radio spectrum could have
an adverse effect on the Company's operating results.

     Under the terms of the Company's subordinated promissory notes, the Company
is required to meet a minimum consolidated net worth requirement. The Company is
in the process of  obtaining a reduction  of this  minimum  requirement.  If the
Company is not  successful in obtaining a reduction in the minimum  consolidated
net worth  requirement and net worth falls below the minimum required level, the
Company  would be in default of its loan  covenants.  Such  events  could have a
material adverse effect on the Company's operations and liquidity.

         Information with respect to GPS Navstar satellite system is included in

P
art I of this report, under the caption "Background," paragraph 6.

NEW ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, (SFAS 133) "Accounting for Derivative
Instruments  and Hedging  Activities."  The Standard will require the Company to
record all derivatives held on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income.  If the derivative
is a hedge,  depending on the nature of the hedge,  changes in the fair value of
derivatives will either be offset against the change in fair value of the hedged
assets,  liabilities,  or firm commitments  through  earnings,  or recognized in
other comprehensive income until the value related to the ineffective portion of
a hedge, if any, will be immediately recognized in earnings. The Company expects
to adopt SFAS 133 as of the  beginning  of its fiscal  year 2000.  The effect of
adopting the Standard is currently being evaluated,  but is not expected to have
a material  adverse  effect on the  Company's  financial  position or results of
operations.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

         Following  is a  discussion  of the  Company's  exposure to market risk
related to changes in interest rates and foreign  currency  exchange rates.  The
Company uses certain derivative financial instruments to manage these risks. The
Company does not use derivative financial instruments for speculative or trading
purposes.  All financial  instruments are used in accordance with board-approved
polices.

Market Interest Rate Risk

         Short-term Investments Owned by the Company. As of January 1, 1999, the
Company  had  short-term   investments  of  $16.3  million.   These   short-term
investments consist of highly liquid investments with original maturities at the
date of purchase between three and twelve months.  These investments are subject
to  interest  rate  risk and will  decrease  in value if market  interest  rates
increase.  A  hypothetical  10 percent  increase in market  interest  rates from
levels at  January  1,  1999,  would  cause the fair  value of these  short-term
investments  to decline by an  immaterial  amount.  Because  the Company has the
ability to hold these  investments  until  maturity the Company would not expect
the value of these  investments to be affected to any significant  degree by the
effect of a sudden change in market interest  rates.  Declines in interest rates
over time will, however, reduce the Company's interest income.

         Outstanding Debt of the Company. As of January 1, 1999, the Company had
outstanding  long-term  debt of  approximately  $30.0  million  of  subordinated
promissory  notes at a fixed  interest rate of 10 percent.  The interest rate of


                                       42

<PAGE>

this instrument is fixed.  However,  a hypothetical  10 percent  decrease in the
interest  rates would not have a material  impact on the  Company.  Increases in
interest rates could, however,  increase interest expense associated with future
borrowings of the Company,  if any. The Company does not currently hedge against
interest rate increases.

Foreign Currency Exchange Rate Risk

         The Company hedges risks associated with foreign currency  transactions
in order to minimize the impact of changes in foreign currency exchange rates on
earnings. The Company utilizes forward contracts to hedge trade and intercompany
receivables and payables. These contracts reduce the exposure to fluctuations in
exchange  rate  movements,  as the  gains and  losses  associated  with  foreign
currency  balances are  generally  offset with the gains and losses on the hedge
contracts.  All hedge  instruments  are marked to market through  earnings every
period.

         The Company  does not  anticipate  any material  adverse  effect on its
consolidated financial position utilizing the current hedging strategy.

         All  contracts  have a maturity of less than one year,  and the Company
does not defer  any gains and  losses,  as they are all  accounted  for  through
earnings every period.

         The following table provides  information  about the Company's  foreign
exchange forward contracts outstanding:


<TABLE>
<CAPTION>
                                       Foreign             Contract Value           Fair Value
                        Buy/       Currency Amount               USD                  in USD
     Currency           Sell        (in thousands)         (in thousands)         (in thousands)
- --------------------  ---------  ---------------------   --------------------    -----------------
<S>                    <C>                   <C>                    <C>                 <C>    
YEN                     Buy                    30,000                  $ 251                $ 265
YEN                     Sell                  415,900                $ 3,394              $ 3,707
NZD                     Buy                     3,200                $ 1,705              $ 1,686
ECU                     Sell                    1,565                $ 1,838              $ 1,833
STERLING                Buy                       650                $ 1,096              $ 1,078
DEM                     Sell                      750                  $ 444                $ 450

</TABLE>


         The  hypothetical  changes and assumptions made above will be different
from what actually occurs in the future.  Furthermore,  the  computations do not
anticipate  actions  that may be taken by  management,  should the  hypothetical
market changes actually occur over time. As a result, actual earnings effects in
the future will differ from those quantified above.


                                       43

<PAGE>


Item 8.     Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>                                                                 
                                                                   January 1,          January 2,
                                                                     1999                1998
- -------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                                                 <C>                 <C>       
ASSETS

Current assets:
     Cash and cash equivalents                                        $ 40,865            $ 19,951
     Short-term investments                                             16,269              53,171
     Accounts receivable, less allowance for doubtful
        accounts of $2,220 and $2,464                                   33,431              49,101
     Inventories                                                        37,166              42,385
     Other current assets                                                4,173               4,147
                                                                 --------------     ---------------
        Total current assets of continuing operations                  131,904             168,755

Property and equipment, at cost less accumulated
   depreciation                                                         15,104              19,676
Intangible assets less accumulated amortization                          1,320               1,525
Deferred income taxes                                                      405                 356
Other assets                                                             7,546               7,426
                                                                 --------------     ---------------
        Total assets of continuing operations                          156,279             197,738

Net assets of discontinued operations                                        -               9,925
                                                                 ==============     ===============
        Total assets                                                 $ 156,279           $ 207,663
                                                                 ==============     ===============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt                                 $ 1,388                $ 44
     Accounts payable                                                   13,000              18,724
     Accrued compensation and benefits                                   4,696               5,830
     Customer advances                                                     808                 830
     Accrued liabilities                                                15,474               5,938
     Accrued liabilities related to disposal of 
        General Aviation                                                 6,743                   -
     Accrued warranty expense                                            5,681               3,453
     Income taxes payable                                                2,158               2,664
                                                                 --------------     ---------------
        Total current liabilities                                       49,948              37,483

Noncurrent portion of long-term debt and other 
        liabilities                                                     31,640              30,697
                                                                 --------------     ---------------
        Total liabilities                                               81,588              68,180
                                                                 --------------     ---------------
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; 22,247 and 22,813 outstanding, respectively        121,501             132,655
     Common stock warrants                                                 700                 700
     Retained earnings (accumulated deficit)                           (46,718)              6,676
     Unrealized gain on short-term investments                              19                   8
     Foreign currency translation adjustment                              (811)               (556)
                                                                 --------------     ---------------
        Total shareholders' equity                                      74,691             139,483

                                                                 --------------     ---------------
        Total liabilities and shareholders' equity                   $ 156,279           $ 207,663
                                                                 ==============     ===============
</TABLE>



See accompanying notes to consolidated financial statements.

                                       44

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                         Janaury 1,         January 2,         December 31,
Years ended                                                                 1999               1998                1996
- ----------------------------------------------------------------------------------------------------------------------------------
 (In thousands, except per share data)

<S>                                                                        <C>                <C>                   <C>    
Revenue                                                                     $ 260,279          $ 258,894             $ 221,924
                                                                       ---------------    ---------------    ------------------


Operating expenses:
     Cost of sales                                                            134,723            118,903               104,881
     Research and development                                                  44,826             37,097                32,716
     Sales and marketing                                                       61,227             56,457                60,358
     General and administrative                                                32,403             26,592                28,452
     Restructuring charges                                                     10,280                  -                 2,134
                                                                       ---------------    ---------------    ------------------
        Total operating expenses                                              283,459            239,049               228,541
                                                                       ---------------    ---------------    ------------------
Operating income (loss) from continuing operations                            (23,180)            19,845                (6,617)

Nonoperating income (expense):
     Interest and investment income                                             3,588              4,462                 4,635
     Interest  and other expense                                               (5,863)            (3,524)               (3,925)
     Foreign exchange gain (loss)                                                 234                234                    (4)
                                                                       ---------------    ---------------    ------------------
        Total nonoperating income (expense)                                    (2,041)             1,172                   706
                                                                       ---------------    ---------------    ------------------
Income (loss) before income taxes from continuing operations                  (25,221)            21,017                (5,911)
Income tax provision (benefit)                                                  1,400              2,496                  (300)
                                                                       ---------------    ---------------    ------------------
Net income (loss) from continuing operations                                $ (26,621)          $ 18,521              $ (5,611)
                                                                       ---------------    ---------------    ------------------
Discontinued Operations:
     Loss from discontinued operations (net of income tax
          benefit of $176 in 1997 and zero in 1996)                          $ (6,911)          $ (9,242)             $ (5,691)
     Estimated loss on disposal of discontinued operations (net of tax)     $ (19,862)               $ -                   $ -
                                                                       ---------------    ---------------    ------------------
              Loss on discontinued operations                               $ (26,773)          $ (9,242)             $ (5,691)
                                                                       ---------------    ---------------    ------------------
Net income (loss)                                                           $ (53,394)           $ 9,279             $ (11,302)
                                                                       ===============    ===============    ==================

Basic net income (loss) per share from continuing operations                  $ (1.19)            $ 0.83               $ (0.25)
Basic net income (loss) per share from discontinued operations                $ (1.19)           $ (0.41)              $ (0.26)
                                                                       ===============    ===============    ==================
Basic net income (loss) per share                                             $ (2.38)            $ 0.42               $ (0.51)
                                                                       ===============    ===============    ==================
Shares used in calculating basic
      net income (loss) per share                                              22,470             22,293                22,005
                                                                       ===============    ===============    ==================

Diluted net income (loss) per share from continuing operations                $ (1.19)            $ 0.80               $ (0.25)
Diluted net income (loss) per share from discontinued operations              $ (1.19)           $ (0.40)              $ (0.26)
                                                                       ===============    ===============    ==================
Diluted net income (loss) per share                                           $ (2.38)            $ 0.40               $ (0.51)
                                                                       ===============    ===============    ==================
Shares used in calculating diluted
      net income (loss) per share                                              22,470             22,947                22,005
                                                                       ===============    ===============    ==================
</TABLE>



See accompanying notes to consolidated financial statements


                                       45

<PAGE>

 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
    
                                                                                               
                                                                Common stock                 Cumulative                    
                                                                and warrants      Retained      other         Total   
                                                            --------------------  earnings  comprehensive  shareholders'
                                                             Shares    Amount    (deficit)  income/(loss)     equity
- ------------------------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                        <C>      <C>          <C>             <C>     <C>    
 Balance at December 31, 1995                               21,642   $ 121,149    $ 8,699         $ 89    $ 129,937
 Components of comprehensive income (loss):
        Net loss                                                                  (11,302)                  (11,302)
        Unrealized gain (loss) on short-term investments                                           (82)         (82)
        Currency translation adjustments                                                           406          406
                                                                                                           ---------
                Total comprehensive income (loss)                                                           (10,978)
 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)
                                                            --------------------------------------------------------
 Balance at December 31, 1996                               22,063     126,235     (2,603)         413      124,045
 Components of comprehensive income (loss):
        Net income                                                                  9,279                     9,279
        Unrealized gain (loss) on short-term investments                                           (12)         (12)
        Currency translation adjustments                                                          (949)        (949)
                                                                                                           ---------
                Total comprehensive income                                                                    8,318
 Issuances of stock under employee plans                       890       8,954          -            -        8,954
 Repurchases of common stock                                  (140)     (1,834)         -            -       (1,834)
                                                            --------------------------------------------------------
 Balance at January 2, 1998                                 22,813     133,355      6,676         (548)     139,483
 Components of comprehensive income (loss):
        Net loss                                                                 (53,394)                  (53,394)
        Unrealized gain (loss) on short-term investments                                            11           11
        Currency translation adjustments                                                          (255)        (255)
                                                                                                          ----------
                Total comprehensive income (loss)                                                           (53,638)
 Issuances of stock under employee plans                       514       4,977          -            -        4,977
 Repurchases of common stock                                (1,080)    (16,131)         -            -      (16,131)
                                                            ======== =========== ========== ============ ===========
 Balance at January 1, 1999                                  22,247   $ 122,201  $ (46,718)      $ (792)   $ 74,691
                                                            ======== =========== ========== ============ ===========
</TABLE>



See accompanying notes to consolidated financial statements


                                       46

<PAGE>

 CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                     January 1,       January 2,     December 31,
 Years ended                                                                           1999             1998            1996
- -----------------------------------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                                              <C>                 <C>               <C>   
 Cash flow from operating activities of continuing operations:
      Net income (loss) from continuing operations                                $    (26,621)       $ 18,521          $ (5,730)
      Adjustments to reconcile net income (loss) from continuing
      operations to cash flows from operating activities of continuing operations:
         Depreciation and amortization expense                                         12,510           12,208            10,140
         Write-down of fixed assets due to restructure                                  5,343                -                 -
         Other                                                                           (835)            (980)            1,337
      Decrease (increase) in assets:
         Accounts receivable, net                                                      15,475          (15,042)            4,342
         Inventories                                                                    5,219           (6,988)           (4,885)
         Other current and noncurrent assets                                            1,622           (1,535)           (2,567)
         Deferred income taxes                                                            (49)              27             1,191
      Increase (decrease) in liabilities:
         Accounts payable                                                              (5,724)           4,961            (2,102)
         Accrued compensation and benefits                                             (1,134)            (722)              807
         Customer advances                                                                (22)          (2,170)            1,920
         Accrued liabilities                                                           10,899             (967)            1,608
         Income taxes payable                                                            (506)           1,795            (2,133)
                                                                                  ------------    -------------    --------------
 Net cash provided  by operating activities of continuing operations                   16,177            9,108             3,928
 Net cash (used) by operating activities of discontinued operations                    (9,209)         (11,159)           (7,796)
                                                                                  ------------    -------------    --------------
 Net cash provided (used) by operating activities                                       6,968           (2,051)           (3,868)
                                                                                  ------------    -------------    --------------
 Cash flow from investing activities:
      Equity investments                                                               (1,548)          (1,889)                -
      Acquisition of property and equipment                                           (11,539)         (10,393)           (9,777)
      Costs of capitalized patents                                                       (992)            (910)             (762)
      Purchase of short-term investments                                              (53,854)         (63,854)          (75,663)
      Maturities/Sales of short-term investments                                        90,756          70,538            83,247
                                                                                  ------------    -------------    --------------
 Net cash provided (used) by investing activities of continuing operations             22,823           (6,508)           (2,955)
 Net cash provided (used) by investing activities of discontinued operations             (339)            (598)             (582)
                                                                                  ------------    -------------    --------------
 Net cash provided (used) by investing activities                                      22,484           (7,106)           (3,537)
                                                                                  ------------    -------------    --------------
 Cash flow from financing activities:
      Issuance of common stock                                                          4,977            8,954             5,774
      Repurchase of common stock                                                      (16,131)         (1,834)           (3,545)
      (Payment)/collection of notes receivable                                           (219)            (504)               66
      (Payments)/proceeds on long-term debt and
            revolving credit facilities                                                 2,835             (179)           (1,930)
                                                                                  ------------    -------------    --------------
 Net cash provided (used) by financing activities of continuing operations             (8,538)           6,437               365
 Net cash provided by financing activities of discontinued operations                       -                -                 -
                                                                                  ------------    -------------    --------------
 Net cash provided (used) by financing activities                                      (8,538)           6,437               365
                                                                                  ------------    -------------    --------------

 Increase (decrease) in cash and cash equivalents                                      20,914           (2,720)           (7,040)
 Cash and cash equivalents, beginning of period                                        19,951           22,671            29,711
                                                                                  ============    =============    ==============
 Cash and cash equivalents, end of period                                            $ 40,865         $ 19,951          $ 22,671
                                                                                  ============    =============    ==============
</TABLE>



 See accompanying notes to consolidated financial statements

                                       47

<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.

         Basis of presentation. During fiscal year 1997, the Company changed its
fiscal year from a calendar  year ending on December 31 to an annual period that
varies  from 52 to 53,  weeks and that  always  ends on the  Friday  nearest  to
December 31, which for fiscal 1998 was January 1, 1999.

         The Company's  fiscal year will normally consist of four equal quarters
of 13 weeks  each,  or 52 weeks;  however,  due to the fact  that  there are not
exactly 52 weeks in a calendar  year and that  there is  slightly  more than one
additional  day per  year  (not  including  the  effects  of leap  year) in each
calendar  year as compared to a 52-week  fiscal  year,  the Company  will have a
fiscal year composed of 53 weeks in certain fiscal years,  as determined by when
Friday falls closest to December 31 in consecutive calendar years.

         In those  resulting  fiscal years that have 53 weeks,  the Company will
record  an  extra  week of  revenues,  costs  and  related  financial  activity.
Therefore,  the  financial  results of those fiscal  years,  and the  associated
quarter,  having the extra week, will not be exactly comparable to the prior and
subsequent  52-week  fiscal years,  and the associated  quarters  having only 13
weeks.  Thus,  due to the inherent  nature of adopting a 52-53 week fiscal year,
the  Company,  analysts,  shareholders,  investors  and others will have to make
appropriate  adjustments to any analysis  performed when comparing the Company's
activities  and  results in fiscal  years that  contain 53 weeks,  to those that
contain the standard 52 weeks.

         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. The Company's policy is to
hedge its known exposure to foreign currency transactions to minimize the effect
of  changes  in  foreign  currency  exchange  rates on  consolidated  results of
operations. The Company enters into simple forward foreign exchange contracts to
either buy or sell currency if the net position  exceeds  $400,000.  The forward
foreign  exchange  contract  obligates  the  Company to  exchange  predetermined
amounts of specified foreign currencies at specified exchange rates on specified
dates,  or to make an equivalent  U.S. dollar payment equal to the value of such
exchange.  For contracts that are designated and effective as hedges,  discounts
or  premiums  (the  difference  between the spot  exchange  rate and the forward
exchange  rate at inception of the  contract) are accreted or amortized to other
operating  expenses over the contract  lives,  using the  straight-line  method,
while  realized and  unrealized  gains and losses  resulting from changes in the
spot  exchange  rate  (including  those  from  open,  matured,   and  terminated


                                       48

<PAGE>

contracts) are included in results of operations.  The related amounts due to or
from counterparties are included in other assets or other liabilities.  Contract
amounts are marked to market,  with changes in market value recorded in earnings
as foreign  exchange  gains or losses.  To date,  the Company  has entered  into
simple  forward  foreign  currency  exchange  contracts to offset the effects of
changes in exchange rates on foreign-denominated  intercompany  receivables.  At
January 1, 1999, the Company had forward foreign currency exchange  contracts to
sell  $3,394,000 of Japanese Yen,  $1,838,000 of European  Currency  units,  and
$444,000  of  German  Marks,  and to buy  $1,705,000  of  New  Zealand  dollars,
$1,096,000  of  British  Pound  Sterling,  and  $251,000  of  Japanese  Yen,  at
contracted rates that 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 as 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 January 1, 1999, the Company's short-term  investments  consisted of
municipal securities totaling $16,269,000 at cost, which had unrealized gains of
$19,000  and had  original  maturities  of less  than one year  from the date of
purchase.  At January 2, 1998,  the  Company's  short-term  investments  in U.S.
Treasury  securities  had a cost of  $53,171,000  and had  unrealized  gains  of
$8,000.

         Concentration of credit risk. In entering into forward foreign exchange
contracts,  the Company has assumed the risk that 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 is also exposed to credit risk in its accounts  receivable  and performs
ongoing  credit  evaluations  of its customers  and  generally  does not require
collateral. The expenses recorded for doubtful accounts receivable were $195,000
in 1998, $315,000 in 1997, and $1,159,000 in 1996.

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

         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,  which were  recognized  when
earned, when the Company had no remaining obligations.

         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 air transport products, for which the period is generally a
basic three year warranty  period with an additional two year warranty sold with
some units. In addition,  select military programs may require extended warranty
periods.

                                       49

<PAGE>

         Advertising  costs.  The  Company  expenses  the  production  costs  of
advertising as incurred.  Advertising expenses were $6,490,000,  $6,328,000, and
$7,587,000 in 1998, 1997 and 1996, 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
market.  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  (loss) and earnings  (loss) per share for 1998,  1997,  and
1996 as 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 the estimated lives, generally periods of four years or less.

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

         Net income  (loss) per share.  In 1997,  the Financial  Accounting  and
Standards Board issued  Statement No. 128,  "Earnings Per Share."  Statement 128
replaced the calculation of primary and fully diluted  earnings (loss) per share
with basic and diluted earnings (loss) per share. Unlike primary earnings (loss)
per share,  basic  earnings  (loss) per share  excludes any dilutive  effects of
options, warrants and convertible securities.  Diluted earnings (loss) per share
is very similar to the  previously  reported fully diluted  earnings  (loss) per
share. All earnings (loss) per share amounts for all periods have been presented
and, where appropriate, restated to conform to the Statement 128 requirements.

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

         Effective  January 1, 1999, the Company adopted  Statement of Financial
Accounting  Standards  (SFAS)  No.  131,   "Disclosures  about  Segments  of  an
Enterprise  and Related  Information."  The  Statement  requires  the Company to
report segment  financial  information  consistent with the presentation made to
the Company's  management  for  decision-making  purposes.  Prior year financial
information   disclosures   have  been  restated  to  be  consistent   with  the
presentation required by SFAS 131 for the fiscal year ended January 1, 1999.

         The  Company  operates  in a single  industry  segment  as a leader  in
designing and developing  innovative  products  enabled by GPS  technology.  The
Company  provides  end-user and Original  Equipment  Manufacture  solutions  for
diverse  applications  including  surveying,  mapping,  marine  survey,  mining,
construction and agriculture, mobile positioning,  commercial avionics, military
systems,  automotive,  timing, and geographic information systems.  During 1998,
the Company  announced that it was  discontinuing  its  participation in General
Aviation. The Company sells its products through a direct sales force located in
fifteen  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  and
Christchurch, New Zealand.  Manufacturing is performed in Sunnyvale,  California
and Austin, Texas.

                                       50

<PAGE>

     The Company  manages its industry  segment within two Business  Units:  the
Precision Positioning Group and the Mobile and Timing Technologies (MTT) Group.

         Each Business Unit is managed  separately because each Business Unit is
subject  to  different  distribution,   marketing,  production,  and  technology
strategies.  The Precision Positioning Group derives its revenues from GPS-based
land surveying,  mining,  construction and agriculture,  geographic  information
systems mapping,  and marine survey markets.  The Mobile and Timing Technologies
market  derives  its  revenues  from  GPS-based   automotive,   timing,   mobile
positioning technologies,  commercial aviation and military systems markets, and
from  development  of software  licenses  and other rights for the use of GPS to
third parties.  The Company  evaluates  these Business  Units'  performance  and
allocates  resources  based on profit  and loss from  operations  before  income
taxes.

         The accounting  policies applied by each of the markets are the same as
those used by the Company in general.

         The table on the following  page presents  revenues,  operating  income
(loss),  and identifiable  assets by the Company's  Business Units.  There is no
recognition of inter-Business  Unit sales or transfers.  Operating income (loss)
is net sales less operating  expenses,  excluding  general  corporate  expenses,
interest income (expense),  and income taxes. The identifiable  assets the Chief
Operating Decision Maker (CODM) views by industry market are accounts receivable
and inventory.  The Company does not report  depreciation  and  amortization  or
capital expenditures by industry markets to the CODM.

                                       51

<PAGE>


<TABLE>
<CAPTION>

                                                      ---------------------------------------
(in thousands)                                                Year ended Janaury 1 ,1999
                                                      ---------------------------------------
                                                             PPG          MTT         Total
                                                      ---------------------------------------
<S>                                                     <C>           <C>         <C>   
External  net revenue                                    $ 165,951     $ 94,328    $ 260,279
Operating income/(loss) before corporate allocations        23,905        1,358       25,263
Corporate allocations(1)                                   (15,093)      (7,239)     (22,332)
                                                      ---------------------------------------
Operating income/(loss) from continuing operations         $ 8,812     $ (5,881)     $ 2,931
Assets:
   Accounts receivable (2)                                $ 32,197     $ 14,837     $ 47,034
    Inventory                                               10,042       16,251       26,293

                                                      ---------------------------------------
                                                             Year ended January 2, 1998
                                                      ---------------------------------------
                                                             PPG          MTT         Total
                                                      ---------------------------------------
External  net revenue                                    $ 142,449    $ 116,445    $ 258,894
Operating income/(loss) before corporate allocations        11,644       19,248       30,892
Corporate allocations (1)                                  (10,872)      (6,368)     (17,240)
                                                      ---------------------------------------
Operating income/(loss) from continuing operations           $ 772     $ 12,880     $ 13,652
Assets:
   Accounts receivable (2)                                $ 31,301     $ 28,215     $ 59,516
    Inventory                                               13,782       17,499       31,281

                                                      ---------------------------------------
                                                              Year ended December 31, 1996
                                                      ---------------------------------------
                                                             PPG          MTT         Total
                                                      ---------------------------------------
External  net revenue                                    $ 140,934     $ 80,990    $ 221,924
Operating income/(loss) before corporate allocations        24,483        1,741       26,224
Corporate allocations (1)                                  (15,366)     (10,560)     (25,926)
                                                      ---------------------------------------
Operating income/(loss) from continuing operations         $ 9,117     $ (8,819)       $ 298
Assets:
   Accounts receivable (2)                                $ 21,147     $ 20,527     $ 41,674
    Inventory                                               11,318       16,730       28,048

</TABLE>


     (1) For the years ended  January 1, 1999 and  January 2, 1998,  the Company
determined the amount of the corporate allocations charged to its Business Units
based on a percentage of the Business Units' monthly inventory balance and gross
profit.   Allocation  percentages  were  determined  at  the  beginning  of  the
respective fiscal year.

     (2) The accounts  receivable  number  excludes cash in advance which is not
allocated between business unit segments.

         Following   are   reconciliations   corresponding   to  totals  in  the
accompanying consolidated financial statements (in thousands):

                                       52

<PAGE>


<TABLE>
<CAPTION>
                                                                 January 1,          January 2,       December 31,
Years ended                                                         1999               1998               1996
- -------------------------------------------------------------------------------------------------------------------

Revenues:
- ------------------------------------------------------------
<S>                                                             <C>                  <C>                <C>    
Total for reportable markets                                     $ 260,279            $ 258,894          $ 221,924
                                                            ===============     ================    ===============


Operating income/(loss) from continuing operations:
- ------------------------------------------------------------
Total for reportable markets                                       $ 2,931             $ 13,652              $ 298
Unallocated corporate expenses                                     (26,111) (1)           6,193 (2)         (6,915)(3)
                                                            ===============     ================    ===============
     Operating income/(loss)                                     $ (23,180)            $ 19,845           $ (6,617)
                                                            ===============     ================    ===============

Assets:
- ------------------------------------------------------------
Accounts Receivable total for reportable markets                  $ 47,034             $ 59,516           $ 41,674
Unallocated (4)                                                    (13,603)             (10,415)            (7,300)
                                                            ===============     ================    ===============
   Total                                                          $ 33,431             $ 49,101           $ 34,374
                                                            ===============     ================    ===============

Inventory total for reportable markets                            $ 26,293             $ 31,281           $ 28,048
Common inventory (5)                                                10,873               11,104             10,810
                                                            ===============     ================    ===============
   Total net inventory                                            $ 37,166             $ 42,385           $ 38,858
                                                            ===============     ================    ===============
</TABLE>



     (1) Includes approximately $10.3 million of restructuring charges.

     (2) For the years ended  January 1, 1999 and  January 2, 1998,  the Company
determined the amount of the corporate allocations charged to its Business Units
based on a percentage of the Business Units' monthly inventory balance and gross
profit which percentage was determined at the beginning of the respective fiscal
year. However, due to the lower than expected actual level of corporate expenses
and higher than expected  inventory  balances in the year ended January 2, 1998,
the Company overallocated corporate expenses to the Business Units. This results
in  a  negative   unallocated   corporate   expense   amount  as  shown  in  the
reconciliation  of operating  profit (loss) from  continuing  operations for the
reportable  segments  to the  amounts  reported in the  Company's  statement  of
operations.

     (3) Includes approximately $2.1 million of restructuring charges.

     (4)  Includes  cash in  advance  and  reserves  that are not  allocated  by
segment.

     (5) This is inventory  that is common  between the business unit  segments.
Parts can be used by either segment.

         The geographic  distribution of the Company's revenues and identifiable
assets are summarized in the table below in thousands.


<TABLE>
<CAPTION>
                                                                       Geographic Area
                                              --------------------------------------------------------------------
                                                                 Europe/                     Other
                                                  U.S.         Middle East    Asia     Foreign Countries  Eliminations      Total
<S>                                               <C>          <C>        <C>           <C>              <C>              <C>   
   1998
        Sales to unaffiliated customers   (1)      $ 139,807    $ 63,987    $ 34,172      $ 22,314             $ -        $ 260,279
        Intergeographic transfers                     79,416           -       1,153             -         (80,569)               -
                                              --------------------------------------------------------------------------------------
        Total revenue                              $ 219,223    $ 63,987    $ 35,325      $ 22,314       $ (80,569)       $ 260,279
                                              --------------------------------------------------------------------------------------

        Identifiable assets                        $ 134,170    $ 13,384     $ 9,460          $ 28          $ (763)       $ 156,279

   1997
        Sales to unaffiliated customers   (1)      $ 140,953    $ 56,844    $ 39,093      $ 22,003             $ -        $ 258,894
        Intergeographic transfers                     29,481       2,482       1,198             -         (33,161)               -
                                              --------------------------------------------------------------------------------------
        Total revenue                              $ 170,434    $ 59,326    $ 40,291      $ 22,003       $ (33,161)       $ 258,894
                                              --------------------------------------------------------------------------------------

        Identifiable assets                        $ 185,809    $ 11,897    $ 10,584          $ 39          $ (666)       $ 207,663

   1996
        Sales to unaffiliated customers   (1)      $ 116,594    $ 47,084    $ 42,251      $ 15,996             $ -        $ 221,924
        Intergeographic transfers                     70,366           -       1,474             -         (71,840)               -
                                              --------------------------------------------------------------------------------------
        Total revenue                              $ 186,960    $ 47,084    $ 43,725      $ 15,996       $ (71,840)       $ 221,924
                                              --------------------------------------------------------------------------------------

        Identifiable assets                        $ 166,400    $ 14,355    $ 10,037           $ 5          $ (956)       $ 189,841

</TABLE>


(1) Sales attributed to countries based on the location of the customer.

         Transfers between U.S. 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 and Asia 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 preceding table.  Sales to unaffiliated  customers in Japan
are made by the Company's Japanese subsidiary.


                                       53

<PAGE>


         No  single  customer  accounted  for 10% or more of total  revenues  in
fiscal 1998, 1997 or 1996.

Note 3 - Discontinued Operations:

         On October 2,  1998,  the  Company  adopted a plan to  discontinue  its
General  Aviation  division.  The Company  anticipates that the division will be
disposed of by June 30,  1999.  Accordingly,  the General  Aviation  division is
being  reported as a discontinued  operation for all periods  presented in these
financial  statements.  Net assets of the  discontinued  operation at October 2,
1998, were written off and consisted  primarily of inventory,  property,  plant,
equipment, and intangible assets.

         The  estimated  loss on the disposal of the  discontinued  operation is
$19.9 million.  The estimate includes a write-off of net assets of $12.7 million
and a provision  of $7.2  million  for costs of  disposal,  including  severance
costs,  facility and certain other contractual costs, and anticipated  operating
losses through the estimated date of disposal.

     The net assets,  which have been  written off in fiscal  1998,  and the net
assets of discontinued operations for fiscal 1997 are summarized as follows:

                                               January 1,       January 2,
                                                  1999             1998
- -------------------------------------------------------------  --------------
(in thousands)

Inventory                                            $ 7,283         $ 5,388
Other current assets                                     451              48
Plant and equipment, net                               3,241           2,289
Other non-current assets                               1,754           2,200
Less write offs                                      (12,729)              -
                                                               --------------
                                             ================  ==============
   Net assets of discontinued operations                 $ -         $ 9,925
                                             ================  ==============

         The  provision of $7.2  million  consisted of $2.9 million of severance
costs,  $1.9 million of facility and certain other  contractual  costs, and $2.4
million of anticipated  operating  losses through the estimated date of disposal
of March 31, 1999.

         As of January 1, 1999,  the Company had incurred  expenses of $390,000.
The Company has a remaining provision of $6.7 million for the costs of disposal,
including  severance costs,  facility and certain other  contractual  costs, and
anticipated operating losses through the estimated date of disposal.

The net revenues of the discontinued  operation are not included in net revenues
of continuing  operations in the  accompanying  statements  of  operations.  The
operating results of the discontinued operation are summarized as follows:



<TABLE>
<CAPTION>      
                                         January 1,       January 2,       December 31,
                                            1999             1998              1996
- -------------------------------------------------------------------------------------------
(in thousands)
<S>                                          <C>             <C>                 <C>   
Net revenues                                  $ 13,482        $ 13,411            $ 11,736
Income (loss) before tax provision              (6,911)         (9,418)             (5,691)
Income tax provision (benefit)                       -            (176)                  -
                                       ================  ==============  ==================
Net loss                                        (6,911)         (9,242)             (5,691)
                                       ================  ==============  ==================
Basic net loss per share                       $ (0.31)        $ (0.41)            $ (0.26)
Diluted net income loss per share              $ (0.31)        $ (0.40)            $ (0.26)
</TABLE>



                                       54

<PAGE>

Note 4 -  Balance sheet components:

                                             January 1,          January 2,
                                               1999                1998
- -----------------------------------------------------------------------------
 (In thousands)

 Inventories
        Raw materials                            $ 22,480            $ 28,477
        Work-in-process                             4,033               6,230
        Finished goods                             10,653               7,678
                                          ----------------    ----------------
                                         
                                                 $ 37,166            $ 42,385
                                          ================    ================

 Property and equipment
        Machinery and equipment                  $ 59,520            $ 51,350
        Furniture and fixtures                      5,763               4,514
        Leasehold improvements                      6,700               6,007
                                          ----------------    ----------------
                                                   71,983              61,871
        Less accumulated depreciation             (56,879)            (42,195)
                                          ----------------    ----------------
                                                 $ 15,104            $ 19,676
                                          ================    ================
Note 5 - Bank line of credit:

         In August  1997,  the Company  entered  into a  three-year  $50,000,000
unsecured  revolving  credit facility with four banks (the "Credit  Agreement").
This credit facility replaced the previous two-year  $30,000,000  unsecured line
that expired in August 1997. The Credit Agreement  enables the Company to borrow
up to $50,000,000,  provided that certain financial and other covenants are met.
Under a separate  agreement  the Company has an  additional  $5,000,000  line of
credit provided only by the lead bank under the Credit  Agreement for "Letter of
Credit"  purposes,  and  this is  also  subject  to the  covenants  in the  main
facility. The Credit Agreement provides for payment of a commitment fee of 0.25%
and  borrowings  to bear  interest at 1% over LIBOR if the total  funded debt to
EBITDA is less than or equal to 1.00 times, 0.3% and borrowings to bear interest
at 1.25%  over  LIBOR if the ratio is  greater  than 1.00 times and less than or
equal to 2.00 times, or 0.4% and borrowings to bear interest at 1.75% over LIBOR
if the ratio is  greater  than 2.00  times.  In  addition  to  borrowing  at the
specified  LIBOR rate,  the Company has the right to borrow with interest at the
higher of (i) one of the bank's  annual  prime rate and (ii) the  federal  funds
rate plus 0.5%.  To date,  the  Company  has not made any  borrowings  under the
lines. In addition,  the Company is restricted  from paying  dividends under the
terms of the Credit Agreement.

         As of  October  27,  1998,  the Agent and  Lenders  of the  $50,000,000
unsecured  revolving  credit facility  granted a limited waiver of the Company's
compliance  with various loan covenants as of October 2, 1998 until December 15,
1998. The Agent and Lenders granted a second limited waiver (an extension of the
first limited  waiver) for the Company's  compliance with various loan covenants
that extended from January 1, 1999 through February 16, 1999. As of February 16,
1999 the Company, the Agent and the Lenders agreed to new covenants that will be
tested by a  compliance  document  as of April 2, 1999,  and for the life of the
loan which expires in August of 2000. The $50,000,000  revolving credit facility
was  modified  to  include  the  $5,000,000  line of credit for Letter of Credit
purposes to simplify  the entire  arrangement  as less than  $150,000  was being
utilized under the separate facility as of January 1, 1999. To date, the Company
has not made any borrowings under the $50,000,000 revolving credit facility.

Note 6 - Restructuring:

         In the third and fourth  quarters of fiscal 1998, the Company  recorded
restructuring  charges totaling $10.3 million classified as operating  expenses.


                                       55

<PAGE>

These charges are a result of the Company's  reorganization  to improve business
processes and to decrease  organizational  redundancies,  to improve  management
accountability and to improve the Company's focus on profitable operations. As a
result  of  the  reorganization,  the  Company  has  downsized  its  operations,
including  reducing  headcount  and  facilities  space usage and  canceling  its
enterprise wide information  system project and certain research and development
projects.  The  impact of these  decisions  is that  significant  amounts of the
Company's fixed assets,  prepaid  expenses,  and purchased  technology have been
impaired  and certain  liabilities  incurred.  The Company has written  down the
related  assets to their  net  realizable  values  and made  provisions  for the
estimated liabilities.

     The elements of the charges in 1998 and the amounts remaining at January 1,
1999, on the balance sheet are as follows (in thousands):


<TABLE>
<CAPTION>
                                                                           Remaining in
                                         Total         Amounts paid/     accrued liabilites
                                      charged to       written off            as of
                                        expense         in 1998          January 1, 1999
                                     ----------------  --------------  --------------------
<S>                                       <C>             <C>                    <C>    
Employee termination benefits              $ 2,864         $ (1,200)              $ 1,664
Facility space reductions                    1,061                -                 1,061
Enterprise wide information system 
     abandonment                             6,360           (4,895)                1,465
                                     ================= =============  ====================
     Subtotal                             $ 10,285         $ (6,095)              $ 4,190
                                     ================= =============  ====================
</TABLE>


         The cash  expenditures  associated with the remaining  obligations will
occur primarily in fiscal 1999.

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

 Long-term debt consists of the following:
                                              January 1,       January 2,
                                                 1999             1998
- ---------------------------------------------------------------------------
 (In thousands)

 Subordinated notes                              $ 29,703         $ 29,600
 Installment loan obligations                       2,776                -
 Other                                                549            1,141
                                             -------------    -------------
                                                   33,028           30,741
 Less current portion                               1,388               44
                                             -------------    -------------
 Noncurrent portion                              $ 31,640         $ 30,697
                                             =============    =============

         During June 1994,  the Company  issued  $30.0  million of  subordinated
promissory  notes bearing  interest at an annual rate of 10%, 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


                                       56

<PAGE>

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 meet a
minimum  consolidated  net worth  requirement.  The Company is in the process of
negotiating  a  reduction  of this  minimum  requirement.  If the company is not
successful  in  negotiating  a reduction in the minimum  consolidated  net worth
requirement  and the Company incurs future losses;  the  accumulated  losses may
cause the company to be in default of its loan covenants. Such events could have
a material adverse effect on the Company's profitability.

         Other  long-term  debt  represents  deferred rent  obligations,  rental
inducements on certain of the Company's leased facilities,  an installment loans
for a fixed asset purchase.  There are three  installment  loans for capitalized
software,  which in total,  have two annual  payments of  $1,388,000.  The first
installment  loan consists of two payments of  $129,480.00  due May 30, 1999 and
May  30,  2000.  The  second  installment  loan  consists  of  two  payments  of
$942,800.00  due May 30,  1999 and May 30,  2000.  The  third  installment  loan
consists of two payments of  315,912.00  due May 01, 1999 and May 01, 2000.  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 that  expire at various  dates from 1999
through  2003.  The Company has options to renew  certain of these leases for an
additional five years. The Company's United Kingdom subsidiary leases a facility
under an operating lease that expires in 2015.


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

 1999                                                         $ 4,991
 2000                                                           4,131
 2001                                                           1,752
 2002                                                           1,372
 2003                                                             690
 Thereafter                                                       905
                                                      ================
 Total                                                       $ 13,841
                                                      ================

     Rent expense under operating  leases was $6,287,000 in 1998,  $5,472,400 in
1997, and $6,004,800 in 1996.

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:


                                       57

<PAGE>

                                                      January 1, 1999
                                              --------------------------------
                                                Carrying             Fair
 (In thousands)                                  Amount              Value
- ------------------------------------------------------------------------------

 Assets:
 Cash and cash equivalents (Note 1)               $ 40,865           $ 40,865
 Short-term investments (Note 1)                    16,269             16,269

 Liabilities:
 Forward foreign exchange contracts (Note 1)        $  281            $   281
 Subordinated notes (Note 7)                        29,703             30,167

         The fair value of the  subordinated  notes has been estimated  using an
estimate of the 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 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,  and  these  contracts  are
restated to the fair value at the end of every month.

Note 10 - Income taxes:

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

                                       January, 1     January 2,    December 31,
 Years ended                             1999           1998           1996
- --------------------------------------------------------------------------------

 Federal:
      Current                              $ 233        $ 1,344       $ (2,557)
      Deferred                                 -              -          1,208
                                      -----------    -----------    -----------
                                             233          1,344         (1,349)
                                      -----------    -----------    -----------
 State:
      Current                                 20             10              5
      Deferred                                 -              -              -
                                      -----------    -----------    -----------
                                              20             10              5
                                      -----------    -----------    -----------
 Foreign:
      Current                              1,195          1,116          1,060
      Deferred                               (48)            26            (16)
                                      -----------    -----------    -----------
                                           1,147          1,142          1,044
                                      -----------    -----------    -----------
 Income tax  provision (benefit)         $ 1,400        $ 2,496         $ (300)
                                      ===========    ===========    ===========

         The domestic  income (loss) from  continuing  operations  before income
taxes  (including  royalty  income  subject  to foreign  withholding  taxes) was
approximately ($26,220,000), $18,800,000, and ($7,615,000) in fiscal years 1998,
1997 and 1996.

         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 (in thousands):

                                       58

<PAGE>

                                         January, 1     January 2,  December 31,
 Years ended                               1999           1998          1996
- --------------------------------------------------------------------------------

 Expected tax from continuing operations
      at 35% in all years                 $ (8,827)     $ 7,356       $ (2,069)
 Tax account valuation adjustments               -       (4,100)        (1,630)
 Operating loss not utilized (utilized)      9,178       (1,410)         2,585
 Foreign withholding taxes                     467          403            170
 Foreign tax rate differential                 329          (28)           277
 Other                                         253          275            367
                                        -----------  -----------    -----------
 Income tax provision (benefit)            $ 1,400      $ 2,496         $ (300)
                                        ===========  ===========    ===========
     Effective tax rate                        (6%)         12%             5%
                                        ===========  ===========    ===========

         The   components  of  deferred  taxes  consist  of  the  following  (in
thousands):

                                                    January, 1     January 2,
                                                      1999           1998
- -----------------------------------------------------------------------------


 Deferred tax liabilities:
      Goodwill                                            $ -          $ 866
      Other individually immaterial items                 178            290
                                                   -----------    -----------
      Total deferred tax liabilities                      178          1,156
                                                   -----------    -----------

 Deferred tax assets:
      Inventory valuation differences                  10,423          6,480
       Expenses not currently deductible                9,907          3,017
      Federal credit carryforwards                      7,252          6,316
       Depreciation                                     3,689          1,163
      State credit carryforwards                        3,138          2,099
      Federal net operating loss (NOL) carryforward     3,023              -
      Warranty                                          2,090          1,234
      Other individually immaterial items               2,660            825
                                                   -----------    -----------
      Total deferred tax assets                        42,182         21,134

      Valuation allowance                             (41,599)       (19,622)
                                                   -----------    -----------
      Total deferred tax assets                           583          1,512
                                                   -----------    -----------
 Total net deferred tax assets                          $ 405          $ 356
                                                   ===========    ===========

         The NOL and credit  carryforwards  listed  above expire in 1999 through
2018.

         The   valuation   allowance   decreased  by  $300   thousand  in  1997.
Approximately $7.2 million of the valuation allowance at January 1, 1999 relates
to the tax benefits of stock option  deductions which will be credited to equity
when realized.

Note 11 - Shareholders' equity:

         1993 Stock  Option  Plan.  In 1992,  the  Company's  Board of Directors
adopted the 1993 Stock  Option Plan (1993  Plan) to replace the  Company's  1983
Stock Option Plan,  which expired in January 1993.  The 1993 Plan, as amended to
date and approved by  shareholders,  provides for the granting of incentive  and
nonstatutory  stock  options  for up to  3,800,000  shares  of  Common  Stock to


                                       59

<PAGE>

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 employee stock options  granted
have  120-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 issued under the 1993 Plan must be at least 85% of the fair market
value of Common  Stock on the date of grant.  As of January 1, 1999,  options to
purchase 2,867,658 shares were outstanding and 374,211 shares were available for
future grant under the 1993 Stock Option Plan.

         1990 Director Stock Option Plan. In December 1990, the Company  adopted
a Director Stock Option Plan under which the Company has reserved 380,000 shares
of Common Stock for options to be granted to nonemployee  directors.  At January
1, 1999,  options to purchase 158,333 shares were outstanding and 145,833 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  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 grant.
As of January 1, 1999,  there were 129,974  shares  available for future grants.
For accounting  purposes,  compensation  cost on these grants 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 1998,  1997,  and 1996  amounted  to $0,  $275,000,  and  $48,744,
respectively. As of January 1, 1999, all outstanding options had been exercised.

         1988 Employee Stock Purchase Plan. In 1988, the Company  established an
employee  stock  purchase  plan under which an aggregate of 2,350,000  shares of
Common  Stock  have  been  reserved  for  issuance  to date as  approved  by the
shareholders.  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 1998,  332,154  shares were issued under the plan for  aggregate  proceeds of
$2,827,000.  At  January  1,  1999,  the  number of shares  reserved  for future
purchases was 402,842.

         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 1998, 1997, and 1996:


<TABLE>
<CAPTION>

                                              January 1,         January 2,       December 31,
                                                 1999               1998              1996
                                          -------------------   ---------------- ------------------
<S>                                                  <C>                <C>                <C>  
Expected dividend yield                                  $ -                $ -                $ -
Expected stock price volatility                       55.65%             58.07%             58.76%
Risk-free interest rate                                5.76%              6.36%              6.29%
Expected life of options after vesting                  1.20               1.19               0.77

</TABLE>


                                       60

<PAGE>

         The  Black-Scholes  option  valuation  model was  developed  for use in
estimating  the fair value of traded  options that 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,  and 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:


<TABLE>
<CAPTION>

                                             January 1,         January 2,      December 31,
                                               1999               1998            1996
                                         -----------------   ---------------- ---------------
<S>                                           <C>               <C>         <C>    
Net income (loss) - as reported                $ (53,394)        $ 9,279     $  (11,302)

Net income (loss) - pro forma                  $ (58,661)        $ 2,899       $ (15,806)

Basic income (loss) per share - as reported      $ (2.38)         $ 0.42         $ (0.51)

Basic income (loss) per share - pro forma        $ (2.61)         $ 0.13         $ (0.72)

Diluted income (loss) per share - as reported    $ (2.38)         $ 0.40         $ (0.51)

Diluted income (loss) per share - pro forma      $ (2.61)         $ 0.13         $ (0.72)
</TABLE>


         Because the fair value  method is  applicable  only to options  granted
subsequent to December 31, 1994,  pro forma effects will not be fully  reflected
until 1998. Accordingly,  these figures are unlikely to be representative of the
effects on reported net income for future years.

         Exercise prices for options  outstanding as of January 1, 1999,  ranged
from $8.00 to $29.625. The weighted average remaining  contractual life of those
options is 7.59 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>   
$8.0000-$9.5000                305              $8.76                 6.13                 123                   $8.92
$9.6250 -$9.8750                72              $9.63                 3.75                  60                   $9.63
$9.9375-$9.9375                488              $9.94                 9.56                   1                   $9.94
$10.0000-$12.0000              336             $10.78                 5.70                 208                  $10.63
$12.2500-$13.1875              314             $12.80                 7.81                 135                  $12.81
$15.3750-$15.3750              762             $15.38                 7.68                 306                  $15.38
$16.8750-$17.0000               43             $17.00                 6.58                  26                  $17.00
$17.5000-$17.5000              375             $17.50                 8.34                 103                  $17.50
$17.8750-$23.0000              329             $19.35                 7.67                 146                  $19.30
$29.6250-$29.6250                2             $29.63                 6.46                   1                  $26.63
- ------------------------  ---------     -----------------    -------------------   -----------------  ----------------------
$8.0000-$29.6250             3,026            $13.64                  7.59               1,110                  $13.91

</TABLE>


         Activity  during 1998,  1997 and 1996 under the  combined  plans was as
follows:

                                       61

<PAGE>


<TABLE>
<CAPTION>
                                               January 1,                        January 2,                     December 31,
                                                 1999                              1998                             1996
                                    --------------------------------  -------------------------------  -----------------------------
                                                   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         2,696       $15.10            2,577            $13.06           2,525            $13.49
     Granted                             1,117        11.40              962             16.45           1,522             16.57
     Exercised                            (132)       11.41             (635)             8.78            (316)             9.35
     Canceled                             (655)       16.30             (208)            15.40          (1,154)            19.61
                                    -----------                    ----------                       -----------

Outstanding at end of year               3,026       $13.64           2,696             $15.10           2,577            $13.06

Exercisable at end of year               1,110       $13.91             700             $13.20             886             $9.99

Weighted-average fair value of options
    granted during year                               $5.21                              $8.30                             $5.24

</TABLE>


         The  Company  took steps to further  strengthen  and  improve  employee
relationships and incentives by extending the period of  exercisability  for all
current  outstanding  employee stock options from five years and three months to
ten years effective as of November 3, 1998.

         During 1996,  under a program  approved by the Board of Directors,  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 restarted  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  48,302  shares of Common  Stock for an aggregate of $650,000 in
1998. The Company,  at its discretion,  matches individual  employee 401(k) Plan
contributions up to $100 per month. The Company's matching  contributions to the
401(k) Plan were $1,159,000 in 1998, $1,033,000 in 1997 and $1,031,000 in 1996.

         Profit-Sharing  Plan.  In 1995,  the  Company  introduced  an  employee
profit-sharing plan in which all employees,  excluding executives,  participate.
The plan  distributes to employees  approximately  5% of quarterly income before
taxes.  Payments  under the plan  during  1998,  1997,  and 1996 were  $138,000,
$549,000, and $43,000, respectively.

         Common shares reserved for future issuances. As of January 1, 1999, the
Company has  reserved  4,078,851  common  shares for issuance  upon  exercise of
options outstanding and options available for grant under the 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 - Earnings Per Share:

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share." The
Company  adopted this standard,  as required for its January 2, 1998,  Financial
Statements. For the years presented, the Company presents both basic and diluted
earnings (loss) per share.

         The following data show the amounts used in computing  earnings  (loss)
per share and the effect on the  weighted-average  number of shares of  dilutive
potential Common Stock.

                                       62

<PAGE>


<TABLE>
<CAPTION>

                                                             January 1,     January 2,    December 31,
                                                                1999           1998           1996
- --------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                                           <C>             <C>            <C>    
Numerator:
    Income available to common shareholders:
       Used in basic and diluted income (loss) per share 
          from continuing operations                           $ (26,621)      $ 18,521       $ (5,611)
       Used in basic and diluted income (loss) per share 
          from discontinued operations                           (26,773)        (9,242)        (5,691)
                                                             ------------   ------------  -------------
       Used in basic and diluted income (loss) per share       $ (53,394)       $ 9,279      $ (11,302)
                                                             ------------   ------------  -------------
Denominator:
     Weighted-average number of common
        shares used in basic income (loss) per share              22,470         22,293         22,005

     Effect of dilutive securities:
          Common stock options                                         -            530              -
          Common stock warrants                                        -            124              -
                                                             ------------   ------------  -------------
     Weighted-average number of common
         shares and dilutive potential common shares
        used in diluted income (loss) per share                   22,470         22,947         22,005
                                                             ============   ============  ==============

 Basic income (loss) per share from continuing operations        $ (1.19)        $ 0.83        $ (0.25)
 Basic loss per share from discontinued operations                 (1.19)         (0.41)         (0.26)
                                                             ============   ============  =============
 Basic income (loss) per share                                   $ (2.38)        $ 0.42        $ (0.51)
                                                             ============   ============  =============

 Diluted income (loss) per share from continuing operations      $ (1.19)        $ 0.80        $ (0.25)
 Diluted loss per share from discontinued operations               (1.19)         (0.40)         (0.26)
                                                             ============   ============  =============
 Diluted income (loss) per share                                 $ (2.38)        $ 0.40        $ (0.51)
                                                             ============   ============  =============
</TABLE>


         If the Company  had  reported  net income in 1998,  an  additional  387
common equivalent shares related to outstanding  options and warrants would have
been included in the calculation of diluted loss per share.

Note 13 - Comprehensive Income (Loss):

     The components of accumulated  other  comprehensive  income (loss),  net of
related tax at January 1, 1999 and January 2, 1998 were as follows:

                                                    Janaury 1,      January 2,
                                                       1999            1998
- --------------------------------------------------------------------------------
(in thousands)

 Currency translation adjustments                         ($811)          ($556)
 Unrealized gain (loss) on short term investments            19               8
                                                    ============   =============
     Accumulated other comprehensive income (loss)        ($792)          ($548)
                                                    ============   =============

Note 14 - Statement of cash flows data:


<TABLE>
<CAPTION>

                                                        January 1,      January 2,      December 31,
Years ended                                                1999            1998             1996
- ------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                        <C>             <C>               <C>    
 Supplemental schedule of noncash investing activities:

 Common stock issued for Terra Corporation                      $ -             $ -           $ 2,857
                                                        ------------    ------------    --------------
 Supplemental disclosure of cash flow information:

 Interest paid                                              $ 3,377         $ 3,313           $ 3,457
                                                        ------------    ------------    --------------
 Income taxes paid                                          $ 1,585           $ 167             $ 483
                                                        ------------    ------------    --------------
</TABLE>


                                       63

<PAGE>

Note 15 - Litigation:

     Settled  Matters.  On May 8,  1998,  Satloc,  Inc. a Trimble  customer  and
competitor, filed a lawsuit in the United States District Court for the District
of   Arizona,   action  No.  CIV  98-0837  PHX  PGR.   The   complaint   alleged
misappropriation  of  trade  secrets  and  confidential   business  information,
intentional  interference with contractual relations,  intentional  interference
with  prospective   contractual  relations,   unfair  competition,   and  unjust
enrichment, arising from Trimble's hiring of a former Satloc, Inc. sales person.
The complaint seeks injunctive  relief,  compensatory and punitive  damages,  an
accounting,  and attorney fees. Trimble has answered the complaint. In September
1998, Satloc, Inc. dismissed its claims with prejudice.

         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  sought  damages  of
approximately  $1,000,000.  The Company filed a general  denial in answer to the
complaint.  The trial was concluded on September 25, 1997, and the jury rendered
its verdict in favor of the Company on all causes of action. The judgment in the
Company's favor is now final and nonappealable.

     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 sought 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 alleged 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
April 28, 1997,  the Court  granted in part,  and denied in part,  the Company's
motion to dismiss.  The Court further  granted the  plaintiffs  leave to replead
certain dismissed claims. On June 19, 1997, the plaintiffs filed a third amended
and  consolidated  complaint.  The Company has answered the complaint by denying
all  liability.  The Company does not believe that it is possible to predict the
outcome  of  this  litigation.   The  parties  have  executed  a  Memorandum  of
Understanding  with respect to settlement of the  litigation  and anticipate the
negotiation  and  execution  of a  definitive  agreement  in the near term.  The
settlement will be subject to approval by the court.

         On November 12, 1998, the Company brought suit in district court in San
Jose,  California against Silicon RF Technology,  Inc. (SiRF) for alleged patent
infringement  of three Trimble  patents.  SiRF has a counter claim. No action by
the Court has taken place yet.

         On January 31,  1997,  counsel for one Philip M. Clegg wrote to Trimble
asserting  that a license under  Clegg's U.S.  Patent No.  4,807,131,  which was
issued  February  21,  1989,  would be  required  by Trimble  because of a joint
venture Trimble had entered into with Caterpillar Corporation concerning the use
of Trimble GPS products in combination with earth moving equipment.  To date, no
infringement  action has been initiated on behalf of Mr. Clegg. The Company does
not  believe  that there will be any  adverse  consequences  to the Company as a
result of this inquiry.

                                       64

<PAGE>

     Other  Matters.  Western  Atlas,  a  Houston  based  supplier  to  the  oil
exploration business, has accused Trimble and other GPS manufactures,  suppliers
and users of infringing  two U.S.  Patents owned by it, namely U.S.  Patent Nos.
5,014,066 and 5,619,212. Western Atlas contends that the foregoing patents cover
certain aspects of GPS receiver  design.  Lawsuits for infringement of these two
patents  are  currently  pending in federal  district  court in  Houston,  Texas
against Garmin  International  Inc. and Rockwell  International  Corp.  Although
Trimble has not been sued by Western Atlas on the foregoing patents, Trimble has
instructed its counsel  thoroughly to investigate the  infringement  threat.  At
present  Trimble  does not expect this threat to have  adverse  consequences  on
Trimble's business.

         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 16 - 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>   
1998
          Total revenue                                                        $ 71,656     $ 71,919      $ 57,420      $ 59,284
          Gross margin                                                           37,591       36,419        24,828        26,718
          Operating income (loss)                                                 4,340        2,434       (13,387)      (16,567)
          Net income (loss) from continuing operations                            4,060        2,631       (15,182)      (18,130)
          Net income (loss) from discontinued operations                         (2,145)      (2,376)      (22,252)            -
          Net income (loss)                                                       1,915          255       (37,434)      (18,130)

          Basic net income (loss) per share from continuing operations             0.17         0.11         (0.68)        (0.82)
          Basic net income (loss) per share from discontinued operations          (0.09)       (0.10)        (1.00)            -
                                                                            ============  ===========  ============  ============
          Basic net income (loss)                                                $ 0.08       $ 0.01       $ (1.68)      $ (0.82)
                                                                            ============  ===========  ============  ============


          Diluted net income (loss) per share from continuing operations           0.17         0.11         (0.68)        (0.82)
          Diluted net income (loss) per share from discontinued operations        (0.09)       (0.10)        (1.00)            -
                                                                            ============  ===========  ============  ============
          Diluted net income (loss)                                              $ 0.08       $ 0.01       $ (1.68)      $ (0.82)
                                                                            ============  ===========  ============  ============


1997
          Total revenue                                                        $ 57,470     $ 65,415      $ 61,806      $ 74,203
          Gross margin                                                           30,848       36,286        34,290        38,567
          Operating income (loss)                                                 3,647        6,722         4,022         5,452
          Net income loss from continuing operations                              3,281        6,189         3,997         5,052
          Net income loss from discontinued operations                           (1,852)      (2,324)       (2,405)       (2,659)
          Net income (loss)                                                       1,429        3,865         1,592         2,393

          Basic net income (loss) per share from continuing operations             0.14         0.29          0.18          0.23
          Basic net income (loss) per share from discontinued operations          (0.08)       (0.11)        (0.11)        (0.12)
                                                                            ============  ===========  ============  ============
          Basic net income (loss)                                                $ 0.06       $ 0.18        $ 0.07        $ 0.11
                                                                            ============  ===========  ============  ============


          Diluted net income (loss) per share from continuing operations           0.14         0.27          0.17          0.21
          Diluted net income (loss) per share from discontinued operations        (0.08)       (0.10)        (0.10)        (0.11)
                                                                            ============  ===========  ============  ============
          Diluted net income (loss)                                              $ 0.06       $ 0.17        $ 0.07        $ 0.10
                                                                            ============  ===========  ============  ============
</TABLE>



         Significant  quarterly  items include the  following:  (i) in the third
quarter of 1998 the Company recorded a$2,453,000  restructuring  charge, (ii) in
the fourth  quarter of 1998 the  Company  recorded  a  $7,827,000  restructuring
charge,  (iii) in the second  quarter of 1997 the  Company  recorded  revenue of
$2,222,000  from a  technology  license;  (iv) in the third  quarter of 1997 the
Company  recorded  revenue  of  $1,800,000  from  a  development   agreement  in
connection with an irrevocable nonrefundable nonrecurring engineering fee.


                                       65

<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 January 1, 1999 and  January 2, 1998,  and the related
consolidated statements of operations,  shareholders' equity, and cash flows for
each of the three  years in the period  ended  January 1, 1999.  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 January  1, 1999 and  January 2, 1998,  and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended January 1, 1999 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 26, 1999




                                       66

<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  "Compliance with
Section 16(a) of the Exchange Act" in the Company's Proxy Statement for its 1999
annual meeting of  shareholders  to be held on June 2, 1999,  (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 of 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" and "Company Performance."


Item 12.  Security Ownership of Certain Beneficial Owners and Management

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


Item 13. Certain Relationships and Related Transactions

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


                                       67

<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 January 1,
                  1999 and January 2, 1998....................           44

                  Consolidated Statements of Operations for
                  each of the three fiscal years in the period
                  ended January 1, 1999........................          45

                  Consolidated Statement of Shareholders'
                  Equity for the three fiscal years
                  ended January 1, 1999........................          46

                  Consolidated Statements of Cash Flows for
                  each of the three fiscal years in the period
                  ended January 1, 1999........................          47

                  Notes to Consolidated Financial Statements           48-65

         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 consolidated
financial statements or the notes thereto.


                                       68

<PAGE>


         3.       Exhibits

Exhibit
Number 

3.1       Restated Articles of Incorporation of the Company filed 
          June 25, 1986. (18)

3.2       Certificate of Amendment of Articles of Incorporation of the Company 
          filed October 6, 1988. (18)

3.3       Certificate of Amendment of Articles of Incorporation of the Company 
          filed July 18, 1990. (18)

3.4       Certificate of Determination of the Company filed 
          February 19, 1999. (18)

3.8       Amended and Restated Bylaws of the Company. (16)

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

4.2       Preferred Shares Rights Agreement dated as of February 18, 1999. (17)

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)

                                       69

<PAGE>

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, Inc. (1)

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)

                                       70

<PAGE>

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 Electronics Corporation. (7)

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. (1)

10.54    Revolving Credit Agreement - First Amendment (12)

10.55    Revolving Credit Agreement - Second Amendment (12)

10.56    Revolving Credit Agreement - Third Amendment (13)

10.57    Revolving Credit Agreement - Fourth Amendment (14)

10.58    Revolving  Credit  Agreement for $50,000,000  dated August 27,
         1997,  with Fleet  National Bank,  Bank of Boston N.A.,  Sanwa
         Bank of California, and ABN Amro Bank N.V., respectively. (15)

10.59    1993 Stock Option Plan, as amended (16)

10.60    1988 Employee Stock Purchase Plan, as amended (16)

10.61    Revolving Credit Agreement - Loan - Third Amendment (18)

10.62+   Employment Agreement between the Company and Bradford W. Parkinson 
         dated September 1, 1998. (18)

                                       71

<PAGE>

10.63+   Employment Agreement between the Comany and Robert S. Cooper dated
         September 1, 1998. (18)

10.64+   Consulting Agreement between the comapny and Bradford W. Parkinson 
         dated September 1, 1998. (18)

10.65+   Standby Consulting Agreement between the Comapny and Bradford W. 
         Parkinson dated September 1, 1998. (18)

10.66+   Consulting Agreement between the Comapny and Robert S. Cooper dated
         September 1, 1998. (18)

10.67+   Employment Agreement between the Company and Steven W. Berglund dated
         March 17, 1999. (18)

10.68+   Nonqualified deferred Compensation Plan of the Company effective 
         February 10, 1994. (18)

21.1     Subsidiaries of the Company. (17)

23.1     Consent of Ernst & Young LLP, independent auditors (see page 66).

24.1     Power of Attorney (included on page 75).

27.1     Financial Data Schedule (17)

*        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  Annual 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.

                                       72

<PAGE>

(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  Annual 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  Annual 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
         Annual 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  Annual 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  Annual 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
         Annual 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
         Annual Report on Form 10-Q for the quarter ended September 30, 1996.

(14)     Incorporated  by reference to  identically  numbered exhibits filed in 
         response to Item 6A,  "Exhibits," of the  registrant's
         Annual Report on Form 10-Q for the quarter ended June 30, 1997.

(15)     Incorporated  by reference to  identically  numbered exhibits filed in 
         response to Item 6A,  "Exhibits," of the  registrant's
         Annual Report on Form 10-Q for the quarter ended September 30, 1997.

(16)     Incorporated  by reference to  identically  numbered exhibits filed in 
         response to Item 6A,  "Exhibits," of the  registrant's
         Annual Report on Form 10-Q for the quarter ended April 3, 1998.

                                       73

<PAGE>

(17)     Incorporated  by  reference  to  Exhibit  No. 1 to the  registrant's 
         Registration  Statement  on Form 8-A  which was filed on 
         February 18,1999.

(18)     Filed herewith.

         (b)      Reports on Form 8-K.

                  No reports on Form 8-K were filed by the registrant during the
fourth quarter ended January 1, 1999.


                                       74

<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/ Steven W. Berglund 
                                Steven W. Berglund,
                                President and Chief
                                Executive Officer


                                March 26, 1999



                                POWER OF ATTORNEY

         Know all persons by these  presents,  that each person whose  signature
appears  below   constitutes   and  appoints   Bradford  W.   Parkinson  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.


                                       75

<PAGE>


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this Annual 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

/s/ Steven W. Berglund     President, Chief Executive            March 26, 1999
    Steven W. Berglund     Officer 

/s/ Mary Ellen Genoves     Vice President Finance,               March 26, 1999
    Mary Ellen Genovese    and Chief Financial Officer
                           (principal financial and principal
                           accounting officer)
                                                 
/s/ Bradford Parkinson     Director                              March 26, 1999
    Bradford W. Parkinson      

/s/ Robert S. Cooper       Director                              March 25, 1999
    Robert S. Cooper          


/s/ John B. Goodrich       Director                              March 26, 1999
    John B. Goodrich


/s/ William Hart           Director                              March 26, 1999
    William Hart


/s/ Charles R. Trimble     Director                              March 24, 1999
    Charles R. Trimble



                                       76

<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
                                    period          Additions     Write-Offs **     period
                                ----------------  --------------  --------------  ------------
Allowance for doubtful accounts:
  <S>                                   <C>             <C>               <C>         <C>         
   Year ended December 31, 1996          $1,074          $1,595            $276        $2,393
   Year ended January 2, 1998             2,393             205             134         2,464
   Year ended January 1, 1999             2,464             458             702         2,220




                                  Balance at                                      Balance at
                                 beginning of     (Reductions)                      end of
                                    period          Additions     Write-Offs **     period
                                ----------------  --------------  --------------  ------------
Inventory Reserves: 
   Year ended December 31, 1996          $5,569          $6,189          $1,876        $9,882
   Year ended January 2, 1998             9,882           2,389           2,862         9,409
   Year ended January 1, 1999             9,409           7,057           2,347        14,119

- ------------------------------------------

** Net of recoveries

</TABLE>







                                       S-1



                                       77

<PAGE>








                                INDEX TO EXHIBITS


                                                              SEQUENTIALLY
EXHIBIT                                                         NUMBERED
 NUMBER                     EXHIBIT                              PAGE

3.1      Restated Articles of Incorporation of the
         Company filed June 25, 1986.                           79-80

3.2      Certificate of Amendment of Articles of
         Incorporation of the  Company filed
         October 6, 1988.                                       81-82

3.3      Certificate of Amendment of Articles of
         Incorporation of the  Company filed July 17, 1990.        83

3.4      Certificate of Determination.                          84-88

10.61    Revolving Credit Agreement - Loan - Third Amendment   89-102


10.62    Employment Agreement between Registrant and
         Bradford W. Parkinson dated September 1, 1998.       103-111  

10.63    Employment Agreement between Registrant and
         Robert S. Cooper  dated September 1, 1998            113-121

10.64    Consulting Agreement between Registrant and
         Bradford W. Parkinson dated September 1, 1998.       120-126

10.65    Standby Consulting Agreement between Registrant and
         Bradford W. Parkinson dated September 1, 1998.       127-132

10.66    Consulting Agreement between Registrant and
         Robert S. Cooper  dated September 1, 1998            133-138

10.67    Emploment Agreement between Registrant and 
         Steven W. Berglund dated March 17, 1999.             139-142

10.68    Nonqualified Deferred Compesation Plan of the
         Company effective February 10, 1994.                 143-165 

21.1     Subsidiaries of the Company                              166

23.1     Consent of  Ernst & Young LLP,
         Independent Auditors                                     167

27.1     Financial Data Schedule for the years ended
         January 1, 1999 and January 2, 1998                      168


                                     78

<PAGE>







                                   EXHIBIT 3.1

                           TRIMBLE NAVIGATION LIMITED


                       RESTATED ARTICLES OF INCORPORATION

         Charles R. Trimble and Robert A. Trimble certify that:

     1. They are the  President  and the  Secretary,  respectively,  of  Trimble
Navigation Limited, a California corporation.

     2. The  Articles  of  Incorporation  of this  corporation  are  amended and
restated to read as follows: I

         The name of this corporation is Trimble Navigation Limited.

                                       II

         The  purpose  of this  corporation  is to engage in any  lawful  act or
         activity for which a  corporation  may be  organized  under the general
         corporation  law of California,  other than the banking  business,  the
         trust company business, or the practice of a profession permitted to be
         incorporated by the California Corporations Code.

                                       III

         This  corporation  is  authorized  to issue only one class of shares of
         stock,  designated  Common  Stock,  and the total number of shares that
         this corporation is authorized to issue is forty million (40,000,000).

         Upon  the  effective   date  of  this  amendment  to  the  Articles  of
         Incorporation, each outstanding share of Common Stock shall be split up
         and converted into four shares of Common Stock.

3. The foregoing  amendment and restatement of the Articles of Incorporation has
been duly approved
 by the Board of Directors of this corporation.

                                      79

<PAGE>

     4. The foregoing amendment and restatement of the Articles of Incorporation
does not  require  the  approval of the  outstanding  shares of the  corporation
because the amendment  only  effected a stock split in  accordance  with Section
902(c) of the California Corporations Code.

         The  undersigned  further  declare  under  penalty of perjury  that the
matters  set  forth  in this  certificate  are  true and  correct  of their  own
knowledge.

         Executed at Sunnyvale, California, June 24, 1986.



                                   /s/ Charles R. Trimble             
                                       Charles R. Trimble, President


                                  /s/ Robert A. Trimble              
                                      Robert A. Trimble, Secretary


                                        80

<PAGE>



                                   EXHIBIT 3.2

                           TRIMBLE NAVIGATION LIMITED


                           CERTIFICATE OF AMENDMENT OF
                          ARTICLES OF INCORPORATION OF
                           TRIMBLE NAVIGATION LIMITED

         Charles R. Trimble and Robert A. Trimble hereby certify that:

     1. They are President and Secretary,  respectively,  of Trimble  Navigation
Limited, a California corporation.

2. The  Articles of  Incorporation  of this  corporation  are amended to add the
following Article IV:

                                       "IV

     Section 1.  Limitation  of  Directors'  Liability.  The  liability  of the
directors of this  corporation  for monetary  damages shall be eliminated to the
fullest extent permissible under California law.

         Section 2.  Indemnification  of Corporate  Agents.  This corporation is
authorized to provide  indemnification  of its agents (as defined in Section 317
of the California General  Corporation Law) through bylaw provisions  agreements
with the agents,  vote of shareholders or disinterested  directors or otherwise,
in  excess of the  indemnification  otherwise  permitted  by such  Section  317,
subject only to the limits on such excess  indemnification  set forth in Section
204 of the California General Corporation Law with respect to actions for breach
of duty to the corporation and its shareholders.

         Section 3. Repeal or  Modification.
  Any repeal or  modification of the
foregoing  provisions of this Article IV shall not adversely affect any right of
indemnification  or  limitation  of  liability  of an agent of this  corporation
relating to acts or omissions occurring prior to such repeal or modification."

     3. The foregoing  Certificate of Amendment of Articles of Incorporation has
been duly approved byn the Board of Directors.

         4. The foregoing  Certificate of Amendment of Articles of Incorporation
has been duly approved by the required vote of  shareholders  in accordance with
Section 902 of the  California  General  Corporation  Law.  The total  number of
outstanding  shares of stock of the  corporation  is 7,270,041  shares of Common
Stock.  The number of shares voting in favor of the  Certificate of Amendment of
Articles of Incorporation equaled or exceeded the vote required.  The percentage
vote required was more than 50% of the total outstanding shares voting together.


                                       81

<PAGE>

         We further declare under penalty of perjury under the laws of the State
of  California  that the matters set forth in the  Certificate  of  Amendment of
Articles of Incorporation are true of our own knowledge.

         Executed at Sunnyvale, California this 7th day of April, 1988.



                      /s/ Charles R. Trimble                      
                          Charles R. Trimble, President


                      /s/ Robert A. Trimble                       
                          Robert A. Trimble, Secretary


                                       82

<PAGE>



                                   EXHIBIT 3.3

                           TRIMBLE NAVIGATION LIMITED



                           CERTIFICATE OF AMENDMENT OF
                          ARTICLES OF INCORPORATION OF
                           TRIMBLE NAVIGATION LIMITED

         Charles R. Trimble and James C. Hunt hereby certify that:

     1. They are President and Chief Financial Officer, respectively, of Trimble
Navigation Limited, a California corporation.

         2. Article III of the Articles of  Incorporation of this corporation is
amended and restated to read in its entirety as follows:
                                      
                                      "III

This  corporation  is authorized to issue two classes of shares to be designated
respectively  Preferred Stock  ("Preferred")  and Common Stock  ("Common").  The
total number of shares of Preferred this corporation shall have the authority to
issue is 3,000,000  without par value,  and the total number of shares of Common
this  corporation  shall have the authority to issue is  40,000,000  without par
value. The Preferred shares authorized by these Articles of Incorporation may be
issued from time to time in one or more series. The Board of Directors is hereby
authorized to fix or alter the rights,  preferences and privileges of any wholly
unissued  class  or  series  of  Preferred  shares,  and the  number  of  shares
constituting any such series and the designation thereof, or any of them."

         3. This Certificate
 of Amendment of Articles of Incorporation  has been
duly approved by the Board of Directors.

         4. This foregoing Certificate of Amendment of Articles of Incorporation
has been duly approved by the required vote of  shareholders  in accordance with
Section 902 of the  California  General  Corporation  Law.  The total  number of
outstanding  shares of stock of the  corporation is 11,653,805  shares of Common
Stock.  The number of shares voting in favor of the  Certificate of Amendment of
Articles of Incorporation equaled or exceeded the vote required.  The percentage
vote required was more than 50% of the total outstanding shares voting together.

         We further declare under penalty of perjury under the laws of the State
of  California  that the matters set forth in this  Certificate  of Amendment of
Articles of Incorporation are true of our own knowledge.

         Executed at Sunnyvale, California this 17th day of July, 1990.



                      /s/ Charles R. Trimble                      
                          Charles R. Trimble, President


                     /s/ James C. Hunt                           
                         James C. Hunt, Chief Financial Officer


                                       83

<PAGE>



                                   EXHIBIT 3.4

                           TRIMBLE NAVIGATION LIMITED


               CERTIFICATE OF DETERMINATION OF RIGHTS, PREFERENCES
                                AND PRIVILEGES OF
                     SERIES A PARTICIPATING PREFERRED STOCK
                          OF TRIMBLE NAVIGATION LIMITED

         The  undersigned,  Bradford  Parkinson  and  John  Goodrich  do  hereby
certify:

         1.  That  they are the duly  elected  and  acting  President  and Chief
Executive Officer and Secretary,  respectively, of Trimble Navigation Limited, a
California corporation (the "Corporation").

         2. That pursuant to the authority conferred upon the Board of Directors
by the  Articles of  Incorporation  of the said  Corporation,  the said Board of
Directors on February 3, 1999 adopted the following resolution creating a series
of 65,000  shares  of  Preferred  Stock  designated  as  Series A  Participating
Preferred Stock:

         "RESOLVED,  that  pursuant  to the  authority  vested  in the  Board of
Directors  of the  Corporation  by the Articles of  Incorporation,  the Board of
Directors  does hereby  provide for the issue of a series of Preferred  Stock of
the Corporation,  to be designated "Series A Participating  Preferred Stock," no
par value,  initially  consisting of 65,000  shares,  and to the extent that the
designations,  powers, preferences and relative and other special rights and
 the
qualifications,  limitations  and  restrictions  of the  Series A  Participating
Preferred  Stock are not stated and  expressed in the Articles of  Incorporation
does  hereby  fix  and  herein  state  and  express  the  designations,  powers,
preferences  and  relative  and other  special  rights  and the  qualifications,
limitations  and  restrictions of such series of Preferred Stock as follows (all
terms used herein  which are defined in the Articles of  Incorporation  shall be
deemed to have the meanings provided herein):

         Section 1  Designation  and Amount.  The shares of such series shall be
designated as "Series A Participating  Preferred  Stock," no par value,  and the
number of shares constituting such series shall be 65,000.

         Section 2 Proportional  Adjustment.  In the event the Corporation shall
at any time after the issuance of any share or shares of Series A  Participating
Preferred  Stock (i) declare any  dividend  on Common  Stock of the  Corporation
("Common  Stock")  payable  in  shares  of  Common  Stock,  (ii)  subdivide  the
outstanding  Common Stock or (iii) combine the  outstanding  Common Stock into a
smaller  number  of  shares,  then in  each  such  case  the  Corporation  shall
simultaneously  effect a  proportional  adjustment to the number of  outstanding
shares of Series A Participating Preferred Stock.

         Section 3         Dividends and Distributions.

                  (a) Subject to the prior and superior  right of the holders of
any shares of any series of Preferred  Stock  ranking  prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends,  the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive  when, as and if declared by the Board of Directors out of funds legally
available for the purpose,  quarterly  dividends payable in cash on the last day
of January, April, July and October, in each year (each such date being referred


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to herein as a  "Quarterly  Dividend  Payment  Date"),  commencing  on the first
Quarterly  Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A  Participating  Preferred  Stock,  in an amount per share
(rounded to the  nearest  cent)  equal to 1,000  times the  aggregate  per share
amount of all cash  dividends,  and 1,000 times the  aggregate  per share amount
(payable in kind) of all non-cash dividends or other  distributions other than a
dividend  payable in shares of Common Stock or a subdivision of the  outstanding
shares of Common  Stock (by  reclassification  or  otherwise),  declared  on the
Common Stock since the immediately  preceding  Quarterly  Dividend Payment Date,
or, with respect to the first Quarterly  Dividend  Payment Date, since the first
issuance of any share or fraction of a share of Series A Participating Preferred
Stock.

                  (b) The  Corporation  shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend payable in shares of Common Stock).

                  (c) Dividends  shall begin to accrue on outstanding  shares of
Series A Participating  Preferred Stock from the Quarterly Dividend Payment Date
next  preceding  the date of  issue of such  shares  of  Series A  Participating
Preferred Stock,  unless the date of issue of such shares is prior to the record
date for the first Quarterly  Dividend  Payment Date, in which case dividends on
such  shares  shall begin to accrue  from the date of issue of such  shares,  or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the  record  date  for the  determination  of  holders  of  shares  of  Series A
Participating  Preferred  Stock  entitled  to receive a quarterly  dividend  and
before such  Quarterly  Dividend  Payment  Date,  in either of which events such
dividends  shall  begin to accrue from such  Quarterly  Dividend  Payment  Date.
Accrued but unpaid  dividends  shall not bear  interest.  Dividends  paid on the
shares  of Series A  Participating  Preferred  Stock in an amount  less than the
total  amount of such  dividends  at the time accrued and payable on such shares
shall be allocated pro rata on a  share-by-share  basis among all such shares at
the time  outstanding.  The  Board of  Directors  may fix a record  date for the
determination  of holders of shares of Series A  Participating  Preferred  Stock
entitled to receive  payment of a dividend  or  distribution  declared  thereon,
which  record date shall be no more than 30 days prior to the date fixed for the
payment thereof.

     Section 4 Voting  Rights.  The holders of shares of Series A  Participating
Preferred Stock shall have the following voting rights:

                  (a) Each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters  submitted to a vote of
the stockholders of the Corporation.

                  (b) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of the stockholders of the Corporation.

                  (c) Except as  required  by law or as  required by Section 11,
holders of Series A  Participating  Preferred Stock shall have no special voting
rights and their  consent  shall not be required  (except to the extent they are
entitled to vote with  holders of Common  Stock as set forth  herein) for taking
any corporate action.

         Section 5         Certain Restrictions.

                  (a) The  Corporation  shall not declare any  dividend on, make
any   distribution   on,  or  redeem  or  purchase  or  otherwise   acquire  for
consideration  any shares of Common Stock after the first issuance of a share or
fraction  of  a  share  of  Series  A   Participating   Preferred  Stock  unless


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concurrently therewith it shall declare a dividend on the Series A Participating
Preferred Stock as required by Section 3 hereof.

                  (b)  Whenever  quarterly   dividends  or  other  dividends  or
distributions payable on the Series A Participating  Preferred Stock as provided
in  Section  3 are in  arrears,  thereafter  and until all  accrued  and  unpaid
dividends  and  distributions,  whether or not  declared,  on shares of Series A
Participating  Preferred  Stock  outstanding  shall have been paid in full,  the
Corporation shall not

                            (i)     declare or pay dividends on, make any other
distributions  on, or redeem or purchase or otherwise acquire for consideration
any shares of stock  ranking  junior  (either as to dividends  or upon  
liquidation,  dissolution  or  winding  up) to the  Series A Participating 
Preferred Stock;

                           (ii)     declare or pay  dividends  on,  make any 
other  distributions  on any shares of stock  ranking on a parity (either as to 
dividends or upon  liquidation,  dissolution or winding up) with Series A 
Participating  Preferred  Stock,  except dividends paid ratably on the Series A
Participating  Preferred  Stock and all such parity stock on which dividends  
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;

                          (iii)     redeem or purchase or otherwise acquire for
consideration  shares of any stock ranking on a parity (either as to dividends 
or upon liquidation, dissolution or winding up) with the Series A Participating 
Preferred Stock, provided that the Corporation may at any time redeem, purchase 
or otherwise  acquire  shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends  or upon  
dissolution,  liquidation  or  winding  up) to the  Series A Participating 
Preferred Stock;

                           (iv)     purchase or otherwise  acquire for  
consideration  any shares of Series A  Participating  Preferred Stock,  or any
shares  of  stock  ranking  on  a  parity  with  the  Series  A Participating  
Preferred Stock,  except in accordance with a purchase offer made in writing or 
by  publication  (as  determined by the Board of Directors) to all holders  of 
such  shares  upon  such  terms  as the  Board of  Directors,  after 
consideration of the respective  annual dividend rates and other relative rights
and  preferences of the respective  series and classes,  shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.

                  (c) The  Corporation  shall not permit any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (a) of
this Section 5,  purchase or  otherwise  acquire such shares at such time and in
such manner.

         Section 6  Reacquired  Shares.  Any  shares  of Series A  Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their  cancellation  become  authorized  but unissued
shares  of  Preferred  Stock  and may be  reissued  as part of a new  series  of
Preferred  Stock to be  created by  resolution  or  resolutions  of the Board of
Directors,  subject to the  conditions  and  restrictions  on issuance set forth
herein and, in the Restated Articles of Incorporation, as then amended.

         Section 7         Liquidation, Dissolution or Winding Up.

                  (a) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation,  no distribution  shall be made to the holders
of shares of stock ranking junior  (either as to dividends or upon  liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,


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prior thereto,  the holders of shares of Series A Participating  Preferred Stock
shall have received fifty thousand dollars  ($50,000) per share,  plus an amount
equal to accrued and unpaid dividends and distributions thereon,  whether or not
declared,  to the date of such payment (the "Series A Liquidation  Preference").
Following the payment of the full amount of the Series A Liquidation Preference,
no additional  distributions  shall be made to the holders of shares of Series A
Participating  Preferred Stock unless,  prior thereto,  the holders of shares of
Common Stock shall have  received an amount per share (the "Common  Adjustment")
equal  to the  quotient  obtained  by  dividing  (i) the  Series  A  Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(c)  below  to  reflect  such  events  as  stock  splits,  stock  dividends  and
recapitalization  with respect to the Common  Stock) (such number in clause (ii)
of this sentence,  the "Adjustment  Number").  Following the payment of the full
amount of the  Series A  Liquidation  Preference  and the Common  Adjustment  in
respect of all outstanding shares of Series A Participating  Preferred Stock and
Common Stock,  respectively,  holders of Series A Participating  Preferred Stock
and  holders  of  shares  of  Common  Stock  shall  receive  their  ratable  and
proportionate  share of the remaining  assets to be  distributed in the ratio of
the  Adjustment  Number to 1 with  respect  to such  Preferred  Stock and Common
Stock, on a per share basis, respectively.

                  (b) In the  event,  however,  that  there  are not  sufficient
assets  available  to  permit  payment  in  full  of the  Series  A  Liquidation
Preference  and the  liquidation  preferences  of all other  series of Preferred
Stock, if any, which rank on a parity with the Series A Participating  Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event,  however,  that there are not sufficient  assets  available to permit
payment in full of the Common  Adjustment,  then such remaining  assets shall be
distributed ratably to the holders of Common Stock.

                  (c) In the event the  Corporation  shall at any time after the
Rights  Dividend  Declaration  Date (i)  declare any  dividend  on Common  Stock
payable in shares of Common Stock, (ii) subdivide the outstanding  Common Stock,
or (iii) combine the  outstanding  Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment  Number by a fraction the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

         Section 8  Consolidation,  Merger,  etc. In case the Corporation  shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case the shares of
Series A  Participating  Preferred  Stock  shall at the same  time be  similarly
exchanged  or changed  in an amount  per share  (subject  to the  provision  for
adjustment  hereinafter set forth) equal to 1,000 times the aggregate  amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be,  into  which or for which  each  share of  Common  Stock is  changed  or
exchanged.  In the  event the  Corporation  shall at any time  after the  Rights
Dividend  Declaration  Date (i) declare any dividend on Common Stock  payable in
shares of Common Stock,  (ii) subdivide the  outstanding  Common Stock, or (iii)
combine the  outstanding  Common Stock into a smaller number of shares,  then in
each such case the amount set forth in the  preceding  sentence  with respect to
the exchange or change of shares of Series A Participating Preferred Stock shall
be adjusted by  multiplying  such amount by a fraction the numerator of which is
the number of shares of Common Stock  outstanding  immediately  after such event
and the  denominator  of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

     Section 9 No  Redemption.  The shares of Series A  Participating  Preferred
Stock shall not be redeemable.

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         Section 10 Ranking.  The Series A  Participating  Preferred Stock shall
rank junior to all other series of the  Corporation's  Preferred Stock as to the
payment of dividends  and the  distribution  of assets,  unless the terms of any
such series shall provide otherwise.

         Section 11 Amendment.  The Restated  Articles of  Incorporation  of the
Corporation  shall not be further  amended in any manner which would  materially
alter or change  the  powers,  preference  or  special  rights  of the  Series A
Participating  Preferred  Stock  so as to  affect  them  adversely  without  the
affirmative  vote of the  holders of a  majority  of the  outstanding  shares of
Series A Participating Preferred Stock, voting separately as a class.

         Section 12 Fractional  Shares.  Series A Participating  Preferred Stock
may be issued in  fractions  of a share  which  shall  entitle  the  holder,  in
proportion  to such  holder's  fractional  shares,  to exercise  voting  rights,
receive  dividends,  participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.

         RESOLVED  FURTHER,  that the  President or any Vice  President  and the
Secretary or any  Assistant  Secretary of this  corporation  be, and they hereby
are,  authorized and directed to prepare and file a Certificate of Determination
of  Rights,   Preferences  and  Privileges  in  accordance  with  the  foregoing
resolution and the provisions of California law and to take such actions as they
may deem  necessary  or  appropriate  to carry out the  intent of the  foregoing
resolution."


         3. That the  authorized  number  of  shares  of Series A  Participating
Preferred  Stock of the  Corporation  is  65,000  and that no shares of Series A
Participating Preferred Stock have been issued.


         We further  declare under penalty of perjury that the matters set forth
in the foregoing  Certificate of  Determination  are true and correct of our own
knowledge.

         Executed at Sunnyvale, California on February 18, 1999.



                           /s/ Bradford Parkinson                             
                               Bradford Parkinson
                               President and Chief Executive Officer


                              /s/ John Goodrich                               
                                  John Goodrich
                                  Secretary



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<PAGE>




                                  EXHIBIT 10.61

                           TRIMBLE NAVIGATION LIMITED


                                 THIRD AMENDMENT


         THIS THIRD AMENDMENT (this  "Amendment") is entered into as of February
16, 1999 by and among  TRIMBLE  NAVIGATION  LIMITED,  a  California  corporation
having  its  chief  executive  office  at  645  North  Mary  Avenue,  Sunnyvale,
California  94086 (the  "Borrower") and FLEET NATIONAL BANK, a national  banking
association  organized  under the laws of the  United  States  and having a head
office at One Federal Street, Boston, Massachusetts 02110, as the Agent and as a
Lender,  BANKBOSTON,  N.A., a national banking association,  organized under the
laws of the  United  States  and  having a head  office at One  Hundred  Federal
Street,  Boston,  Massachusetts 02110, as the Syndication Agent and as a Lender,
SANWA BANK  CALIFORNIA,  a banking  corporation  organized under the laws of the
State of California  and having an office at 220 Almaden  Boulevard,  2nd Floor,
San Jose,  California 95113, as a Lender,  and ABN AMRO BANK N.V., a Netherlands
banking  corporation having an office at 101 California Street,  Suite 4550, San
Francisco,  California 94115, as a Lender,  under the Loan Agreement (as defined
below), to which reference is made for the definitions of all capitalized terms,
used, but not otherwise defined,
 herein.

                                 R E C I T A L S

         WHEREAS,  the parties have entered  into a Loan  Agreement  dated as of
August 27, 1997 among the Borrower,  the Agent,  the Syndication  Agent, and the
lenders from time to time party thereto (the "Lenders"),  as amended by a Letter
of Amendment  dated  December 17, 1997,  and a Second Letter of Amendment  dated
August  11,  1998 (the  "Agreement"),  pursuant  to which the  Lenders  issued a
Revolving Credit Loan Commitment to the Borrower in the maximum principal amount
of $50,000,000.00;

         WHEREAS, pursuant to a certain Waiver Letter dated October 27, 1998 and
a certain  Supplement  to Loan  Agreement  and  Additional  Waiver  Letter dated
December 9, 1998 (the "December 9, 1998 Supplement"), the Borrower was granted a
limited waiver with respect to the Borrower's  compliance with certain covenants
contained in the Agreement for the Borrower's  fiscal  quarters ended October 2,
1998 and January 1, 1999, conditional upon the satisfaction of certain specified
waiver conditions  contained therein on or prior to February 16, 1999, including
inter alia the  agreement  of the Agent and the  Lenders  to  further  amend the
Agreement in certain respects;

     WHEREAS,  the Agent and the Lenders  have agreed to amend the  Agreement as
hereinafter set forth;

         NOW THEREFORE,  in  consideration  of the mutual benefits to be derived
from the parties' continuing relationship under the Agreement and for other good
and  valuable  consideration,  the  receipt  and  adequacy  of which are  hereby
acknowledged,  the Borrower,  the Agent, the Syndication  Agent, and the Lenders
hereby agree that the Agreement is hereby amended,  effective  February 16, 1999
(the "Effective Date"), as follows:

     1. The following  defined  terms  appearing in Section 1.1 of the Agreement
are hereby amended in their entirety, respectively, to read as follows:

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<PAGE>

         "Commitment" means the Lenders' several commitments to make or maintain
the Loans as set forth in Section 2.1 hereof in the maximum  outstanding  amount
of each  Lender's Pro Rata Share of  $50,000,000,  minus,  until the fifth (5th)
Business Day following delivery of the Borrower's quarterly financial statements
pursuant to Section 5.3.3 of the Agreement and the related Officer's Certificate
as required by Section 5.3.4 reflecting Operating Income and Net Income equal to
or greater than one dollar ($1.00), a reserve of $25,000,000, as such amount may
be reduced pursuant to Section 2.6.4.

         "Financing Documents" means,  collectively,  this Agreement, each Note,
the Security  Documents,  the Side Letter, the Post-Closing  Letter, if any, any
Letter of Credit, any Letter of Credit Agreement,  any agreement with any Lender
providing any interest rate  protection  arrangement  and each other  agreement,
instrument  or document  now or  hereafter  executed in  connection  herewith or
therewith.

         "Net Income"  means,  for any fiscal  period,  the net after tax income
(loss) of the Borrower and any Subsidiaries  for such period,  excluding (i) any
extraordinary or other non-recurring  gains, and (ii) any gains from the sale or
disposition  of assets  other than in the ordinary  course of  business,  all as
determined on an accrual and  consolidated  basis in accordance with GAAP, plus,
to the extent included in the  calculation of net income,  any amount taken as a
one-time charge against earnings attributable to (i) the settlement of the class
action  litigation  described in Exhibit A attached hereto,  (ii) the closing of
the Borrower's  commercial marine division,  or (iii) charges resulting from the
reduction  in  Borrower's  employees  resulting  from the  Borrower's  switch to
contract  manufacturing,  provided  that the amount of all such charges added to
net income shall not exceed $2,000,000 in the aggregate.

         "Security  Documents"  means  any and all  documents,  instruments  and
agreements now or hereafter providing security for the Obligations and any other
Indebtedness  of the  Borrower  or any  Subsidiary  to any of the  Lenders,  the
Issuing Lender and/or the Collateral Agent, the Agent or the Syndication  Agent,
including   without   limitation  the  following   documents,   instruments  and
agreements:  any  mortgages  on and  collateral  assignments  of  real  property
interests  (fee,  leasehold  and  easement) of the  Borrower and any  Subsidiary
granting Liens thereon;  landlord lien waivers and consents as may be reasonably
requested by the Collateral  Agent;  security  agreements  granting Liens on all
Borrower's and any  Subsidiary's  fixtures and tangible and intangible  personal
property;  collateral assignments of Borrower's and any Subsidiary's  contracts,
licenses,  permits,  easements and leases;  collateral assignments of Borrower's
and any Subsidiary's  copyrights;  conditional assignments of Borrower's and any
Subsidiary's trademarks and patents; any subordination  agreement;  any software
escrow  agreement;  any  guaranty;  any  pledge  of  the  capital  stock  of any
Subsidiary;  casualty and liability insurance policies providing coverage to the
Collateral  Agent for the benefit of the Lenders;  UCC  financing  statements or
similar filings perfecting the above-referenced security interests,  pledges and
assignments,  all as executed, delivered to and accepted by the Collateral Agent
and as may be required by this Agreement, as any of the foregoing may be amended
from time to time.

         2.  Section  1.1 of the  Agreement  is hereby  further  amended  by the
addition of the following new defined terms to be added alphabetically thereto:

         "Collateral  Agent"  means  Fleet  National  Bank,  in its  capacity as
collateral agent under the Security Documents.

         "Issuing  Lender"  means Fleet  National  Bank,  in its capacity as the
issuer of Letters of Credit hereunder.

         "LC Participant" has the meaning set forth in Section 2.1.1(e).

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<PAGE>

         "Letter of Credit" has the meaning set forth in Section 2.1.1(a).

         "Letter of Credit  Agreement"  means an application and agreement for a
Standby  Letter  of  Credit,  in  such  form as may at any  time be  customarily
required by the Issuing Lender for its issuance of Standby Letters of Credit.

         "Letter  of Credit  Fees"  means the fee  payable  by the  Borrower  in
accordance with Section 2.2.2(b).

         "Net Worth"  means the excess of the total  assets of the  Borrower and
its Subsidiaries over total  liabilities,  as determined on a consolidated basis
in accordance with GAAP.

         "Operating  Income" means operating  income as determined in accordance
with GAAP, plus, to the extent included in the calculation of operating  income,
any amount taken as a one-time charge against  earnings  attributable to (i) the
settlement of the class action litigation  described in that certain  Disclosure
Letter  dated as of  February  16,  1999,  (ii) the  closing  of the  Borrower's
commercial  marine  division,  or (iii) charges  resulting from the reduction in
Borrower's   employees   resulting  from  the  Borrower's   switch  to  contract
manufacturing,  provided  that the amount of all such charges added to operating
income shall not exceed $2,000,000 in the aggregate.

         "Standby  Letter  of  Credit"  means  any  standby  letter of credit or
similar  instrument  issued or deemed  issued for the  account  of the  Borrower
pursuant  to Section  2.1.1 for the  purpose of  supporting  obligations  of the
Borrower  or  incurred  in the  ordinary  course of  business  with  respect  to
insurance obligations and workers' compensation,  surety bonds and other similar
statutory  obligations,  and all  obligations  customarily  supported by standby
letters of credit and satisfactory to the Issuing Lender.

         "Total Capitalization" means, as of the date of any determination,  the
sum of (i) Total Funded Debt, and (ii) Net Worth.

         "Total Funded Debt" means, as of the date of any determination, the sum
of (i) the principal amount of all Obligations,  including,  without limitation,
the Revolving Loans and the Letters of Credit,  (ii) the principal amount of all
Subordinated  Debt, and (iii) all Capitalized  Lease Obligations of the Borrower
and its Subsidiaries.

         "Unpaid Drawing" has the meaning set forth in Section 2.1.1(g).

     3. The first paragraph of Section 2.1 of the Agreement is hereby amended in
its entirety to read as follows:

         Section 2.1. The Revolving Credit Loans.  Each of the Lenders severally
agrees,  subject to the terms and  conditions of this  Agreement and provided no
Default or Event of Default has occurred and is continuing,  to make Advances of
Revolving  Credit Loans to the Borrower  from time to time after  receipt by the
Agent from time to time prior to the Revolving  Credit Repayment Date of, and at
the times  provided  for in, a Request and an Interest  Rate  Election  from the
Borrower in accordance with this Agreement,  during the period commencing on the
Closing Date and ending on the Business Day immediately  preceding the Revolving
Credit  Repayment  Date,  in an  aggregate  principal  amount  at any  one  time
outstanding  not to exceed the lesser of (i) such Lender's Pro Rata Share of the
Revolving  Credit Loan Commitment less (ii) in each case, such Lender's Pro Rata
Share of the  aggregate  outstanding  stated  amount of any Letters of Credit or
Letter of Credit Agreements and any Unpaid Drawing; and

         4.  Section  2.1 of the  Agreement  is hereby  further  amended  by the
addition of the  following  new Section  2.1.1  immediately  following  the last
paragraph thereof:

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<PAGE>

         Section 2.1.1.    The Letters of Credit

               (a) Subject to the terms and  conditions  hereof and  provided no
Default or Event of Default has occurred and is continuing, at any time and from
time to time prior to the  Revolving  Credit  Repayment  Date,  the Borrower may
request  that the Issuing  Lender  issue for the account of the  Borrower one or
more irrevocable  Letters of Credit  denominated in Dollars,  and otherwise in a
form customarily  used by the Issuing Lender,  or in such other form as has been
approved by the Issuing Lender,  in support of such  obligations of the Borrower
described  in the  definitions  of  Standby  Letter  of  Credit  and  any  other
obligations of the Borrower that are reasonably  acceptable to the Agent and the
Issuing Lender and otherwise permitted to exist pursuant to this Agreement (each
such letter of credit, a "Letter of Credit").

               (b) The Issuing  Lender agrees to issue (subject to the terms and
conditions  contained herein) following its receipt of a request for a Letter of
Credit for the account of the Borrower  one or more  Letters of Credit  provided
that the  Issuing  Lender  shall be under no  obligation  to issue any Letter of
Credit if at the time of such issuance:

                        (i) any order,  judgment or decree of any  governmental
authority or arbitrator  shall purport by its terms to enjoin or restrain the 
Issuing  Lender from issuing such Letter of Credit or any requirement  of law  
applicable  to the Issuing Bank or any request or directive (whether or not 
having the force of law) from any  governmental  authority  with jurisdiction  
over the Issuing Lender shall prohibit or request that the Issuing Lender 
refrain from, the issuance of letters of credit  generally or such Letter of 
Credit in particular, or shall impose upon the Issuing Lender with respect to
such Letter of Credit any  restriction  or reserve or capital  requirement  (for
which the Issuing Lender is not otherwise compensated) not in effect on the date
of this  Agreement,  or any  unreimbursed  loss,  cost or expense  which was not
applicable,  in  effect  or known to the  Issuing  Lender as of the date of this
Agreement and which the Issuing Lender in good faith deems material to it; or

                        (ii) the Issuing Lender shall have received  notice from
any other Lender prior to the issuance of such Letter of Credit to the effect
that one or more of the conditions  specified in Section 3.1.2 are not then  
satisfied,  or that the  issuance  of such  Letter of Credit would violate any 
provision of this Section 2.1.1.

               (c) Notwithstanding the foregoing,  (i) no Letter of Credit shall
be issued if the stated amount of which,  when added to the aggregate  amount of
all  Letters  of Credit and any Unpaid  Drawing at such time,  would  exceed the
lesser of (x) $5,000,000,  and (y) when added to the aggregate  principal amount
of  all  Revolving  Credit  Loans  then  outstanding,  an  amount  equal  to the
Commitment;  and (ii) each Letter of Credit  shall by its terms  terminate or be
terminable by the Issuing  Lender on such date that would result in all drawings
thereunder,  being funded  pursuant to the terms thereof prior to the earlier of
(x) the date which occurs twelve (12) months after the date of issuance  thereof
(although any such Letter of Credit may be extendable for successive  periods of
up to twelve (12)  months,  but not beyond the sixth  Business  Day prior to the
Revolving Credit Repayment Date, on terms acceptable to the Issuing Lender), and
(y) the date  which is six (6)  Business  Days  prior  to the  Revolving  Credit
Repayment Date.

               (d)  Each  request  for a  Letter  of  Credit  shall  be  made by
submission  by the Borrower to the Agent of a Letter of Credit  Agreement,  duly
completed and executed by the Borrower and in effect at such time, no later than
five (5) Business  Days prior to the proposed  date of issuance of the Letter of
Credit,  provided  that  if the  express  provisions  of any  Letter  of  Credit
Agreement conflict with the express provisions of this Agreement, the provisions
of this agreement  shall control to the extent of such  conflict.  The making of
each request for a Letter of Credit shall be deemed to be a  representation  and


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warranty by the Borrower  that such Letter of Credit may be issued in accordance
with, and will not violate the  requirements  of, this Section 2.1.1.  The Agent
shall  promptly  notify,  and deliver to, the Issuing Lender each such Letter of
Credit Agreement.  Upon the issuance of any Letter of Credit, the Issuing Lender
shall promptly notify the Agent and each Lender of such issuance; and

               (e) Immediately upon issuance of a Letter of Credit,  the Issuing
Lender shall be deemed to have sold and  transferred to each Lender,  other than
the Issuing  Lender (each such Lender,  in its  capacity  under this  subsection
2.1.1(e),  an "LC  Participant") and each LC Participant shall be deemed to have
irrevocably and unconditionally  purchased and received from the Issuing Lender,
without recourse or warranty,  an undivided  interest and  participation in such
Letter of Credit to the extent of such LC  Participant's  Pro Rata Share in such
Letter of Credit,  each  drawing  made  thereunder  and the  obligations  of the
Borrower with respect thereto,  and any security therefor or guaranty pertaining
thereto.  Upon any change in the  Commitment,  or in the Pro Rata  Shares of the
Lenders pursuant to Section 9.11 hereof,  it is hereby agreed that, with respect
to all outstanding  Letters of Credit and any Unpaid Drawing at such time, there
shall  be an  automatic  adjustment  to  the  participations  pursuant  to  this
subsection  2.1.1(e) to reflect the new Pro Rata Shares of any assigning  Lender
and its assignee or of all Lenders with respect to the  Commitment,  as the case
may be;

               (f) In determining whether to pay under any Letter of Credit, the
Issuing Lender shall have no obligation relative to the other Lenders other than
to confirm  that any  documents  required to be  delivered  under such Letter of
Credit  appear to have been  delivered  and that  they  appear to  substantially
comply on their face with the requirements of such Letter of Credit.  Any action
taken or omitted to be taken by the Issuing  Lender under or in connection  with
any Letter of Credit if taken or omitted in the absence of gross  negligence  or
willful  misconduct,  shall not create  for the  Issuing  Lender  any  resulting
liability to the Borrower, the Guarantors, the Agent or any other Lender.

               (g) The Borrower agrees to reimburse the Issuing Lender by making
payment to the Issuing  Lender in immediately  available  funds at the office of
the Issuing  Lender  specified  for such  payment by the Issuing  Lender for any
payment or  disbursement  made by the Issuing  Lender under any Letter of Credit
(each, an "Unpaid Drawing")  immediately after, and, in any event on the date of
such payment or  disbursement,  with interest on the amount so paid or disbursed
by the Issuing  Lender to the extent not reimbursed  prior to 2.00 P.M.  (Boston
time) on the date of such payment or  disbursement,  from and including the date
paid or disbursed to but excluding the date the Issuing Lender was reimbursed by
the Borrower  therefor at a rate equal to the Default Rate.  The Issuing  Lender
shall  give the  Borrower  prompt  notice of each  drawing  under any  Letter of
Credit,  provided  that the  failure  to give any  such  notice  shall in no way
affect, impair or diminish the Borrower's  obligations  hereunder.  The Borrower
hereby  authorizes  and  instructs  the  Issuing  Lender to charge  against  the
Borrower's  accounts with the Issuing  Lender on each date on which a payment is
due under a Letter of Credit,  and on any  subsequent  date if and to the extent
any such payment is not made when due, an amount up to the  principal,  interest
and fees due and payable to the Issuing Lender  thereunder and such charge shall
be deemed payment thereunder to the extent that immediately  available funds are
then in such  accounts.  The  Issuing  Lender  shall use  reasonable  efforts in
accordance  with the Issuing  Lender's  customary  procedures to give subsequent
notice of any such charge to the  Borrower,  but the failure to give such notice
shall not affect the validity of any such charge;

               (h) In the event that the Issuing  Lender makes any payment under
any Letter of Credit and the Borrower shall have failed to reimburse the Issuing
Lender  under any  Letter of  Credit  or  Letter  of Credit  Agreement,  and any
outstanding  Indebtedness of the Borrower relating  thereto,  the Issuing Lender
shall promptly notify the Agent, which shall promptly notify each LC Participant
of such  failure,  and each LC  Participant  shall  promptly  pay to the Issuing
Lender in  Dollars  its Pro Rata Share of such  unreimbursed  amount in same day

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funds. If the Agent so notifies,  prior to 12 P.M. (Boston time) on any Business
Day, each such LC  Participant  shall make  available to the Issuing Lender such
payment on such Business  Day, or if such notice is given after 12 P.M.  (Boston
time) on any Business  Day, on the next  succeeding  Business Day. If and to the
extent that any such LC Participant  shall not have so made such funds available
to the Issuing Lender,  such LC Participant  agrees to pay to the Issuing Lender
forthwith on demand such amount  together  with interest  thereon,  for each day
from the date such amount was due under this subsection  2.1.1(h) until the date
such  amount is paid to the Issuing  Lender,  at the  Federal  Funds  Rate.  The
obligations  of each LC  Participant  under this  subsection  2.1.1(h)  shall be
absolute  and  unconditional  and all  payments  due  from  each LC  Participant
hereunder  shall be made  notwithstanding  the occurrence or  continuation of an
Event of Default or the failure to satisfy any  condition set forth in Article 3
of this Agreement;

               (i)  Whenever  the  Issuing  Lender   receives  a  payment  of  a
reimbursement  obligation  as to which it has received any payments  from the LC
Participants pursuant to subsection 2.1.1(h) above, the Issuing Lender shall pay
to each LC Participant which has paid its Pro Rata Share thereof, in Dollars and
in same day funds,  an amount equal to such LC  Participant's  share (based upon
the  proportionate  aggregate amount originally funded by such LC Participant to
the aggregate  amount funded by all LC  Participants) of the principal amount of
such  reimbursement  obligation and interest thereon accruing after the purchase
of the respective participations;

               (j) The obligation of each LC Participant to make payments to the
Issuing  Lender with  respect to any Letter of Credit and such LC  Participant's
participation therein and the obligation of the Borrower to make payments to the
Issuing  Lender,  shall  not  be  subject  to  any  qualification  or  exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement, including, without limitation, any of the following circumstances:

                        (i)  Any lack of validity or enforceability of this 
Agreement or any of the other Financing Documents;

                        (ii) The  existence  of any claim,  set-off,  defense or
other right which the Borrower may have at any time against a beneficiary named 
in a Letter of Credit or any transferee or assignee of any Letter of Credit 
(or any Person for whom any such  transferee or assignee may be acting),  the 
Issuing Lender, the Agent, any Lender, or any other Person, whether  in  
connection  with  this  Agreement,   any  Letter  of  Credit,  the transactions
contemplated herein or any unrelated  transactions  (including any underlying  
transactions  between  the  Borrower  or any  other  Person  and the
beneficiary named in any Letter of Credit);

                        (iii)  Any  draft,  certificate  or any  other  document
presented under the Letter of Credit upon which payment has been made in good  
faith and  according  to its terms  proving to be forged, fraudulent,  invalid 
or  insufficient  in any respect or any  statement  therein being untrue or 
inaccurate in any respect;

                        (iv)  The  surrender  or  impairment  of any collateral
or any  other  security  for the  Obligations  or the performance or observance 
of any of the terms of any of the Financing Documents;

                    (v)  The occurrence of any Default or Event of Default; or

                    (vi)  The failure to give notice of the issuance of any 
Letter of Credit;

provided that, no LC Participant shall be obligated to pay such LC Participant's
Pro Rata Share of any unreimbursed amount arising from any wrongful payment made
by the issuing  Lender under a Letter of Credit as a result of acts or omissions
constituting  willful  misconduct or gross negligence on the part of the Issuing
Lender.

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               (k) Indemnification.  In addition to amounts payable as elsewhere
provided in this Agreement,  the Borrower agrees to protect,  indemnify, pay and
save  the  Issuing  Lender,   the  Agent,  the  Syndication  Agent  and  the  LC
Participants harmless from and against any and all claims, demands, liabilities,
damages,  losses,  costs, charges and expenses (including  reasonable attorneys'
fees)  which the  Issuing  Lender,  the Agent or any LC  Participant  (each,  an
"Indemnified  Party") may incur or be subject to (other than as a result of acts
or omissions of any such  Indemnified  Party  constituting  gross  negligence or
willful  misconduct  as determined  by a court of competent  jurisdiction)  as a
consequence, directly or indirectly, of

                    (i)  the issuance of any Letter of Credit; or

                        (ii)  the  failure  of the  Issuing  Lender  to  honor a
drawing under any Letter of Credit as a result of any act or omission,  whether 
rightful or wrongful, of any present or future de jure or de facto governmental
authority (all such acts or omissions being  hereinafter referred to 
collectively as "Government Acts").

               (l) As  among  the  Borrower  and the  Indemnified  Parties,  the
Borrower assumes all risks of the acts and omissions of, or misuse of any of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the  Letter  of  Credit  Agreements,   the  Indemnified  Parties  shall  not  be
responsible for:

                        (i) the form,  validity,  sufficiency,  accuracy,  
genuineness or legal effect of any document submitted by any Person in 
connection with the  application for and issuance of and presentation of drafts 
with respect to any of the Letters of Credit, even if it should prove to be, in 
any or all respects, invalid, insufficient,  inaccurate, fraudulent or forged;

                        (ii) the validity or  sufficiency  of any  instrument  
transferring  or assigning or  purporting to transfer or assign any Letter of 
Credit or the rights or  benefits  thereunder  or  proceeds thereof,  in whole 
or in part,  which may prove to be invalid or ineffective for any reason;

                    (iii)  the failure of any drawing to strictly comply with 
the terms of a Letter of Credit;

                        (iv)  errors,  omissions,  interruptions  or  delays  in
transmission or delivery of any messages, by mail, cable, telegraph, telex or 
otherwise, whether or not they be indecipherable;

                        (v) errors in  interpretation  of technical  terms other
than those resulting from gross negligence or willful misconduct;

                        (vi) any loss or delay in the  transmission or otherwise
of any document required in order to make a drawing under any Letter of Credit 
or of the proceeds thereof;

                        (vii) the  non-application  or misapplication by the 
beneficiary of any Letter of Credit of the proceeds of any drawing under such 
Letter of Credit; or

                        (viii) any  consequences  arising from causes beyond the
control of the Issuing Lender, the Agent or any LC Participant, including, 
without limitation, any Government Acts.

None of the foregoing shall affect,  impair or prevent the vesting of any of the
Indemnified Parties' rights or powers under this Section 2.1.1.

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               (m)  If,  notwithstanding  the  provisions  of  Section  2.1.1(c)
hereof,  any Letter of Credit is outstanding on the Revolving  Credit  Repayment
Date (each,  a  "Post-Termination  Letter of  Credit"),  then on or prior to the
Revolving  Credit  Payment Date, the Borrower  shall,  promptly on demand by the
Issuing  Lender,   deposit  with  the  Issuing  Lender,  with  respect  to  each
Post-Termination Letter of Credit then outstanding,  as the Issuing Lender shall
specify, cash collateral ("Cash Collateral") in an amount necessary to reimburse
the  Issuing  Lender for  payments to be made by the  Issuing  Lender  under any
Post-Termination  Letter of Credit.  Such Cash  Collateral  shall be held by the
Issuing  Lender,  as  security  for,  and to  provide  for the  payment  of, the
obligations  of the  Borrower  with respect to the  Post-Termination  Letters of
Credit.  In the event  that any  amount  of Cash  Collateral  remains  after the
expiration of all  Post-Termination  Letters of Credit, so long as no Obligation
which is then due and payable is  outstanding  on such date,  the Issuing Lender
shall return such amount promptly to the Borrower.

         5. Section 2.2.2 of the Agreement is hereby  amended by the addition of
the following new Section 2.2.2.4 immediately at the end thereof:

         2.2.2.4  Letter of Credit Fees. The Borrower shall pay to the Agent for
the account of the  Issuing  Lender and each LC  Participant  for each Letter of
Credit  issued by the  Lender a per annum  fee equal to the  product  of (x) the
stated amount  thereof,  and (y) the Applicable  Margin then in effect for Libor
Loans, payable annually in advance on the date of issuance and each renewal date
thereof,  plus,  an  additional  amount  payable on the dates  specified  by the
Issuing  Lender and for the sole account of the Issuing  Lender,  such  standard
fees and  costs  as the  Issuing  Lender  may from  time to time  establish  for
issuance, transfer, amendment and negotiation of each Letter of Credit and other
customary  charges of the Issuing  Lender with  respect  thereto (the "Letter of
Credit Fees").

         6. Section 2.6.4 of the Agreement is hereby  amended in its entirety to
read as follows:

                  Section  2.6.4.  Permanent  Reduction  of  Commitment.  At the
Borrower's option, the Commitment may be permanently and irrevocably  reduced in
whole or in part by an amount of at least  $500,000  and to the extent in excess
thereof in integral  multiples  of $100,000 at any time;  provided  that (i) the
Borrower  gives the Agent written notice of the exercise of such option at least
three (3) Business Days prior to the effective date thereof,  (ii) the aggregate
outstanding balance of the Revolving Credit Loans plus the aggregate outstanding
amount of any  Letters of Credit and any  Undrawn  Amounts,  does not exceed the
Commitment, as so reduced on the effective date of such reduction, and (iii) the
Borrower is not,  and after  giving  effect to such  reduction,  would not be in
violation of Section 2.6.3.  Any such reduction  shall  concurrently  reduce the
Dollar amount of each Lender's Pro Rata Share of the Commitment.

         7.  Section  2.6 of the  Agreement  is hereby  further  amended  by the
addition of the following new Section 2.6.5 immediately at the end thereof:

                  Section 2.6.5. If at any time the aggregate  principal  amount
of the Revolving  Credit Loans plus the aggregate  outstanding  stated amount of
any Letters of Credit and any Unpaid  Drawing shall exceed the  Commitment,  the
Borrower shall immediately pay to the Agent in immediately available Dollars for
the ratable account of the Lenders the amount of such excess.

         8. Section 2.8 of the  Agreement  is hereby  amended in its entirety to
read as follows:

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     Section 2.8. Use of  Proceeds.  The Borrower  shall use the proceeds of the
Loans and obtain Letters of Credit solely for Borrower's working capital and for
general corporate purposes.

         9. Section 3.1.2 of the Agreement is hereby  amended in its entirety to
read as follows:

                  Section  3.1.2.   Conditions   Precedent  To  All  Loans.  The
Commitment  and the  obligation  of each Lender to make or maintain its Pro Rata
Share of any Advance or Loan and/or the Issuing  Lender to consider  any request
for a Letter of Credit,  are subject to  performance  by the Borrower of all its
obligations  under  this  Agreement  and to the  satisfaction  of the  following
further conditions precedent:

                  (a) The fact that, immediately prior to and upon the making of
each Loan or  issuance  of any Letter of Credit,  no Event of Default or Default
shall have occurred and be continuing;

                  (b) The fact that the  representations  and  warranties of the
Borrower  contained  in  Article  4,  infra and in each of the  other  Financing
Documents,  are true and correct in all material  respects on and as of the date
of each Advance, Loan or Letter of Credit except as altered hereafter by actions
consented to or not prohibited  hereunder.  The Borrower's delivery of the Notes
to the Lenders and of each  Request and Letter of Credit  Agreement to the Agent
shall be deemed to be a  representation  and  warranty by the Borrower as of the
date of such  Advance,  Loan or Letter of  Credit as to the facts  specified  in
Sections 3.1.2(a) and (b);

                  (c)  Receipt  by the  Agent on or prior  to the  Business  Day
specified  in the  definition  of Interest  Rate  Election of a written  Request
stating the amount requested for the Loan or Advance in question and an Interest
Rate  Election  for  such  Loan or  Advance,  all  signed  by a duly  Authorized
Representative of the Borrower on behalf of the Borrower;

                  (d) That there exists no law or regulation by any governmental
authority having  jurisdiction  over the Agent or any of the Lenders which would
make it  unlawful  in any  respect for such Lender to make its Pro Rata Share of
the Loan or  Advance,  or  purchase  a  participation  in any  Letter of Credit,
including, without limitation, Regulations U, T, and X of the Board of Governors
of the Federal Reserve System; and

                  (e)      No Material Adverse Effect has occurred.

         10. Section  5.1.10 of the Agreement  ("Minimum  Fixed Charge  Coverage
Ratio") is hereby  deleted in its entirety and the following new Section  5.1.10
inserted in its stead:

                  Section  5.1.10.  Maximum  Ratio of Total Funded Debt to Total
Capitalization. Commencing January 1, 1999, maintain a ratio of (i) Total Funded
Debt to (ii) Total Capitalization of less than .55:1.00.

         11.  Section  5.1.11 of the Agreement is hereby amended in its entirety
to read as follows:

                  Section 5.1.11.  Minimum Consolidated  Tangible Net Worth. (i)
Maintain  a  Consolidated  Tangible  Net  Worth in an  amount  not less than the
Borrower's  Consolidated Tangible Net Worth as of the end of the Borrower's 1998
fiscal  year,  minus  $5,000,000,  and (ii) comply  with  Section 8K of the Note
Purchase  Agreement  dated as of June 13, 1994 among the Borrower,  John Hancock
Mutual Life and John Hancock Life Insurance, as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time.

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<PAGE>

         12.  Section 5.1.12 of the Agreement is hereby is hereby deleted in its
entirety and the following new Section 5.1.12 inserted in its stead:

                  Section 5.1.12.  Minimum Cash Balances.  Maintain at all times
on and after February 16, 1999  unrestricted cash balances in an amount equal to
or  greater  than  (x) on any  date  prior  to the  delivery  of the  Borrower's
financial  statements  to the Agent  pursuant  to Section  5.3.3 and the related
Officer's  Certificate as required by Section 5.3.4 reflecting  Operating Income
and  Net  Income  equal  to or  greater  than  one  dollar  ($1.00)  for two (2)
consecutive  fiscal  quarters,  the sum of (i)  $25,000,000,  plus fifty percent
(50%) or more of the aggregate principal  outstanding amount of all Obligations,
including,  without limitation, the Revolving Loans and the Letters of Credit in
one or more accounts  maintained  by the Borrower with the Agent,  plus (ii) the
balance of such  Obligations in one or more accounts  maintained by the Borrower
with a Lender other than the Agent,  and (y)  thereafter (i) fifty percent (50%)
or  more of the  aggregate  outstanding  principal  amount  of all  Obligations,
including,  without  limitation,  the Revolving Loans and the Letters of Credit,
plus (ii) the balance of the principal amount of such Obligations in one or more
accounts maintained by the Borrower with a Lender other than the Agent.

         13.  Section  5.1.13 of the Agreement is hereby amended in its entirety
to read as follows:

                  Section  5.1.13.  Minimum  Quick Ratio  Maintain at the end of
each fiscal  quarter of the  Borrower a ratio of (i) the sum of (w) cash on hand
or on deposit in any bank or trust company which has not suspended business, (x)
Cash Equivalent Investments (without duplication with clause (w) above), and (y)
net outstanding amount of accounts  receivable to (ii) (x) Current  Liabilities,
excluding  the  principal  outstanding  amount  of any  Obligations  at any time
classified as Current Liabilities, of not less than 1.5:1.0. Each item described
in clauses (i) and (ii) of this  Section  5.1.13 shall be  calculated  as of the
last day of the Borrower fiscal quarter and include only the item(s) in question
of the Borrower and its Subsidiaries on a consolidated basis.

         14. Section 5.2.3 of the Agreement is hereby amended in its entirety to
read as follows:

                  Section 5.2.3. Acquisitions, Dissolution, etc. Acquire, in one
or  a  series  of  transactions,  any  properties  or  assets  (other  than  the
acquisition  of inventory,  materials  and  equipment in the ordinary  course of
business) or ownership interests in another Person, or dissolve, liquidate, wind
up, merge or  consolidate  or combine with another  Person  (other than mergers,
consolidations  or other  combinations  in which the  Borrower is the  surviving
entity);  (i) on any date  prior to the  delivery  of the  Borrower's  financial
statements to the Agent pursuant to Section 5.3.3 reflecting  operating  income,
as determined in accordance  with GAAP,  and Net Income equal to or greater than
one dollar ($1.00),  and (ii) as to which on or before the thirtieth  (30th) day
prior to the consummation of any such acquisition, the Borrower has delivered to
the Agent a pro-forma Compliance  Certificate on a consolidated basis (including
the to-be-acquired  assets and any assumed liabilities or if ownership interests
are acquired, the to-be-acquired Person if such Person is to be a Subsidiary and
if not, the to-be-acquired  ownership interests, all measured as set forth below
in this  Section  5.2.3),  which such  pro-forma  Compliance  Certificate  shall
indicate  that no Default or Event of Default  exists or would  exist  following
consummation  of the  permitted  transaction  and that the Borrower  would be in
compliance with (on a consolidated basis including the to-be-acquired assets and
any  assumed   liabilities   or  if  ownership   interests  are  acquired,   the
to-be-acquired  Person if such  Person  is to be a  Subsidiary  and if not,  the
to-be-acquired  ownership interests),  Sections 5.1.10, 5.1.10A,  5.1.11, 5.1.12
and 5.1.13 and Sections 5.2.8 and 5.2.9 following  consummation of the permitted
transaction,  including the to-be-acquired assets, Person or ownership interests
and the operating  results thereof on the same basis and for the same periods as
the Borrower is measured for each such covenant, respectively.

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         15. Section 5.2.4 of the Agreement is hereby amended in its entirety to
read as follows:

                  Section 5.2.4.  Disposition of Assets.  Effect any disposition
of material  assets,  other than (i) the  disposition  of assets in the ordinary
course of  business,  consistent  with past  practices,  (ii) subject to Section
5.2.8, the disposition of assets not to exceed 15% of Consolidated  Tangible Net
Worth in the aggregate over the period commencing on the Closing Date and ending
on August 31, 2000,  the value of which assets shall be based upon the aggregate
book value of all such assets  determined as of the date of the sale thereof and
prior to such  disposition,  and (iii) in  addition  to  dispositions  of assets
permitted  under clauses (i) and (ii) of this Section 5.2.4,  the disposition of
assets associated with the Borrower's transition to contract manufacturing.

         16. Section 5.2.9 of the Agreement is hereby amended in its entirety to
read as follows:

                  Section 5.2.9.  Minimum  Operating and Net Income.  (i) During
the period beginning with the Borrower's  fiscal quarter ending March,  1999 and
ending on the fiscal quarter ending  December,  1999, have a negative  Operating
Income or a negative Net Income for any two fiscal quarters,  and (ii) as of the
end of each fiscal quarter of the Borrower commencing with the Borrower's fiscal
quarter ending in March,  2000, have a negative  Operating Income, or a negative
Net Income for the rolling four quarter fiscal period  consisting of such fiscal
quarter and the three immediately preceding fiscal quarters.

         17.  Section  5.2.10  of  the  Agreement   ("Dividends,   Payments  and
Distributions")   is  hereby  amended  by  deleting  clause  (iii)  thereof  and
substituting in its stead the following new clause (iii):

                  (iii) on any date  following  the  delivery of the  Borrower's
financial  statements  to the Agent  pursuant  to Section  5.3.3 and the related
Officer's  Certificate as required by Section 5.3.4 reflecting  Operating Income
and Net  Income  equal to or  greater  than one  dollar  ($1.00)  for  three (3)
consecutive  fiscal  quarters,  the Borrower  shall be  permitted to  repurchase
shares of its own capital stock provided that on or before the thirtieth  (30th)
day prior to the consummation of any such repurchase, the Borrower has delivered
to the Agent a pro-forma  Compliance  Certificate on a consolidated basis, which
such  pro-forma  Compliance   Certificate  shall  indicate  that,  assuming  the
repurchase  had  occurred  on the  last day of the most  recently  ended  fiscal
quarter,  no  Default  or Event of  Default  exists  or  would  exist  following
consummation  of such  repurchase  and that,  after giving effect  thereto,  the
Borrower would be in compliance with Sections 5.1.10,  5.1.10A,  5.1.11,  5.1.12
and 5.1.13 and Sections 5.2.8 and 5.2.9.

        18. Exhibit  3.1.1.10 to the Agreement (Form of Compliance  Certificate)
is hereby  deleted and a new Exhibit  3.1.1.10 in the form attached  hereto as "
Exhibit 3.1.1.10 " substituted in its stead.

                  This Amendment shall take effect as of the Effective Date upon
receipt  by the  Agent of the last item  specified  below  (other  than any item
expressly deferred or waived in writing by the Majority Lenders):

                  (i)      this Amendment duly executed by the parties hereto;

                  (ii) a certificate of the Secretary or an Assistant  Secretary
of  the  Borrower  with  respect  to  resolutions  of  its  Board  of  Directors
authorizing  the  execution  and  delivery  of this  Amendment,  and  any  other


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<PAGE>

documents required to be delivered by this Amendment, identifying the officer(s)
authorized to execute, deliver and take all other actions required thereunder;

                  (iii)  a  Disclosure  Letter  executed  by the  Borrower  with
respect to the representations and warranties contained in the Loan Agreement;

                  (iv) an Escrow  Agreement  and each of the Security  Documents
required by the Agent in connection  with the creation and  perfection of a Lien
on all assets of the Borrower in favor of the Collateral  Agent, for the benefit
of the Agent,  the Syndication  Agent,  the Issuing  Lender,  and the Lenders as
security  for the  Obligations  duly  executed by an  authorized  officer of the
Borrower,  (v) an  Opinion  of the  Borrower's  counsel  with  respect  to  this
Amendment  and the Security  Documents  and the Escrow  Agreement  referenced in
clause (iv) above;

                  (v)      payment to the Agent, for the ratable benefit of 
the Lenders approving this Amendment,  of the amendment fee in the amount of 
$50,000; and

                  (vi) such other documents,  and evidence of completion of such
other  matters,  as the  Agent  or the  Required  Lenders  reasonably  may  deem
necessary or desirable.

         The  Borrower  hereby  represents  and  warrants to the Lenders that no
Default or Event of Default exists under the  Agreement.  Nothing in this Second
Letter of Amendment shall be construed to be an amendment of any other provision
of the Agreement and all of the provisions of the Agreement shall remain in full
force and effect.

         This Amendment supersedes the December 9, 1998 Supplement, the terms of
which shall have no further force or effect.

         This  Amendment  is executed as an  instrument  under seal and shall be
governed by and construed in  accordance  with the laws of The  Commonwealth  of
Massachusetts  without  regard to its  conflicts of law rules.  All parts of the
Agreement not affected by this Amendment are hereby ratified and affirmed in all
respects,  provided that if any provision of the Agreement  shall conflict or be
inconsistent  with this  Amendment,  the terms of this Amendment shall supersede
and prevail.  Upon and after the date of this  Amendment  all  references to the
Agreement in that document, or in any related document, shall mean the Agreement
as amended by this  Amendment.  Except as expressly  provided in this Amendment,
the execution and delivery of this Amendment does not and will not amend, modify
or  supplement  any  provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement,  and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
This Amendment may be executed in one or more  counterparts with the same effect
as if the signatures hereto and thereto were upon the same instrument.







                      [THIS SPACE INTENTIONALLY LEFT BLANK]


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<PAGE>


         IN WITNESS  WHEREOF,  each of the Borrower,  the Agent, the Syndication
Agent,  and the Lenders in  accordance  with Section 9.5 of the  Agreement,  has
caused this  Amendment to be executed and  delivered  by their  respective  duly
authorized officers as an instrument under seal as of the Effective Date.

                        BORROWER:

                           TRIMBLE NAVIGATION LIMITED


                          By: /s/ John E. Huey
                                  John E. Huey
                                  Treasurer


                        AGENT:

                           FLEET NATIONAL BANK


                          By:/s/ Mathew M. Glauninger
                                 Mathew M. Glauninger
                                 Vice President and Senior
                                 Relationship Manager


                        SYNDICATION AGENT:

                          BANKBOSTON, N.A.


                          By: /s/ Anthony B. Kwee
      Print Name                  Anthony   B. Kwee
                          Title: Vice President



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<PAGE>
                  LENDERS:

                     FLEET NATIONAL BANK


                      By: /s/ Mathew M. Glauninger              
                              Mathew M. Glauninger
                              Vice President and Senior
                              Relationship Manager


                     BANKBOSTON, N.A.

                     By: /s/ Anthony B. Kwee                         
          Print Name         Anthony B. Kwee
                      Title: Vice President


                     SANWA BANK CALIFORNIA

                     By:
          
          Print Name
                      Title:


                     ABN AMRO BANK N.V.

                     By: /s/ Dianne D. Barkley         
         Print Name          Diannie D. Barkley
                      Title: Group Vice President
                                                       

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<PAGE>



                                 EXHIBIT 10.62

                              EMPLOYMENT AGREEMENT


     This  Employment  Agreement  (this  "Agreement")  is  entered  into  as  of
September 1, 1998 (the "Effective Date"),  between Trimble Navigation Limited, a
California  corporation  (the  "Company"),  and Dr.  Bradford W.  Parkinson (the
"Executive").

         WHEREAS,  the  Company  desires  to  employ  the  Executive  as of  the
Effective Date and the Executive  desires to accept  employment with the Company
on the terms and conditions set forth below;

         WHEREAS,  simultaneously with the execution hereof, the Company and the
Executive are entering into a Consulting Agreement (the "Consulting  Agreement")
pursuant to which  Executive will consult to Company  immediately  following the
Employment  Period (as  defined  in Section 2 below) and are  entering a Standby
Consulting Agreement (the "Standby Consulting Agreement");

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
respective  covenants and agreements of the parties  contained in this document,
the Company and the Executive agree as follows:

         1. Employment and Duties.  During the Employment  Period (as defined in
Section 2 below),  the  Executive  will serve as President  and Chief  Executive
Officer of the Company.  The duties and  responsibilities  of the Executive
 will
include the duties and  responsibilities  for the Executive's  corporate offices
and positions as set forth in the  Company's  bylaws from time to time in effect
and such other  duties and  responsibilities  as the board of  directors  of the
Company (the "Board of Directors")  may from time to time  reasonably  assign to
the  Executive,  in all cases to be consistent  with the  Executive's  corporate
offices and positions.  Notwithstanding the foregoing,  in the event a successor
is hired to serve as President  and/or Chief  Executive  Officer of the Company,
Executive will continue as an employee of the Company for the Employment  Period
(as  defined  in  Section  2 below)  and  will  perform  all  such  tasks as are
reasonably required of him by such President and/or Chief Executive Officer. The
Executive will perform  faithfully the executive  duties  assigned to him to the
best of his ability and in the best interests of the Company. The Executive will
continue to serve as a director of the Company without additional compensation.

         2.       Employment Period.

                  (a) Term. The employment  period will begin upon the Effective
Date and will continue thereafter until May 31, 1999 (the "Employment  Period"),
unless sooner  terminated  pursuant to the provisions of this Agreement.  At the
end of the  Employment  Period,  Executive  will continue as a consultant to the
Company pursuant to the Consulting Agreement.


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<PAGE>

                  (b)  Early   Termination.   The  Company  may   terminate  the
Executive's  employment prior to the end of the Employment  Period by giving the
Executive 30 days'  advance  notice in writing.  If the Company  terminates  the
Executive's  employment prior to the end of the Employment Period for any reason
other  than Cause or  Disability,  both as defined  below,  or if the  Executive
terminates his employment for Good Reason,  as defined below,  the provisions of
Sections  10(a)(i),  10(b) and 10(c) will apply. The Executive may terminate his
employment  prior to the end of the  Employment  Period by giving the Company 30
days' advance written notice.  If the Executive  terminates his employment prior
to the end of the Employment  Period other than for Good Reason,  the provisions
of Section 10(a)(ii) will apply. Upon termination of the Executive's  employment
with the Company, the Executive's rights under any applicable benefit plans will
be determined under the provisions of those plans.

                  (c) Death.  The  Executive's  employment will terminate in the
event of his death.  The Company will have no  obligation  to pay or provide any
compensation  or benefits  under this  Agreement  on account of the  Executive's
death,  or for periods  following  the  Executive's  death,  provided,  that the
Company's obligations under Section 10(a)(i) will not be interrupted as a result
of the Executive's  death. The Executive's rights under the benefit plans of the
Company  in the event of the  Executive's  death  will be  determined  under the
provisions of those plans.

                  (d) Cause.  During the  Employment  Period,  the  Company  may
terminate the Executive's  employment for cause by giving the Executive 10 days'
advance notice in writing.  For all purposes under this Agreement,  "Cause" will
mean (i) willful  failure by the Executive to  substantially  perform his duties
hereunder,  (ii)  a  willful  act  by  the  Executive  which  constitutes  gross
misconduct and which is injurious to the Company,  (iii) a willful breach by the
Executive  of a material  provision  of this  Agreement,  or (iv) a material and
willful  violation  of a federal or state law or  regulation  applicable  to the
business of the  Company.  No act, or failure to act, by the  Executive  will be
considered  "willful" unless committed  without a reasonable belief that the act
or omission was in the Company's best interest. No compensation or benefits will
be paid or  provided  to the  Executive  under  this  Agreement  on account of a
termination for Cause, or for periods following the date when such a termination
of employment is effective.  The  Executive's  rights under the benefit plans of
the Company will be determined under the provisions of those plans.

                  (e)  Disability.  The Company may  terminate  the  Executive's
employment  for  Disability by giving the  Executive 30 days' advance  notice in
writing. For all purposes under this Agreement,  "Disability" will mean that the
Executive, at the time notice is given, has been unable to substantially perform
his duties under this  Agreement  for a period of not less than two  consecutive
months as the result of his incapacity due to physical or mental illness. In the
event that the Executive resumes the effective  performance of substantially all
of his duties  hereunder  before the  termination of his  employment  under this
Section 2(e) becomes effective,  the notice of termination will automatically be
deemed  to have  been  revoked.  No  compensation  or  benefits  will be paid or
provided to the Executive  under this  Agreement on account of  termination  for
Disability,  or for  periods  following  the date  when  such a  termination  of
employment is effective.  The Executive's  rights under the benefit plans of the
Company will be determined under the provisions of those plans.

                  (f) Good Reason.  Employment  with the Company may be regarded
as having been constructively  terminated by the Company,  and the Executive may
therefore terminate his employment for Good Reason and thereupon become entitled
to the benefits of Section  10(a)(i) and 10(b) below,  if, before the end of the
Employment  Period,  one or more of the following events will occur (unless such
event(s) applies generally to all senior management of the Company):


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<PAGE>

                                    (i)     a material reduction by the Company 
in the Salary (as defined in Section 4, below) of the Executive as in effect 
immediately prior to such reduction;

                                    (ii) a material  reduction by the Company in
the kind or level of employee benefits to which the Executive is entitled  
immediately  prior to such  reduction with the result that the Executive's 
overall benefits package is significantly reduced;

                                    (iii)   the required  relocation  of the  
Executive to a facility or a location  more than 25 miles from the Executive's  
then present  location over Executive's  written  objection made withing
30 days of such  required  relocation;  (iv) any purported termination of the 
Executive's employment by the Company other than for death, Disability or for 
Cause, or any purported termination for which the grounds relied upon are not 
valid; or

                                    (v)    the failure of the Company to obtain 
the  assumption of this  Agreement or the Stock Option (as defined in Section 5)
by any successor.

         3. Place of Employment.  The Executive's  services will be performed at
the  Company's  principal  executive  offices at 585 N. Mary Avenue,  Sunnyvale,
California. The parties acknowledge, however, that the Executive may be required
to travel in connection with the performance of his duties hereunder.

         4. Salary. For all services to be rendered by the Executive pursuant to
this  Agreement,  the Company agrees to pay the Executive  during the Employment
Period a salary (the "Salary") at an monthly rate of not less than $30,000.  The
Salary will be paid in periodic  installments  in accordance  with the Company's
regular payroll practices. The Company will be entitled to withhold, or cause to
be withheld,  from payment any amount of withholding  taxes required by law with
respect  to  payments  made to  Executive  in  connection  with  his  employment
hereunder.

         5.       Stock Option and Other Benefits .

                  (a) Stock Option.  The Board of Directors  has granted,  as of
August 19, 1998, the Executive as partial  consideration  for the performance of
this  Agreement  a five year option  (the  "Stock  Option") to purchase  100,000
shares of the  Company's  Common Stock (the "Option  Shares") at the fair market
value  of the  Common  Stock  of the  Company  on the  date of  grant,  which is
contingent  upon a continuous  employment  or  consulting  relationship  between
Executive  and the  Company.  Such fair  market  value is equal to the per share
closing  price for the  Company's  Common Stock on the National  Association  of
Securities Dealers,  National Market System on such date of grant as recorded in
The Wall Street Journal. The Stock Option will vest as described in Section 5(b)
below and will be subject to such other terms and conditions as are described in
Section 5(c) below.

                  (b)  Vesting.   Option  Shares  will  vest  in  equal  monthly
installments  over the six-month period that begins as of the Effective Date and
ends February 28, 1999.


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<PAGE>

                   (c) Option Provisions. The Stock Option will be granted under
the 1993 Stock  Option Plan (the "Stock  Plan") and will be subject to the terms
and conditions of the Stock Plan and form of option agreement.

         6. Expenses.  The Executive will be entitled to prompt reimbursement by
the Company for all reasonable ordinary and necessary travel, entertainment, and
other  expenses  incurred  by the  Executive  during the  Employment  Period (in
accordance  with the policies and procedures  established by the Company for its
senior executive officers) in the performance of his duties and responsibilities
under this  Agreement;  provided,  that the Executive will properly  account for
such expenses in accordance with Company  policies and  procedures.  The parties
agree that for  purposes of this  Section,  the  Executive's  air travel will be
coach class domestically and business class internationally.

         7. Other  Benefits.  During the  Employment  Period,  the Company  will
reimburse  Executive  for  the  cost  of  maintaining  his  Stanford  University
benefits,  in an  amount  not in excess of $1,000  per  month,  plus the  amount
necessary  to gross up that  amount  for  applicable  taxes to provide an amount
equal to the cost of such benefits net of  Executive's  tax cost.  The Executive
will not be entitled to  participate  in any employee  benefit plans or programs
which cover health, dental and life insurance.  Employee will participate in the
other  benefit  programs of the Company.  Executive  will continue to vest those
options  received  by  Executive  prior  to the  date  hereof,  as  though  this
employment was continuous employment under these terms.

         8. Vacations and Holidays.  During the Employment Period, the Executive
will be entitled to paid vacation  which will accrue at the rate of one week per
quarter  and will also be entitled to Company  holidays in  accordance  with the
Company's policies.

         9. Other Activities.  During the Employment  Period, the Executive will
devote  substantially all of his working time and efforts,  during the Company's
normal  business  hours to the  business  and  affairs  of the  Company  and its
subsidiaries  and to the  diligent and  faithful  performance  of the duties and
responsibilities  duly  assigned to him pursuant to this  Agreement,  except for
vacations, holidays and sickness. However, the Executive may devote a reasonable
amount of his time to civic, community,  or charitable activities,  may continue
his  relationship   with  The  Aerospace   Corporation,   Draper   Laboratories,
IntegriNautics  Corporation and Stanford  University (related to GPS activities)
to the extent that such  activities  do not conflict with his duty of loyalty to
the Company, and, with the prior written approval of the Board of Directors,  to
serve as a director  of other  corporations  and to other  types of  business or
public activities not expressly mentioned in this Section.

         10.  Termination  Benefits.  In the  event the  Executive's  employment
terminates prior to the end of the Employment Period, then the Executive will be
entitled to receive severance and other benefits as follows:

                  (a)      Severance.

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<PAGE>


                                    (i)     Involuntary  Termination.  If the 
Company terminates the Executive's  employment other than for death, Disability 
or Cause,  or if the Executive  terminates his employment for Good Reason,  
then, in lieu of any severance benefits to which the Executive may  otherwise  
be entitled  under any Company  severance  plan or program, the Executive  will 
be  entitled  to payment of his  Salary on the  regular  payroll periods of the 
Company  until the end of the  Employment  Period or, if earlier, until  a 
breach  by  the  Executive  of  his  obligations   under  Sections  11 
(Proprietary Information) or 12 (Non-Solicit) hereof.

                                    (ii)    Other  Termination.  In  the  event
the  Executive's  employment  terminates  for  death, Disability or Cause,  or 
the Employee  resigns for other than Good Reason,  then the Executive will only 
be entitled to receive any benefits  accrued to date and as may then be  
established  under  the Company's  existing  benefit  plans and policies at the 
time of such  termination.  The Executive will receive only that compensation 
provided  for  herein  accrued  for  periods  served  prior to the termination  
of employment  but will not be entitled to any  additional  amounts under this
 Agreement.

                  (b)  Options.  In the  event  the  Executive's  employment  is
terminated  by the Company as  described  in Section  10(a)(i)  above,  then the
Executive  will  continue to vest in the  unvested  portion of the Stock  Option
until February 28, 1999 (subject to the term of the Stock Option). If terminated
as described in Section 10(a)(ii), such vesting will terminate as of the date of
such termination.

                  (c) No Duty to Mitigate. The Executive will not be required to
mitigate the amount of any payment  contemplated  by this Agreement  (whether by
seeking new employment or in any other manner).

         11.   Proprietary   Information.   During  the  Employment  Period  and
thereafter,  the Executive  will not,  without the prior written  consent of the
Board of Directors, disclose or use for any purpose (except in the course of his
employment  under this  Agreement  and in  furtherance  of the  business  of the
Company or any of its affiliates or subsidiaries)  any confidential  information
or proprietary data of the Company.  As an express  condition of the Executive's
employment  with the Company,  the Executive  agrees to execute  confidentiality
agreements  as  requested  by the  Company,  including  but not  limited  to the
Company's form of Employment,  Confidential  Information,  Invention Assignment,
and  Arbitration   Agreement,   which  is  attached  hereto  as  Exhibit  A  and
incorporated herein by reference.

         12.  Non-Solicit.  The Executive  covenants and agrees with the Company
that during his employment  with the Company and for a period  expiring one year
after the date of termination of such employment, he will not solicit any of the
Company's  then-current employees to terminate their employment with the Company
or to become  employed by any firm,  company or other business  enterprise  with
which the Executive may then be connected.

         13.      Noncompete.

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<PAGE>

                  (a) Scope.  Executive  agrees that during the period beginning
on the Effective Date and continuing for the term of this Agreement, he will not
enter into the  employ of, or render  services  to,  any firm,  corporation,  or
organization  in a capacity  that gives him  responsibility  for that segment of
such entity's  business which derives more than 10% of its annual  revenues from
sales of products which directly  compete with products which are offered by the
Company  during  the  term  of  the  Employment  Agreement  and  the  Consultant
Agreement;  provided, however, that Executive may continue his relationship with
Draper Labs, the Aerospace Corporation,  IntegriNautics Corporation and Stanford
University  (related  to GPS  activities)  and any other firm,  corporation,  or
organization  which  the  Board of  Directors  approves  subject  to the duty of
loyalty to the Company.

                  (b) Geographic Area. The parties acknowledge that the business
of the Company and its subsidiaries is international in scope. The parties agree
that the  geographical  areas in which  the  restrictions  provided  for in this
Agreement apply include all cities,  counties and states of the United States of
America. In addition, the parties agree that the geographical areas in which the
restrictions  provided for in this Agreement  apply include all foreign  nations
outside  the  United  States  of  America  in which  the  Company  or any of its
subsidiaries  engages  in sales,  or  otherwise  conducts  business  or  selling
efforts.

                  (c)  Severability.  The  parties  intend  that  the  covenants
contained in this Section be  construed as a series of separate  covenants,  one
for each county of each state of the United  States and each nation.  Except for
geographic  coverage,  each such separate  covenant will be deemed  identical in
terms  of the  covenants  contained  in  this  Agreement.  If,  in any  judicial
proceeding, a court will refuse to enforce any of the separate covenants (or any
part thereof) deemed included in this Section, then such unenforceable  covenant
(or such part) will be deemed  eliminated  from this  Section for the purpose of
those  proceedings  to the extent  necessary  to permit the  remaining  separate
covenants (or portions thereof) to be enforced. In the event that the provisions
of  this  Section  should  ever be  deemed  to  exceed  the  time or  geographic
limitations,  or the scope of these  covenants,  as permitted by applicable law,
then  such  provisions  will be  reformed  to the  maximum  time  or  geographic
limitations, as the case may be, permitted by applicable laws.

         14. Right to Advice of Counsel. The Executive  acknowledges that he has
had the  opportunity  to fully review this  Agreement  and if he so chooses,  to
consult with counsel and is fully aware of his rights and obligations under this
Agreement.

         15. Successors.  The Company will require any successor (whether direct
or  indirect,  by  purchase,  merger,  consolidation  or  otherwise)  to  all or
substantially  all of the  business  and/or  assets of the Company to assume the
obligations of this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such  succession  had taken place.
Failure  of the  Company  to  obtain  such  assumption  agreement  prior  to the
effectiveness  of any such succession will entitle the Executive to the benefits
described in Sections 10(a)(i) and 10(b) of this Agreement, subject to the terms
and conditions therein.

         16.      Arbitration.



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<PAGE>

                  (a) Disputes.  Except as provided in Section 16(c) below,  the
Company and the Executive agree that, to the extent permitted by applicable law,
any dispute or  controversy  arising under or in connection  with this Agreement
will  be  settled  exclusively  by  arbitration  in  San  Jose,  California,  in
accordance with the rules of the American Arbitration Association then in effect
by an arbitrator selected by both parties within ten days after either party has
notified  the other in  writing  that it  desires a dispute  between  them to be
settled by arbitration. In the event the parties cannot agree on such arbitrator
within such ten-day period,  each party will select an arbitrator and inform the
other party in writing of such  arbitrator's  name and address  within five days
after the end of such ten-day  period and the two  arbitrators  so selected will
select a third arbitrator within 15 days thereafter;  provided, however, that in
the event of a failure by either  party to select an  arbitrator  and notify the
other  party of such  selection  within  the time  period  provided  above,  the
arbitrator  selected  by the  other  party  will be the sole  arbitrator  of the
dispute.  The  decision  of  the  arbitrator  or a  majority  of  the  panel  of
arbitrators  will be binding  upon the parties and judgment in  accordance  with
that  decision  may be  entered  in any  court  having  jurisdiction  thereover.
Punitive damages will not be awarded.

                  (b) Consent to Personal  Jurisdiction.  The arbitrator(s) will
apply California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  Executive hereby consents to the personal  jurisdiction
of the  state  and  federal  courts  located  in  California  for any  action or
proceeding  arising  from or  relating  to this  Agreement  or  relating  to any
arbitration in which the parties are participants.

                  (c)  Equitable  Relief.  The parties may apply to any court of
competent   jurisdiction  for  a  temporary   restraining   order,   preliminary
injunction,  or other interim or  conservatory  relief,  as  necessary,  without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

                  (d)  Acknowledgment.  EXECUTIVE HAS READ AND UNDERSTANDS  THIS
AGREEMENT,  WHICH DISCUSSES  ARBITRATION.  EXECUTIVE UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT,  EXECUTIVE  AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN  CONNECTION  WITH THIS  AGREEMENT,  OR THE  INTERPRETATION,  VALIDITY,
CONSTRUCTION,   PERFORMANCE,   BREACH  OR   TERMINATION   THEREOF,   TO  BINDING
ARBITRATION,  EXCEPT AS PROVIDED  IN SECTION  16(c),  AND THAT THIS  ARBITRATION
CLAUSE  CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE  RESOLUTION  OF ALL  DISPUTES  RELATING TO ALL  ASPECTS OF THE  RELATIONSHIP
BETWEEN THE PARTIES.

         17. Absence of Conflict. The Executive represents and warrants that his
employment  by the Company as described  herein will not conflict  with and will
not be constrained by any prior or other  employment or consulting  agreement or
relationship.


                                      109

<PAGE>


         18. Assignment. This Agreement and all rights under this Agreement will
be binding  upon and inure to the benefit of and be  enforceable  by the parties
hereto  and  their  respective  personal  or legal  representatives,  executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This  Agreement  is  personal  in nature,  and  neither  of the  parties to this
Agreement  will,  without the written  consent of the other,  assign or transfer
this  Agreement  or any right or  obligation  under this  Agreement to any other
person or entity;  except that the rights and  obligations  of the Company under
this  Agreement may be assigned to a corporation  which becomes the successor to
the Company as the result of a merger or other corporate  reorganization or sale
of  substantially  all the assets to a successor which continues the business of
the  Company  or any  other  subsidiary  of the  Company,  provided,  that  such
assignment  will not relieve the Company of its  obligations  hereunder.  If the
Executive  should  die while any  amounts  are still  payable  to the  Executive
hereunder,  all such amounts,  unless otherwise provided herein, will be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no such designee, to the Executive's estate.

         19.  Notices.  For  purposes  of  this  Agreement,  notices  and  other
communications  provided  for in this  Agreement  will be in writing and will be
delivered  personally or sent by United States  certified  mail,  return receipt
requested, postage prepaid, addressed as follows:

                  If to the Company: Trimble Navigation Limited
                                     585 N. Mary Avenue
                                     P.O. Box 3642
                                     Sunnyvale, CA 94088-3642
                                     Attn: Board of Directors

or to such other  address or the attention of such other person as the recipient
party has previously  furnished to the other party in writing in accordance with
this  Section.  Such  notices or other  communications  will be  effective  upon
delivery  or, if  earlier,  three days after they have been  mailed as  provided
above.

         20.  Integration.  This  Agreement,  the  Consulting  Agreement and the
Standby  Consulting  Agreement  represent the entire agreement and understanding
between the  parties as to the subject  matter  hereof and  supersede  all prior
agreements  whether written or oral. No waiver,  alteration,  or modification of
any of the  provisions of this  Agreement  will be binding unless in writing and
signed by the party against whom  enforcement of the change or  modification  is
sought.

         21.  Waiver.  Failure  or delay on the part of either  party  hereto to
enforce  any  right,  power,  or  privilege  hereunder  will  not be  deemed  to
constitute a waiver thereof.  Additionally, a waiver by either party or a breach
of any promise  hereof by the other party will not operate as or be construed to
constitute a waiver of any subsequent waiver by such other party.

         22. Severability.  Whenever possible,  each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any  provision of this  Agreement is held to be invalid,  illegal or
unenforceable   in  any  respect  under  any  applicable  law  or  rule  in  any
jurisdiction,  such invalidity,  illegality or unenforceability  will not affect
any  other  provision  or any other  jurisdiction,  but this  Agreement  will be
reformed,  construed  and  enforced  in such  jurisdiction  as if such  invalid,
illegal or unenforceable provision had never been contained herein.

         23. Applicable Law. This Agreement will be governed by and construed in
accordance with the internal  substantive laws, and not the choice of law rules,
of the State of California.


                                      110

<PAGE>

         24. Counterparts.  This Agreement may be executed in counterparts, each
of which will be deemed to be an original,  and which together will constitute a
single agreement.

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized  officer,  as of the day and year
first above written.


EXECUTIVE:                         TRIMBLE NAVIGATION LIMITED:

/s/ Bradford W. Parkinson            By: /s/ Robert S. Cooper
Dr. Bradford W. Parkinson
                                     Name:  Robert S. Cooper              

                                     Title: Chairman



                                      111

<PAGE>




                                  EXHIBIT 10.63

                              EMPLOYMENT AGREEMENT

This Employment  Agreement (this "Agreement") is entered into as of September 1,
1998 (the "Effective Date"),  between Trimble  Navigation  Limited, a California
corporation (the "Company"), and Dr. Robert S. Cooper (the "Executive").

         WHEREAS,  the  Company  desires  to  employ  the  Executive  as of  the
Effective Date and the Executive  desires to accept  employment with the Company
on the terms and conditions set forth below;

         WHEREAS,  simultaneously  with the  execution  hereof,  the Company and
Consultant are entering a Standby Consulting  Agreement (the "Standby Consulting
Agreement");

         NOW,  THEREFORE,  in  consideration  of the  foregoing  recital and the
respective  covenants and agreements of the parties  contained in this document,
the Company and the Executive agree as follows:

         1. Employment and Duties.  During the Employment  Period (as defined in
Section 2 below),  the  Executive  will  serve as  Chairman  of the Board of the
Company which position will be deemed an executive officer position.  The duties
and   responsibilities   of  the   Executive   will   include   the  duties  and
responsibilities  for the  Executive's  corporate  offices and  positions as set
forth in the Company's  bylaws from time to time in effect
 and such other duties
and  responsibilities  as the board of  directors  of the Company (the "Board of
Directors")  may from time to time  reasonably  assign to the Executive,  in all
cases to be consistent with the Executive's corporate offices and positions. The
Executive will perform  faithfully the executive  duties  assigned to him to the
best of his ability and in the best  interests  of the Company.  Executive  will
continue to serve as a director of the Company without additional compensation.

         2.       Employment Period.

                  (a) Term. The employment  period will begin upon the Effective
Date and will  continue  thereafter  until  August  31,  1999  (the  "Employment
Period"), unless sooner terminated pursuant to the provisions of this Agreement.
Thereafter, Executive's employment will be at will.

                  (b)  Early   Termination.   The  Company  may   terminate  the
Executive's  employment prior to the end of the Employment  Period by giving the
Executive 30 days'  advance  notice in writing.  If the Company  terminates  the
Executive's  employment prior to the end of the Employment Period for any reason
other  than Cause or  Disability,  both as defined  below,  or if the  Executive
terminates his employment for Good Reason,  as defined below,  the provisions of
Sections  10(a)(i),  10(b) and 10(c) will apply. The Executive may terminate his
employment  prior to the end of the  Employment  Period by giving the Company 30
days' advance written notice.  If the Executive  terminates his employment prior
to the end of the Employment  Period other than for Good Reason,  the provisions
of Section 10(a)(ii) will apply. Upon termination of the Executive's  employment
with the Company, the Executive's rights under any applicable benefit plans will
be determined under the provisions of those plans.

                                      112

<PAGE>


                  (c) Death.  The  Executive's  employment will terminate in the
event of his death.  The Company will have no  obligation  to pay or provide any
compensation  or benefits  under this  Agreement  on account of the  Executive's
death,  or for periods  following  the  Executive's  death,  provided,  that the
Company's obligations under Section 10(a)(i) will not be interrupted as a result
of the Executive's  death. The Executive's rights under the benefit plans of the
Company  in the event of the  Executive's  death  will be  determined  under the
provisions of those plans.

                  (d) Cause.  During the  Employment  Period,  the  Company  may
terminate the Executive's employment for cause by giving the Executive ten days'
advance notice in writing.  For all purposes under this Agreement,  "Cause" will
mean (i) willful  failure by the Executive to  substantially  perform his duties
hereunder,  (ii) a  willful  act by the  Executive  which  is  injurious  to the
Company, (iii) a willful breach by the Executive of a material provision of this
Agreement, or (iv) a material and willful violation of a federal or state law or
regulation applicable to the business of the Company. No act, or failure to act,
by the  Executive  will be  considered  "willful"  unless  committed  without  a
reasonable  belief that the act or omission was in the Company's  best interest.
No compensation or benefits will be paid or provided to the Executive under this
Agreement on account of a termination  for Cause,  or for periods  following the
date when such a termination of employment is effective.  The Executive's rights
under the benefit plans of the Company will be determined  under the  provisions
of those plans.

                  (e)  Disability.  The Company may  terminate  the  Executive's
employment  for  Disability by giving the  Executive 30 days' advance  notice in
writing. For all purposes under this Agreement,  "Disability" will mean that the
Executive, at the time notice is given, has been unable to substantially perform
his duties under this  Agreement  for a period of not less than two  consecutive
months as the result of his incapacity due to physical or mental illness. In the
event that the Executive  resumes the  performance of  substantially  all of his
duties  hereunder  before the  termination of his employment  under this Section
2(e) becomes  effective,  the notice of termination will automatically be deemed
to have been revoked.  No  compensation  or benefits will be paid or provided to
the Executive under this Agreement on account of termination for Disability,  or
for  periods  following  the date  when  such a  termination  of  employment  is
effective. The Executive's rights under the benefit plans of the Company will be
determined under the provisions of those plans.

                  (f) Good Reason.  Employment  with the Company may be regarded
as having been constructively  terminated by the Company,  and the Executive may
therefore terminate his employment for Good Reason and thereupon become entitled
to the benefits of Sections  10(a)(i) and 10(b) below, if, before the end of the
Employment  Period,  one or more of the following events will occur (unless such
event(s) applies generally to all senior management of the Company):

                           (i) a material  reduction by the Company in the 
Salary of the  Executive as in effect  immediately  prior to such reduction;

                           (ii) any  purported  termination  of the  Executive's
employment by the Company which is not effected for death, Disability or for 
Cause, or any purported termination for which the grounds relied upon are not 
valid; or

                           (iii)  the  failure  of the  Company  to  obtain  the
assumption of this Agreement or the Stock Option (as defined in Section 5) by 
any successor.

                                      113

<PAGE>

         3. Place of Employment.  The Executive's  services will be performed at
the  Company's  principal  executive  offices at 585 N. Mary Avenue,  Sunnyvale,
California. The parties acknowledge, however, that the Executive may be required
to travel in connection with the performance of his duties hereunder.

         4. Salary. For all services to be rendered by the Executive pursuant to
this  Agreement,  the Company agrees to pay the Executive  during the Employment
Period a salary (the  "Salary") at a monthly rate of not less than $10,000.  The
Salary will be paid in periodic  installments  in accordance  with the Company's
regular payroll practices. The Company will be entitled to withhold, or cause to
be withheld,  from payment any amount of withholding  taxes required by law with
respect  to  payments  made to  Executive  in  connection  with  his  employment
hereunder.

         5.       Stock Option.

                  (a) Stock  Option.  Subject  to the  approval  of the Board of
Directors,  the Company will grant the  Executive a five year option (the "Stock
Option") to purchase  60,000 shares of the  Company's  Common Stock (the "Option
Shares")  at the fair  market  value of the Common  Stock of the  Company on the
Effective Date,  which is contingent upon a continuous  employment or consulting
relationship  between Executive and the Company.  Such fair market value will be
equal to the per share  closing  price  for the  Company's  Common  Stock on the
National Association of Securities Dealers,  National Market System on such date
of grant as recorded in The Wall Street  Journal.  The Stock Option will vest as
described in Section 5(b) and will be subject to such other terms and conditions
as are described in Section 5(c).

                  (b)  Vesting.   Option  Shares  will  vest  monthly  over  the
twelve-month  period  that begins as of the  Effective  Date and ends August 31,
1999.

                  (c) Option Provisions.  The Stock Option will be granted under
the 1993 Stock  Option Plan (the "Stock  Plan") and will be subject to the terms
and conditions of the Stock Plan and form of option agreement.

         6. Expenses.  The Executive will be entitled to prompt reimbursement by
the Company for all reasonable ordinary and necessary travel, entertainment, and
other  expenses  incurred  by the  Executive  during the  Employment  Period (in
accordance  with the policies and procedures  established by the Company for its
senior executive officers) in the performance of his duties and responsibilities
under this  Agreement;  provided,  that the Executive will properly  account for
such expenses in accordance with Company  policies and  procedures.  The parties
agree that for  purposes of this  Section,  the  Executive's  air travel will be
coach class domestically and business class internationally.

         7. Other Benefits.  During the Employment Period, the Executive will be
entitled to participate in employee benefit plans or programs of the Company, if
any, to the extent that his  position,  tenure,  salary,  age,  health and other
qualifications  make him  eligible  to  participate,  subject  to the  rules and
regulations applicable thereto.

         8.  Holidays.  The  Executive  will be entitled to Company  holidays in
accordance  with the  Company's  policies  in  effect  from time to time for its
senior executive officers.


                                      114

<PAGE>

         9. Other Activities.  The Executive will devote approximately one third
of his working time and efforts  during the Company's  normal  business hours to
the business and affairs of the Company and its subsidiaries and to the diligent
and faithful performance of the duties and responsibilities duly assigned to him
pursuant to this  Agreement.  Executive will be free to commence and to continue
his other business  relationships without restriction other than with respect to
his duty of loyalty to the Company.

         10.  Termination  Benefits.  In the  event the  Executive's  employment
terminates prior to the end of the Employment Period, then the Executive will be
entitled to receive severance and other benefits as follows:

                  (a)      Severance.

                           (i) Involuntary  Termination.  If the Company  
terminates the Executive's  employment  other than for death, Disability or 
Cause,  or if the Executive  terminates  his  employment  for Good Reason,  
then,  in lieu of any  severance  benefits to which the  Executive  may 
otherwise be entitled under any Company severance plan or program, the Executive
will be entitled to payment of his Salary on the regular  payroll periods of the
Company until the end of the Employment Period or, if earlier, until a breach by
the Executive of his obligations under Sections 11 (Proprietary  Information) or
12 (Non-Solicit) hereof.

                           (ii)  Other  Termination.  In the event the 
Executive's  employment  terminates  for death,  Disability  or Cause,  or the 
Employee  resigns for other than Good Reason,  then the Executive will be  
entitled to receive  any  benefits  accrued to date only as may then be
established under the Company's  existing benefit plans and policies at the time
of such termination.  The Executive will receive only that compensation provided
for herein accrued for periods served prior to the termination of employment but
will not be entitled to any additional amounts under this Agreement.

                  (b)  Options.  In the  event  the  Executive's  employment  is
terminated  by the Company as  described  in Section  10(a)(i)  above,  then the
Executive  will  continue to vest in the  unvested  portion of the Stock  Option
until August 31, 1999 (subject to the term of the Stock  Option).  If terminated
as described in Section 10(a)(ii), such vesting will terminate as of the date of
such termination.

                  (c) No Duty to Mitigate. The Executive will not be required to
mitigate the amount of any payment  contemplated  by this Agreement  (whether by
seeking new employment or in any other manner).

                                      115

<PAGE>

         11.   Proprietary   Information.   During  the  Employment  Period  and
thereafter,  the Executive  will not,  without the prior written  consent of the
Board of Directors, disclose or use for any purpose (except in the course of his
employment  under this  Agreement  and in  furtherance  of the  business  of the
Company or any of its affiliates or subsidiaries)  any confidential  information
or proprietary data of the Company.  As an express  condition of the Executive's
employment  with the Company,  the Executive  agrees to execute  confidentiality
agreements  as  requested  by the  Company,  including  but not  limited  to the
Company's form of Employment,  Confidential  Information,  Invention Assignment,
and  Arbitration   Agreement,   which  is  attached  hereto  as  Exhibit  A  and
incorporated herein by reference.

         12.  Non-Solicit.  The Executive  covenants and agrees with the Company
that during his employment  with the Company and for a period  expiring one year
after the date of termination of such employment, he will not solicit any of the
Company's  then-current employees to terminate their employment with the Company
or to become  employed by any firm,  company or other business  enterprise  with
which the Executive may then be connected.

         13. Right to Advice of Counsel. The Executive  acknowledges that he has
had the  opportunity  to fully review this  Agreement  and if he so chooses,  to
consult with counsel and is fully aware of his rights and obligations under this
Agreement.

         14. Successors.  The Company will require any successor (whether direct
or  indirect,  by  purchase,  merger,  consolidation  or  otherwise)  to  all or
substantially  all of the  business  and/or  assets of the Company to assume the
obligations of this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such  succession  had taken place.
Failure  of the  Company  to  obtain  such  assumption  agreement  prior  to the
effectiveness  of any such succession will entitle the Executive to the benefits
described in Sections 10(a)(i) and 10(b) of this Agreement, subject to the terms
and conditions therein.

         15.      Arbitration.

                  (a) Disputes.  Except as provided in Section 15(d) below,  the
Company and the Executive agree that, to the extent permitted by applicable law,
any dispute or  controversy  arising under or in connection  with this Agreement
will  be  settled  exclusively  by  arbitration  in  San  Jose,  California,  in
accordance with the rules of the American Arbitration Association then in effect
by an arbitrator selected by both parties within ten days after either party has
notified  the other in  writing  that it  desires a dispute  between  them to be
settled by arbitration. In the event the parties cannot agree on such arbitrator
within such ten-day period,  each party will select an arbitrator and inform the
other party in writing of such  arbitrator's  name and address  within five days
after the end of such ten-day  period and the two  arbitrators  so selected will
select a third arbitrator within 15 days thereafter;  provided, however, that in
the event of a failure by either  party to select an  arbitrator  and notify the
other  party of such  selection  within  the time  period  provided  above,  the
arbitrator  selected  by the  other  party  will be the sole  arbitrator  of the
dispute.  The  decision  of  the  arbitrator  or a  majority  of  the  panel  of
arbitrators  will be binding  upon the parties and judgment in  accordance  with
that  decision  may be  entered  in any  court  having  jurisdiction  thereover.
Punitive damages will not be awarded.

                  (b) Consent to Personal  Jurisdiction.  The arbitrator(s) will
apply California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  Executive hereby consents to the personal  jurisdiction
of the  state  and  federal  courts  located  in  California  for any  action or
proceeding  arising  from or  relating  to this  Agreement  or  relating  to any
arbitration in which the parties are participants.


                                      116

<PAGE>


                  (c)  Equitable  Relief.  The parties may apply to any court of
competent   jurisdiction  for  a  temporary   restraining   order,   preliminary
injunction,  or other interim or  conservatory  relief,  as  necessary,  without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

                  (d)  Acknowledgment.  EXECUTIVE HAS READ AND UNDERSTANDS  THIS
AGREEMENT,  WHICH DISCUSSES  ARBITRATION.  EXECUTIVE UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT,  EXECUTIVE  AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN  CONNECTION  WITH THIS  AGREEMENT,  OR THE  INTERPRETATION,  VALIDITY,
CONSTRUCTION,   PERFORMANCE,   BREACH  OR   TERMINATION   THEREOF,   TO  BINDING
ARBITRATION,  EXCEPT AS PROVIDED  IN SECTION  15(c),  AND THAT THIS  ARBITRATION
CLAUSE  CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE  RESOLUTION  OF ALL  DISPUTES  RELATING TO ALL  ASPECTS OF THE  RELATIONSHIP
BETWEEN THE PARTIES.

         16. Absence of Conflict. The Executive represents and warrants that his
employment  by the Company as described  herein will not conflict  with and will
not be constrained by any prior or other  employment or consulting  agreement or
relationship.

         17. Assignment. This Agreement and all rights under this Agreement will
be binding  upon and inure to the benefit of and be  enforceable  by the parties
hereto  and  their  respective  personal  or legal  representatives,  executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This  Agreement  is  personal  in nature,  and  neither  of the  parties to this
Agreement  will,  without the written  consent of the other,  assign or transfer
this  Agreement  or any right or  obligation  under this  Agreement to any other
person or entity;  except that the rights and  obligations  of the Company under
this  Agreement may be assigned to a corporation  which becomes the successor to
the Company as the result of a merger or other corporate  reorganization or sale
of substantially all the assets to a corporation which continues the business of
the  Company  or any  other  subsidiary  of the  Company,  provided,  that  such
assignment  will not relieve the Company of its  obligations  hereunder.  If the
Executive  should  die while any  amounts  are still  payable  to the  Executive
hereunder,  all such amounts,  unless otherwise provided herein, will be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no such designee, to the Executive's estate.

         18.  Notices.  For  purposes  of  this  Agreement,  notices  and  other
communications  provided  for in this  Agreement  will be in writing and will be
delivered  personally or sent by United States  certified  mail,  return receipt
requested, postage prepaid, addressed as follows:


                                      117

<PAGE>

                  If to the Company:   Trimble Navigation Limited
                                       585 N. Mary Avenue
                                       P.O. Box 3642
                                       Sunnyvale, CA  94088-3642
                                       Attn: Board of Directors

or to such other  address or the attention of such other person as the recipient
party has previously  furnished to the other party in writing in accordance with
this  Section.  Such  notices or other  communications  will be  effective  upon
delivery  or, if  earlier,  three days after they have been  mailed as  provided
above.

         19.  Integration.  This Agreement and the Standby Consulting  Agreement
represent the entire agreement and  understanding  between the parties as to the
subject  matter  hereof and supersede all prior  agreements  whether  written or
oral. No waiver,  alteration,  or  modification of any of the provisions of this
Agreement will be binding unless in writing and signed by the party against whom
enforcement of the change or modification is sought.

         20.  Waiver.  Failure  or delay on the part of either  party  hereto to
enforce  any  right,  power,  or  privilege  hereunder  will  not be  deemed  to
constitute a waiver thereof.  Additionally, a waiver by either party or a breach
of any promise  hereof by the other party will not operate as or be construed to
constitute a waiver of any subsequent waiver by such other party.

         21. Severability.  Whenever possible,  each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any  provision of this  Agreement is held to be invalid,  illegal or
unenforceable   in  any  respect  under  any  applicable  law  or  rule  in  any
jurisdiction,  such invalidity,  illegality or unenforceability  will not affect
any  other  provision  or any other  jurisdiction,  but this  Agreement  will be
reformed,  construed  and  enforced  in such  jurisdiction  as if such  invalid,
illegal or unenforceable provision had never been contained herein.

         22. Applicable Law. This Agreement will be governed by and construed in
accordance with the internal  substantive laws, and not the choice of law rules,
of the State of California.

         23. Counterparts.  This Agreement may be executed in counterparts, each
of which will be deemed to be an original,  and which together will constitute a
single agreement.


                                      118

<PAGE>

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized  officer,  as of the day and year
first above written.


EXECUTIVE:                               TRIMBLE NAVIGATION LIMITED:

/s/ Robert S. Cooper                     By: /s/ Bradford W. Parkinson
Dr. Robert S. Cooper
                                         Name: Bradford W. Parkinson

                                         Title: President


                                      1119

<PAGE>





                                  EXHIBIT 10.64

                              CONSULTING AGREEMENT


         This  Consulting  Agreement  (this  "Agreement")  is entered into as of
September  1, 1998 (the  "Effective  Date") by and  between  Trimble  Navigation
Limited, a California corporation (the "Company"), and Dr. Bradford W. Parkinson
("Consultant").

         WHEREAS,  simultaneously  with the  execution  hereof,  the Company and
Consultant are entering an Employment Agreement (the "Employment Agreement") and
a Standby Consulting Agreement (the "Standby Consulting Agreement");

         WHEREAS, the Company,  immediately  following the Employment Period (as
defined  in the  Employment  Agreement),  desires  to  retain  Consultant  as an
independent  contractor  to perform  consulting  services  for the  Company  and
Consultant  is willing to perform such  services,  on terms set forth more fully
below;

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein, the parties agree as follows:

         1.       Services and Compensation

                  (a) Services. Consultant will devote approximately eight hours
each week during the Company's normal business hours to the business and affairs
of the Company and its subsidiaries and to the diligent and faithful performance
of the duties and responsibilities  duly assigned to him (the "Services") by
 the
Chief Executive Officer of the Company.

                  (b)  Compensation.  The Company will pay Consultant $6,000 per
month during the term of this Agreement; provided, however, that in the event of
Consultant's  death or disability during the term of this Agreement,  Consultant
will not be entitled to receive such amount.

                  (c) Expenses.  The Company will  reimburse  Consultant for all
reasonable  travel  expenses  incurred  by  Consultant  in  performing  Services
pursuant to this Agreement.

         2.       Confidentiality

                  (a) Definition.  "Confidential  Information" means any Company
proprietary information,  technical data, trade secrets or know-how,  including,
but not limited to,  research,  product plans,  products,  services,  customers,
customer  lists,  markets,  software,   developments,   inventions,   processes,
formulas,  technology,  designs, drawings,  engineering,  hardware configuration
information,  marketing, finances or other business information disclosed by the
Company  either  directly or  indirectly  in  writing,  orally or by drawings or
inspection of parts or equipment.


                                      120

<PAGE>


                  (b) Non-Use and Non-Disclosure. Consultant will not, during or
subsequent  to the  term  of this  Agreement,  use  the  Company's  Confidential
Information  for any  purpose  whatsoever  other  than  the  performance  of the
Services  on  behalf of the  Company  or  disclose  the  Company's  Confidential
Information  to  any  third  party.  It is  understood  that  such  Confidential
Information  will remain the sole  property of the Company.  Consultant  further
agrees to take all reasonable precautions to prevent any unauthorized disclosure
of such  Confidential  Information  including,  but not limited to,  having each
employee of  Consultant,  if any, with access to any  Confidential  Information,
execute a nondisclosure  agreement containing  provisions in the Company's favor
identical  to Sections 2, 3 and 4 of this  Agreement.  Confidential  Information
does not include  information  which (i) is known to  Consultant  at the time of
disclosure  to  Consultant  by the Company as  evidenced  by written  records of
Consultant,  (ii) has become publicly known and made generally available through
no  wrongful  act of  Consultant,  or (iii)  has  been  rightfully  received  by
Consultant from a third party who is authorized to make such disclosure. Without
the Company's prior written approval, Consultant will not directly or indirectly
disclose to anyone the existence of this  Agreement or the fact that  Consultant
has this arrangement with the Company.

                  (c) Former  Employer's  Confidential  Information.  Consultant
agrees that  Consultant  will not  improperly  use or disclose  any  proprietary
information  or trade secrets of any former or current  employer or other person
or entity with which  Consultant  has an agreement or duty to keep in confidence
information  acquired by Consultant,  if any, and that Consultant will not bring
onto the  premises  of the  Company  any  unpublished  document  or  proprietary
information belonging to such employer,  person or entity unless consented to in
writing  by such  employer,  person or entity.  Consultant  will  indemnify  the
Company and hold it harmless from and against all claims,  liabilities,  damages
and expenses, including reasonable attorneys fees and costs of suit, arising out
of or in connection  with any violation or claimed  violation of a third party's
rights  resulting in whole or in part from the Company's use of the work product
of Consultant under this Agreement.

                  (d)   Third   Party   Confidential   Information.   Consultant
recognizes  that the Company has  received  and in the future will  receive from
third parties their confidential or proprietary information subject to a duty on
the Company's part to maintain the  confidentiality  of such  information and to
use it only for certain limited purposes. Consultant agrees that Consultant owes
the  Company  and such  third  parties,  during the term of this  Agreement  and
thereafter,  a duty to hold all such confidential or proprietary  information in
the  strictest  confidence  and  not to  disclose  it to  any  person,  firm  or
corporation  or to use it except as  necessary  in carrying out the Services for
the Company consistent with the Company's agreement with such third party.

                  (e)  Return  of  Materials.   Upon  the  termination  of  this
Agreement,  or upon Company's  earlier  request,  Consultant will deliver to the
Company  all  of  the  Company's  property  or  Confidential   Information  that
Consultant may have in Consultant's possession or control.

         3.       Ownership



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                  (a)  Assignment.  Consultant  agrees  that  all  copyrightable
material,  notes,  records,   drawings,   designs,   inventions,   improvements,
developments,   discoveries  and  trade  secrets  (collectively,   "Inventions")
conceived,  made or discovered by Consultant,  solely or in  collaboration  with
others,  during the period of this  Agreement  which relate in any manner to the
business  of  the  Company  that   Consultant  may  be  directed  to  undertake,
investigate or experiment with, or which  Consultant may become  associated with
in work,  investigation or experimentation in the line of business of Company in
performing  the  Services  hereunder,  are the  sole  property  of the  Company.
Consultant  further  agrees to assign (or cause to be assigned)  and does hereby
assign fully to the Company all Inventions  and any  copyrights,  patents,  mask
work rights or other intellectual property rights relating thereto.

                  (b) Further  Assurances.  Consultant agrees to assist Company,
or its  designee,  at the Company's  expense,  in every proper way to secure the
Company's rights in the Inventions and any copyrights, patents, mask work rights
or other intellectual property rights relating thereto in any and all countries,
including the  disclosure to the Company of all pertinent  information  and data
with respect thereto, the execution of all applications,  specifications, oaths,
assignments and all other  instruments  which the Company will deem necessary in
order to apply for and obtain  such  rights and in order to assign and convey to
the Company, its successors,  assigns and nominees the sole and exclusive right,
title and interest in and to such Inventions, and any copyrights,  patents, mask
work rights or other intellectual  property rights relating thereto.  Consultant
further agrees that Consultant's  obligation to execute or cause to be executed,
when it is in  Consultant's  power to do so, any such  instrument or papers will
continue after the termination of this Agreement.

                  (c) Pre-Existing  Materials.  Consultant agrees that if in the
course of performing the Services,  Consultant  incorporates  into any Invention
developed hereunder any invention, improvement,  development, concept, discovery
or other proprietary  information owned by Consultant or in which Consultant has
an interest, (i) Consultant will inform Company, in writing before incorporating
such  invention,   improvement,   development,   concept,   discovery  or  other
proprietary  information  into any  Invention  and (ii) the  Company  is  hereby
granted  and will have a  nonexclusive,  royalty-free,  perpetual,  irrevocable,
worldwide license to make, have made,  modify, use and sell such item as part of
or in  connection  with such  Invention.  Consultant  will not  incorporate  any
invention,  improvement,  development,  concept,  discovery or other proprietary
information  owned by any third party into any Invention without Company's prior
written permission.

                  (d) Attorney in Fact. Consultant agrees that if the Company is
unable because of Consultant's unavailability,  dissolution,  mental or physical
incapacity,  or for any other reason, to secure Consultant's  signature to apply
for or to pursue any  application  for any United  States or foreign  patents or
mask work or copyright  registrations  covering the  Inventions  assigned to the
Company above,  then Consultant hereby  irrevocably  designates and appoints the
Company and its duly authorized  officers and agents as  Consultant's  agent and
attorney in fact, to act for and in Consultant's behalf and stead to execute and
file  any such  applications  and to do all  other  lawfully  permitted  acts to
further  the  prosecution  and  issuance  of  patents,  copyright  and mask work
registrations  thereon  with the same legal  force and effect as if  executed by
Consultant.

         4. Conflicting Obligations. Consultant certifies that Consultant has no
outstanding  agreement  or  obligation  that  is in  conflict  with  any  of the
provisions of this Agreement,  or that would preclude  Consultant from complying
with the provisions hereof, and further certifies that Consultant will not enter
into any such conflicting agreement during the term of this Agreement.


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         5.  Non-Solicit.  The Consultant  covenants and agrees with the Company
that during his consultancy  with the Company and for a period expiring one year
after the date of  termination of such  consultancy,  he will not solicit any of
the Company's  then-current  employees to terminate  their  employment  with the
Company or to become  employed  by any other  firm,  company  or other  business
enterprise with which the Consultant may then be connected.

         6.       Noncompete.

(1) Scope.  Consultant  agrees that during the period beginning on the Effective
Date and continuing for the term of this  Agreement,  he will not enter into the
employ of, or render  services to, any firm,  corporation,  or organization in a
capacity  that  gives  him  responsibility  for that  segment  of such  entity's
business  which  derives  more than 10% of its  annual  revenues  from  sales of
products which  directly  compete with products which are offered by the Company
during  the  term of the  Employment  Agreement  and the  Consultant  Agreement;
provided,  however,  that  Executive may continue his  relationship  with Draper
Labs,  the  Aerospace  Corporation,   IntegriNautics  Corporation  and  Stanford
University  (related  to GPS  activities)  and any other firm,  corporation,  or
organization  which  the  Board of  Directors  approves  subject  to the duty of
loyalty to the Company.

(2) Geographic  Area. The parties  acknowledge  that the business of the Company
and its  subsidiaries  is  international  in scope.  The parties  agree that the
geographical  areas in which the  restrictions  provided  for in this  Agreement
apply  include all cities,  counties and states of the United States of America.
In  addition,  the  parties  agree  that the  geographical  areas  in which  the
restrictions  provided for in this Agreement  apply include all foreign  nations
outside  the  United  States  of  America  in which  the  Company  or any of its
subsidiaries  engages  in sales,  or  otherwise  conducts  business  or  selling
efforts.

(3)  Severability.  The parties  intend  that the  covenants  contained  in this
Section be construed as a series of separate  covenants,  one for each county of
each state of the United States and each nation. Except for geographic coverage,
each such separate  covenant will be deemed  identical in terms of the covenants
contained in this Agreement. If, in any judicial proceeding, a court will refuse
to enforce any of the separate  covenants (or any part thereof)  deemed included
in this Section, then such unenforceable  covenant (or such part) will be deemed
eliminated from this Section for the purpose of those  proceedings to the extent
necessary to permit the remaining separate covenants (or portions thereof) to be
enforced. In the event that the provisions of this Section should ever be deemed
to exceed the time or geographic  limitations,  or the scope of these covenants,
as permitted by  applicable  law, then such  provisions  will be reformed to the
maximum  time or  geographic  limitations,  as the  case  may be,  permitted  by
applicable laws.

         7.       Term and Termination

                  (a) Term.  This  Agreement  will commence on June 1, 1999 
and will continue until the earlier of (i) June 1, 2002 or (ii) termination as 
provided below.

                  (b)  Termination.  The Company may  terminate  this  Agreement
immediately  and without prior notice if  Consultant  refuses to or is unable to
perform  the  Services  or is in  breach  of  any  material  provision  of  this
Agreement.


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<PAGE>


                  (c) Survival.  Upon such  termination all rights and duties of
the parties toward each other will cease except:

                           (i)      that the Company will be obliged to pay, 
within 30 days of the effective date of  termination,  all amounts owing to
Consultant  for Services  completed and accepted by the Company prior to the 
termination date and related  expenses,  if any, in accordance with the
provisions of Section 1 (Services and Compensation) hereof; and

                           (ii)     Sections 2  (Confidentiality),
3 (Ownership),  5 (Non-Solicit) and 8 (Independent Contractor) will survive 
termination of this Agreement.

         8.  Assignment.  Neither  this  Agreement  nor any right  hereunder  or
interest herein may be assigned or transferred by Consultant without the express
written consent of the Company.

         9. Independent  Contractor.  It is the express intention of the parties
that Consultant is an independent contractor.  Nothing in this Agreement will in
any  way  be  construed  to  constitute  Consultant  as an  agent,  employee  or
representative  of  the  Company,  but  Consultant  will  perform  the  Services
hereunder as an independent contractor.  Consultant acknowledges and agrees that
Consultant  is  obligated  to report  as income  all  compensation  received  by
Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges
the obligation to pay all  self-employment  and other taxes thereon.  Consultant
further  agrees to indemnify  and hold  harmless the Company and its  directors,
officers,   and  employees  from  and  against  all  taxes,   losses,   damages,
liabilities,  costs and  expenses,  including  attorney's  fees and other  legal
expenses,  arising  directly or indirectly  from (i) any negligent,  reckless or
intentionally wrongful act of Consultant or Consultant's  assistants,  employees
or agents,  (ii) a determination by a court or agency that the Consultant is not
an independent contractor, or (iii) any breach by the Consultant or Consultant's
assistants,  employees  or  agents  of any of the  covenants  contained  in this
Agreement.

         10. Benefits.  Consultant  acknowledges and agrees and it is the intent
of the parties hereto that Consultant receive no Company-sponsored benefits from
the Company either as a Consultant or employee.  Such benefits include,  but are
not  limited to,  paid  vacation,  sick  leave,  medical  insurance,  and 401(k)
participation.  If Consultant is  reclassified  by a state or federal  agency or
court as an employee,  Consultant  will become a reclassified  employee and will
receive no benefits  except those  mandated by state or federal law,  even if by
the  terms  of the  Company's  benefit  plans  in  effect  at the  time  of such
reclassification Consultant would otherwise be eligible for such benefits.

         11.      Arbitration and Equitable Relief


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<PAGE>

                  (a) Disputes.  Except as provided in Section 11(c) below,  the
Company and the  Consultant  agree that,  to the extent  permitted by applicable
law,  any  dispute  or  controversy  arising  under or in  connection  with this
Agreement will be settled exclusively by arbitration in San Jose, California, in
accordance with the rules of the American Arbitration Association then in effect
by an arbitrator selected by both parties within ten days after either party has
notified  the other in  writing  that it  desires a dispute  between  them to be
settled by arbitration. In the event the parties cannot agree on such arbitrator
within such ten-day period,  each party will select an arbitrator and inform the
other party in writing of such  arbitrator's  name and address  within five days
after the end of such ten-day  period and the two  arbitrators  so selected will
select a third arbitrator within 15 days thereafter;  provided, however, that in
the event of a failure by either  party to select an  arbitrator  and notify the
other  party of such  selection  within  the time  period  provided  above,  the
arbitrator  selected  by the  other  party  will be the sole  arbitrator  of the
dispute.  The  decision  of  the  arbitrator  or a  majority  of  the  panel  of
arbitrators  will be binding  upon the parties and judgment in  accordance  with
that  decision  may be  entered  in any  court  having  jurisdiction  thereover.
Punitive damages will not be awarded.

                  (b) Consent to Personal  Jurisdiction.  The arbitrator(s) will
apply California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  Consultant hereby consents to the personal jurisdiction
of the  state  and  federal  courts  located  in  California  for any  action or
proceeding  arising  from or  relating  to this  Agreement  or  relating  to any
arbitration in which the parties are participants.

                  (c)  Equitable  Relief.  The parties may apply to any court of
competent   jurisdiction  for  a  temporary   restraining   order,   preliminary
injunction,  or other interim or  conservatory  relief,  as  necessary,  without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

                  (d)  Acknowledgment.  CONSULTANT HAS READ AND UNDERSTANDS THIS
AGREEMENT,  WHICH DISCUSSES ARBITRATION.  CONSULTANT UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT,  CONSULTANT AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN  CONNECTION  WITH THIS  AGREEMENT,  OR THE  INTERPRETATION,  VALIDITY,
CONSTRUCTION,   PERFORMANCE,   BREACH  OR   TERMINATION   THEREOF,   TO  BINDING
ARBITRATION,  EXCEPT AS PROVIDED  IN SECTION  11(c),  AND THAT THIS  ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF CONSULTANT'S RIGHT TO A JURY TRIAL AND RELATES TO
THE  RESOLUTION  OF ALL  DISPUTES  RELATING TO ALL  ASPECTS OF THE  RELATIONSHIP
BETWEEN THE PARTIES.

         12.  Governing  Law.  This  Agreement  will be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

         13. Entire Agreement.  This Agreement, the Employment Agreement and the
Standby  Consulting  Agreement  represent the entire agreement and understanding
between the  parties as to the subject  matter  hereof and  supersede  all prior
agreements  whether written or oral. No waiver,  alteration,  or modification of
any of the  provisions of this  Agreement  will be binding unless in writing and
signed by the party against whom  enforcement of the change or  modification  is
sought.

         14.  Attorney's  Fees.  In any court  action at law or equity  which is
brought by one of the parties to enforce or  interpret  the  provisions  of this
Agreement,  the prevailing party will be entitled to reasonable attorney's fees,
in addition to any other relief to which that party may be entitled.


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<PAGE>


         15.  Severability.  The invalidity or unenforceability of any provision
of this  Agreement,  or any terms thereof,  will not affect the validity of this
Agreement as a whole, which will at all times remain in full force and effect.

         16. Counterparts.  This Agreement may be executed in counterparts, each
of which  will be  deemed  an  original,  and  which  together  will be a single
instrument.


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.


CONSULTANT:                        TRIMBLE NAVIGATION LIMITED

By:/s/ Bradford W. Parkinson       By:/s/ Robert S. Cooper           
Dr. Bradford W. Parkinson
                                   Name:  Robert S. Cooper                  

                                   Title: Chairman                         


                                  Address: 585 N. Mary Avenue
                                  P.O. Box 3642
                                  Sunnyvale, CA 94088-3642


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<PAGE>



                                  EXHIBIT 10.65

                          STANDBY CONSULTING AGREEMENT


         This Standby Consulting Agreement (this "Agreement") is entered into as
of September 1, 1998 (the "Effective  Date") by and between  Trimble  Navigation
Limited, a California corporation (the "Company"), and Dr. Bradford W. Parkinson
("Consultant").

         WHEREAS,  simultaneously  with the  execution  hereof,  the Company and
Consultant are entering an Employment Agreement (the "Employment Agreement") and
a Consulting Agreement (the "Consulting Agreement");

         WHEREAS,  the  Company,   immediately   following  the  termination  of
Consultant's  status as an  employee  under  the  Employment  Agreement  or as a
consultant  under the  Consulting,  the Company desires to retain the ability to
use Consultant as an independent  contractor to perform consulting  services for
the  Company  as the need for such  services  may  arise  from  time to time and
Consultant  is willing to perform such  services,  on terms set forth more fully
below;

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein, the parties agree as follows:

         1.       Services and Compensation

                  (a) Services. Consultant will perform consulting services (the
"Services") on as needed basis as determined by the Chief  Executive  Officer of
the Company
 in consideration for $1.00 per year.

                  (b) Compensation. The Company will pay Consultant on an hourly
basis at a rate  mutually  determined  by  Consultant  and the  Chief  Executive
Officer of the Company at the time the Services are performed.

                  (c) Expenses.  The Company will  reimburse  Consultant for all
reasonable  travel  expenses  incurred  by  Consultant  in  performing  Services
pursuant to this Agreement.

         2.       Confidentiality

                  (a) Definition.  "Confidential  Information" means any Company
proprietary information,  technical data, trade secrets or know-how,  including,
but not limited to,  research,  product plans,  products,  services,  customers,
customer  lists,  markets,  software,   developments,   inventions,   processes,
formulas,  technology,  designs, drawings,  engineering,  hardware configuration
information,  marketing, finances or other business information disclosed by the
Company  either  directly or  indirectly  in  writing,  orally or by drawings or
inspection of parts or equipment.


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<PAGE>

                  (b) Non-Use and Non-Disclosure. Consultant will not, during or
subsequent  to the  term  of this  Agreement,  use  the  Company's  Confidential
Information  for any  purpose  whatsoever  other  than  the  performance  of the
Services  on  behalf of the  Company  or  disclose  the  Company's  Confidential
Information  to  any  third  party.  It is  understood  that  such  Confidential
Information  will remain the sole  property of the Company.  Consultant  further
agrees to take all reasonable precautions to prevent any unauthorized disclosure
of such  Confidential  Information  including,  but not limited to,  having each
employee of  Consultant,  if any, with access to any  Confidential  Information,
execute a nondisclosure  agreement containing  provisions in the Company's favor
identical  to Sections 2, 3 and 4 of this  Agreement.  Confidential  Information
does not include  information  which (i) is known to  Consultant  at the time of
disclosure  to  Consultant  by the Company as  evidenced  by written  records of
Consultant,  (ii) has become publicly known and made generally available through
no  wrongful  act of  Consultant,  or (iii)  has  been  rightfully  received  by
Consultant from a third party who is authorized to make such disclosure. Without
the Company's prior written approval, Consultant will not directly or indirectly
disclose to anyone the existence of this  Agreement or the fact that  Consultant
has this arrangement with the Company.

                  (c) Former  Employer's  Confidential  Information.  Consultant
agrees that  Consultant  will not  improperly  use or disclose  any  proprietary
information  or trade secrets of any former or current  employer or other person
or entity with which  Consultant  has an agreement or duty to keep in confidence
information  acquired by Consultant,  if any, and that Consultant will not bring
onto the  premises  of the  Company  any  unpublished  document  or  proprietary
information belonging to such employer,  person or entity unless consented to in
writing  by such  employer,  person or entity.  Consultant  will  indemnify  the
Company and hold it harmless from and against all claims,  liabilities,  damages
and expenses, including reasonable attorneys fees and costs of suit, arising out
of or in connection  with any violation or claimed  violation of a third party's
rights  resulting in whole or in part from the Company's use of the work product
of Consultant under this Agreement.

                  (d)   Third   Party   Confidential   Information.   Consultant
recognizes  that the Company has  received  and in the future will  receive from
third parties their confidential or proprietary information subject to a duty on
the Company's part to maintain the  confidentiality  of such  information and to
use it only for certain limited purposes. Consultant agrees that Consultant owes
the  Company  and such  third  parties,  during the term of this  Agreement  and
thereafter,  a duty to hold all such confidential or proprietary  information in
the  strictest  confidence  and  not to  disclose  it to  any  person,  firm  or
corporation  or to use it except as  necessary  in carrying out the Services for
the Company consistent with the Company's agreement with such third party.

                  (e)  Return  of  Materials.   Upon  the  termination  of  this
Agreement,  or upon Company's  earlier  request,  Consultant will deliver to the
Company  all  of  the  Company's  property  or  Confidential   Information  that
Consultant may have in Consultant's possession or control.

         3.       Ownership


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<PAGE>

                  (a)  Assignment.  Consultant  agrees  that  all  copyrightable
material,  notes,  records,   drawings,   designs,   inventions,   improvements,
developments,   discoveries  and  trade  secrets  (collectively,   "Inventions")
conceived,  made or discovered by Consultant,  solely or in  collaboration  with
others,  during the period of this  Agreement  which relate in any manner to the
business  of  the  Company  that   Consultant  may  be  directed  to  undertake,
investigate or experiment with, or which  Consultant may become  associated with
in work,  investigation or experimentation in the line of business of Company in
performing  the  Services  hereunder,  are the  sole  property  of the  Company.
Consultant  further  agrees to assign (or cause to be assigned)  and does hereby
assign fully to the Company all Inventions  and any  copyrights,  patents,  mask
work rights or other intellectual property rights relating thereto.

                  (b) Further  Assurances.  Consultant agrees to assist Company,
or its  designee,  at the Company's  expense,  in every proper way to secure the
Company's rights in the Inventions and any copyrights, patents, mask work rights
or other intellectual property rights relating thereto in any and all countries,
including the  disclosure to the Company of all pertinent  information  and data
with respect thereto, the execution of all applications,  specifications, oaths,
assignments and all other  instruments  which the Company will deem necessary in
order to apply for and obtain  such  rights and in order to assign and convey to
the Company, its successors,  assigns and nominees the sole and exclusive right,
title and interest in and to such Inventions, and any copyrights,  patents, mask
work rights or other intellectual  property rights relating thereto.  Consultant
further agrees that Consultant's  obligation to execute or cause to be executed,
when it is in  Consultant's  power to do so, any such  instrument or papers will
continue after the termination of this Agreement.

                  (c) Pre-Existing  Materials.  Consultant agrees that if in the
course of performing the Services,  Consultant  incorporates  into any Invention
developed hereunder any invention, improvement,  development, concept, discovery
or other proprietary  information owned by Consultant or in which Consultant has
an interest, (i) Consultant will inform Company, in writing before incorporating
such  invention,   improvement,   development,   concept,   discovery  or  other
proprietary  information  into any  Invention  and (ii) the  Company  is  hereby
granted  and will have a  nonexclusive,  royalty-free,  perpetual,  irrevocable,
worldwide license to make, have made,  modify, use and sell such item as part of
or in  connection  with such  Invention.  Consultant  will not  incorporate  any
invention,  improvement,  development,  concept,  discovery or other proprietary
information  owned by any third party into any Invention without Company's prior
written permission.

                  (d) Attorney in Fact. Consultant agrees that if the Company is
unable because of Consultant's unavailability,  dissolution,  mental or physical
incapacity,  or for any other reason, to secure Consultant's  signature to apply
for or to pursue any  application  for any United  States or foreign  patents or
mask work or copyright  registrations  covering the  Inventions  assigned to the
Company above,  then Consultant hereby  irrevocably  designates and appoints the
Company and its duly authorized  officers and agents as  Consultant's  agent and
attorney in fact, to act for and in Consultant's behalf and stead to execute and
file  any such  applications  and to do all  other  lawfully  permitted  acts to
further  the  prosecution  and  issuance  of  patents,  copyright  and mask work
registrations  thereon  with the same legal  force and effect as if  executed by
Consultant.

         4. Conflicting Obligations. Consultant certifies that Consultant has no
outstanding  agreement  or  obligation  that  is in  conflict  with  any  of the
provisions of this Agreement,  or that would preclude  Consultant from complying
with the provisions hereof, and further certifies that Consultant will not enter
into any such conflicting agreement during the term of this Agreement.


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<PAGE>

         5.  Non-Solicit.  The Consultant  covenants and agrees with the Company
that during his consultancy  with the Company and for a period expiring one year
after the date of  termination of such  consultancy,  he will not solicit any of
the Company's  then-current  employees to terminate  their  employment  with the
Company or to become  employed  by any other  firm,  company  or other  business
enterprise with which the Consultant may then be connected.

         6.       Term and Termination

                  (a) Term. This Agreement will commence  immediately  following
the  termination  of  Consultant's  status as an employee  under the  Employment
Agreement or as a consultant  under the Consulting  Agreement (as defined in the
Consulting Agreement) and will continue for a period of five years from the date
of this Agreement.

                  (b) Termination.  The Company may not terminate this Agreement
unless Consultant is in breach of any material provision of this Agreement.

                  (c) Survival.  Upon such  termination all rights and duties of
the parties toward each other will cease except:

                           (i)      that the Company will be obliged to pay, 
within 30 days of the effective date of  termination,  all amounts owing to 
Consultant  for Services  completed and accepted by the Company prior to the 
termination date and related  expenses,  if any, in accordance with the 
provisions of Section 1 (Services and Compensation) hereof; and

                           (ii)     Sections 2  (Confidentiality),  
3 (Ownership),  5 (Non-Solicit) and 8 (Independent Contractor) will survive 
termination of this Agreement.

         7.  Assignment.  Neither  this  Agreement  nor any right  hereunder  or
interest herein may be assigned or transferred by Consultant without the express
written consent of the Company.

         8. Independent  Contractor.  It is the express intention of the parties
that Consultant is an independent contractor.  Nothing in this Agreement will in
any  way  be  construed  to  constitute  Consultant  as an  agent,  employee  or
representative  of  the  Company,  but  Consultant  will  perform  the  Services
hereunder as an independent contractor.  Consultant acknowledges and agrees that
Consultant  is  obligated  to report  as income  all  compensation  received  by
Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges
the obligation to pay all  self-employment  and other taxes thereon.  Consultant
further  agrees to indemnify  and hold  harmless the Company and its  directors,
officers,   and  employees  from  and  against  all  taxes,   losses,   damages,
liabilities,  costs and  expenses,  including  attorney's  fees and other  legal
expenses,  arising  directly or indirectly  from (i) any negligent,  reckless or
intentionally wrongful act of Consultant or Consultant's  assistants,  employees
or agents,  (ii) a determination by a court or agency that the Consultant is not
an independent contractor, or (iii) any breach by the Consultant or Consultant's
assistants,  employees  or  agents  of any of the  covenants  contained  in this
Agreement.


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<PAGE>

         9. Benefits. Consultant acknowledges and agrees and it is the intent of
the parties hereto that Consultant  receive no  Company-sponsored  benefits from
the Company either as a Consultant or employee.  Such benefits include,  but are
not  limited to,  paid  vacation,  sick  leave,  medical  insurance,  and 401(k)
participation.  If Consultant is  reclassified  by a state or federal  agency or
court as an employee,  Consultant  will become a reclassified  employee and will
receive no benefits  except those  mandated by state or federal law,  even if by
the  terms  of the  Company's  benefit  plans  in  effect  at the  time  of such
reclassification Consultant would otherwise be eligible for such benefits.

         10.      Arbitration and Equitable Relief

                  (a) Disputes.  Except as provided in Section 10(c) below,  the
Company and the  Consultant  agree that,  to the extent  permitted by applicable
law,  any  dispute  or  controversy  arising  under or in  connection  with this
Agreement will be settled exclusively by arbitration in San Jose, California, in
accordance with the rules of the American Arbitration Association then in effect
by an arbitrator selected by both parties within ten days after either party has
notified  the other in  writing  that it  desires a dispute  between  them to be
settled by arbitration. In the event the parties cannot agree on such arbitrator
within such ten-day period,  each party will select an arbitrator and inform the
other party in writing of such  arbitrator's  name and address  within five days
after the end of such ten-day  period and the two  arbitrators  so selected will
select a third arbitrator within 15 days thereafter;  provided, however, that in
the event of a failure by either  party to select an  arbitrator  and notify the
other  party of such  selection  within  the time  period  provided  above,  the
arbitrator  selected  by the  other  party  will be the sole  arbitrator  of the
dispute.  The  decision  of  the  arbitrator  or a  majority  of  the  panel  of
arbitrators  will be binding  upon the parties and judgment in  accordance  with
that  decision  may be  entered  in any  court  having  jurisdiction  thereover.
Punitive damages will not be awarded.

                  (b) Consent to Personal  Jurisdiction.  The arbitrator(s) will
apply California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  Consultant hereby consents to the personal jurisdiction
of the  state  and  federal  courts  located  in  California  for any  action or
proceeding  arising  from or  relating  to this  Agreement  or  relating  to any
arbitration in which the parties are participants.

                  (c)  Equitable  Relief.  The parties may apply to any court of
competent   jurisdiction  for  a  temporary   restraining   order,   preliminary
injunction,  or other interim or  conservatory  relief,  as  necessary,  without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

                  (d)  Acknowledgment.  CONSULTANT HAS READ AND UNDERSTANDS THIS
AGREEMENT,  WHICH DISCUSSES ARBITRATION.  CONSULTANT UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT,  CONSULTANT AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN  CONNECTION  WITH THIS  AGREEMENT,  OR THE  INTERPRETATION,  VALIDITY,
CONSTRUCTION,   PERFORMANCE,   BREACH  OR   TERMINATION   THEREOF,   TO  BINDING
ARBITRATION,  EXCEPT AS PROVIDED  IN SECTION  10(c),  AND THAT THIS  ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF CONSULTANT'S RIGHT TO A JURY TRIAL AND RELATES TO
THE  RESOLUTION  OF ALL  DISPUTES  RELATING TO ALL  ASPECTS OF THE  RELATIONSHIP
BETWEEN THE PARTIES.


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         11.  Governing  Law.  This  Agreement  will be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

         12. Entire Agreement.  This Agreement, the Employment Agreement and the
Consulting  Agreement  represent the entire agreement and understanding  between
the parties as to the subject  matter hereof and supersede all prior  agreements
whether  written or oral. No waiver,  alteration,  or modification of any of the
provisions of this Agreement will be binding unless in writing and signed by the
party against whom enforcement of the change or modification is sought.

         13.  Attorney's  Fees.  In any court  action at law or equity  which is
brought by one of the parties to enforce or  interpret  the  provisions  of this
Agreement,  the prevailing party will be entitled to reasonable attorney's fees,
in addition to any other relief to which that party may be entitled.

         14.  Severability.  The invalidity or unenforceability of any provision
of this  Agreement,  or any terms thereof,  will not affect the validity of this
Agreement as a whole, which will at all times remain in full force and effect.

         15. Counterparts.  This Agreement may be executed in counterparts, each
of which  will be  deemed  an  original,  and  which  together  will be a single
instrument.


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.


CONSULTANT:                         TRIMBLE NAVIGATION LIMITED

By:/s/ Bradford W. Parkinson        By: /s/ Robert S. Cooper                 
Dr. Bradford W. Parkinson
                                    Name:   Robert S. Cooper       

                                   Title:   Chairman         


                                   Address: 585 N. Mary Avenue
                                   P.O. Box 3642
                                   Sunnyvale, CA  94088-3642


                                      132

<PAGE>




                                  EXHIBIT 10.66

                          STANDBY CONSULTING AGREEMENT


         This Standby Consulting Agreement (this "Agreement") is entered into as
of September 1, 1998 (the "Effective  Date") by and between  Trimble  Navigation
Limited,  a California  corporation  (the  "Company"),  and Dr. Robert S. Cooper
("Consultant").

         WHEREAS,  simultaneously  with the  execution  hereof,  the Company and
Consultant are entering an Employment Agreement (the "Employment Agreement");

         WHEREAS,  the  Company,   immediately   following  the  termination  of
Consultant's status as an employee under the Employment  Agreement,  the Company
desires to retain the ability to use Consultant as an independent  contractor to
perform  consulting  services for the Company as the need for such  services may
arise from time to time and Consultant is willing to perform such  services,  on
terms set forth more fully below;

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein, the parties agree as follows:

         1.       Services and Compensation

                  (a) Services. Consultant will perform consulting services (the
"Services") on as needed basis as determined by the Chief  Executive  Officer of
the Company in consideration for $1.00 per year.

                  (b) Compensation. The Company will pay Consultant on an hourly
basis
 at a rate  mutually  determined  by  Consultant  and the  Chief  Executive
Officer of the Company at the time the Services are performed.

                  (c) Expenses.  The Company will  reimburse  Consultant for all
reasonable  travel  expenses  incurred  by  Consultant  in  performing  Services
pursuant to this Agreement.

         2.       Confidentiality

                  (a) Definition.  "Confidential  Information" means any Company
proprietary information,  technical data, trade secrets or know-how,  including,
but not limited to,  research,  product plans,  products,  services,  customers,
customer  lists,  markets,  software,   developments,   inventions,   processes,
formulas,  technology,  designs, drawings,  engineering,  hardware configuration
information,  marketing, finances or other business information disclosed by the
Company  either  directly or  indirectly  in  writing,  orally or by drawings or
inspection of parts or equipment.


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<PAGE>

                  (b) Non-Use and Non-Disclosure. Consultant will not, during or
subsequent  to the  term  of this  Agreement,  use  the  Company's  Confidential
Information  for any  purpose  whatsoever  other  than  the  performance  of the
Services  on  behalf of the  Company  or  disclose  the  Company's  Confidential
Information  to  any  third  party.  It is  understood  that  such  Confidential
Information  will remain the sole  property of the Company.  Consultant  further
agrees to take all reasonable precautions to prevent any unauthorized disclosure
of such  Confidential  Information  including,  but not limited to,  having each
employee of  Consultant,  if any, with access to any  Confidential  Information,
execute a nondisclosure  agreement containing  provisions in the Company's favor
identical  to Sections 2, 3 and 4 of this  Agreement.  Confidential  Information
does not include  information  which (i) is known to  Consultant  at the time of
disclosure  to  Consultant  by the Company as  evidenced  by written  records of
Consultant,  (ii) has become publicly known and made generally available through
no  wrongful  act of  Consultant,  or (iii)  has  been  rightfully  received  by
Consultant from a third party who is authorized to make such disclosure. Without
the Company's prior written approval, Consultant will not directly or indirectly
disclose to anyone the existence of this  Agreement or the fact that  Consultant
has this arrangement with the Company.

                  (c) Former  Employer's  Confidential  Information.  Consultant
agrees that  Consultant  will not  improperly  use or disclose  any  proprietary
information  or trade secrets of any former or current  employer or other person
or entity with which  Consultant  has an agreement or duty to keep in confidence
information  acquired by Consultant,  if any, and that Consultant will not bring
onto the  premises  of the  Company  any  unpublished  document  or  proprietary
information belonging to such employer,  person or entity unless consented to in
writing  by such  employer,  person or entity.  Consultant  will  indemnify  the
Company and hold it harmless from and against all claims,  liabilities,  damages
and expenses, including reasonable attorneys fees and costs of suit, arising out
of or in connection  with any violation or claimed  violation of a third party's
rights  resulting in whole or in part from the Company's use of the work product
of Consultant under this Agreement.

                  (d)   Third   Party   Confidential   Information.   Consultant
recognizes  that the Company has  received  and in the future will  receive from
third parties their confidential or proprietary information subject to a duty on
the Company's part to maintain the  confidentiality  of such  information and to
use it only for certain limited purposes. Consultant agrees that Consultant owes
the  Company  and such  third  parties,  during the term of this  Agreement  and
thereafter,  a duty to hold all such confidential or proprietary  information in
the  strictest  confidence  and  not to  disclose  it to  any  person,  firm  or
corporation  or to use it except as  necessary  in carrying out the Services for
the Company consistent with the Company's agreement with such third party.

                  (e)  Return  of  Materials.   Upon  the  termination  of  this
Agreement,  or upon Company's  earlier  request,  Consultant will deliver to the
Company  all  of  the  Company's  property  or  Confidential   Information  that
Consultant may have in Consultant's possession or control.

         3.       Ownership


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<PAGE>

                  (a)  Assignment.  Consultant  agrees  that  all  copyrightable
material,  notes,  records,   drawings,   designs,   inventions,   improvements,
developments,   discoveries  and  trade  secrets  (collectively,   "Inventions")
conceived,  made or discovered by Consultant,  solely or in  collaboration  with
others,  during the period of this  Agreement  which relate in any manner to the
business  of  the  Company  that   Consultant  may  be  directed  to  undertake,
investigate or experiment with, or which  Consultant may become  associated with
in work,  investigation or experimentation in the line of business of Company in
performing  the  Services  hereunder,  are the  sole  property  of the  Company.
Consultant  further  agrees to assign (or cause to be assigned)  and does hereby
assign fully to the Company all Inventions  and any  copyrights,  patents,  mask
work rights or other intellectual property rights relating thereto.

                  (b) Further  Assurances.  Consultant agrees to assist Company,
or its  designee,  at the Company's  expense,  in every proper way to secure the
Company's rights in the Inventions and any copyrights, patents, mask work rights
or other intellectual property rights relating thereto in any and all countries,
including the  disclosure to the Company of all pertinent  information  and data
with respect thereto, the execution of all applications,  specifications, oaths,
assignments and all other  instruments  which the Company will deem necessary in
order to apply for and obtain  such  rights and in order to assign and convey to
the Company, its successors,  assigns and nominees the sole and exclusive right,
title and interest in and to such Inventions, and any copyrights,  patents, mask
work rights or other intellectual  property rights relating thereto.  Consultant
further agrees that Consultant's  obligation to execute or cause to be executed,
when it is in  Consultant's  power to do so, any such  instrument or papers will
continue after the termination of this Agreement.

                  (c) Pre-Existing  Materials.  Consultant agrees that if in the
course of performing the Services,  Consultant  incorporates  into any Invention
developed hereunder any invention, improvement,  development, concept, discovery
or other proprietary  information owned by Consultant or in which Consultant has
an interest, (i) Consultant will inform Company, in writing before incorporating
such  invention,   improvement,   development,   concept,   discovery  or  other
proprietary  information  into any  Invention  and (ii) the  Company  is  hereby
granted  and will have a  nonexclusive,  royalty-free,  perpetual,  irrevocable,
worldwide license to make, have made,  modify, use and sell such item as part of
or in  connection  with such  Invention.  Consultant  will not  incorporate  any
invention,  improvement,  development,  concept,  discovery or other proprietary
information  owned by any third party into any Invention without Company's prior
written permission.

                  (d) Attorney in Fact. Consultant agrees that if the Company is
unable because of Consultant's unavailability,  dissolution,  mental or physical
incapacity,  or for any other reason, to secure Consultant's  signature to apply
for or to pursue any  application  for any United  States or foreign  patents or
mask work or copyright  registrations  covering the  Inventions  assigned to the
Company above,  then Consultant hereby  irrevocably  designates and appoints the
Company and its duly authorized  officers and agents as  Consultant's  agent and
attorney in fact, to act for and in Consultant's behalf and stead to execute and
file  any such  applications  and to do all  other  lawfully  permitted  acts to
further  the  prosecution  and  issuance  of  patents,  copyright  and mask work
registrations  thereon  with the same legal  force and effect as if  executed by
Consultant.

         4. Conflicting Obligations. Consultant certifies that Consultant has no
outstanding  agreement  or  obligation  that  is in  conflict  with  any  of the
provisions of this Agreement,  or that would preclude  Consultant from complying
with the provisions hereof, and further certifies that Consultant will not enter
into any such conflicting agreement during the term of this Agreement.


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<PAGE>

         5.  Non-Solicit.  The Consultant  covenants and agrees with the Company
that during his consultancy  with the Company and for a period expiring one year
after the date of  termination of such  consultancy,  he will not solicit any of
the Company's  then-current  employees to terminate  their  employment  with the
Company or to become  employed  by any other  firm,  company  or other  business
enterprise with which the Consultant may then be connected.

         6.       Term and Termination

                  (a) Term. This Agreement will commence  immediately  following
the  termination  of  Consultant's  status as an employee  under the  Employment
Agreement or as a consultant  under the Consulting  Agreement (as defined in the
Consulting Agreement) and will continue for a period of five years from the date
of this Agreement.

                  (b) Termination.  The Company may not terminate this Agreement
unless Consultant is in breach of any material provision of this Agreement.

                  (c) Survival.  Upon such  termination all rights and duties of
the parties toward each other will cease except:

                           (i)      that the Company will be obliged to pay, 
within 30 days of the effective date of  termination,  all amounts owing to 
Consultant  for Services  completed and accepted by the Company prior to the
termination date and related  expenses,  if any, in accordance with the
provisions of Section 1 (Services and Compensation) hereof; and

                           (ii)     Sections 2  (Confidentiality),  
3 (Ownership),  5 (Non-Solicit) and 8 (Independent Contractor) will survive 
termination of this Agreement.

         7.  Assignment.  Neither  this  Agreement  nor any right  hereunder  or
interest herein may be assigned or transferred by Consultant without the express
written consent of the Company.

         8. Independent  Contractor.  It is the express intention of the parties
that Consultant is an independent contractor.  Nothing in this Agreement will in
any  way  be  construed  to  constitute  Consultant  as an  agent,  employee  or
representative  of  the  Company,  but  Consultant  will  perform  the  Services
hereunder as an independent contractor.  Consultant acknowledges and agrees that
Consultant  is  obligated  to report  as income  all  compensation  received  by
Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges
the obligation to pay all  self-employment  and other taxes thereon.  Consultant
further  agrees to indemnify  and hold  harmless the Company and its  directors,
officers,   and  employees  from  and  against  all  taxes,   losses,   damages,
liabilities,  costs and  expenses,  including  attorney's  fees and other  legal
expenses,  arising  directly or indirectly  from (i) any negligent,  reckless or
intentionally wrongful act of Consultant or Consultant's  assistants,  employees
or agents,  (ii) a determination by a court or agency that the Consultant is not
an independent contractor, or (iii) any breach by the Consultant or Consultant's
assistants,  employees  or  agents  of any of the  covenants  contained  in this
Agreement.


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<PAGE>

         9. Benefits. Consultant acknowledges and agrees and it is the intent of
the parties hereto that Consultant  receive no  Company-sponsored  benefits from
the Company either as a Consultant or employee.  Such benefits include,  but are
not  limited to,  paid  vacation,  sick  leave,  medical  insurance,  and 401(k)
participation.  If Consultant is  reclassified  by a state or federal  agency or
court as an employee,  Consultant  will become a reclassified  employee and will
receive no benefits  except those  mandated by state or federal law,  even if by
the  terms  of the  Company's  benefit  plans  in  effect  at the  time  of such
reclassification Consultant would otherwise be eligible for such benefits.

         10.      Arbitration and Equitable Relief

                  (a) Disputes.  Except as provided in Section 10(c) below,  the
Company and the  Consultant  agree that,  to the extent  permitted by applicable
law,  any  dispute  or  controversy  arising  under or in  connection  with this
Agreement will be settled exclusively by arbitration in San Jose, California, in
accordance with the rules of the American Arbitration Association then in effect
by an arbitrator selected by both parties within ten days after either party has
notified  the other in  writing  that it  desires a dispute  between  them to be
settled by arbitration. In the event the parties cannot agree on such arbitrator
within such ten-day period,  each party will select an arbitrator and inform the
other party in writing of such  arbitrator's  name and address  within five days
after the end of such ten-day  period and the two  arbitrators  so selected will
select a third arbitrator within 15 days thereafter;  provided, however, that in
the event of a failure by either  party to select an  arbitrator  and notify the
other  party of such  selection  within  the time  period  provided  above,  the
arbitrator  selected  by the  other  party  will be the sole  arbitrator  of the
dispute.  The  decision  of  the  arbitrator  or a  majority  of  the  panel  of
arbitrators  will be binding  upon the parties and judgment in  accordance  with
that  decision  may be  entered  in any  court  having  jurisdiction  thereover.
Punitive damages will not be awarded.

                  (b) Consent to Personal  Jurisdiction.  The arbitrator(s) will
apply California law to the merits of any dispute or claim, without reference to
conflicts of law rules.  Consultant hereby consents to the personal jurisdiction
of the  state  and  federal  courts  located  in  California  for any  action or
proceeding  arising  from or  relating  to this  Agreement  or  relating  to any
arbitration in which the parties are participants.

                  (c)  Equitable  Relief.  The parties may apply to any court of
competent   jurisdiction  for  a  temporary   restraining   order,   preliminary
injunction,  or other interim or  conservatory  relief,  as  necessary,  without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

                  (d)  Acknowledgment.  CONSULTANT HAS READ AND UNDERSTANDS THIS
AGREEMENT,  WHICH DISCUSSES ARBITRATION.  CONSULTANT UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT,  CONSULTANT AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN  CONNECTION  WITH THIS  AGREEMENT,  OR THE  INTERPRETATION,  VALIDITY,
CONSTRUCTION,   PERFORMANCE,   BREACH  OR   TERMINATION   THEREOF,   TO  BINDING
ARBITRATION,  EXCEPT AS PROVIDED  IN SECTION  10(c),  AND THAT THIS  ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF CONSULTANT'S RIGHT TO A JURY TRIAL AND RELATES TO
THE  RESOLUTION  OF ALL  DISPUTES  RELATING TO ALL  ASPECTS OF THE  RELATIONSHIP
BETWEEN THE PARTIES.


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<PAGE>

         11.  Governing  Law.  This  Agreement  will be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

         12.  Entire  Agreement.  This  Agreement and the  Employment  Agreement
represent the entire agreement and  understanding  between the parties as to the
subject  matter  hereof and supersede all prior  agreements  whether  written or
oral. No waiver,  alteration,  or  modification of any of the provisions of this
Agreement will be binding unless in writing and signed by the party against whom
enforcement of the change or modification is sought.

         13.  Attorney's  Fees.  In any court  action at law or equity  which is
brought by one of the parties to enforce or  interpret  the  provisions  of this
Agreement,  the prevailing party will be entitled to reasonable attorney's fees,
in addition to any other relief to which that party may be entitled.

         14.  Severability.  The invalidity or unenforceability of any provision
of this  Agreement,  or any terms thereof,  will not affect the validity of this
Agreement as a whole, which will at all times remain in full force and effect.

         15. Counterparts.  This Agreement may be executed in counterparts, each
of which  will be  deemed  an  original,  and  which  together  will be a single
instrument.


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.


CONSULTANT:                         TRIMBLE NAVIGATION LIMITED

By: /s/ Robert S. Cooper            By: Bradford W. Parkinson            
Dr. Robert S. Cooper
                                    Name: Bradford W. Parkinson     

                                    Title: President  


                                   Address: 585 N. Mary Avenue
                                   P.O. Box 3642
                                   Sunnyvale, CA  94088-3642

                                      138

<PAGE>



                                 EXHIBIT 10.67

March 17, 1999



Mr. Steve Berglund

Subject: Revised offer of employment

Dear Steve:

The Board of Directors is pleased to extend to you this offer of  employment  to
serve as Chief  Executive  Officer and to be  appointed as a member of the board
for Trimble  Navigation  Limited.  We believe you are uniquely suited to the TNL
position  in light of your  background  and  experience  and the  nature  of our
company's markets and opportunities.

Your base salary compensation would be $33,333 per month, payable on the regular
payroll period of the company,  commencing on your first day of employment.  The
board offers a bonus  opportunity  of up to 50% of your  compensation  base, pro
rata at the end of our 1999 fiscal year, with half of this amount guaranteed for
1999.  For the year 2000,  you will be eligible for a 50% bonus with criteria as
negotiated with the board.

You would be awarded  options to  purchase  400,000  shares of stock which would
vest 20% at the first anniversary and monthly thereafter for five years from the
date of grant.  The option  exercise price would be the fair market value of the
stock on your  employment  start date. We anticipate that your presence may have
an impact on the stock price so that it might be wise for your
 employment  start
date to occur upon your date of agreement to serve as the CEO, which we would be
required to announce immediately.

In the event of a Change of  Control  of the  company  (as  defined on Exhibit A
hereto), you would receive an additional 12 months of vesting of your shares. If
the Change of Control occurred during your first 12 months of service, you would
receive ratable vesting for the first year plus the year of accelerated vesting.

You are eligible for the Trimble Executive  Non-qualified  Deferred Compensation
Plan.  Under this plan, you may defer up to 100% of future salary and up to 100%
of any future bonus. Details to be provided under separate cover.


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<PAGE>




Trimble will assist you in your relocation to Sunnyvale. This will include:

o    Mortgage  assistance:  Recognizing the  exceptional  housing market in this
     area, we are willing to lend you, at your election,  up to $400,000,  to be
     secured by a second deed of trust on the real property, at the lending rate
     at which the  company  borrows as  adjusted  from time to time,  which loan
     would be forgiven  ratably over a five-year  period so long as you continue
     to be employed.  If your employment  relationship  ends during that period,
     the  remaining   obligation  would  be  due  on  the  anniversary  of  such
     separation. We will add the yearly interest to your compensation.
o    Six months of interim housing at $3,000/month.
o    Cost  reimbursement  for movement of household goods from your primary home
     to Sunnyvale,  including up to two  automobiles  if required.  Trimble will
     determine the carrier.
o    The reasonable cost of two house-hunting  trips (5 days in length per trip)
     for you and your family, including transportation, lodging, and meals.
o    Provision  for an  automobile  for two weeks,  or until your  shipped  auto
     arrives,  up to a  maximum  of four  weeks.  Payment  of fuel  will be your
     responsibility.
o    Reimbursement of reasonable  travel,  meals, and lodging incurred in travel
     by the most direct route, for you and your family, by rail, air or personal
     car to Sunnyvale. Receipts must be provided.
o    Storage for your household goods (excluding auto)for a maximum of 90 days, 
     if required. o A relocation  allowance of $10,000 to offset miscellaneous  
     expenses related to your relocation.
o    165% of the cost of a real estate commission which you incur on the sale of
     your present principle residence within one year from your employment start
     date.

All  relocation  reimbursements  and company paid  expenses will be reflected on
your W-2 tax form. As some expenses are considered tax deductible,  we recommend
that you consult with a tax consultant.

Upon an Involuntary Termination or a termination other than for "Cause" (as both
terms are defined on Exhibit A) or as a result of your  disability,  the company
would provide you with 12 months severance. The amount of the severance would be
equal to your current base salary plus one half of your annual bonus  accrued to
the date of  separation.  If separation  occurred  prior to January 1, 2000, the
"annual"  bonus  amount  (accrued  ratably  from your start date to December 31,
1999)  would be  treated as fully  guaranteed  and thus would be equal to 25% of
your base  salary  accrued to the date of  separation  and would be added to the
severance payments ratably over the following 12 months. If separation  occurred
after  December 31, 1999, the bonus amount would be calculated at the end of the
fiscal year in which severance occurred and you would be paid an amount equal to
one half of the  pro-rated  bonus  amount based on the  percentage  of that year
prior to separation.


                                      140

<PAGE>


Trimble has an attractive  benefits  package for employees,  including  medical,
dental,  life,  short and  long-term  disability  insurance,  and a Savings  and
Retirement  Plan (401k) with a company match,  and Employee Stock Purchase Plan.
Details of other  benefits,  such as paid time off and  holidays,  will be given
during your employee orientation.

The board members and I are enthusiastic in making this offer to you and believe
that between  inherent value of the company and your management  skills there is
the  opportunity  to  achieve  very  substantial  growth  in  the  value  of the
shareholder investment.

Sincerely,


/s/ Bradford W. Parkinson
Bradford W. Parkinson
President and CEO

BWP:rb




I accept the above  offer of  employment  and will begin work as an  employee of
Trimble Navigation Limited on March 17, 1999.


/s/ Steven W. Berglund                     _______________________________
Steve Berglund


                                      141

<PAGE>

                                    EXHIBIT A

Definition of Terms.  The following terms referred to in this Letter shall have
the following meanings:

"Cause"  means (i) your being  convicted of a felony,  (ii) a willful act by you
which constitutes gross misconduct and which is injurious to the Corporation and
which is not cured by you within 30 days after written  notice of such breach is
given to you by the Board of Directors or (iii) continued and repeated  refusals
to abide by the reasonable directions of the board of directors.

"Change of Control" means the occurrence of any of the following events: (i) the
direct  or  indirect  sale,  lease,   exchange  or  other  transfer  of  all  or
substantially  all (50% or more) of the assets of the  Corporation to any person
or entity or group of persons or entities  acting in concert as a partnership or
other  group (a "Group of  Persons"),  (ii) the merger,  consolidation  or other
business  combination of the Corporation  with or into another  corporation with
the effect  that the  shareholders  of the  Corporation  immediately  before the
merger, consolidation or other business combination, hold, immediately after any
such  transaction,  50% or  less  of  the  combined  voting  power  of the  then
outstanding   securities   of  the   surviving   corporation   of  such  merger,
consolidation  or other business  combination  ordinarily (and apart from rights
accruing under special  circumstances)  having the right to vote in the election
of directors  of such  surviving  entity,  or (iii) a person or Group of Persons
shall,  as a result  of a tender  or  exchange  offer,  open  market  purchases,
privately  negotiated  purchases or otherwise,  have become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities  Exchange Act of 1934, as
amended)  of  securities  of the  Corporation  representing  50% or  more of the
combined  voting power of the then  outstanding  securities of such  corporation
ordinarily (and apart from rights accruing under special  circumstances)  having
the right to vote in the election of directors.

"Involuntary Termination" means (i) without your consent, your assignment to any
duties  or the  significant  reduction  of  your  duties,  either  of  which  is
inconsistent   with  your   position   or  title   with  the   Corporation   and
responsibilities in effect immediately prior to such assignment, or your removal
from such  position and  responsibility,  or a reduction  in your title;  (ii) a
greater than 10% reduction by the  Corporation in your base  compensation  as in
effect  immediately  prior  to such  reduction;  provided,  however,  that  such
reduction  shall  not  apply if  substantially  all  executive  officers  of the
Corporation  agree to a similar  reduction  in base  compensation;  or (iii) any
purported  termination  of you  by  the  Corporation  (other  than  a  voluntary
termination initiated by you) which is not effected for disability or for Cause.


                                      142

<PAGE>




                                  EXHIBIT 10.68

                           TRIMBLE NAVIGATION LIMITED
                     NONQUALIFIED DEFERRED COMPENSATION PLAN

                            PLAN AND TRUST AGREEMENT
                          (EFFECTIVE FEBRUARY 10, 1994)

                                

                                      143

<PAGE>


                           TRIMBLE NAVIGATION LIMITED

                NONQUALIFIED DEFERRED COMPENSATION PLAN AND TRUST



         THIS PLAN AND TRUST  AGREEMENT,  effective  as of February 1, 1994 (the
"Effective  Date"),  is made and entered into by and between Trimble  Navigation
Limited (the "Company"),  acting on behalf of itself and any  subsidiaries,  and
John H. Barnet as trustee (the  "Trustee").  Throughout,  Company  shall include
wherever  relevant any entity that is directly or  indirectly  controlled by the
Company  or any  entity  in  which  the  Company  has a  significant  equity  or
investment interest, as determined by the Company.


RECITALS:

     1........The Company wishes to establish a supplemental employee retirement
plan  for  the  benefit  of a  select  group  of  highly  compensated  employees
designated by the Company,  and in its sole discretion,  as eligible  executives
("Executives").

     2........The  Company  wishes to  provide  that the plan to be  established
under this plan or  agreement  shall be  designated  as the  Trimble  Navigation
Limited Nonqualified Deferred Compensation Plan (the "Plan").

     3........The  Company  wishes to provide  under the Plan for the
 payment of
vested accrued benefits to the Executives and their beneficiary or beneficiaries
("Trust Beneficiaries").

     4........The  Company  wishes to  provide  under the Plan that the  Company
shall pay all of the accrued benefits from its general assets.

     5........The   Company   wishes  to  establish   two   irrevocable   trusts
(individually, a "Trust," and together, the "Trusts") to set aside contributions
by the Company to meet its obligations under the Plan.

     6........The Company wishes to make contributions to the Trusts and
that such  contributions  be held by the Trustee and  invested,  reinvested  and
distributed, all in accordance with the provisions of this Plan.

         7........The  Company intends that amounts  allocated to the Trusts and
the earnings  thereon shall be used by the Trustee to satisfy the liabilities of
the Company  under the Plan with respect to each  Executive  for whom an Account
has been  established  and such  utilization  shall  be in  accordance  with the
procedures set forth herein.

     8........The  Company intends that the Trusts be "grantor  trusts" with the
corpus and income of the Trusts  treated as assets and income of the Company for
federal and state income tax purposes.


                                      144

<PAGE>


     9........The  Company  intends  that the assets of the Trusts  shall at all
times be  subject  to the  claims of the  general  creditors  of the  Company as
provided in Article XI.

         10.......The Company intends that the existence of the Trusts shall not
alter  the  characterization  of the  Plan as  "unfunded"  for  purposes  of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and shall
not be construed  to provide  income to the  Executives  under the Plan prior to
actual payment of the vested accrued benefits thereunder.

         NOW THEREFORE, the Company does hereby establish the Plan and Trusts as
follows and does also hereby agree that the Plan and Trusts shall be structured,
held and disposed of as follows:


                                    ARTICLE I

                               PLAN ADMINISTRATION

         A........The  Plan  shall  be  administered  by  John  H.  Barnet  (the
"Administrator").  Subject  to the  provisions  in the Plan and to the  specific
duties  delegated  by  the  Board  of  Directors  to  such  Administrator,   the
Administrator   shall  be  responsible  for  the  general   administration   and
interpretation   of  the  Plan  and  for  carrying  out  its   provisions.   The
Administrator shall have such powers as may be necessary to discharge its duties
hereunder,  including,  but not by way of limitation,  the following  powers and
duties:

                  (1)  discretionary  authority  to construe and  interpret  the
         terms of the Plan, and to determine  eligibility and the amount, manner
         and time of payment of any benefits hereunder;

                  (2) to prescribe  procedures to be followed by Executives  for
         purposes of Plan participation and distribution of benefits; and

                  (3)      to take such other action as may be necessary and 
         appropriate for the proper administration of the Plan.

         B........The Administrator may adopt such rules, regulations and bylaws
and may make such  decisions as it deems  necessary or desirable  for the proper
administration  of the Plan. Any rule or decision that is not inconsistent  with
the  provisions  of the Plan shall be  conclusive  and binding  upon all persons
affected  by  it,  and  there  shall  be  no  appeal  from  any  ruling  by  the
Administrator that is within its authority, except as otherwise provided herein.


                                      145

<PAGE>

                                   ARTICLE II

             ELIGIBILITY, PARTICIPATION AND BENEFICIARY DESIGNATION

         A........Eligible  Employees.  The  following  categories  of employees
("Eligible  Employees")  shall be  eligible  to  participate  in the  Plan:  (i)
employees who are designated as eligible to participate on the attached  Exhibit
A to this Plan;  and (ii) any other  employee or  category  of employee  that is
designated by the  Administrator  as eligible to  participate  in the Plan.  The
Administrator  reserves the right to modify the definition of eligible  employee
at any time. Any Eligible  Employee who has commenced  participation in the Plan
shall be referred to in this Plan as an "Executive."

         B........Participation.   Each   Executive   may   elect  to   commence
participation   in  the  Plan  by  completing  a  Trimble   Navigation   Limited
Nonqualified  Deferred   Compensation  Plan  Deferred   Compensation   Agreement
("Deferred Compensation Agreement") within 30 days following the Effective Date.
Any  individual  who becomes an Eligible  Employee  after the Effective Date may
participate in the Plan by filing a Deferred  Compensation  Agreement  within 30
days following the date on which the Administrator gives such individual written
notice that the individual is an Eligible  Employee.  Any Eligible  Employee who
does not  execute a Deferred  Compensation  Agreement  within  the time  periods
described  herein  may  nevertheless  participate  in the Plan  commencing  with
Compensation  paid in the next  succeeding  calendar  year by filing an executed
Deferred  Compensation  Agreement with the Administrator before the beginning of
such calendar year.

         C........Beneficiary Designation. Each Executive, prior to entering the
Plan, shall designate a beneficiary or beneficiaries to receive the remainder of
any interest of the Executive under the Plan. An Executive may change his or her
beneficiary designation at any time on written notice to the Administrator. Each
beneficiary  designation  shall be in a form prescribed by the Administrator and
will be effective only when filed with the Administrator  during the Executive's
lifetime.  Each beneficiary designation filed with the Administrator will cancel
all  previously  filed  beneficiary  designations.  In the  absence  of a  valid
designation,  or  if no  designated  beneficiary  survives  the  Executive,  the
Executive's interest shall be distributed to the Executive's estate.


                                   ARTICLE III

                       PLAN CONTRIBUTIONS AND ALLOCATIONS


                                      146

<PAGE>

         A........Participant  Deferrals.  Each Executive  participating  in the
Plan shall execute a Deferred Compensation  Agreement authorizing the Company to
withhold a percentage of the Executive's  Compensation  which would otherwise be
paid to the Executive with respect to services  rendered.  Compensation shall be
defined for purposes of the  foregoing as the cash  compensation  payable to the
Executive in connection with the Executive's services to the Company,  including
all amounts  which an  Executive  elects to have the Company  contribute  on his
behalf as a deferral contribution  ("Compensation").  The deferral percentage is
applied to Compensation  after all other applicable payroll deductions have been
applied.  The  Administrator  may, in its discretion,  establish in the Deferred
Compensation  Agreement  minimum  and  maximum  levels  of bonus  and  non-bonus
compensation that may be deferred pursuant to the Plan.  Compensation  deferrals
made by an  Executive  under this Plan shall be held as an asset of the  Company
and the Company intends to deposit the amounts deferred into the Trusts.

         B........Election  Changes.  An  Executive  may,  in  such  form as the
Administrator may prescribe,  discontinue deferral of future compensation at any
time; however, no other modifications to the Deferred Compensation Agreement may
be made  prior  to the  commencement  of the  calendar  year  following  written
notification to the Company of any desired modifications.  The Administrator has
the power to establish uniform and nondiscriminatory rules and from time to time
to modify  or  change  such  rules  governing  the  manner  and  method by which
Compensation  deferral  contributions  shall be made,  as well as the manner and
method  by  which   Compensation   deferral   contribution  may  be  changed  or
discontinued temporarily or permanently. All Compensation deferral contributions
shall be  authorized  by the  Executive in writing,  made by payroll  deduction,
deducted from the Executive's  Compensation  without  reduction for any taxes or
withholding  (except to the extent required by law or the  regulations) and paid
over to the Trusts by the Company. Notwithstanding the foregoing, each Executive
shall remain liable for any and all employment  taxes owing with respect to such
Executive's Compensation deferral contributions.

         C........Cessation of Eligible Status. In the event an Executive ceases
to be an Eligible  Employee while also a participant in the Plan,  such employee
may continue to make Compensation deferral  contributions under the Plan through
the end of the  payroll  period in which the  employee  ceases to be an Eligible
Employee.  Thereafter,  such  employee  shall not make any further  Compensation
deferral  contributions  to the Plan  unless or until he or she again  meets the
eligibility requirements of Article II above.

         D........Company  Matching  Contributions.  As of the  last day of each
calendar year or such earlier time or times as the  Administrator may determine,
the Company may make matching  contributions to the Trusts in such amount as the
Board of Directors of the Company shall specify.

         E........Company  Discretionary Contributions.  The Company may, in its
sole discretion, make discretionary contributions to the Accounts of one or more
Executives  at such times and in such  amounts as the Board of  Directors of the
Company shall determine.

         F........Allocations.  The Compensation deferral  contributions and any
Company  contributions  made under the Plan on behalf of an  Executive  shall be
credited to the  Executive's  Account.  The  Administrator  shall  establish and
maintain  separate  subaccounts as it determines to be necessary and appropriate
for the proper  administration  of the Plan. Each Executive  Account consists of
the aggregate  interest of the Executive under the Plan (and in the Trust Funds,
as such term is defined in Article V), as reflected in the records maintained by
the Company for such purposes.


                                      147

<PAGE>

                                   ARTICLE IV

                                     VESTING

         A........Compensation   Deferral   Contributions.   The   value  of  an
Executive's   Account   attributable   to  Executives'   Compensation   deferral
contributions shall always be fully vested and nonforfeitable.

         B........Company  Contributions.  The value of an  Executive's  Account
attributable to any Company contributions  pursuant to Article III.D and E shall
vest in its entirety  five (5) years after the date of the Company  contribution
to which  such  value  relates,  provided  the  Executive  has  remained  in the
continuous  employ of the  Company  throughout  such  five-year  period.  If the
Executive's  employment with the Company  terminates for any reason prior to the
expiration  of such  five-year  period,  no portion of the  Executive's  Account
attributable to Company  contributions  occurring within the preceding five-year
period shall be considered vested for purposes of of this Plan. Upon termination
of an Executive's employment with the Company for any reason, any portion of the
Executive's Account that is not then vested (including  allocable  earnings,  as
determined by the Administrator), shall be forfeited.


                                    ARTICLE V

                                   TRUST FUND

         A........Trusts.  The Company  hereby  establishes  the Trusts with the
Trustee,  consisting of such sums of money and other property  acceptable to the
Trustee as from time to time shall be paid or delivered to the Trustee. All such
money and other property,  all investments and  reinvestments  made therewith or
proceeds  thereof and all  earnings and profits  thereon,  less all payments and
charges as authorized  herein,  shall  constitute  the "Trust  Funds." The Trust
Funds  shall at all times be subject to the claims of general  creditors  of the
Company as provided in Article XI.

         B........Grantor   Trusts.  The  Trusts  hereby  established  shall  be
irrevocable, but for the issuance by the Internal Revenue Service of unfavorable
tax  rulings on the status of the Trusts as grantor  trusts.  Subject to Article
XI,  assets of the Trusts shall be held for the  exclusive  purpose of providing
vested accrued benefits to the Trust Beneficiaries and defraying expenses of the
Trusts in accordance  with the provisions of this Plan. No part of the income or
corpus of the Trust Funds shall be  recoverable  by or for the Company  prior to
the termination of the Trusts and the satisfaction of all liabilities  under the
Plans.

     C........Assignment.  No right or interest to receive accrued benefits from
the Trusts may be assigned, sold, anticipated, ---------- alienated or otherwise
transferred by the Trust Beneficiaries.

                                      148

<PAGE>


         D........Trustee. The Trustee accepts the Trusts established under this
Plan on the terms and subject to the provisions set forth herein,  and it agrees
to discharge and perform fully and faithfully all of the duties and  obligations
imposed upon it under this Plan.

         E........Trust  Assets.  The  principal  of the Trusts and any earnings
thereon  shall be held  separate  and apart from other  funds of the Company and
shall be used  exclusively for the uses and purposes  herein set forth.  Neither
the Trust  Beneficiaries  nor the Plan shall have any preferred claim on, or any
beneficial  ownership  interest  in, any assets of the Trusts  prior to the time
such  assets  are paid to a Trust  Beneficiary  as vested  accrued  benefits  as
provided  in Article  IX, and all rights  created  under the Plan and the Trusts
under this Plan shall be mere  unsecured,  contractual  rights of the Executives
against the Company.


                                   ARTICLE VI

               GENERAL DUTIES OF THE ADMINISTRATOR AND THE TRUSTEE

         A........Administrator  Duties.  The  Administrator  will  provide  the
Trustee  with a copy of any  future  amendment  to this Plan  promptly  upon its
adoption.  The  Administrator  may from time to time hire  outside  consultants,
accountants,  actuaries, legal counsel or recordkeepers to perform such tasks as
the Administrator may from time to time determine.

         B........Trustee  Duties. The Trustee shall manage, invest and reinvest
the Trust  Funds as provided  in Article  XII of this Plan.  The  Trustee  shall
collect the income on the Trust Funds, and make distributions  therefrom, all as
hereinafter provided.

         C........Company  Contributions.  While the Plan remains in effect, and
prior to a  Change  in  Control,  as  defined  below,  the  Company  shall  make
contributions  to the Trust Funds at least once each quarter.  The amount of any
quarterly  contributions shall be at the discretion the Company. At the close of
each calendar year, the Company shall make additional contributions to the Trust
Funds to the  extent  that  previous  contributions  to the Trust  Funds for the
current calendar year are not equal to the total of the  Compensation  deferrals
made by each Executive plus Company  matching  contributions  and  discretionary
contributions,  if any,  accrued,  as of the close of the current calendar year.
The  Trustee  shall not be liable  for any  failure  by the  Company  to provide
contributions  sufficient to pay all accrued  benefits under the Plan in full in
accordance with the terms of this Plan.

         D........Department  of  Labor  Determination.  In the  event  that any
Executives are found to be ineligible, that is, not members of a select group of
highly  compensated  employees,   according  to  a  determination  made  by  the
Department  of  Labor,  the  Administrator  will  take  whatever  steps it deems
necessary,  in its sole  discretion  to equitably  protect the  interests of the
affected Executives.

                                      149

<PAGE>


                                   ARTICLE VII

                       ALLOCATION OF TRUST INCOME OR LOSS

         A........Determination  of Net Income.  As of each  Valuation  Date (as
defined in Article  VII.D  below),  the  Administrator  shall  determine the net
income or loss of the Trust Funds  based on a statement  from the Trustee of the
receipts and  disbursements  of the Trust Funds since the immediately  preceding
Valuation  Date  and of the  fair  market  value  of the  Trust  Funds as of the
Valuation Date. If one or more separate  investment  funds have been established
as  provided  in  Article  XII,  each fund  shall be valued  separately  on each
Valuation  Date and the net  income or loss of each fund shall be  allocated  to
each  Account  invested in such  investment  fund.  In  addition,  self-directed
accounts as defined under  Article XII.B shall be valued  according to Section C
of this Article.

         B........Valuation.  As  of  each  Valuation  Date  and  prior  to  any
allocation of contributions  and forfeitures to be made as of such date, the net
income or loss of the Trust  Funds  since the  immediately  preceding  Valuation
Date,  including net  appreciation or depreciation  and any expenses paid by the
Trusts,  shall be allocated  to each Account in the ratio that the value,  as of
the immediately  preceding  Valuation Date of each such Account  invested in the
Trust Funds bears to the value, as of the immediately  preceding Valuation Date,
of all Accounts invested in the Trust Funds. If one or more separate  investment
funds  have been  established,  the net  income  or loss of each  fund  shall be
allocated to each Account  invested in such investment fund in proportion to the
value of each  Account  invested in such funds as of the  immediately  preceding
Valuation Date. The Administrator shall adopt suitable procedures to establish a
proportionate crediting of Trust income or loss to those portions of Accounts in
the case of  contributions  or hardship  withdrawals  that have  occurred in the
interim period since the immediately preceding Valuation Date.

         C........Valuation   of  Segregated   Accounts.   The  portion  of  any
Executive's  Account  invested on a segregated  basis as provided in Article XII
shall be valued  separately  on each  Valuation  Date and the net income or loss
allocated to such Account shall be based on the assets,  including income, gain,
loss and/or other change in value of the assets constituting such portion of the
Account.

         D........Valuation  Dates.  The Trust Funds,  any  separate  investment
funds  and any  segregated  account  shall be  valued as of the last day of each
calendar year and as of any other date the Company  directs the Trustee to value
the Trust Funds, as provided in Article VII.E.

         E........Special  Valuation  Dates  at  Administrator  Discretion.  The
Administrator  may direct the Trustee to determine  the fair market value of the
Trust Funds and may make a determination  of Trust income or loss as of any date
other than the last day of a calendar year.


                                      150

<PAGE>


                                  ARTICLE VIII

                              EXECUTIVES' ACCOUNTS

         A........Separate Accounts. The Administrator shall open and maintain a
separate Account for each Executive.  Each Executive's Account shall reflect the
amounts allocated  thereto and distributed  therefrom and such other information
as affects the value of such Account  pursuant to this Plan.  The  Administrator
may maintain records of Accounts to the nearest whole dollar.

         B........Statement of Accounts. As soon as practicable after the end of
each calendar year the Administrator shall furnish to each Executive a statement
of his  Account,  determined  as of the  end of such  calendar  year.  Upon  the
discovery of any error or miscalculation in an Account,  the Administrator shall
correct it, to the extent correction is practically feasible; provided, however,
that any such statement of Account shall be considered to reflect accurately the
status of the  Executive's  Account  for all  purposes  under  the Plan  unless,
subject  to any  longer  period  required  by  ERISA,  the  Executive  reports a
discrepancy  to the  Administrator  within six (6) months  after  receipt of the
statement.  The Administrator shall have no obligation to make adjustments to an
Executive's Account for any discrepancy  reported to the Administrator more than
six (6) months after receipt of the  statement,  or for a discrepancy  caused by
the Executive's error. Statements to Executives are for reporting purposes only,
and no allocation,  valuation or statement  shall vest any right or title in any
part of the Trust Funds, nor require any segregation of Trust assets,  except as
is specifically provided in this Plan.

         C........Accounts   Which  Are  Not  Segregated.   When  employment  is
terminated and payment is not deferred, the amount of the payment shall be based
on the  value  of  the  vested  portion  of the  Executive's  Account  as of the
Valuation Date immediately  preceding his termination date plus any contribution
subsequently  credited to such Account and less any  distributions  subsequently
made from the Account.

         D........Segregated Accounts. Payment to an Executive shall be based on
the value of the vested  portion of the  Executive's  segregated  Account at the
date of  distribution.  The value of his or her segregated  Account shall be the
current  fair  market  value,  including  any  income or loss,  of the  property
constituting such segregated Account.


                                   ARTICLE IX

                         PAYMENTS TO A TRUST BENEFICIARY

                                      151

<PAGE>


         A........General.   Payments  of  vested  accrued   benefits  to  Trust
Beneficiaries from the Trust Funds shall be made in accordance with the Deferred
Compensation Agreement between the Company and the Executive; provided, however,
the Trustee shall make such payments, as directed by the Administrator,  only to
the extent the Company is not at such time  Insolvent  as defined in Article XI.
Except as otherwise expressly provided in the Executive's Deferred  Compensation
Agreement,  no distribution  shall be made or commenced prior to the Executive's
termination of employment or death, or a "Change of Control,"  whichever  occurs
earlier.  An Executive who makes an Early  Distribution  Election (as defined in
the  Deferred  Compensation  Agreement)  may,  at least  one  year  prior to the
distribution  date specified in such Early  Distribution  Election,  revoke such
Election in favor of a subsequent  distribution date; provided that an Executive
may revoke an Early Distribution  election once only. For purposes of this Plan,
a "Change in Control" shall be deemed to have occurred if any person  (including
a "Group" as such term is used in Section  13(d)(3) of the  Securities  Exchange
Act of 1934,  as amended)  acquires  shares of the  Company  either (i) having a
majority  of the total  number  of votes  that may be cast for the  election  of
directors of the Company or (ii) possessing,  directly or indirectly,  the power
to control the  direction of  management  or policies of the Company;  provided,
however,  that no Change of  Control  shall be deemed to occur in the event of a
merger, consolidation or reorganization of the Company where the shareholders of
the Company  immediately  prior to such merger,  consolidation or reorganization
own greater than 50% of the outstanding shares of the Company  immediately after
such  merger,  consolidation  or  reorganization.  The  Trustee  shall  have  no
responsibility  to determine  whether a Change in Control has occurred and shall
be advised of such event by the Company.

         B........Cash  Distributions.  Where  the  distribution  of  all or any
portion of an  Executive's  Account is to be deferred  in the form of cash,  the
Account  shall  continue  to be held  and  invested  in the  Trusts  subject  to
revaluation as provided in Article VII.

         C........In Kind Distributions. In kind distributions shall be (i) made
only in a form of  investment  that was held on  behalf  of the  Executive  as a
segregated  investment  pursuant to Article XII.B in a separate  investment fund
pursuant to Article XII.D immediately  preceding the date of distribution,  (ii)
limited to the amount of such  investment  so held,  and (iii) based on the fair
market value of the distributable  property, as determined by the Trustee at the
time of distribution.

         D........Method of Distribution. Payment to any Trust Beneficiary shall
be  made  pursuant  to  the  Deferred  Compensation  Agreement  executed  by the
Executive, in whole or in part. A Trust Beneficiary may specify, at least ninety
(90)  days  prior  to  the  commencement  of  any  distribution,   whether  such
distribution shall be made in a lump sum or in installments.

                  (1)      In a lump sum, in cash and/or in kind, or

                  (2) In  annual  installments  equal to 1/n of the  Executive's
vested  accrued  benefit where n is the number of  installments  remaining to be
paid.

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<PAGE>


         E........Certain  Distributions. In case of any distribution to a minor
or to a legally incompetent person, the Administrator may (1) direct the Trustee
to make the distribution to his legal representative,  to a designated relative,
or directly to such person for his  benefit,  or (2) instruct the Trustee to use
the  distribution  directly  for his support,  maintenance,  or  education.  The
Trustee shall not be required to oversee the application, by any third party, of
any distributions made pursuant to this Article IX.E.

         F........IRS  Determination.  Notwithstanding  any other  provisions of
this Plan,  if any amounts held in either  Trust are found in a  "determination"
(within the meaning of Section 1313(a) of the Internal  Revenue Code of 1986, as
amended (the  "Code")) to have been  includible in the gross income of any Trust
Beneficiary  prior to payment of such amounts from such Trust, the Trustee shall
as soon as practicable pay such amounts to the Trust Beneficiary, as directed by
the Company.  For  purposes of this  Section,  the Trustee  shall be entitled to
written  notice from the  Administrator  that a  determination  described in the
preceding  sentence  has  occurred  and to  receive a copy of such  notice.  The
Trustee shall have no responsibility until so advised by the Administrator.

         G........Limitation   on  Distributions.   Notwithstanding   any  other
provision  of this Plan,  the  Trustee  shall  limit each  distribution  to each
"covered  employee"  (as such term is defined in Section  162(m) of the Code) of
the Company at the time of each such distribution,  such that the sum of (i) the
distributions  made to such  covered  employee  and (ii) the  other  "applicable
employee  remuneration"  (as such term is defined in Section 162(m) of the Code)
paid to such covered employee, during the fiscal year in which such distribution
is made, does not exceed $1,000,000.


                                    ARTICLE X

                              HARDSHIP WITHDRAWALS

         A........General   Rule.   At  the   request  of  an   Executive,   the
Administrator  shall  authorize a withdrawal at any time of the accrued  benefit
attributable  to the  Executive's  Compensation  deferrals  and  gains or losses
thereon under the  Executive's  Account,  provided that  authorization  for such
withdrawal  and  the  amount  thereof  shall  be  given  only on  account  of an
unforeseeable  emergency.  The term "unforeseeable  emergency" shall mean severe
financial  hardship  to the  Executive  resulting  from a sudden and  unexpected
illness or accident of the  Executive or of a dependent  (as defined in Internal
Revenue Code section 152(a)) of the Executive,  loss of the Executive's property
due to casualty, or other similar extraordinary and unforeseeable  circumstances
arising  as a  result  of  events  beyond  the  control  of the  Executive.  The
circumstances  that will constitute an unforeseeable  emergency will depend upon
the facts of each case,  but in any case,  payment may not be made to the extent
that such hardship is or may be relieved --

                  (1)      hrough reimbursement or compensation by insurance or
otherwise,

                  (2) By liquidation of the  Executive's  assets,  to the extent
the liquidation of such assets would not itself cause severe financial hardship,
or


                                      153

<PAGE>

                  (3) By cessation of deferrals under the Plan.

The Administrator shall establish reasonable procedures and guidelines uniformly
applied,  to determine  whether an  unforeseeable  emergency  exists;  provided,
however, that no withdrawal request shall be granted if to do so could result in
the inclusion of Trust Funds amounts in the gross income of Trust  Beneficiaries
prior to payment of such amounts from the Trust Funds  because  approval of such
request would be inconsistent with any applicable statute,  regulation,  notice,
ruling or other pronouncement of the Internal Revenue Service  interpreting this
or similar provisions.


                                   ARTICLE XI

                  TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
                   TRUST BENEFICIARIES WHEN COMPANY INSOLVENT

     A........Company  Insolvency.  The Company shall be considered  "Insolvent"
and an "Insolvency" shall be deemed to exist for purposes of this Plan under any
of the following circumstances:

                  (1)      The  Company  is  unable  to pay  its  debts  as they
                           mature,  defined as having a weighted average overdue
                           payables balance in excess of 270 days.

                  (2)      A receiver or trustee is  appointed  to take  
                           possession  of all or  substantially  all of the 
                           assets of the Company.

                  (3)      There is a  general  assignment  by the  Company  
                           for the benefit of creditors.

                  (4)      An action or  proceeding  is  commenced by or against
                           the Company under any  insolvency or bankruptcy  act,
                           or any  other  statute  or  regulation  having as its
                           purpose the  protection of creditors,  and the action
                           or proceeding is not discharged  within 60 days after
                           the date of commencement.

         B........Plan Suspension. Notwithstanding any provision in this Plan to
the  contrary,  if at any time  while  either  Trust is still in  existence  the
Company becomes Insolvent, the Trustee shall upon written notice thereof suspend
the payment of all amounts  from the existing  Trust Funds and shall  thereafter
(i) not permit any further elective Compensation  deferral  contributions by the
Executives and (ii) discontinue all contributions by the Company to the existing
Trusts on behalf of the  Executives.  The Trustee shall hold the existing  Trust
Funds in suspense for the benefit of the Company's creditors until it receives a
court order  directing the  disposition of the existing  Trust Funds;  provided,
however,  that the  Trustee  may  deduct  or  continue  to  deduct  its fees and
expenses,  including  fees of any  consultants,  actuaries,  accountants,  legal
counsel or recordkeepers  retained by the Company or Trustee to provide services
to the Trusts.

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<PAGE>


         C........Notice  of  Insolvency.  By its approval and execution of this
Plan,  the  Company  represents  and  agrees  that its Board of  Directors,  the
Administrator,  and its Chief  Executive  Officer,  as from time to time acting,
shall have the  fiduciary  duty and  responsibility  on behalf of the  Company's
creditors  to  give  to the  Trustee  prompt  written  notice  of the  Company's
Insolvency and the Trustee shall be entitled to rely thereon to the exclusion of
all directions or claims to pay vested accrued benefits  thereafter made. Absent
such notice, the Trustee shall have no responsibility for determining whether or
not the Company has become Insolvent.

         D........If  after being  Insolvent,  the Company later becomes solvent
without  the entry of a court  order  concerning  the  disposition  of the Trust
Funds,  or if any  bankruptcy or insolvency  proceedings  referred to in Article
XI.A are  dismissed,  the Company shall by written  notice so inform the Trustee
and the Trustee shall thereupon resume all its duties and responsibilities under
this Plan without  regard to this Article XI until and unless the Company  again
becomes Insolvent as such term is defined herein.

         E........If the Trustee discontinues  payments from the Trusts pursuant
to this Article XI and subsequently  resumes payments,  or removes the suspended
status of the Trusts,  interest will be added to the Accounts of all Executives,
including  those  Accounts  from which a payment was held in  suspense,  for the
period of  discontinuance  at not less than the average rate on 90-Day  Treasury
Bills  auctioned  during  the period of  discontinuance,  to be  determined  and
calculated by the Company.  The Company will not make any other contributions to
the  Trusts  that   otherwise   would  have  been  made  during  the  period  of
discontinuance.


                                   ARTICLE XII

                   INVESTMENT AND ADMINISTRATION OF TRUST FUND

         A........Investments.  The Trustee shall have the power:

                  (1)      To invest and  reinvest  the Trust  Funds;  provided,
                           however,  the Trustee may  delegate  this  investment
                           authority,  in whole or in part,  and subject to such
                           terms  and   conditions  and  as  the  Trustee  shall
                           require, to the Administrator,  an Investment Manager
                           who meets the requirements of Section 3(38) of ERISA,
                           and, in  accordance  with Sections B through F below,
                           Executives participating in the Plan (with respect to
                           their own account),  and provided  further than in no
                           event shall the Trust Funds be invested in securities
                           of Trimble Navigation Limited;

                  (2)      To  collect  and  receive  any and all  money  and 
                           other  property  due to the Trust  Funds and to give 
                           full discharge therefore;


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<PAGE>

                  (3)      To settle,  compromise or submit to  arbitration  any
                           claims,  debts or damages due or owing to or from the
                           Trusts;   to  commence  or  defend   suits  or  legal
                           proceedings  to protect  any  interest of the Trusts;
                           and to  represent  the  Trusts  in all suits or legal
                           proceedings  in any court or before any other body or
                           tribunal;

                  (4)      Generally  to do all acts,  whether or not  expressly
                           authorized,  which the Trustee may deem  necessary or
                           desirable for the protection of the Trust Funds.

                  Persons  dealing with the Trustee shall be under no obligation
to see to the proper  application of any money paid or property delivered to the
Trustee or to inquire into the Trustee's authority as to any transaction.

         B........Segregated  Investments  -  Participant  Direction  Permitted.
Subject  to the  provisions  of  Article  XII.A.  and at the  discretion  of the
Administrator,  Executives  may be  permitted  to direct the  Trustee in writing
regarding  the  investment  of  funds in their  Accounts,  in a manner  and form
prescribed by the Administrator;  provided,  however,  that such right to direct
shall  apply  on a  nondiscriminatory  basis  to all  Executives  who  meet  the
requirements established by the Administrator. Such directed investment Accounts
shall be  segregated  and shall be valued  separately  by the Trustee  under the
provisions of Article  VII.C.  Valuations of such Accounts shall be made at such
times as the Administrator may require, but no less frequently than annually. In
no  event,  for  valuation  purposes,   shall  the  property  constituting  such
segregated Accounts, or the net income or loss thereon, be commingled with other
Executives'  Accounts.  Such  segregated  Accounts  may be  charged  with  their
proportionate  share of any general  expenses  charged to the Trusts or with the
full share of any expense  incurred  directly or indirectly  in connection  with
such Accounts.

         C........Participant  Direction  Subject to  Administrator  and Trustee
Approval.  Neither  the  Administrator  nor  the  Trustee  shall  be  under  any
obligation to approve or disapprove any specific investment medium.  Neither the
Company  nor the  Trustee  has any  liability  for any losses or damage that may
occur or result from (i) the  approval of or failure to approve of any  specific
investment medium;  (ii) the imposition of any administrative  rules relating to
the timing of  investment  elections  of any sort;  or (iii) any  administrative
delay in  carrying  out or failure to carry out  investment  elections  within a
specified  time.  The  Administrator  or the Trustee may disapprove or refuse to
carry out any  investment  directions  which in its  opinion  would  subject the
Company or the Trustee to burdensome  administrative  responsibilities  or which
the  Administrator  determines to be  inappropriate  from a legal,  financial or
social  perspective.  Prior  to  carrying  out any  investment  direction  of an
Executive,  the Trustee may require releases or any other documents,  agreements
or indemnifications as it may consider necessary.  The Trustee, in approving any
investment  medium  or in  making  investments  under  this  Plan,  shall not be
restricted by statutes governing the legal investment of trust funds.


                                      156

<PAGE>

         D........Separate   Investment  Funds  -  Administrator  May  Establish
Separate  Funds.  The  Administrator  may,  in its sole  discretion,  direct the
Trustee to create one or more separate  investment funds,  having such different
specific  investment  objectives  as the  Administrator  shall from time to time
determine.  The  Administrator  shall  determine  and  may  from  time  to  time
redetermine the number of investment  funds and the specific  objectives of said
funds and the  investments  or kinds of  investment  which  shall be  authorized
therefor.

                  Each  Participant has the right to instruct the  Administrator
to direct the Trustee in writing to invest his  Account in one or more  separate
investment funds, or in a directed investment,  provided,  however,  that if any
Executive  fails to make a direction  pursuant to this  Article as to all or any
part of such Account,  the undirected portion of an Executive's Account shall be
invested by the Trustee.

         E........Administrator To Establish Rules. The Administrator may at any
time make such uniform and  nondiscriminatory  rules as it determines  necessary
regarding  the   administration   of  the  directed   investment   option.   The
Administrator  may also  develop  and  maintain  rules  governing  the rights of
Executives to change their  investment  directions  and the frequency with which
such changes can be made.


                                  ARTICLE XIII

                              ACCOUNTING BY TRUSTEE

         The  Trustee   shall  keep   accurate  and  detailed   records  of  all
investments,  receipts, disbursements, and all other transactions required to be
done, including such specific records as shall be agreed upon in writing between
the Administrator and the Trustee. All such accounts, books and records shall be
open to inspection and audit at all reasonable times by the  Administrator,  the
Administrator's  representatives or agents.  Within one hundred and twenty (120)
days  following  the close of each  calendar  quarter and within one hundred and
twenty (120) days after the removal or resignation  of the Trustee,  the Trustee
shall deliver to the  Administrator a written account of its  administration  of
the Trusts  during such  quarter or during the period from the close of the last
preceding quarter to the date of such removal or resignation,  setting forth all
investments, receipts, disbursements and other actions effected by it, including
a description  of all securities and  investments  purchased and sold,  with the
cost or net  proceeds  of such  purchases  or sales  (accrued  interest  paid or
receivable being shown separately),  and showing all cash,  securities and other
property held in the Trusts at the end of such quarter or as of the date of such
removal  or  resignation,  as the  case  may be.  The  written  approval  of any
accounting  by  the  Administrator   shall  be  final  as  to  all  matters  and
transactions  stated or shown therein and binding upon the Administrator and all
persons who then shall be or then after shall become  interested  in the Trusts.
Failure of the Administrator to notify the Trustee within 180 days after receipt
of any accounting of its disapproval of such accounting  shall be the equivalent
of written approval.

                                      157

<PAGE>


                                   ARTICLE XIV

                            RESPONSIBILITY OF TRUSTEE

         The Trustee  shall act with the care,  skill,  prudence  and  diligence
under the  circumstances  then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use; provided,  however,  that the
Trustee  shall incur no liability  to anyone for any action taken  pursuant to a
direction, request or approval given by the Administrator or any Executive which
is contemplated by and complies with the terms of this Trust  Agreement,  and to
that  extent the  Trustee  shall be  relieved  of the  prudent  person  rule for
investments.  The Trustee may hire agents, accountants,  actuaries recordkeepers
and  financial  consultants.  Expenses  of such  persons  shall be  deemed to be
expenses of management  and  administration  of the Trusts within the meaning of
Article XV.D,  below.  The Trustee  shall have,  without  exclusion,  all powers
conferred on Trustees by  applicable  law unless  expressly  provided  otherwise
herein.


                                   ARTICLE XV

                   TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

         A........Company Assets. It is the intention of the Company to have the
corpus  and  income of the Trusts  established  hereunder  treated as assets and
income of the Company to be used to satisfy the Company's  legal liability under
the Plan in respect of all of the  Executives,  and the Company  agrees that all
income, deductions and credits of the Trust Funds belong to the Company as owner
for  income  tax  purposes  and will be  included  on the  Company's  income tax
returns.

         B........Taxes.   The  Company  shall  from  time  to  time  pay  taxes
(references  in this Plan to the payment of taxes  shall  include  interest  and
applicable  penalties)  of any and all  kinds  whatsoever  which at any time are
lawfully  levied or upon or become  payable in respect of the Trust  Funds,  the
income or any  property  forming a part  thereof,  or any  security  transaction
pertaining  thereto.  To the extent that any taxes  levied or assessed  upon the
Trust Funds are not paid by the Company or contested by the Company  pursuant to
the last sentence of this  Article,  the Trustee shall pay such taxes out of the
Trust Funds, and the Company shall, upon demand by the Trustee, deposit into the
Trust  Funds an amount  equal to the amount paid from the Trust Funds to satisfy
such tax  liability.  If  requested  by the  Company,  the Trustee  shall at the
Company's  expense,  contest  the  validity  of such taxes in any manner  deemed
appropriate  by the  Company  or its  counsel,  but only if it has  received  an
indemnity bond or other security  satisfactory to it to pay any expenses of such
contest. Alternatively,  the Company may itself contest the validity of any such
taxes,  but any such  contest  shall not  affect  the  Company's  obligation  to
reimburse the Trust Funds for taxes paid from the Trust Funds.


                                      158

<PAGE>

         C........Withholding.  In making payments from the Trusts,  the Trustee
shall be liable for  federal  income tax  withholding,  and shall  withhold  the
appropriate amount of tax, if any, as provided by applicable law and regulation,
from any  payment  made to a Trust  Beneficiary,  unless  the  Company  does not
provide the Trustee with the necessary  information as set forth in regulations,
in which case the Company shall assume all relevant liability.

         D........Compensation;  Expenses.  The Trustee may be paid compensation
by the Company in accordance with any written agreement for this purpose between
them; provided,  however, that a Trustee who is an officer, director or employee
of the Company shall serve without compensation. The Trustee shall be reimbursed
by the Company for its reasonable  expenses of management and  administration of
the  Trusts,  including  reasonable  compensation  of any agent  engaged  by the
Trustee to assist it in such management and administration. The Trustee shall be
able to charge  the Trust  Funds for such  compensation  and for any  reasonable
expenses  including  counsel,  appraisal or accounting fees, and the same may be
deducted from the Trust Funds unless paid by the Company  within sixty (60) days
after the Company  receives  written billing by the Trustee;  provided that this
paragraph  shall  not  apply  while a dispute  over the  amount of such  charges
exists.


                                   ARTICLE XVI

                              PROTECTION OF TRUSTEE

         A........Certification.  The Company  shall  certify to the Trustee the
name or names of any person or persons  authorized to act for the Company.  Such
certification shall be signed by the Secretary of the Company duly authorized by
the Board of Directors.  Until the Company notifies the Trustee,  in a similarly
signed  notice,  that any such  person  is no longer  authorized  to act for the
Company, the Trustee may continue to rely upon the authority of such person. The
Trustee may rely upon any certificate,  notice or direction of the Company which
the Trustee reasonably believes to have been signed by a duly authorized officer
or agent of the Company.  Notices to the Trustee shall be sent in writing to the
Trustee,  c/o  Trimble  Navigation  Limited,  585  N.  Mary  Avenue,  Sunnyvale,
California 94088-3642. No communication shall be binding upon the Trust Funds or
the Trustee  until it is received by the Trustee and unless it is in writing and
signed by an authorized person.  Notices to the Company shall be sent in writing
attention to the Company's principal office to the Chief Financial Officer,  c/o
Trimble  Navigation  Limited,   585  N.  Mary  Avenue,   Sunnyvale,   California
94088-3642, or to such other address as the Company may specify. No notice shall
be binding upon the Company until it is received by the Company.

         B........Legal  Counsel. The Trustee may consult with any legal counsel
("Legal  Counsel"),  except as provided in Article  XVIII.C,  for the purpose of
obtaining advice on topics including but not limited to the construction of this
Plan,  its duties  hereunder,  or any act which it proposes to take or omit, and
shall not be liable for any action  taken or omitted in good faith  pursuant  to
such  advice.  Expenses  of Legal  Counsel  shall be  deemed to be  expenses  of
management and  administration  of the Trusts within the meaning of Article XV.D
hereof.

                                      159

<PAGE>


         C........Trustee  Duties.  The Trustee shall discharge its duties under
this Plan in a manner  consistent  with the objectives of this Plan. The Trustee
shall not be liable for any loss  sustained  by the Trust Funds by reason of the
purchase,  retention,  sale or exchange of any  investment  in good faith and in
accordance  with  the  provisions  of  this  Plan.  The  Trustee  shall  have no
responsibility or liability for any failure of the Company to make contributions
to the Trust Funds or to pay vested  accrued  benefits  when due. The  Trustee's
duties and obligations shall be limited to those expressly imposed upon it under
the  provisions of this Plan  relating to the Trusts,  and the Trustee shall not
have  responsibility  under the  provisions  of this Plan  relating to the Plan,
notwithstanding any reference to the Plan.


                                  ARTICLE XVII

                           INDEMNIFICATION OF TRUSTEE

         To  the  fullest  extent  permitted  by  law,  the  Company  agrees  to
indemnify,  to defend,  and to hold  harmless the Trustee  against any liability
whatsoever  for any action  taken or  omitted  by such  Trustee in good faith in
connection with this Plan or duties hereunder and for any expenses or losses for
which  the  Trustee  may  become  liable  as a  result  of any such  actions  or
non-actions unless resultant from gross negligence or willful misconduct.


                                  ARTICLE XVIII

              RESIGNATION AND REMOVAL OF TRUSTEE AND LEGAL COUNSEL

         A........Resignation.  The  Trustee  may resign  upon thirty (30) days'
prior written notice to the Company,  except that any such resignation shall not
be effective until a successor  trustee has been  appointed,  and such successor
has accepted the  appointment in writing,  but in any event no later than ninety
(90) days after such resignation.  The Company shall condition its acceptance of
such successor on the obtaining from such successor of a written  statement that
the  successor  has read this  Plan and  Trust  Agreement  and  understands  its
obligations thereunder.

         B........Removal.  The Company may remove the Trustee  upon thirty (30)
days'  prior  written  notice  to the  Trustee.  Any such  removal  shall not be
effective  until the close of such notice  period and delivery by the Company to
the Trustee of (i) an instrument in writing appointing a successor trustee, (ii)
an acceptance of such  appointment in writing  executed by such  successor,  and
(iii) a written statement by such proposed successor that the successor has read
this Plan and Trust Agreement and understands its obligations thereunder.


                                      160

<PAGE>

         C........Successor  Trustee.  Upon the  resignation  or  removal of the
Trustee and  appointment of a successor,  the Trustee shall transfer and deliver
the  Trust  Funds  to  such  successor.  Following  the  effective  date  of the
appointment of the successor,  the Trustee's  responsibility  hereunder shall be
limited to managing the assets in its  possession,  transferring  such assets to
the  successor  and  settling  its final  account.  Neither  the Trustee nor the
successor  shall be liable for the acts of the other.  All of the provisions set
forth herein with respect to the Trustee shall relate to each successor with the
same  force and effect as if such  successor  had been  originally  named as the
Trustee hereunder.


                                   ARTICLE XIX

                 DURATION AND TERMINATION OF TRUST AND AMENDMENT

          A........Irrevocable.  The Trusts are hereby declared to be 
irrevocable and shall continue until all vested accrued benefits have been paid.

         B........Termination  of  Trust.  If the  Trusts  terminate  under  the
provisions of Article  XIX.A,  the Trustee shall  liquidate the Trust Funds and,
after their final  accounting has been settled,  shall distribute to the Company
the net  balance of any  assets of the Trust  Funds  remaining  after all vested
accrued  benefits and  administration  expenses have been paid. Upon making such
distribution, the Trustee shall be relieved from all further liability.

         C........Plan  Amendment.  This  Plan  may  be  amended,  or  the  Plan
terminated or suspended,  by an instrument in writing  executed on behalf of the
Company  by  the  President  of the  Company  or  the  Administrator,  or a duly
appointed representative of the Board of Directors and delivered to the Trustee,
provided,  however,  that (i) no amendment  will be made to this Plan which will
cause this Plan,  the Trusts or the assets of the Trust  Funds to be governed by
or subject to Part 2, 3 or 4 of Title I of ERISA,  (ii) no such amendment  shall
adversely  affect  any  Trust  Beneficiary's  accrued  benefit,  (iii)  no  such
amendment  shall increase the duties or  responsibilities  of the Trustee unless
the Trustee  consents  thereto in writing,  (iv) no such  amendment  which would
cause the Trusts to be other than "grantor trusts," or have contributions to the
Trusts by the  Company,  or income and gains of the Trust  Funds,  constitute  a
taxable  event to the  Trusts or to the  Executives,  and (v) no such  amendment
shall cause the vested  accrued  benefit  paid to Trust  Beneficiaries  from the
Trust Fund to become nondeductible to the Company in the year of payment.


     ARTICLE XX

     MISCELLANEOUS

         A........California  Law.  This Plan and the Trusts  hereby  created 
shall be construed and regulated by the laws of the State of California.


                                      161

<PAGE>

         B........Headings.  The headings of sections in this Plan are used 
herein for  convenience  of  reference  only and in case of any conflict the 
text of this Plan shall control.

         C........Successorship.  This Plan shall be  binding  upon and inure to
the benefit of any  successor  to the  Company or its  business as the result of
merger, consolidation,  reorganization, transfer of assets or otherwise, and any
subsequent  successor thereto;  and any such successor shall be deemed to be the
"Company"  under  this  Plan.  In the event of any such  merger,  consolidation,
reorganization,  transfer of assets or other similar transaction,  the successor
to the  Company  or its  business  or any  subsequent  successor  thereto  shall
promptly  notify the  Trustee in writing of its  successorship  and  furnish the
Trustee  with the  information  specified in Article  XVI.A of this Plan.  In no
event shall any such transaction described herein suspend or delay the rights of
Trust Beneficiaries to receive their vested accrued benefits hereunder.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed  by their duly  authorized  officers as of the day and year first above
written.


TRIMBLE NAVIGATION LIMITED          TRUSTEE


By:                                                                    
                                                      John H. Barnet
Title:                                                

Date:                                                         Date:   


                                      162

<PAGE>


                           TRIMBLE NAVIGATION LIMITED
                     NONQUALIFIED DEFERRED COMPENSATION PLAN
                         DEFERRED COMPENSATION AGREEMENT



1.        I acknowledge that the terms and conditions of the Trimble  Navigation
          Limited  Nonqualified  Deferred  Compensation  Plan ("Plan") have been
          explained  to me,  including  the tax  consequences  of my decision to
          participate in the Plan.

2.        I agree to defer all or a portion  of my current  income,  and to have
          that  income  paid to me at a later  date  pursuant  to the  terms and
          conditions of the Plan,  which is  incorporated  by reference,  in its
          entirety, in this Agreement.

3.        I  acknowledge  that under the terms of the Plan,  no payments  can be
          made in the event Trimble  Navigation Limited is Insolvent (as defined
          in the Plan).

4.        I understand that this Agreement is not an employment agreement,  does
          not  guarantee  that  I  will  receive  any  predetermined  amount  of
          compensation, and does not guarantee that I will receive any bonus.

5.        I  understand  that  any  income  I defer  will be held as an asset of
          Trimble  Navigation  Limited and will remain  subject to the claims of
          the general creditors of Trimble Navigation Limited.

ELECTION TO DEFER INCOME

I hereby elect to defer

          % of my future salary (between 1% and 100%)

          % of any future bonus (between 1% and 100%)

I understand that I may discontinue  deferral of future Compensation at any time
during the year, but that I may make no other change in the Agreement  until the
beginning of the calendar year after I have notified Trimble  Navigation Limited
in writing  of the  change I desire.  I also  understand  that if I  discontinue
deferral of future Compensation during the year, I cannot restart deferral until
the beginning of the succeeding calendar year.

DISTRIBUTION

I understand  that all vested  amounts held for my benefit  under the Plan shall
begin to be distributed  upon the earlier of my  termination of employment  with
Trimble Navigation Limited for any reason,  including retirement,  disability or
death,  or upon a change of control or unforeseen  emergency as described in the
Plan.  In  addition,  I may elect to commence an early  distribution  (an "Early
Distribution Election") prior to such dates by making the following election:

Distribution  of  vested  amounts  held for my  benefit  under  the Plan  should
commence:

                  3 years after the date of this Agreement
                                    or
                  5 years after the date of this Agreement

                                      163

<PAGE>

I understand that an Early  Distribution  Election cannot be changed,  except to
make a one-time only  election to extend the deferral  period which must be made
at least one year before the deferral period ends.

METHOD OF PAYMENT (One method must be checked in order for this to be a valid 
Agreement)

Subject to the  preceding  election,  if any,  I elect  that the  payment of all
vested  amounts  due me under this  Agreement  and the Plan shall be made in the
following manner:

       One single lump sum  payment  paid as soon as  administratively  possible
following termination of employment or my death.

       Annual  installments  equal to 1/n of the  assets on deposit in the trust
       credited  to  my  account,  where  n is  the  number  of  installments
       remaining to be paid. I hereby  elect _____  annual  payments  (not to
       exceed 10  years),  with the first  payment  being made in the year in
       which I terminate from employment or die, whichever first occurs.

       Annual installments  equal to a specified % of the vested assets credited
       to my account  under the Trust.  I hereby elect _____ annual  payments
       (not to exceed 10 years). Please indicate the installment % by year in
       the following space provided:

                  Year                 %   

                           1                 
                                    ---------
                           2                 
                                    ---------
                           3                 
                                    ---------
                           4                 
                                    ---------
                           5                 
                                    ---------
                           6                 
                                    ---------
                           7                 
                                    ---------
                           8                 
                                    ---------
                           9                 
                                    ---------
                           10       100%

I understand that my elected method of distribution can be changed up to 90 days
prior to the date of actual distribution.

I understand  further that my elected method of distribution  may be modified by
Trimble  Navigation  Limited at any time prior to my  termination of employment,
provided that any such  modification that impairs my rights under this Agreement
and the Plan shall be subject to my consent.

                                      164

<PAGE>

DESIGNATED BENEFICIARY

In the event that I should die before all  amounts  payable to me under the Plan
have been paid, I designate the following  beneficiary  to receive the remainder
of my interest  under the Plan. I understand  that I may change this  Designated
Beneficiary at any time on written notice to Trimble Navigation Limited.

       Please follow the Beneficiary Election on file for the Trimble Navigation
Limited Savings and Retirement Plan.

                             or

          Name(s) and Relationship:                                             



The foregoing  Election is voluntarily  made by me after  reviewing the terms of
the Plan and with knowledge  that this Election is irrevocable  until changed in
accordance with the terms of the Plan.


                           Agreed:
(Signature)
                           TRIMBLE NAVIGATION LIMITED

(Print Name)
                           By                                                  

(Social Security Number)


(Date)                     (Date)



                                      165

<PAGE>




                                  EXHIBIT 21.1

                           TRIMBLE NAVIGATION LIMITED

                       LIST OF SUBSIDIARIES OF REGISTRANT


TR Navigation Corporation                     Trimble Middle East WLL
(incorporated in California)                 (organized under the laws of Egypt)

Trimble Specialty Products, Inc.             Trimble Brasil Limitada
(incorporated in California)                (organized under the laws of Brazil)

Trimble Navigation Europe Limited            Trimble Mexico S. de R.L.
(organized under the laws of  the           (organized under the laws of Mexico)
 United Kingdom)           
                                             Datacom Software Limited
Trimble Navigation International            (incorporated in California)
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)


                                      166

<PAGE>




                                  EXHIBIT 23.1

                           TRIMBLE NAVIGATION LIMITED



               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


     We consent to the use of our report  dated  January 26, 1999 in this Annual
Report (Form 10-K) of Trimble Navigation Limited
for the year ended January 1, 1999.


         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, 333-04670, 333-28429
and 333-53703)  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  26,  1999  with  respect  to the
consolidated  financial  statements and schedule of Trimble  Navigation  Limited
included in the Annual Report (Form 10-K) for the year ended January 1, 1999.




                                            /s/ ERNST & YOUNG LLP
                
 Palo Alto, California
 March 25, 1999


                                      167

<PAGE>





<TABLE> <S> <C>
                                               
<ARTICLE>                                           5
<LEGEND>                                       
    THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
    CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF
    EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL 
    STATEMENTS
</LEGEND>                                      
<MULTIPLIER>                                      1,000
                                                          
<S>                              <C>                                 <C>
<PERIOD-TYPE>                    12-MOS                           12-MOS
<FISCAL-YEAR-END>                JAN-01-1999                 JAN-02-1998
<PERIOD-END>                     JAN-01-1999                 JAN-02-1998

<CASH>                                     40,865                 19,951
<SECURITIES>                               16,269                 53,171
<RECEIVABLES>                              33,431                 49,101
<ALLOWANCES>                                    0                      0
<INVENTORY>                                37,166                 42,385
<CURRENT-ASSETS>                          131,904                168,755
<PP&E>                                     15,104                 19,676
<DEPRECIATION>                                  0                      0
<TOTAL-ASSETS>                            156,279                207,663
<CURRENT-LIABILITIES>                      49,948                 37,483
<BONDS>                                         0                      0
<PREFERRED-MANDATORY>                           0                      0
<PREFERRED>                                     0                      0
<COMMON>                                  122,201                133,355
<OTHER-SE>                                (47,510)                 6,128
<TOTAL-LIABILITY-AND-EQUITY>              156,279                207,663
<SALES>                                   260,279                258,894
<TOTAL-REVENUES>                          260,279                258,894
<CGS>                                     134,723                118,903
<TOTAL-COSTS>                             134,723                118,903
<OTHER-EXPENSES>                          148,736                120,146
<LOSS-PROVISION>                                0                      0
<INTEREST-EXPENSE>                          3,396                  3,525
<INCOME-PRETAX>                           (25,221)                21,017
<INCOME-TAX>                                1,400                  2,496
<INCOME-CONTINUING>                       (26,621)                18,521
<DISCONTINUED>                            (26,773)                (9,242)
<EXTRAORDINARY>                                 0                      0
<CHANGES>                                       0                      0
<NET-INCOME>                              (53,394)                 9,279
<EPS-PRIMARY>                               (2.38)                  0.42
<EPS-DILUTED>                               (2.38)                  0.40
        

                                      

 

</TABLE>