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 December 31, 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 Identification No.)
 incorporation or organization)       

  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
                         Preferred Share Purchase Rights
                                (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  $673,572,000 as of March 13,
2000,  based on the closing  sale price of the common  stock on the Nasdaq Stock
Market for that date.

     There were 22,930,113  shares of the  registrant's  Common Stock issued and
outstanding as of March 13, 2000.

                       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  2000  Annual  Meeting  of
Shareholders  to be held on May 11,  2000.  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.


<PAGE>

     This  report  contains  forward-looking  statements  within the  meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange  Act of  1934.  Actual  results  could  differ  materially  from  those
indicated in the forward-looking  statements as a result of the risk factors set
forth in, or  incorporated  by reference into, this report and other reports and
documents that the Company files with the  Securities  and Exchange  Commission.
The Company has attempted to identify forward-looking  statements in this report
by placing an asterisk (*) before paragraphs containing such material.

                                     PART I


Item 1.           Business

General

     Trimble  Navigation  Limited,  a California  corporation  ("Trimble" or the
"Company"),  develops,  markets, and distributes innovative products and systems
enabled by Global Positioning System ("GPS") technology. We provide end-user and
original  equipment   manufacturer  (OEM)  solutions  for  diverse  applications
including Architecture/Engineering/Construction,  Asset Management and Tracking,
Agriculture,  and  GPS  Component  Technologies.  Trimble  designs  and  markets
electronic  products that determine precise geographic  location.  Our principal
products,  which  utilize  proprietary  software and  firmware,  are  integrated
systems  for  collecting,  analyzing  and  displaying  position  data  in  forms
optimized for specific end-user applications.

Background

     Precise determination of locations both on and above the earth's surface is
a fundamental  requirement in many applications.  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 a single 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 by the U.S.  Air Force Space  Command to have
achieved Full Operational  Capability.  GPS can complement or replace many other
forms of  electronic  navigation  and position  data  systems.  GPS offers major
advantages  over  prior  technologies  in terms of ease of use,  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 a signal from the satellite to the receiver.
The receiver  then  triangulates  its  position  using its known  distance  from
various  satellites,  and  calculates  latitude,  longitude and altitude.  Under
normal  circumstances,  a current  stand-alone GPS receiver is able to calculate
its position at any point on earth, in the earth's atmosphere, or in lower earth
orbit, to within 100 meters, 24 hours a day. When a GPS receiver is coupled with
a reference  receiver with known precise  position,  accuracies of less than ten
centimeters  are  possible.  In addition,  GPS  provides  highly  accurate  time
measurement.

     * The usefulness of GPS is dependent upon the locations of the receiver and
the 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 U.S.
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.


                                       2

<PAGE>


     By using a technique  called  "differential  GPS" involving two or more GPS
receivers,  accuracies can currently be improved to  approximately  one to three
meters for navigation,  sub-meter for precision  positioning,  and less than ten
centimeters  for  survey  and  machine  guidance  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  receiver
technology.  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-specific solutions.

     Navstar  satellites and their ground support systems are complex electronic
systems subject to electronic and mechanical failures and possible sabotage. The
satellites were  originally  designed to have lives of 7.5 years and are subject
to damage by the hostile space  environment in which they operate.  However,  of
the current  deployment  of 27  satellites  in place,  some have already been in
place for 11 years and have an  average  age of 6 years.  To repair  damaged  or
malfunctioning   satellites  is  currently  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, a 1996 Presidential Decision Directive marks the
first time in the  evolution  of GPS that  access for  civilian  use has a 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 Trimble'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

     Trimble sees GPS as an  information  utility.  In order to exploit the wide
range  of  applications  made  possible  by  this  information  utility,  we are
implementing the following strategies:

     * Targeted Markets.  Trimble targets a number of specific markets, based on
end-user   applications.    The   markets   that   we   currently   target   are
Architecture/Engineering/Construction,    Asset    Management    and   Tracking,
Agriculture   and  GPS   Component   Technology.   We  believe  that  by  adding
application-specific  features and  functionality  to our core GPS technology we
can deliver  value-added  products  and  enhance  productivity  in our  targeted
markets. In the Architecture/Engineering/Construction market, Trimble focuses on
the centimeter positioning, data collection management,  wireless communication,
and machine  guidance and control.  In the Asset  Management and Tracking market
Trimble focuses on asset tracking, fleet management,  intelligent transportation
systems,  and public safety through integration of GPS,  information  technology
and  wireless  communication.  In the  Agriculture  market  we focus on  precise
machine guidance, yield monitoring,  and variable rate application of fertilizer
and  chemicals.  We intend to continue to leverage our GPS component  technology
directly to Original Equipment Manufacturers (OEMs) for integration into various
applications.

     Differentiated  Product  Solutions.  Trimble seeks to establish and sustain
leadership in its targeted markets by offering products that are  differentiated
through software, firmware,  customized user interfaces, and quality service and
support.  Where feasible, we emphasize  application-specific  systems that solve
end-user problems in our targeted markets. We believe that a substantial portion
of the value of our products is derived  from the  firmware  that is embedded in
the product or software  provided to enable superior  performance.  In addition,
Trimble  incorporates  

                                       3

<PAGE>


other   technologies   into  many  of  its   products,   such  as  wireless
communications, information technologies and non-GPS positioning technologies in
order to optimize product features for our end-users.

     Multichannel  Distribution  and Strategic  Alliances.  Trimble 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. We have built
a  worldwide  sales  and  service  organization  made up of  Company  employees,
distributors  and  dealers.  In  addition,  we intend to continue to develop new
alliances and to strengthen existing alliances and OEM relationships to increase
our leverage of GPS component  technologies.  Trimble has pursued such alliances
with  several  companies,  including  VDO Car  Communication  (a division of the
Mannesmann Group),  Pioneer Electronics  Corporation,  Seiko Epson, Blaupunkt (a
wholly owned subsidiary of Robert Bosch GmbH), NortelNetworks,  British Telecom,
E-systems, Honeywell, and Intel in the Mobile and Timing Technology segment; and
Caterpillar,  Inc.,  Topcon,  and CNH Global (formerly Case  Corporation) in the
Precision Positioning segment.

INDUSTRY SEGMENTS

     Trimble  operates in a single industry segment as a leader in designing and
developing  innovative  products enabled by GPS technology.  We provide end-user
and Original  Equipment  Manufacture  solutions for diverse  applications in our
target markets. These applications include:

     o Architecture/Engineering/Construction  --  surveying,  mapping,  machine
       guidance/control;
     o Asset Management and Tracking -- fixed asset mapping and fleet management
       using mobile positioning;
     o Agriculture -- mapping, yield monitoring,  variable rate applications and
       machine guidance/control; and
     o GPS Component  Technologies  -- automotive  navigation,  timing  systems,
       commercial avionics, and military systems.

     We design,  market,  and  distribute  electronic  products  that  determine
precise geographic  location combined with data  communications and applications
software.  We sell our 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 Trimble's  facilities
in Sunnyvale,  California,  and Christchurch,  New Zealand.  Solectron currently
manufactures most of Trimble's  products.  In addition,  we have a manufacturing
facility in Austin,  Texas,  focused  primarily  on  FAA-certified  products for
commercial aviation and military systems.

     To achieve distribution,  marketing,  production, and technology advantages
for our targeted  markets,  we manage our industry  segment  within two Business
Units:  the  Precision  Positioning  Group  (PPG)  and  the  Mobile  and  Timing
Technologies  Group  (MTT).  Each  Business  Unit is  managed  by a senior  vice
president who is responsible for strategy,  marketing,  product  development and
financial performance.

     The  Precision   Positioning  Group  derives  its  revenue  from  precision
positioning  solutions for the architecture,  engineering,  construction,  asset
management,  and agriculture  markets.  These markets require  sub-centimeter to
meter  3D   positioning   accuracy   for   surveying,   mapping,   and   machine
guidance/control  applications. The Mobile and Timing Technologies Group derives
its revenues from automotive, timing, fleet management, commercial aviation, and
military  systems,  as well as from  development of software  licenses and other
rights for the use of our GPS technology to third parties.

     Although we believe 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.  Our future growth will depend
on the timely  development  of the industry  markets in which Trimble  currently
competes, and on our ability to continue to identify and exploit new markets for
our products.

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  typically  system  solutions in
high-end, value-added markets.


                                       4

<PAGE>


     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.  We  believe  this
interoperability  developed by Trimble is an extremely  important advantage over
any of the competition. The emphasis is on providing solutions for applications,
which combine GPS and other technologies,  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.

Products

The following is a table of some of the Precision Positioning Group products.

----------------------------------- --------------------------------------------
PRODUCT                             BRIEF DESCRIPTION
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
4000 Series                         GPS   receiver  and   associated   antennas 
                                    that  provide   position information for 
                                    surveying.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
4600 LS(TM)                         Low-cost single-frequency survey system.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
4700/4800 GPS Total Station         Real time surveying system that incorporates
                                    dual   frequency    receiver   and antenna  
                                    with a  radio  modem  and antenna.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
4000 MSGR P/Y Survey System         Turnkey solution for military land survey 
                                    applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
TTS(TM)300/500 Total Station        Optical extension of the GPS Total Station
                                    utilizing, reflectorless technology  for 
                                    surveying in areas where GPS signals are 
                                    obstructed.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Trimble   Geomatics   Office(TM)    Application   software  for  GPS
and Survey Controller               postprocessing, survey project management, 
                                    and field data collection.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
TRIMTALK(TM), TRIMMARK(TM),         Radio   modems  used  for
and   TRIMCOMM(TM) Radios           real-time  GPS  applications  that
                                    provide   broadcast   and  receive
                                    functions  for VHF,  UHF,  and 900
                                    MHz    spread     spectrum    data
                                    transmissions.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
MS750(TM)                           Real-time Kinematic GPS technology
                                    that provides precise  positioning
                                    to  hydrographic  survey,   marine
                                    construction,      and     machine
                                    guidance/control applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
4000RSi(TM)/ DSi                    Uses advanced GPS technology
                                    to      create      high-precision
                                    Differential GPS (DGPS) system for
                                    marine  survey,   navigation,  and
                                    positioning.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
DSM(TM)                             Sub-meter marine survey sensor.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Beacon Control System               A complete solution for   establishing  a  
                                    network of remote stations for the broadcast
                                    of  differential   GPS  correction data.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
GeoExplorer(R)3                     Rugged handheld GIS data collection and 
                                    maintenance system.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Pathfinder Pro Family               GIS data collection and maintenance  systems
                                    that provide real-time sub-meter accuracy.  
                                    The systems  are used in a wide  range off
                                    applications,  such as utility asset
                                    management,   environmental monitoring
                                    and scientific research, hazardous waste
                                    cleanup, and natural resource and land
                                    management.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Pathfinder Office   Microsoft       Windows-based application  provides fast, 
                                    simple data  processing  and export  from
                                    data     collected,      including planning,
                                    data     dictionary creation,  batch  
                                    processing,  and sophisticated  editing and
                                    output of collected data.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Pathfinder Card                     Easy-to-use  mobile GIS data collection and 
                                    maintenance  system that works with a 
                                    standard pen and notebook PCs.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Pathfinder Tools(TM) Software       Powerful software  development kit (SDK)
Development Kit                     designed   to   integrate Trimble GPS 
                                    receivers  with custom mapping and GIS 
                                    applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
BenchGuide(TM)                      Provides mining machine  operators with 
                                    precision  GPS-based guidance in  locating 
                                    correct   bench  or terrain  elevations  
                                    without using survey stakes.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
CAES                                Machine guidance system for mining 
                                    applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
TrimFlight GPS(TM)                  An advanced aerial guidance  and  mapping  
                                    tool  that provides highly accurate guidance
                                    suitable for many precise airborne 
                                    operations.
----------------------------------- --------------------------------------------


                                       5

<PAGE>

----------------------------------- --------------------------------------------
AgGPS(R)132                         High-performance GPS receiver used
                                    to calculate  sub-meter  positions
                                    in real  time.  Used by farmers to
                                    tag soil type, insect infestation,
                                    or crop yield.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
AgGPS(R)170 Field Computer          Rugged  mobile  computing  platform  that 
                                    adds data  logging and field mapping  to  
                                    AgGPS  receivers  and enhanced  guidance to
                                    the  AgGPS Parallel  Swathing Option. The 
                                    AgGPS 170 Field Computer is a tool for
                                    custom  applicators  who desire  top-of-the-
                                    line  field  guidance with data storage for 
                                    environmental reporting, and customer 
                                    billing.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
SiteVision(TM)GPS                   Earthmoving   grade  control system   that
                                    enables    machine operators to view the
                                    site plan in the cab.
----------------------------------- --------------------------------------------

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  and chipset  licenses  and other rights for the use of our
GPS technology by third parties.

     This  Business  Unit  focuses  on  product  lines  that  address  the fleet
management market, and leverage GPS component technologies for use in automotive
navigation,  timing for  telecommunications,  commercial  aviation  and military
systems.   The   product   lines  in  these   markets   involve   full-function,
high-performance  embedded  GPS  engines  that are  frequently  utilized in some
markets with integrated  communication systems such as cellular,  satellite, and
special  mobile radio systems.  The GPS equipment  provides  accurate  position,
velocity,  and timing  information  for use in such diverse  applications as car
navigation,  airborne  navigation,  munitions  guidance,  vehicle and high-value
cargo tracking.

     Trimble supplies GPS boards and chipsets,  and licenses  technology to some
of the leading automotive electronics suppliers,  including 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.  Trimble airborne
navigation products are flown by more than 100 of the world's major airlines.

     Trimble supplies timing products to major telecommunications infrastructure
suppliers,  including  NortelNetworks,  AT&T Wireless,  Qualcomm,  and Glenayre.
These products include frequency synthesis hardware, which is timed by precision
GPS  receiver and is used to control  most of the time and  frequency  functions
within  wireless  base  stations.  Cellular  telephones,  paging  networks,  and
wireless  local loop  telephony  use these base  stations.  Precision  timing is
expected to become even more important as wireless  traffic  migrates from voice
centric to data centric applications.

Products

The  following  is a table of some of the Mobile and Timing  Technologies  Group
products.

----------------------------------- --------------------------------------------
PRODUCT                             BRIEF DESCRIPTION
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
ACE II   GPS(TM)   Module           Powerful miniature  8-channel  GPS  board
                                    designed    for     applications requiring  
                                    high  performance  at low cost.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Lassen(TM)-SKII                     Miniature 8-channel GPS receiver ideal for 
                                    in-car  navigation and telemetric systems.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
SveeEight  Plus GPS Module          8-channel GPS  technology  in a convenient  
                                    plug-and play-form factor.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
CrossCheck(TM) Family               Integrates GPS, wireless cellular, and     
                                    computing technologies   into   a   single
                                    low-cost mobile  positioning and
                                    communications     system    for
                                    commercial fleet management.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Placer(TM)Family and                Mobile positioning and communication system
Placer(TM)GPS 450/455               with various communications interfaces.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Galaxy Immarsat-C/GPS(TM)           The   first commercial    product     which
                                    integrates    two-way   wireless satellite 
                                    communications  with GPS location  data for 
                                    long-haul trucking and marine applications.
----------------------------------- --------------------------------------------


                                       6

<PAGE>

----------------------------------- --------------------------------------------
Trimble GPS/AVL Subsystem           A system which combines radio communications
                                    and GPS technologies to enable public safety
                                    agencies to decrease emergency response call
                                    times  and  improve  operational efficiency.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
FleetVision(R)3.2                   Microsoft  Windows-based  application which 
                                    provides fleet operators with cost-effective
                                    and easy-to-use solution for tracking mobile
                                    assets.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Palisade(TM) NTP                    High-performance, cost-effective reference  
Synchronization Kit                 time source that uses GPS  technology  to  
                                    synchronize computers, servers, and internet
                                    applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
ThunderBolt(TM) GPS Disciplined     GPS clock designed  specifically  for
Clock                               precision timing and synchronization  of   
                                    wireless networks.   Variations  of  this
                                    basic  design  are used by major
                                    telecommunication infrastructure providers 
                                    such as NortelNetworks,  AT&T  Wireless,
                                    and Qualcomm.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
ACE UTC GPS                         A unit that integrates GPS timing technology
                                    into the ACE   form   factor,   which  is
                                    slightly  bigger than a business card.
                                    Ideal for precision timing applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Bullet(TM) II/Bullet(TM)II HE       Rugged GPS antenna for timing systems  
                                    installed outdoors.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Trimble 8100                        An IFR-certified C129-A1 aviation navigation
                                    system that provides GPS position, velocity,
                                    and course data,  plus flight  management
                                    information for the business, commercial and
                                    air transport markets.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
HT9100(TM)                          A  product   created   from  the Trimble/  
                                    Honeywell partnership combines Trimble's GPS
                                    technology   with    Honeywell's flight
                                    management  technology to create  a complete
                                    system  for Communications,  Navigation, and
                                    Surveillance/Air Traffic Management for  air
                                    transport operations.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Trimble  2101  Approach  Plus and   Is a Dzus  rail-mount,  GPS-based flight
I/O Approach Plus                   management  and  navigation system for  
                                    corporate,  helicopter and regional commuter
                                    aviation.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Force(TM) TM GPS Module  Series     A  GPS module  that has been  developed
                                    for  embedded  integration  into
                                    high-performance land, sea, aircraft and  
                                    missile applications.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
TA-12                               High-performance,   all-in-view, PPS GPS
                                    receiver  for  military aircraft operating
                                    within the US National  Airspace  System.  
                                    The TA-12  receiver is FAA TSO-C129A
                                    certified  and  designed   for integration
                                    with Flight Management  Systems  (FMS)  that
                                    require  Instrument Flight Rules (IFR) - 
                                    certified operations.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Cargo Utility GPS Receiver (CUGR)   A  complete  GPS-based   navigation  system
                                    for  military  aircraft operations.
----------------------------------- --------------------------------------------

Sales and Marketing

     Trimble  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.  We have substantial variation in the needs
of our sales and distribution channels, which are rapidly changing.

     Domestic. Trimble sells its products in the United States primarily through
dealers,   distributors,   and  authorized  representatives,   supplemented  and
supported  by our direct  salesforce.  We have also  pursued  alliances  and OEM
relationships  with established  foreign and domestic  companies to assist us 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 52%, 46%, and 46% of Trimble's total revenue in fiscal years 1999,
1998  and  1997,  respectively.   Sales  to  unaffiliated  customers  in  Europe
represented  25%,  25%,  and 22% of net  revenue in such  periods,  and sales to
unaffiliated  customers in the Far East  represented  14%, 13%, and 15% of total
revenue in such periods, respectively.


                                       7

<PAGE>

     Support.  Trimble's  general terms and conditions for sales of its products
include  a  one-year  warranty.   Commercial  Aviation  products,  however,  are
generally  sold  with a basic  three-year  warranty  period  with an  additional
two-year  warranty sold with some units;  select  military  programs may require
extended warranty periods.  We support our products on a board replacement level
from locations in the United Kingdom, Singapore, Japan, and New Zealand, as well
as  Sunnyvale,  California.  Trimble's  dealers and  distributors  also  provide
factory-trained  third-party  maintenance,  including  warranty and non warranty
repairs.  We reimburse  dealers and  distributors  for all  authorized  warranty
repairs  they  perform.  Trimble  does not derive a  significant  portion of its
revenues from support activities.

Competition

     * In the segments  currently  being  addressed by Trimble,  competition  is
intense. Within each of its segments, Trimble has encountered direct competition
from both foreign and domestic  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, customer-oriented GPS applications.

     The PPG segment faces  competition from Leica AG, Spectra Precision (Thermo
Electron),  Topcon,  Sokkia,  Ashtech Precision Products (part of Magellan Corp.
via Orbital Sciences Corp.),  Novatel (Canadian Marconi),  Allen Osborne,  Javad
Positioning   Systems,    Communications   Systems   International,    Corvallis
Microtechnology, Inc., and Tripod Data Systems.

     The MTT segment faces ongoing competition from Motorola,  Inc.; Japan Radio
Corporation,  Rockwell International Corporation,  Symmetricom,  Datum, Odetics,
Rockwell Collins, Universal Navigation Corporation,  Canadian Marconi Company (a
subsidiary  of  the  General  Electric  Company  plc),   Northstar  Avionics  (a
subsidiary of Canadian  Marconi),  and UPS Aviation  Technologies (a division of
United Parcel Service of America,  Inc.), The New Honeywell Incorporated (Merged
Allied Signal and Honeywell),  Smiths Industries,  ARNAV, Interstate Electronics
(subsidiary of Figgie International),  Raytheon, and Litton Industries,  Orbital
Sciences Corp., and Wireless Link.

     A  number  of  Trimble's  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 Trimble  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.  We believe that our products  currently
compete favorably with other products on most of the foregoing  factors,  though
we may be at a competitive  disadvantage  against other companies having greater
financial, marketing, and service and support resources.

     * Trimble  believes that its ability to compete  successfully in the future
against  existing and additional  competitors will depend largely on its ability
to provide systems products and services that have significantly  differentiated
features with improved  cost/benefit  ratios to our  end-users.  There can be no
assurances that we will be able to implement this strategy successfully, or that
our competitors, many of whom have substantially greater resources than Trimble,
will not apply those resources to compete  successfully  against us on the basis
of system features and end-user cost/benefit ratios.

Research and Development

     Trimble's  leadership  position in its targeted  markets is the result,  in
large part,  of its strong  commitment  to  research  and  development.  Trimble
invests  heavily in developing  positioning  and  information  technologies  and
wireless  communications,  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
fiscal years.


                                       8

<PAGE>


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

Research and development        $ 36,493          $ 45,763             $ 38,242


     Often a new product is developed  initially for an individual  customer who
is willing to purchase  development-stage  products.  We have used feedback from
such  initial  customers as a primary  source of  information  in designing  and
refining our products and in defining, with greater precision, customer needs in
emerging market areas.  During 1996, Trimble  established an advanced technology
laboratory  where we devote a portion of our corporate  research and development
expenditures to advance core GPS technology and its integration into synergistic
technologies  such as  communications,  sensors,  and information  technologies.
These  technological   advances  are  sometimes  supported  financially  through
strategic alliances and partnerships.

     * Trimble  expects that a  significant  portion of future  revenues will be
derived  from  sales of newly  introduced  products.  Consequently,  our  future
success  depends in part on our ability to  continue to develop 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  our  market  position.   Development  and  manufacturing
schedules for technology products are difficult to predict,  and there can be no
assurance that we 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 Trimble's future success. In addition,  some of our
products are subject to governmental and similar  certifications before they can
be sold. For example,  CE certification  for radiated  emissions is required for
most GPS receiver  products sold in the European  Union.  An inability to obtain
such  certifications  in a timely  manner  could have an  adverse  effect on our
operating results.

Manufacturing

     Trimble  seeks to be a low-cost  provider and to serve the growth in demand
for GPS-based products and systems through the outsourcing of manufacturing, and
the design of products around a common core of receivers.

     On August  10,  1999,  Trimble  signed  an Asset  Purchase  Agreement  with
Solectron  Corporation  and  Solectron  Federal  Systems,  Inc.   (collectively,
"Solectron"). The closing of the transaction occurred on August 13, 1999. At the
closing  of the Asset  Purchase  Agreement,  Trimble  transferred  to  Solectron
substantially all of our tangible  manufacturing assets located at the Company's
Sunnyvale,  California,  campus.  These  assets  include  but are not limited to
equipment,  fixtures and work in progress, as well as certain contract and other
intangible  assets  and  rights,  together  with  certain  related  obligations,
including  but  not  limited  to  real  property  subleases  covering  Trimble's
manufacturing floor space, and outstanding purchase order commitments. The Asset
Purchase Agreement also provided for Solectron's  subsequent purchase, on August
30, 1999, of Trimble's entire component inventory on hand as of August 13, 1999.

     Concurrent  with the closing of the Asset Purchase  Agreement,  Trimble and
Solectron also entered into a Supply  Agreement.  The Supply Agreement  provides
for the exclusive  manufacture by Solectron of almost all Trimble products for a
period of three years. In addition,  Trimble maintains a manufacturing  facility
in Austin,  Texas,  primarily  focused on FAA certified  products for commercial
aviation and military systems.

     Solectron offered  employment to approximately  230 Trimble  manufacturing,
engineering  and  related  support  personnel,   and  Trimble  understands  that
substantially  all  such  employees  initially  accepted  such  employment  with
Solectron.

     * The  utilization of Electronic  Manufacturing  Services (EMS) provided by
Solectron  will  enable  the  management  of  Trimble  to focus on the true core
competencies  of Trimble's  business,  while still  deriving the benefits from a
world-class manufacturing organization.  Benefits which Trimble hopes to receive
from this outsourcing of manufacturing include:

     o The purchasing power of a company with a multibillion-dollar  procurement
       budget.  
     o Supply chain management and order fulfillment models developed to support
       the stringent demands of current customers.

                                       9

<PAGE>


     o Flexibility and ability to respond to upside/market  opportunities due to
       the large scale of Solectron's manufacturing capacity.
     o Manufacturing,  service  and  distribution  capabilities  on a worldwide
       scale, enabling Trimble to provide more cost-effective supply solutions,
       closer to its customers.
     o Manufacturing  practices  yielding stable  processes and providing better
       quality output.   
     o Availability  of the latest  and most  cost-effective  product  assembly
       technologies.
     o Provision  of latest  design  services  to  participate  in the  product
       development   cycle   with  a  fresh   and   unbiased   focus  on  design
       for manufacturability, lower cost, higher quality and higher reliability.

     Trimble will continue to provide state-of-the art Computer Aided Design and
Computer  Integrated  Manufacturing  service  capabilities  to  the  development
community relating to PCB layout, assembly drawing and schematic development. We
intend to remain  self-sufficient  in this field to ensure that the  development
entities  can have the  maximum  benefit  from the  utilization  of their  time,
contributing to faster and more effective product release cycles.

     Trimble  maintains quality control  procedures for its products,  including
testing during design, prototype, and pilot stages of production, and inspection
and testing of finished products using automated test equipment.

     Trimble 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. Our core receiver  technology has
evolved since the  development of our first GPS receiver  product in 1984, as we
have worked to reduce the size, weight,  power consumption and cost of the basic
GPS receiver. In this process, we have designed our own semi-custom, single-chip
GPS processor.

Backlog

     Trimble  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,  we believe that
backlog information is not material to an understanding of our business.

Patents, Trademarks, and Licenses

     Trimble currently holds approximately 280 U.S. patents and 18 related
foreign  patents that expire at various  dates no earlier than 2005. It also has
more than 180 U.S. and foreign patent applications pending. We currently license
certain  peripheral   aspects  of  our  technology  from  Spectrum   Information
Technologies and GeoResearch.

     Although we believe that our patents and trademarks  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.  We actively  develop and protect our intellectual
property through a program of patenting, enforcement, and licensing.

     We do not  believe  that  any of our  products  infringe  patent  or  other
proprietary  rights of third parties,  but we cannot be certain that they do not
do so. (See Note 17 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 our profitability.

     In the second quarter of 1997,  Trimble expanded a prior license  agreement
with Pioneer Electronic  Corporation for certain of the technology  contained in
our TANS product for inclusion in in-vehicle  navigation products sold in Japan.
We received a one-time  $2.2  million  licensing  fee in  consideration  for the
expansion of this license.

     * Trimble  expects  that we will enter into  other  licensing  arrangements
relating to its technologies.

     "Trimble"  with the  sextant  logo,  "Trimble  Navigation,"  "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.


                                       10

<PAGE>

Employees

     As of December 31, 1999, Trimble employed 978 persons:  317 in research and
product development,  400 in sales and marketing, 118 in manufacturing,  and 143
in administration  and finance.  Of these, 75 were located in Europe, 175 in New
Zealand,  16 in Japan,  6 in Singapore,  5 in  Australia,  and 701 in the United
States. We also employ temporary and contract  personnel.  Use of such personnel
has  decreased  over the last year and is not  included  in the above  headcount
numbers.  Competition  in recruiting  personnel is intense.  We believe that our
continued  ability to attract and retain highly skilled  management,  marketing,
and  technical  personnel  is essential  to our future  growth and success.  Our
employees are not represented by a labor union, and we have not experienced work
stoppages.

     Trimble's  success  depends  in  part  on the  continued  contribution  and
long-term  effectiveness  of our executive  officers and key  technical,  sales,
marketing, support, research and development,  manufacturing, and administrative
personnel, many of whom would be difficult to replace.

                                       11

<PAGE>


Executive Officers of the Company

     The names,  ages, and positions of the Company's  executive  officers as of
March 27, 2000 are as follows:

Name                          Age                 Position
--------------------------------------------------------------------------------
Steven W. Berglund........... 48     President, Chief Executive Officer
Mary Ellen Genovese.......... 40     Vice President, Finance, Chief Financial 
                                     Officer and Corporate Controller
Charles E. Armiger, Jr....... 45     Vice President, Worldwide Sales
David M. Hall................ 51     Group Vice President, Mobile and Timing
                                     Technologies
Patrick J. Hehir............. 38     Senior Vice President, Chief Manufacturing 
                                     Officer
John E. Huey................. 50     Treasurer
Ron C. Hyatt................. 60     Group Vice President, Precision Positioning
Michael W. Lesyna............ 39     Vice President, Strategic Marketing
Bruce E. Peetz............... 48     Vice President, Advanced 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, Mr.
Berglund  was  president  of  Spectra  Precision,  Inc.,  with  global  sales of
approximately  $200 million,  develops and manufactures  surveying  instruments,
laser-based construction alignment instruments, and construction machine control
systems.  During his fourteen years with  Spectra-Physics,  Mr.  Berglund held a
variety of positions that included four years based in Europe.  Prior to Spectra
Precision,  Mr.  Berglund  spent a number of years in the early  1980s 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.

     Mary Ellen  Genovese  joined  Trimble in  December  1992 as  controller  of
manufacturing  operations.  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
October1997  and vice president of finance and corporate  controller in February
1998.  Currently,  she is Trimble's  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 of Minton 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, and 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,  and
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. 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.


                                       12

<PAGE>


     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
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
in1973 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, Mr. 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. Mr. Hehir also held process engineering, production and quality
positions at Pulse  Engineering in Ireland.  He 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, Mr.
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. Mr. 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.  He was  promoted to Assistant  Treasurer in 1995 and  Treasurer in
1996.  As  Treasurer,  Mr. Huey has  responsibility  for the  Company's  banking
relationships including syndicated credit facilities, domestic and international
cash management, credit/collection/DSO management and worldwide risk management,
including  setting  and  execution  of the  Company's  hedging  policy and stock
administration.   Past  business   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.

         Ron  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  Group.  He is  responsible  for
managing surveying,  mapping/GIS,  and machine  guidance/control  product lines.
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.

     Michael W. Lesyna joined Trimble as Vice  President of Strategic  Marketing
in September 1999. Mr. Lesyna brings broad experience in developing business and
marketing  strategies for  high-technology  companies.  Mr. Lesyna joins Trimble
from Booz Allen & Hamilton, where he spent six years, most recently serving as a
principal in the operations management group. While at Booz Allen & Hamilton, he
was  responsible  for advising  companies  on a wide range of strategic  issues.
Prior to Booz  Allen &  Hamilton,  Mr.  Lesyna  held a  variety  of  engineering
positions at Allied Signal Aerospace. He served as a project engineer for Allied
Signal's European consortium in Germany, was a development and test engineer for
the altitude  chamber,  and was a design  engineer for the  company's  first jet
fighter engine afterburner. Mr. Lesyna received an MBA from Stanford University.
He also  received  an MS in  mechanical  engineering  and a B.S.  in  mechanical
engineering from Stanford.


                                       13

<PAGE>

     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 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 years at Hewlett
Packard and four years at Hughes Aircraft  Company.  Mr. Peetz received his B.S.
degree in Electrical Engineering from the Massachusetts  Institute of Technology
in 1973, and did graduate work in computer science at UCLA.


I
tem 2.           Properties

     Trimble  currently  leases an aggregate  of 396,500  square feet in fifteen
buildings in Sunnyvale,  California.  Trimble uses approximately  221,000 square
feet; and the balance is subleased to others.  The leases and subleases on these
buildings  expire at various dates  through  2004.  In addition,  we lease three
buildings in Austin, Texas,  totaling  approximately 50,600 square feet. Trimble
uses  approximately  25,000  square  feet  to  manufacture   GPS-based  aviation
products.  The balance is subleased;  the leases and subleases expire at various
dates  through  2004.  We also lease  65,000  square  feet in two  buildings  in
Christchurch, New Zealand, for software development. These leases expire in 2005
and 2010.  Trimble's  two largest  international  sales offices are those in the
United Kingdom  (15,465 square feet) and Japan (5,640 square feet). In addition,
our sales offices in Australia,  China, France, Germany, Hungary, Italy, Mexico,
Spain, Singapore, Russia, and in various cities throughout the United States are
leased.  Trimble currently does not own any real estate or buildings.  Trimble's
international office leases expire at various dates through 2005. Certain of the
leases have  renewal  options.  We believe that our  facilities  are adequate to
support our 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 17 to the Consolidated  Financial  Statements,
hereof under the caption "Pending Matters."


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

     Not applicable.



                                       14

<PAGE>



                                     PART II


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

     Trimble's  Common Stock is traded on the Nasdaq Stock  Market(R)  under the
symbol TRMB. The following  table sets forth,  for the quarters  indicated,  the
range of high and low closing  sales  prices for  Trimble's  Common Stock on the
Nasdaq Stock Market(R):

                                         High              Low

               1999:

                        Fourth           23 1/8            10 1/2
                        Third            13 1/4            9
                        Second           13 3/4            9 3/8
                        First            10 1/2            7 1/4

               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

     Trimble had 1,357 registered shareholders of record as of March 13, 2000.

     Trimble'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 our control,  and due also to
the nature of our business, such short falls can be sudden.

     Trimble  has  never  paid  cash  dividends  on its  Common  Stock.  Trimble
presently  intends to retain its  earnings  to finance  the  development  of its
business,  and does not  presently  intend to declare any cash  dividends in the
foreseeable  future.  Under our  current  $50,000,000  revolving  line of credit
agreement,  Trimble is  restricted  from paying  dividends  without the lender's
consent. Under Trimble's Note Purchase Agreement,  pursuant to which the Company
issued $30,000,000 of its subordinated promissory notes in June 1994, Trimble is
also restricted  from paying  dividends.  See Notes 7 and 9 to the  Consolidated
Financial Statements contained in Item 8.

                                       15

<PAGE>


 Item 6.  Selected Financial Data

 HISTORICAL FINANCIAL REVIEW

 Summary Consolidated Statements of Operations Data

<TABLE>
<CAPTION>
                                                              December 31,  January 1, January 2, December 31, December 31,
 Fiscal Years ended                                               1999        1999       1998         1996        1995
---------------------------------------------------------------------------------------------------------------------------
 (In thousands, except per share data)
<S>                                                             <C>        <C>         <C>          <C>         <C>   
 Revenue                                                         $ 271,364  $ 268,323   $ 266,442    $ 226,784   $ 227,859
                                                              -------------------------------------------------------------
 Operating expenses
     Cost of sales                                                 127,117    141,075     124,411      107,744      96,792
     Research and development                                       36,493     45,763      38,242       27,833      30,518
     Sales and marketing                                            53,543     61,874      57,661       61,112      60,321
     General and administrative                                     33,750     33,245      27,424       35,136      23,395
     Restructuring charges                                               -     10,280           -        2,134           -
                                                              -------------------------------------------------------------
  Total operating expenses                                          250,903    292,237     247,738      233,959     211,026
                                                              -------------------------------------------------------------
 Operating income (loss) from continuing operations                 20,461    (23,914)     18,704       (7,175)     16,833
 Nonoperating income (expense), net                                    274     (2,041)      1,172          706         773
                                                              -------------------------------------------------------------
 Income (loss) before income taxes from continuing operations       20,735    (25,955)     19,876       (6,469)     17,606
 Income tax provision (benefit)                                      2,073      1,400       2,496         (300)      3,121
                                                              -------------------------------------------------------------
 Net income (loss) from continuing operations                     $ 18,662  $ (27,355)   $ 17,380     $ (6,169)   $ 14,485
                                                              -------------------------------------------------------------
Loss from discontinued operations (net of tax)                           -     (5,760)     (8,101)      (5,134)     (3,224)
Estimated gain (loss) on disposal of discontiued operations 
  (net of tax)                                                       2,931    (20,279)          -            -           -
                                                              -------------------------------------------------------------
Net income (loss)                                                 $ 21,593  $ (53,394)    $ 9,279    $ (11,303)   $ 11,261
                                                              =============================================================

Basic net income(loss) per share from continuing operations         $ 0.83    $ (1.22)     $ 0.78      $ (0.28)     $ 0.73
Basic net income(loss) per share from discontinued operations       $ 0.13    $ (1.16)    $ (0.36)     $ (0.23)    $ (0.16)
                                                              -------------------------------------------------------------
Basic net income(loss) per share                                    $ 0.96    $ (2.38)     $ 0.42      $ (0.51)     $ 0.56
                                                              =============================================================
       Shares used in calculating basic
               earnings per share                                   22,424     22,470      22,293       22,005      19,949
                                                              =============================================================

Diluted net income(loss) per share from continuing operations       $ 0.82    $ (1.22)     $ 0.75      $ (0.28)     $ 0.68
Diluted net income(loss) per share from discontinued operations     $ 0.13    $ (1.16)    $ (0.35)     $ (0.23)    $ (0.15)
                                                              -------------------------------------------------------------
Diluted net income(loss) per share                                  $ 0.95    $ (2.38)     $ 0.40      $ (0.51)     $ 0.53
                                                              =============================================================
       Shares used in calculating diluted
               earnings per share                                   22,852     22,470      22,947       22,005      21,318
                                                              =============================================================

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


 Other Operating Data:                                        December 31,  January 1, January 2, December 31, December 31,
Fiscal Years ended                                                1999        1999       1998         1996        1995
---------------------------------------------------------------------------------------------------------------------------
 (In thousands, except percentages)

 Gross margin percentage                                               53%        47%         53%          52%         58%
 Operating income (loss) percentage                                     8%        (9%)         7%          (3%)         7%
 EBITDA (1)                                                       $ 29,534  $ (11,404)   $ 30,911      $ 2,965    $ 24,875
 Depreciation and amortization                                       9,073     12,510      12,207       10,140       8,042
 EBITDA percentage                                                     11%        (4%)        12%           1%         11%

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

 Working capital                                                 $ 111,808   $ 81,956   $ 133,434    $ 122,409   $ 135,097
 Total assets                                                      181,751    156,279     207,663      189,841     196,763
 Noncurrent portion of long-term debt                               33,821     31,640      30,697       30,938      31,316
 Shareholders' equity                                            $ 100,796   $ 74,691   $ 139,483    $ 124,045   $ 129,937

<FN>
(1) EBITDA consists of earnings from continuing operations before interest income, interest expense, other
nonoperating income and expense, income taxes, depreciation and amortization. EBITDA is not a measure of
financial performance under generally accepted accounting principles and should not be considered in isolation or
as an alternative to net income as an indicator of a company's performance or to cash flows from operating
activities as a measure of liquidity.
</FN>
</TABLE>


                                       16

<PAGE>



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

RESULTS OF CONTINUING OPERATIONS

     In fiscal  1999,  Trimble's  annual  revenues  from  continuing  operations
increased to $271.4  million from $268.3 million in fiscal 1998. In fiscal 1999,
Trimble had net income from continuing operations of $18.7 million, or $0.82 per
share,  diluted,  compared  to a net loss from  continuing  operations  of $27.4
million, or ($1.22) per share, diluted, in fiscal 1998. The total net income for
fiscal 1999, including discontinued operations,  was $21.6 million, or $0.95 per
share,  diluted,  compared  to a total  net  loss  for  fiscal  1998,  including
discontinued operations, of $53.4 million, or ($2.38) per share, diluted.

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

<TABLE>
<CAPTION>
                                                                   December 31,           January 1,            January 2,
Fiscal Years ended                                                    1999                  1999                  1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                   <C>                   <C>    
 Revenue                                                                   100%                  100%                  100%
                                                                ----------------     -----------------     -----------------
Operating expenses:
    Cost of sales                                                           47%                   53%                   47%
    Research and development                                                13%                   17%                   14%
    Sales and marketing                                                     20%                   23%                   22%
    General and administrative                                              12%                   12%                   10%
    Restructuring charges                                                    0%                    4%                    0%
                                                                ----------------     -----------------     -----------------
           Total operating expenses                                          92%                  109%                   93%
                                                                ----------------     -----------------     -----------------
 Operating income (loss) from Continuing Operations                          8%                   (9%)                   7%

Nonoperating income (expense), net                                           0%                   (1%)                   0%
                                                                ----------------     -----------------     -----------------
 Income (loss) before income taxes from Continuing Operations                8%                  (10%)                   7%

Income tax provision                                                         1%                    1%                    1%
                                                                ----------------     -----------------     -----------------
 Net income (loss) from Continuing Operations                                7%                  (10%)                   7%
                                                                ----------------     -----------------     -----------------

Loss from Discontinued Operations (net of tax)                               0%                   (2%)                  (3%)
Estimated gain (loss) on disposal of Discontiued Operations 
  (net of tax)                                                               1%                   (8%)                   0%
                                                                ----------------     -----------------     -----------------
Net Income (loss)                                                            8%                  (20%)                   3%
                                                                ================     =================     =================
</TABLE>


     Revenue.  In fiscal 1999,  total revenue  increased to $271.4  million from
$268.3  million in fiscal 1998,  which  represents a percentage  increase of 1%.
Total revenue  increased in fiscal 1998 to $268.3 million from $266.4 million in
fiscal  1997,  which  represents  a  percentage  increase  of less than 1%.  The
following table breaks out Trimble's revenues by industry segment:


<TABLE>
<CAPTION>
                                  ---------------------------------------------------------------------------
                                    December 31,    % Total     January 1,   % Total    January 2,    % Total
                                      1999          Revenue        1999      Revenue       1998       Revenue
-------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                  <C>              <C>        <C>           <C>       <C>            <C>
 Precision Positioning Group          $ 161,294        59%        $165,951      62%       $ 142,449      53%
 Mobile and Timing Technologies         110,070        41%         102,372      38%         123,993      47%
                                  --------------   --------  --------------  -------   ------------- --------
          Total revenue               $ 271,364       100%        $268,323     100%       $ 266,442     100%
                                  --------------   --------  --------------  -------   ------------- --------
</TABLE>


Precision Positioning Group

     The Precision  Positioning  Group  revenues  decreased by 3% in fiscal 1999
over  fiscal  1998.  The 1999  revenue  decrease  compared to 1998 is due to the
following:  

     o Sales were impacted  from the change in commission  structure for some of
       our products from commission dealers to buy/sell  dealers in fiscal 1999.
       Under the buy/sell arrangement, the product is discounted to the dealer, 
       as opposed to end-user pricing with commissions recorded under sales and 
       marketing expense.
     o Sales  to  Original  Equipment  Manufacturers  such  as CNH  Global  and
       Caterpillar  decreased as compared to 1998 sales due to an economic  
       slowdown in the United States for mining and agriculture related 
       products.


                                       17

<PAGE>

     o In the fourth  quarter of 1999,  delivery  problems due to critical  part
       shortages in our supply chain,  and transitional  issues with outsourcing
       our manufacturing, had a negative impact on revenue for the fiscal year 
       ended 1999.

     Precision  Positioning  Group  revenues  had a growth rate of 16% in fiscal
1998 over fiscal 1997.  The 1998 increase  compared to 1997 was primarily due to
increases in 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 Trimble's GPS
Total  Station 4800 and 4700  products.  Also,  the  increase in marine  survey,
mapping,  and GIS,  as well as mining,  construction  and  agriculture  reflects
increased demand for these products.

Mobile and Timing Technologies

     Mobile and Timing  Technologies  revenues  increased 8% in fiscal 1999 over
fiscal 1998. The increase is attributable to strong growth in our automotive and
timing  markets  which was partially  offset by decreases in commercial  marine,
commercial air transport, and military systems, due to the following:

     o Trimble  decided to exit the  commercial  marine  business  in the fourth
       quarter  of 1998 and sold the last of such  products  in the  second  
       quarter of 1999.
     o Commercial  air transport was down, due to decreases in market demand and
       the successful  conclusion of shipments in fiscal 1998 to American  
       Airlines and Continental Airlines through our Honeywell alliance,  which 
       were not repeated in fiscal 1999.
     o Military  systems  declined due to the completion of our CUGR contract in
       the first quarter of 1998 which sales were not repeated in 1999.

     The Mobile and Timing  Technologies  revenues  decreased 17% in fiscal 1998
from fiscal 1997. The 1998 decrease was 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 our 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. In addition,  Mobile and Timing
Technologies  revenues  in  1997,  included  $1.8  million  in  revenues  from a
development   agreement  in  connection   with  an  irrevocable   nonrefundable,
nonrecurring engineering fee and a nonrecurring one-time $2.2 million technology
license from Pioneer Electronic  Corporation in connection with expansion of its
prior license for in-car navigation.

     * 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.  Trimble believes that  opportunities in this market have been
substantially reduced by cutbacks in U.S. and foreign military spending.

Export Sales

     * Export sales from domestic operations,  as a percentage of total revenue,
were 38% in 1999, 34% in 1998, and 28% in 1997. Sales to unaffiliated  customers
in foreign  locations,  as a percentage of total revenue,  were 52% in 1999, and
46% in both 1998 and 1997.  Trimble  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, Trimble 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  (SA) -- 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.  Trimble's results
of  operations  could be  adversely  affected  if we 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 Trimble's  total  revenues in fiscal 1999,  1998 or
1997. 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 

                                       18

<PAGE>


costs,  and new product  start-up  costs.  In fiscal 1999, the gross margin
percentage on product sales was 53%,  compared with 47% in 1998 and 53% in 1997.
The   increase  in  gross  margin   percentages   primarily   reflect   improved
manufacturing   cost  controls   achieved  through  the   consolidation  of  the
manufacturing  organization,  resulting  in  improved  efficiencies  and reduced
inventory.  In  addition,  gross  margins in the second half of fiscal 1999 were
favorably  impacted by the cost benefits of  outsourcing  our  manufacturing  to
Solectron.  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; 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.

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

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


                                               Fiscal Years Ended
                           ----------------------------------------------------
                               December 31,       January 1,        January 2,
                                  1999               1999              1998
-------------------------------------------------------------------------------
(In thousands)

Research and development         $ 36,493           $ 45,763          $ 38,242
Sales and marketing                53,543             61,874            57,661
General and administrative         33,750             33,245            27,424
Restructuring charges                   -             10,280                 -
                           ---------------    ---------------     -------------
 Total                          $ 123,786          $ 151,162         $ 123,327
                           ---------------    ---------------     -------------

     Research and Development.  Research and development  spending  decreased in
absolute  dollars during fiscal 1999,  representing  13% of revenues as compared
with 17% in 1998 and 14% in 1997. The lower research and development expenses in
1999 are due primarily to Trimble's  receiving  approximately  $4.2 million more
funds from cost reimbursement  projects in 1999 as compared to 1998. Also, there
were  decreases  in our  expenses  of  approximately  $5.0  million  related  to
electronic parts, depreciation, travel, personnel, and other supplies as part of
the Company's  restructuring  plans which were  implemented  in the last half of
fiscal 1998.

     The  dollar  increase  from  1997  to 1998 is due  primarily  to  Trimble's
receiving approximately$3.5 million fewer funds from cost reimbursement projects
in 1998 as compared with 1997.

     Trimble plans to continue its aggressive development of future products.

     * Sales and Marketing. Sales and marketing expenses decreased during fiscal
1999,  representing  20% of  revenues,  as compared  with 23% in 1998 and 22% in
1997. The primary reason for the dollar and percentage decrease in expenses from
1998  to  1999  is  decreases  of  approximately   $7.7  million  in  personnel,
consultants,  travel,  advertising,  trade shows,  expensed demo equipment,  and
other office  supplies as part of the Company's  restructuring  plan,  which was
implemented in the last half of fiscal 1998. In addition, sales commissions were
lower as a percentage of sales,  due to the change in dealer  structure for some
of our product lines from commission dealers to buy/sell.

     The primary reason for the dollar and percentage increases in expenses from
1997 to 1998 was an increase of  approximately  $2.1  million in  personnel  and
related  expenses  that  accompany  an increase in the number of  employees.  In
addition,  Trimble  experienced  increases  in  expenses of  approximately  $1.1
million related to trade shows, advertising, and demo equipment expenses.

     * Trimble's future growth will depend in part on the timely development and
continued  viability  of the markets in which we currently  compete,  and on our
ability to  continue to identify  and exploit new markets for our  products.  In
addition, we have encountered  significant  competition in selected markets, and
we expect  such  competition  to  intensify  as the market for GPS  applications
receives  acceptance.  Several of Trimble's  competitors 


                                       19

<PAGE>

are major corporations with substantially greater financial, technical, and
marketing  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 Trimble's revenues and profitability.

     General and Administrative.  General and administrative  expenses increased
in absolute  dollars  during  fiscal  1999,  representing  12% of  revenues,  as
compared  with 12% in 1998 and 10% in  1997.  The  increase  in  fiscal  1999 as
compared to 1998 is due to an increase in the  allowance  for doubtful  accounts
related to  customers  in South  America  for 1999;  and an increase in building
rental costs due to the renewal of many of our building  leases.  This  increase
was  partially  offset  by  space  consolidations  as part of our  restructuring
efforts in the fourth quarter of 1998.

     The  increase  from  1997  to 1998  was due  primarily  to an  increase  of
approximately  $1.7 million in personnel and the related expenses that accompany
an increase in the number of employees and  consultants,  as well as an increase
of  approximately  $1.7  million  in  outside  services  related  to legal  fees
associated with certain litigation matters during 1998.

     Restructuring  Charges.  As noted in Note 8 to the  Consolidated  Financial
Statements   during  the  year  ended  January  1,  1999,   Trimble  recorded  a
restructuring  charge of $10.3 million classified in operating  expenses.  These
charges were a result of Trimble's  reorganization to improve business processes
and   to   decrease   organizational   redundancies,   to   improve   management
accountability and to improve our focus on profitable operations. As a result of
the  reorganization,   Trimble  downsized  its  operations,  including  reducing
headcount  and  facilities   space  usage,   and  canceled  its   enterprisewide
information  system project and certain research and development  projects.  The
impact of these  decisions  was that  significant  amounts of our fixed  assets,
prepaid  expenses,  and  purchased  technology  had been  impaired  and  certain
liabilities  incurred.  Trimble  wrote  down the  related  assets  to their  net
realizable values and made provisions for the estimated liabilities.

     The  elements  of the  charges  incurred  in  fiscal  1998 and the  amounts
remaining  at  December  31,  1999,  on the  balance  sheet are as  follows  (in
thousands):

<TABLE>
<CAPTION>
                                       Total
                                     charged to         Amounts paid/            Amounts paid/              Remaining in
                                     expense in          written off              written off            accrued liabilites
                                    fiscal 1998        in fiscal 1998            in fiscal 1999       as of December 31, 1999
                                   --------------- ------------------------  ----------------------- --------------------------
<S>                                   <C>              <C>                      <C>                            <C>  
Employee termination benefits          $ 2,864          $ (1,200)                  $ (371)                      $ 1,293
Facility space reductions                1,061                 -                 $ (1,053)                            8
ERP system abandonment                   6,360            (4,895)                $ (1,465)                            -
                                   ------------ ---------------------------  ----------------------- --------------------------
     Subtotal                         $ 10,285          $ (6,095)                $ (2,889)                      $ 1,301
                                   ============ ============================ ======================= ==========================
</TABLE>


     The cash expenditures  associated with the remaining obligations will occur
primarily in fiscal 2000.

     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 $28,000 in fiscal 1999,  compared with gains of
$234,000 in 1998 and 1997.  Trimble's policy is to hedge its exposure to foreign
currency  transactions  in order 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  increased  in 1999 from 1998 and  decreased  in 1998 from
1997.  The higher  interest  income in 1999 is due  primarily  to the  increased
interest  income received on cash and short-term  investments  because of higher
average balance for fiscal 1999 over fiscal 1998.

     The  decrease  in 1998  from  1997 was  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 1999 due to lower fees in foreign
locations.  Interest expense includes interest on a $30.0 million note issued in
August  1995,  and fees on unused  lines of  credit.  (See  Notes 7 and 9 to the
Consolidated  Financial  Statements  for details of long-term  debt and lines of
credit.)

     Income  Tax  Provision.  Trimble's  effective  tax  rates  from  continuing
operations  for  fiscal  years  1999,  1998 and 1997  are  10%,  (6%),  and 12%,
respectively.  The 1999 and 1997  income  tax rates  are less  than the  federal



                                       20

<PAGE>

statutory  rate of 35%, due  primarily to the  realization  of the benefits from
prior net operating losses and previously reserved deferred tax assets. The 1998
income tax rate  differs  from the federal  statutory  rate,  due  primarily  to
foreign taxes and the inability to realize the benefit of net operating losses.

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

LITIGATION

     * Trimble is involved in a number of legal  matters as discussed in Note 17
to the  Consolidated  Financial  Statements.  While  Trimble  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 December  31,  1999,  Trimble had cash and cash  equivalents  of $49.3
million and $52.7 million in  short-term  investments.  Trimble's  cash and cash
equivalents and short-term  investments increased from the prior year, due to an
increase  in net income and the  receipt of $26.9  million in cash as part of an
agreement  with  Solectron  for  the  outsourcing  of  Trimble's   manufacturing
operations  located in  Sunnyvale,  California  (See Note 4 to the  consolidated
financial  statements).  Trimble's long-term debt consisted primarily of a $30.0
million  note  obligation  due in 2001.  We had no debt  outstanding  under  our
$50,000,000 unsecured line of credit but had issued certain letters of credit as
of December 31, 1999,  amounting to approximately  $283,000.  Trimble 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, 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  operating
cash needs for at least the next twelve months.

     * In fiscal  1999,  the cash  provided by  operating  activities  was $23.6
million,  as compared  to cash  provided  of $7.0  million in the  corresponding
period in 1998.  Cash  provided by operating  activities  in 1999 arose from the
Company's  net income,  plus  depreciation  and  amortization  and  decreases in
inventories  and offset  partially  by  increases  in  accounts  receivable  and
decreases in accrued  liabilities.  Inventory from  continuing  operations as of
December 31, 1999  decreased  by $20.6  million  from the 1998  year-end  levels
primarily,  due  to  the  transition  of  certain  manufacturing  operations  to
Solectron as well as a focused  effort by Trimble to reduce  inventory by supply
chain synchronization, reducing lead and cycle times, simplifying product lines,
and implementing tighter control over its material forecasting process (See Note
4 to the consolidated  financial  statements.)  Trimble's ability to continue to
generate cash from operations will depend in a large part on revenues,  the rate
of collections  of accounts  receivable,  and the  successful  management of the
Solectron manufacturing relationship.

     Cash provided by sales of common stock in 1999 represents the proceeds from
purchases made by employees pursuant to Trimble's stock option plan and employee
stock  purchase  plan,  and totaled $4.5 million for the year ended December 13,
1999.

     * In August 1997, Trimble entered into a three-year,  $50,000,000 unsecured
revolving credit facility with four banks (the "Credit  Agreement").  The Credit
Agreement  enables  Trimble to borrow up to  $50,000,000,  provided that certain
financial  and other  covenants  are met. As of October 20, 1999,  Trimble,  the
Agent, and the Lenders agreed to change and amend certain covenants for the life
of the loan,  which expires in August of 2000. The $50,000,000  revolving credit
facility was modified to include  Trimble's  prior separate  $5,000,000  line of
credit and to simplify the entire arrangement. 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,  Trimble 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,  Trimble has not made any
borrowings under the $50,000,00  unsecured  revolving  credit facility,  but has
issued  certain  letters  of  credit  as of  December  31,  1999,  amounting  to
approximately $283,000. In addition, Trimble is restricted from paying dividends
under the terms of the Credit Agreement.

     In June 1994, Trimble 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 


                                       21

<PAGE>

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 Trimble 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,  Trimble  is also
restricted from paying dividends.

     The  issuance  of the  subordinated  promissory  notes  also  included  the
issuance of 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 net
proceeds of the notes were  $29,348,000.  The notes are  recorded as  noncurrent
liabilities,  net of appraised fair value attributed to the warrants.  The value
of the warrants and the issuance costs are being amortized to 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,  Trimble  is  required  to meet a minimum  consolidated  net worth
requirement.   If  Trimble  falls  below  the  minimum  consolidated  net  worth
requirement we could be in default of our loan covenants. Such events could have
a material adverse effect on Trimble's operations and liquidity.

     Trimble  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,  Trimble approved the repurchase of an additional 1.6 million shares under
the discretionary  program.  During 1997,  Trimble purchased 139,500 shares at a
cost of $1.8 million.  During 1998,  Trimble  purchased 1.08 million shares at a
cost of $16.1 million.  During fiscal 1999, no shares were repurchased under the
discretionary program.

     * Trimble  presently  expects  capital  expenditures  in fiscal  2000 to be
approximately  $5.4 million,  primarily for computer  equipment,  software,  and
leasehold improvements associated with business expansion.

     Trimble  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 nor any potential
future investments will be successful.

     * Trimble 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. Trimble does not currently
believe  that the  introduction  of the Euro will have a material  effect on its
foreign exchange and hedging activities. Trimble has also assessed the potential
impact  the  Euro  conversion  will  have  in  regard  to its  internal  systems
accommodating Euro-denominated  transactions.  Trimble will continue to evaluate
the impact of the Euro  introduction  over time,  based on  currently  available
information.  Trimble does not currently  anticipate  any adverse  impact of the
Euro conversion on the Company.

YEAR 2000 IMPACT

Year 2000 Issues

     Computers and software,  as well as other equipment that relied 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."  Trimble is not aware of any year 2000 issues that
have  affected  its  business.  In  preparation  for the year 2000,  we incurred
internal  staff costs as well as consulting  and other  expenses.  The year 2000
expenses for external  services  totaled  less than $1.0  million.  During 1999,
Trimble updated a significant  portion of its computer  software to be year 2000
compliant.

     * Trimble is also not aware of any  material  problems  with  customers  or
suppliers.  Accordingly, Trimble does not anticipate incurring material expenses
or experiencing any material operational disruption as a result of any year 2000
issues.

CERTAIN OTHER RISK FACTORS

     Trimble's  revenues  have  historically  tended to fluctuate on a quarterly
basis due to the timing of shipments of products under contracts and the sale of
licensing rights. A significant  portion of Trimble's  quarterly revenues occurs
from orders received and immediately  shipped to customers in the last few weeks
and days of a quarter.  If 


                                       22

<PAGE>


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.

     Due to competitive  pressure,  prices of certain of Trimble'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 our net revenue.

     With the  selection of Solectron  as an  exclusive  manufacturing  partner,
Trimble is  substantially  dependent upon a sole supplier for the manufacture of
its  precision  positioning  and  mobile and timing  technologies  products.  In
addition,  we rely on sole  suppliers  for a number of our critical  ASICS.  The
dependence upon these sole suppliers  subjects  Trimble to risks associated with
an  interruption of supply if we are not able to find  alternative  sources on a
timely basis. There can be no assurance that any delay, disruptions,  or quality
problems  resulting  from the use of a sole  supplier  will not have a  material
adverse effect on Trimble's business and results of operations.

     Trimble'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 Trimble's
stock. Additionally,  certain macro-economic factors such as changes in interest
rates could also have an impact on the trading price of Trimble stock.

     The value of  Trimble's  products  relies  substantially  on our  technical
innovation  in fields in which there are many current  patent  filings.  Trimble
recognizes that as new patents are issued or are brought to our attention by the
holders of such patents,  it may be necessary  for us to withdraw  products from
the market,  take a license from such patent holders,  or redesign our products.
Trimble does not believe any of its products currently infringe patents or other
proprietary rights of third parties, but we cannot be certain 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
Trimble's revenues or profitability.  (See Note 17 to the Condensed Consolidated
Financial Statements.)

     Trimble's future revenue stream depends to a large degree on our ability to
bring new  products to market on a timely  basis.  In some of our markets -- for
example, Land Survey and GIS where we have a market leadership position, a delay
in new product  introductions  could have a significant impact on our results of
operations.  No  assurance  can be given that we will not incur  problems in the
future in innovating and introducing new products.

     Trimble is continuously  evaluating  alliances and external  investments in
technologies  related to its  business,  and has already  entered  into  certain
strategic  alliances and has made relatively  small  strategic  investments in a
number of GPS related technology companies. Acquisitions of companies, divisions
of  companies,  or products  and  alliances  and  strategic  investments  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;  (iii) loss
of key employees of acquired operations; and (iv) inability to recover strategic
investments  in  development  stage  entities.  Any such  problems  could have a
material adverse effect on Trimble's business,  financial condition, and results
of  operations.  No assurances can be given that we will not incur problems from
current or future alliances,  acquisitions, or investments.  Furthermore,  there
can be no  assurance  that  we  will  realize  value  from  any  such  strategic
alliances, acquisitions, or investments.

     Trimble currently enjoys strong relationships with a few key customers.  An
increasing  amount of our revenue is  generated  from large OEMs such as Philips
VDO, Nortel, Caterpillar, CNH Global (formerly Case Corporation),  and others. A
reduction or loss of business with these customers could have a material adverse
effect on our  financial  condition and results of  operations.  There can be no
assurance  that  Trimble  will  realize  value from these  relationships  in the
future.

     The ability of Trimble 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 our industry and location is intense, and there can be no assurance
that we will be able to attract,  motivate and retain enough qualified employees
necessary for the future continued development of our business and products.

     Trimble 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, Trimble's products that use 


                                       23

<PAGE>

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 our 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 our operating results.

     Trimble's  GPS  technology  is  dependent  on the  use of  radio  frequency
spectrum.   The  assignment  of  spectrum  is  controlled  by  an  international
organization known as the International  Telecommunications Union (ITU). Any ITU
reallocation of radio frequency spectrum,  including frequency band segmentation
or sharing of spectrum,  may  materially  and  adversely  affect the utility and
reliability  of our products,  which would,  in turn,  cause a material  adverse
effect on our operating  results.  In addition,  emissions from mobile satellite
service and other equipment  operating in adjacent frequency bands or inband may
materially  and adversely  affect the utility and  reliability  of our products,
which could result in a material adverse effect on our operating results.

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." SFAS 133 will require Trimble 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.  With  respect  to
derivatives which are hedges,  depending on the nature of the hedge,  changes in
the fair value of  derivatives  either will be offset against the change in fair
value of the hedged assets,  liabilities,  or firm commitments through earnings,
or will be  recognized  in other  comprehensive  income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be immediately  recognized in earnings. In June of 1999 the Financial
Accounting  Standards Board delayed the effective date of implementation for one
year; therefore, SFAS 133 is effective for fiscal years beginning after June 15,
2000.  Trimble  expects to adopt SFAS 133 as of the beginning of its fiscal year
2001. The effect of adopting the SFAS 133 is currently being  evaluated,  but is
not expected to have a material adverse effect on Trimble's  financial  position
or results of operations.

     In December  1999,  the  Securities  and Exchange  Commission  issued staff
Accounting  Bulletin No. 101 (SAB 101). SAB 101 summarizes  certain areas of the
staff's views in applying  generally accepted  accounting  principles to revenue
recognition in financial  statements.  Trimble is currently assessing the impact
of SAB 101, but does not expect that it will have a material  adverse  effect on
Trimble's financial position or results of operations.


I
tem 7A.        Quantitative and Qualitative Disclosure about Market Risk

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

Market Interest Rate Risk

     Short-term  Investments  Owned by the  Company.  As of December  31,  1999,
Trimble  had  short-term   investments  of  $52.7  million.   These   short-term
investments  consisted  of $50.2  million  of highly  liquid  investments,  with
original  maturities at the date of purchase between three and twelve months and
a $2.5  million  liquid  investment  with an  original  maturity  at the date of
purchase  of 15  months  (See  Note 2 to the  Condensed  Consolidated  Financial
Statements).  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 December 31, 1999,  would cause
the fair value of these  short-term  investments  to  decline  by an  immaterial
amount.  Because  Trimble  has the  ability  to  hold  these  investments  until
maturity,  we 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 our interest
income.

     As of January 1, 1999, Trimble had short-term investments of $16.3 million.
These  short-term  investments  consisted  of highly  liquid  investments,  with
original  maturities at the date of purchase  between  three and twelve  months.
(See  Note  2  to  the  Condensed   Consolidated  Financial  Statements.)  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 


                                       24

<PAGE>

an  immaterial  amount.  Because  Trimble  has the  ability  to hold  these
investments  until maturity,  we 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 our interest income.

     Outstanding  Debt of the  Company.  As of December  31, 1999 and January 1,
1999, Trimble 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 this instrument is fixed. A hypothetical 10 percent decrease in
the  interest  rates would not have a material  impact on Trimble.  Increases in
interest rates could, however,  increase interest expense associated with future
borrowings of Trimble,  if any. We do not currently hedge against  interest rate
increases.

Foreign Currency Exchange Rate Risk

     Trimble hedges risks associated with foreign currency transactions in order
to  minimize  the  impact of  changes  in  foreign  currency  exchange  rates on
earnings.  Trimble  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.

     *  Trimble  does  not  anticipate  any  material   adverse  effect  on  its
consolidated financial position utilizing our current hedging strategy.

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

     The following table provides  information  about Trimble's foreign exchange
forward contracts outstanding as of December 31, 1999:


<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                         67,000                       $ 657                  $ 656
YEN                         Sell                       261,000                     $ 2,517                $ 2,568
NZD                         Buy                          4,400                     $ 2,257                $ 2,289
EURO                        Sell                         2,955                     $ 3,097                $ 3,014
Sterling                    Buy                          1,230                     $ 2,002                $ 1,996

</TABLE>


     The following table provides  information  about Trimble's foreign exchange
forward contracts outstanding as of January 1, 1999:


<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  Trimble's  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.


                                       25

<PAGE>


Item 8.         Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          December 31,            January 1,
                                                                              1999                   1999
------------------------------------------------------------------------------------------------------------------
(In thousands)

ASSETS
<S>                                                                       <C>                    <C>    
Current assets:
      Cash and cash equivalents                                              $ 49,264               $ 40,865
      Short-term investments                                                   52,728                 16,269
      Accounts receivable, less allowance for doubtful
         accounts of $2,949 and $2,220, respectively                           36,005                 33,431
      Inventories                                                              16,435                 37,166
      Other current assets                                                      4,510                  4,173
                                                                     -----------------     ------------------
         Total current assets of continuing operations                        158,942                131,904

Property and equipment, at cost less accumulated
   depreciation                                                                12,333                 15,104
Intangible assets less accumulated amortization                                 1,238                  1,320
Deferred income taxes                                                             387                    405
Other assets                                                                    8,851                  7,546
                                                                     -----------------     ------------------
         Total assets of continuing operations                                 22,809                156,279
                                                                     -----------------     ------------------
         Total assets                                                        $181,751               $156,279
                                                                     =================     ==================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
      Current portion of long-term debt                                       $ 1,388                $ 1,388
      Accounts payable                                                         11,710                 13,000
      Accrued compensation and benefits                                         7,011                  4,696
      Customer advances                                                             -                    808
      Accrued liabilities                                                      14,091                 15,474
      Accrued liabilities related to disposal of General Aviation               2,212                  6,743
      Accrued warranty expense                                                  5,786                  5,681
      Income taxes payable                                                      2,983                  2,158
      Deferred gain on sale of assets                                           1,953                      -
                                                                      -----------------     ------------------
         Total current liabilities                                             47,134                 49,948

Noncurrent portion of long-term debt and other liabilities                     30,566                 31,640
Noncurrent portion of gain on sale of assets                                    3,255                      -
                                                                      ----------------     ------------------
         Total liabilities                                                     80,955                 81,588
                                                                      ----------------     ------------------
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; 22,742 and 22,247 shares outstanding, respectively       125,969                121,501
      Common stock warrants                                                       993                    700
      Accumulated deficit                                                     (25,125)               (46,718)
      Accumulated other comprehensive loss                                     (1,041)                  (792)
                                                                      ----------------     ------------------
         Total shareholders' equity                                           100,796                 74,691
                                                                      ----------------     ------------------
         Total liabilities and shareholders' equity                          $181,751               $156,279
                                                                      ================     ==================

</TABLE>


See accompanying notes to consolidated financial statements.

                                       26

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION> 
                                                                       December 31,             Janaury 1,             January 2,
Fiscal Years ended                                                         1999                    1999                   1998
-----------------------------------------------------------------------------------------------------------------------------------
 (In thousands, except per share data)
<S>                                                                        <C>                   <C>                    <C>    
Revenue                                                                     $ 271,364             $ 268,323              $ 266,442
                                                                 ---------------------     -----------------     ------------------
Operating expenses:
     Cost of sales                                                            127,117               141,075                124,411
     Research and development                                                  36,493                45,763                 38,242
     Sales and marketing                                                       53,543                61,874                 57,661
     General and administrative                                                33,750                33,245                 27,424
     Restructuring charges                                                          -                10,280                      -
                                                                 ---------------------     -----------------     ------------------
        Total operating expenses                                              250,903               292,237                247,738
                                                                 ---------------------     -----------------     ------------------
Operating income (loss) from continuing operations                             20,461               (23,914)                18,704

Nonoperating income (expense):
     Interest and investment income                                             3,857                 3,588                  4,462
     Interest  and other expense                                               (3,611)               (5,863)                (3,524)
     Foreign exchange gain                                                         28                   234                    234
                                                                 ---------------------     -----------------     ------------------
        Total nonoperating income (expense)                                       274                (2,041)                 1,172
                                                                 ---------------------     -----------------     ------------------
Income (loss) before income taxes from continuing operations                   20,735               (25,955)                19,876
Income tax provision                                                            2,073                 1,400                  2,496
                                                                 ---------------------     -----------------     ------------------
Net income (loss) from continuing operations                                 $ 18,662             $ (27,355)              $ 17,380
                                                                 ---------------------     -----------------     ------------------

Discontinued Operations:
     Loss from discontinued operations (net of income tax
          benefit of $0 in 1999, $0 in 1998, and $176 in 1997)                    $ -              $ (5,760)              $ (8,101)
     Estimated gain (loss) on disposal of discontinued operations
          (net of tax)                                                        $ 2,931             $ (20,279)                   $ -
                                                                 ---------------------    ------------------     ------------------
              Loss on discontinued operations                                  $ 2,931            $ (26,039)              $ (8,101)
                                                                 ----------------------   ------------------     ------------------
Net income (loss)                                                             $ 21,593            $ (53,394)               $ 9,279
                                                                 ======================   ==================     ==================

Basic net income (loss) per share from continuing operations                   $ 0.83               $ (1.22)                $ 0.78
Basic net income (loss) per share from discontinued operations                 $ 0.13               $ (1.16)               $ (0.36)
                                                                ----------------------    ------------------     ------------------
Basic net income (loss) per share                                              $ 0.96               $ (2.38)                $ 0.42
                                                                ======================    ==================     ==================
Shares used in calculating basic
      net income (loss) per share                                              22,424                22,470                 22,293
                                                                ======================    ==================     ==================

Diluted net income (loss) per share from continuing operations                 $ 0.82               $ (1.22)                $ 0.75
Diluted net income (loss) per share from discontinued operations               $ 0.13               $ (1.16)               $ (0.35)
                                                                ----------------------    ------------------     ------------------
Diluted net income (loss) per share                                            $ 0.95               $ (2.38)                $ 0.40
                                                                ======================    ==================     ==================
Shares used in calculating diluted
      net income (loss) per share                                              22,852                22,470                 22,947
                                                                ======================    ==================     ==================

</TABLE>


See accompanying notes to consolidated financial statements.


                                       27

<PAGE>

 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                              
                                                           Common stock                          Accumulative          
                                                           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, 1996                           22,063       $ 126,235       $ (2,603)           $ 413        $ 124,045
 Components of comprehensive income:
        Net income                                                                      9,279                             9,279
        Unrealized loss on short-term investments                                                          (12)             (12)
        Currency translation adjustments                                                                  (949)            (949)
                                                                                                                 ---------------
                Total comprehensive income                                                                                8,318
                                                                                                                 ---------------
 Subtotal                                                                                                               132,363
                                                                                                                 ---------------
 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:
        Net loss                                                                      (53,394)                          (53,394)
        Unrealized gain on short-term investments                                                           11               11
        Currency translation adjustments                                                                  (255)            (255)
                                                                                                                 ---------------
                Total comprehensive income                                                                              (53,638)
                                                                                                                 ---------------
 Subtotal                                                                                                                85,845
                                                                                                                 ---------------
 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
 Components of comprehensive income:
        Net income                                                                     21,593                            21,593
        Unrealized loss on short-term investments                                                         (142)            (142)
        Currency translation adjustments                                                                  (107)            (107)
                                                                                                                 ---------------
                Total comprehensive income                                                                               21,344
                                                                                                                 ---------------
 Subtotal                                                                                                                96,035
                                                                                                                 ---------------
 Issuances of stock under employee plans                   495           4,468              -                -            4,468
 Issuance of warrants                                        -             293              -                -              293
                                                    ----------------------------------------------------------------------------
 Balance at December 31, 1999                           22,742       $ 126,962      $ (25,125)        $ (1,041)       $ 100,796
                                                    ============================================================================
</TABLE>


See accompanying notes to consolidated financial statements.


                                       28

<PAGE>

 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                December 31,        January 1,        January 2,
 Fiscal Years ended                                                                1999               1999              1998
-----------------------------------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                                         <C>                <C>                  <C>    
 Cash flow from operating activities of continuing operations:
       Net income (loss) from continuing operations                          $     18,662       $    (27,355)        $ 17,380
       Adjustments to reconcile net income (loss) from continuing
       operations to cash flows provided by operating activities of 
              continuing operations:
          Depreciation and amortization expense                                     9,073             12,510           12,208
          Writedown of fixed assets due to restructure                                  -              5,343                -
          Other                                                                      (702)              (835)            (980)
       Decrease (increase) in assets:
          Accounts receivable, net                                                 (2,574)            15,475          (15,042)
          Inventories                                                               6,653              5,219           (7,767)
          Other current and noncurrent assets                                        (354)             1,622           (1,535)
          Deferred income taxes                                                        18                (49)              27
       Increase (decrease) in liabilities:
          Accounts payable                                                         (1,290)            (5,724)           4,961
          Accrued compensation and benefits                                         2,315             (1,134)            (722)
          Customer advances                                                          (808)               (22)          (2,170)
          Accrued liabilities                                                      (8,193)            10,482             (967)
          Income taxes payable                                                        825               (506)           1,795
                                                                      --------------------   ----------------     ------------
 Net cash provided  by operating activities of continuing operations               23,625             15,026            7,188
 Net cash used by operating activities of discontinued operations                       -             (8,058)          (9,239)
                                                                      --------------------   ----------------     ------------
 Net cash provided (used) by operating activities                                  23,625              6,968           (2,051)
                                                                      --------------------   ----------------     ------------
 Cash flow from investing activities:
       Equity investments                                                            (748)            (1,548)          (1,889)
       Acquisition of property and equipment                                       (6,411)           (11,539)         (10,393)
        Proceeds from sale of assets                                               26,863                  -                -
       Costs of capitalized patents                                                (1,127)              (992)            (910)
       Purchase of short-term investments                                         (54,809)           (53,854)         (63,854)
       Maturities/Sales of short-term investments                                  18,350             90,756           70,538
                                                                      --------------------   ----------------     ------------
 Net cash provided (used) by investing activities of continuing 
       operations                                                                 (17,882)            22,823           (6,508)
 Net cash used by investing activities of discontinued operations                       -               (339)            (598)
                                                                      --------------------   ----------------     ------------
 Net cash provided (used) by investing activities                                 (17,882)            22,484           (7,106)
                                                                      --------------------   ----------------     ------------
 Cash flow from financing activities:
       Issuance of common stock                                                     4,468              4,977            8,954
       Repurchase of common stock                                                       -            (16,131)          (1,834)
       Payment of notes receivable                                                   (540)              (219)            (504)
       (Payments)/proceeds on long-term debt and
             revolving credit facilities                                           (1,272)             2,835             (179)
                                                                      --------------------   ----------------     ------------
 Net cash provided (used) by financing activities of continuing 
       operations                                                                   2,656             (8,538)           6,437
 Net cash provided by financing activities of discontinued operations                   -                  -                -
                                                                      --------------------   ----------------     ------------
 Net cash provided (used) by financing activities                                   2,656             (8,538)           6,437
                                                                      --------------------   ----------------     ------------
 Increase (decrease) in cash and cash equivalents                                   8,399             20,914           (2,720)
 Cash and cash equivalents, beginning of period                                    40,865             19,951           22,671
                                                                      --------------------   ----------------     ------------
 Cash and cash equivalents, end of period                                        $ 49,264           $ 40,865         $ 19,951
                                                                      ====================   ================    =============
</TABLE>


 See accompanying notes to consolidated financial statements.

                                       29

<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.  Trimble  Navigation  Limited  ("Trimble"  or  the
"Company")  fiscal year is an annual  period that varies from 52 to 53 weeks and
always  ends on the Friday  nearest to  December  31,  which for fiscal 1999 was
December 31, 1999.

     Trimble'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, Trimble will have a fiscal year comprising 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,  Trimble 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,  Trimble,  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.
Fiscal 1999, 1998, and 1997 were all comprised of 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 Trimble'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.  Trimble'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.  Trimble 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 Trimble 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  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,  Trimble has  entered  into  simple  forward  foreign
currency  exchange  contracts to offset the effects of changes in exchange rates
on foreign-denominated  intercompany receivables.  At December 31, 1999, Trimble
had forward foreign currency  exchange  contracts to sell $2,517,000 of Japanese
yen, and  $3,097,000  of European  Currency  units and to buy  $2,257,000 of New
Zealand dollars,  $2,002,000 of British pound sterling, and $657,000 of Japanese
yen, at contracted rates that mature over the next six 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.


                                       30

<PAGE>

     Short   term/Marketable   securities.   Trimble  has   classified  all  its
short-term/marketable    investments   as    "available-for-sale"    securities.
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.  Trimble has  classified  all  investments as short-term
since it has the intent and ability to redeem them within the year.  (See Note 2
to the Consolidated Financial Statements.)

     Concentration  of credit risk.  In entering into forward  foreign  exchange
contracts,  Trimble  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
Trimble does not expect any losses as a result of counterparty defaults. Trimble
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 $1,875,000 in 1999,
$195,000 in 1998, and $315,000 in 1997.

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

     Revenue recognition. Trimble recognizes revenue from product sales when the
products are shipped to the customer, title has transferred,  and no significant
obligations  remain.  Trimble also  requires the  following:  (i) execution of a
written  customer  order,  (ii) delivery of the product,  (iii) fee is fixed and
determinable,   and  (iv)  collectibility  of  the  proceeds  is  probable.   In
circumstances where the customer has delayed their acceptance of our product, we
defer recognition of revenue until acceptance.  Revenues from purchased extended
warranty and support agreements is deferred and recognized ratably over the term
of the  warranty/support  period.  Substantially  all  technology  licenses  and
research  revenue have consisted of initial  license fees and  royalties,  which
were recognized when earned, when Trimble had no remaining obligations.

     In fiscal 1999,  Trimble  adopted  Statement of Position 97-2 (SOP 97-2) as
set forth by FASB,  "Software Revenue  Recognition," which requires that revenue
recognized  from  software  arrangements  be  allocated  to each  element of the
arrangement based on the relative fair values of the elements,  such as software
products, upgrades, enhancements,  post-contract customer support, installation,
or training.  Revenue from  post-contract  customer  support (PCS) is recognized
ratably over the period of the PCS agreement. However, PCS revenue is recognized
immediately  upon the sale of the software when the PCS  arrangement  is for one
year or less. The  implementation  of SOP 97-2 did not have a material impact on
the recognized revenue of the Company.

     In December  1998,  the AICPA issued SOP 98-9,  Modifications  of SOP 97-2,
Software Revenue  Recognition,  with respect to Certain  Transactions.  SOP 98-9
amends SOP 97-2 Software Revenue  Recognition to require  recognition of revenue
using the  "residual  method"  when certain  criteria  are met.  Trimble will be
required to implement  these  provisions  of SOP 98-9 for its fiscal year ending
December 31, 2000.  SOP 98-9 also amends SOP 98-4,  an earlier  amendment to SOP
97-2,  which extended the deferral of the application of certain passages of SOP
97-2.  Trimble  does not  believe the impact of SOP 98-9 will be material to its
financial position, results of operations and cash flows.

     Trimble  accounts for long-term  contracts on the  percentage of completion
method,  and income is recognized as work on contracts  progress,  but estimated
losses on contracts in progress are immediately charged to operations.

     In December  1999,  the  Securities  and Exchange  Commission  issued staff
Accounting  Bulletin No. 101 (SAB 101). SAB 101 summarizes  certain areas of the
staff's views in applying  generally accepted  accounting  principles to revenue
recognition in financial  statements.  Trimble is currently assessing the impact
of SAB 101, but does not expect that it will have a material  adverse  effect on
Trimble's financial position or results of operations.

     Product warranty. Trimble 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.


                                       31

<PAGE>

     Advertising costs.  Trimble expenses the production costs of advertising as
incurred.  Advertising expenses were $4,229,000,  $6,490,000,  and $6,328,000 in
fiscal 1999, 1998, and 1997, respectively.

     Research and Development and Engineering Costs.  Research,  development and
engineering costs are charged to expense when incurred. The Company has received
third party funding of $7.1million  $2.9 million and $6.4 million in 1999,  1998
and 1997,  respectively.  The  Company  has  offset  research,  development  and
engineering  expenses by the third party funding,  as the third party funding is
based upon research and  development  expenditures  and the Company  retains the
rights to any technology that is developed.

     Stock  compensation.  In  accordance  with the  provisions  of Statement of
Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for  Stock-Based
Compensation,"  Trimble  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 13 to the Consolidated  Financial  Statements  describes the plans
operated by Trimble, and contains a summary of the pro forma effects to reported
net income (loss) and earnings (loss) per share for fiscal 1999,  1998, and 1997
as if Trimble 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.  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.

     Intangible  Assets.  Intangible  assets  consist of  patents,  license  and
trademarks.  Intangible assets are amortized on a straight-line basis over their
estimated lives, generally periods of four years or less.

     Long-lived Assets. In accordance with Financial  Accounting Standards Board
("FASB") Statement of Financial  Accounting  Standards No. 121,  "Accounting for
the Impairment of Long-lived  Assets and  Long-lived  Assets to be Disposed Of",
the carrying value of intangible  assets and other long-lived assets is reviewed
on a regular  basis for the existence of facts or  circumstances,  both internal
and external, that may suggest impairment.

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

     Earnings (loss) per share. Basic earnings per share represents the weighted
average  common shares  outstanding  during the period and excludes any dilutive
effects of options,  warrants, and convertible securities.  The dilutive effects
of  options,  warrants,  and  convertible  securities  are  included  in diluted
earnings per share.

     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."  SFAS 133 will
require  Trimble 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. With respect to derivatives which are hedges, depending on the nature of
the  hedge,  changes  in the fair  value of  derivatives  either  will be offset
against  the  change in fair value of the hedged  assets,  liabilities,  or firm
commitments  through  earnings,  or will be  recognized  in other  comprehensive
income until the hedged item is recognized in earnings.  The ineffective portion
of a  derivative's  change  in fair  value  will be  immediately  recognized  in
earnings.  In June of 1999 the Financial  Accounting Standards Board delayed the
effective date of implementation for one year; therefore,  SFAS 133 is effective
for fiscal years  beginning  after June 15, 2000.  Trimble expects to adopt SFAS
133 as of the beginning of its fiscal year 2001. The effect of adopting the SFAS
133 is currently being evaluated, but is not expected to have a material adverse
effect on Trimble's financial position or results of operations.

Note 2 - Short term investments:

     All  marketable  securities  are intended by management to be available for
sale and are reported at fair value with net unrealized gains or losses reported
within shareholders' equity. Realized gains and losses are recorded based on the
specific  identification method. The carrying amount of Trimble's investments is
shown in the table below:

                                       32

<PAGE>

<TABLE>
<CAPTION>

                                                           Fiscal Year ended
                                                            December 31, 1999
                                   --------------------------------------------------------------------
                                                        Gross              Gross
                                     Amortized         Unamortized       Unamortized      Estimated
                                       Cost             Gains             Losses          Fair Value
-------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                    <C>                   <C>             <C>             <C>    
Investments:
  U.S. government
      obligations                       $ 32,631               $ -             $ (99)         $ 32,532
  State and municipal
      securities                           7,658                 -                (1)            7,657
  Certificates of deposit                  2,500                 -                (2)            2,498
  Corporate debt securities                7,462                 -               (20)            7,442
  Other                                    2,600                 -                (1)            2,599
-------------------------------------------------------------------------------------------------------
Total                                   $ 52,851               $ -            $ (123)         $ 52,728
                                   ====================================================================
</TABLE>


<TABLE>
<CAPTION>

                                                           Fiscal Year ended
                                                             January 1, 1999
                                   --------------------------------------------------------------------
                                                        Gross              Gross
                                     Amortized         Unamortized       Unamortized      Estimated
                                       Cost             Gains             Losses          Fair Value
-------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                     <C>                   <C>               <C>           <C>   
Investments:
  U.S. government
      obligations                            $ -               $ -               $ -               $ -
  State and municipal                                                                                -
      securities                          16,250                19                 -            16,269
  Certificates of deposit                      -                 -                 -                 -
  Corporate debt securities                    -                 -                 -                 -
  Other                                        -                 -                 -                 -
-------------------------------------------------------------------------------------------------------
Total                                   $ 16,250              $ 19               $ -          $ 16,269
                                   ====================================================================
</TABLE>


     At December 31, 1999, investments with scheduled maturities within one year
were $50.2  million  and for  maturities  between  one to three  years were $2.5
million.  At January 1, 1999,  investments with scheduled  maturities within one
year were $16.3 million and for maturities between one to three years was $0.


                                       33

<PAGE>

Note 3 - Balance sheet components:


                                              December 31,         January 1,
                                                 1999                 1999
--------------------------------------------------------------------------------
 (In thousands)

 Inventories
         Raw materials                             $ 2,582             $ 22,480
         Work-in-process                             2,232                4,033
         Finished goods                             11,621               10,653
                                         ------------------     ----------------
                                                  $ 16,435             $ 37,166
                                         ==================     ================

 Property and equipment
         Machinery and equipment                  $ 50,831             $ 59,520
         Furniture and fixtures                      5,930                5,763
         Leasehold improvements                      5,387                6,700
                                         ------------------     ----------------
                                                    62,148               71,983
         Less accumulated depreciation             (49,815)             (56,879)
                                         ------------------     ----------------
                                                  $ 12,333             $ 15,104
                                         ==================     ================

Note 4 - Disposition of assets:

     On August  10,  1999,  Trimble  signed  an Asset  Purchase  Agreement  with
Solectron  Corporation  and  Solectron  Federal  Systems,  Inc.   (collectively,
"Solectron"). The closing of the transaction occurred on August 13, 1999. At the
closing  of the Asset  Purchase  Agreement,  Trimble  transferred  to  Solectron
substantially  all  of  Trimble's  tangible   manufacturing  assets  located  at
Trimble's Sunnyvale,  California campus, including but not limited to equipment,
fixtures and work in progress,  and certain contract and other intangible assets
and rights, together with certain related obligations, including but not limited
to real property  subleases covering  Trimble's  manufacturing  floor space, and
outstanding  purchase  order  commitments.   In  addition,  the  Asset  Purchase
Agreement also provided for Solectron's subsequent purchase, on August 30, 1999,
of Trimble's entire component inventory, on hand as of August 13, 1999.

     The final  purchase  price for these assets was $26.9  million.  As part of
this agreement Trimble incurred some employee and facility related  liabilities,
which have been  accrued  for and offset  against  the gain on the sale of these
assets.  The net gain on the  transaction  to Trimble of $5.9  million  has been
deferred  and is being  recognized  over the  three-year  exclusive  life of the
Supply Agreement described below.

     Concurrently with the closing of the Asset Purchase Agreement,  Trimble and
Solectron also entered into a Supply  Agreement.  The Supply Agreement  provides
for the exclusive  manufacture by Solectron of almost all Trimble products for a
period  of three  years.  Solectron  will  initially  manufacture  such  Trimble
products under the Supply Agreement in the same Trimble  buildings in which such
products were previously  manufactured  by Trimble,  and Trimble has sublet such
space to Solectron as part of this transaction.  Solectron offered employment to
approximately  230  Trimble  manufacturing,   engineering  and  related  support
personnel,  and  Trimble  understands  that  substantially  all  such  employees
accepted such employment with Solectron.

Note 5 - The Company, industry segment, geographic, and customer information:

     Effective   January  1,  1999,   Trimble  adopted  Statement  of  Financial
Accounting  Standards  (SFAS)  No.  131,   "Disclosures  about  Segments  of  an
Enterprise and Related  Information."  The Statement  requires Trimble to report
segment  financial  information  consistent  with the  presentation  made to the
Company's management for decision-making purposes.

     Trimble  operates in a single industry segment as a leader in designing and
developing  innovative  products enabled by GPS technology.  We provide end-user
and Original  Equipment  Manufacture  solutions for diverse  applications in our
target markets. These applications include:

     o Architecture/Engineering/Construction  -  surveying,  mapping,  machine
       guidance/control:

                                       34

<PAGE>

     o Asset  Management and Tracking - fixed asset mapping and fleet management
       using mobile positioning:
     o Agriculture - mapping, yield monitoring,  variable rate applications, and
       machine guidance/control, and
     o GPS  Component  Technologies  - automotive  navigation,  timing  systems,
       commercial avionics, and military systems.

     We design,  market,  and  distribute  electronic  products  that  determine
precise geographic  location combined with data  communications and applications
software.  We sell our 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 Trimble's  facilities
in Sunnyvale,  California,  and Christchurch,  New Zealand.  Solectron currently
manufactures  most of Trimble's  products.  In addition we have a  manufacturing
facility  in Austin,  Texas  primarily  focused on FAA  certified  products  for
commercial aviation and military systems.

     To achieve distribution,  marketing,  production, and technology advantages
for our  targeted  markets we manage our  industry  segment  within two Business
Units:  the  Precision  Positioning  Group  (PPG)  and  the  Mobile  and  Timing
Technologies  (MTT) Group.  Each Business Unit is managed by a group senior vice
president who is responsible for strategy,  marketing,  product  development and
financial performance.

     The  Precision   Positioning  Group  derives  its  revenue  from  precision
positioning  solutions for the architecture,  engineering,  construction,  asset
management,  and agriculture  markets.  These markets require  sub-centimeter to
meter  3D   positioning   accuracy   for   surveying,   mapping,   and   machine
guidance/control  applications. The Mobile and Timing Technologies Group derives
its revenues from automotive,  timing,  fleet management,  commercial  aviation,
military systems and from development of software  licenses and other rights for
the use of our GPS technology to third parties. Trimble 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 Trimble in general.

     The table on the following page presents revenues, operating income (loss),
and identifiable  assets by Trimble'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 that  Trimble's  Chief
Operating Decision Maker (CODM) views by industry market are accounts receivable
and inventory.  Trimble does not report depreciation and amortization or capital
expenditures by industry markets to the CODM.


                                       35

<PAGE>


<TABLE>
<CAPTION>
                                                         -------------------------------------------------
                                                                         December 31, 1999
                                                         -------------------------------------------------
                                                               PPG              MTT            Total
                                                         -------------------------------------------------
<S>                                                            <C>             <C>             <C>    
External  net revenue                                           $ 161,294       $ 110,070       $ 271,364
Operating profit/(loss) before corporate allocations               52,900          13,864          66,764
Corporate allocations (1)                                         (23,853)        (11,209)        (35,062)
                                                         -------------------------------------------------
Operating profit from continuing operations                      $ 29,047         $ 2,655        $ 31,702
Assets:
   Accounts receivable (2)                                       $ 29,205        $ 20,204        $ 49,409
    Inventory                                                     $ 6,720         $ 9,715        $ 16,435

                                                         -------------------------------------------------
                                                                          January 1 ,1999
                                                         -------------------------------------------------
                                                               PPG              MTT            Total
                                                         -------------------------------------------------
External  net revenue                                           $ 165,951       $ 102,372       $ 268,323
Operating profit/(loss) before corporate allocations               23,905           1,137          25,042
Corporate allocations (1)                                         (15,093)         (7,751)        (22,844)
                                                         -------------------------------------------------
Operating profit/(loss) from continuing operations                $ 8,812        $ (6,614)        $ 2,198
Assets:
   Accounts receivable (2)                                       $ 32,197        $ 14,837        $ 47,034
    Inventory                                                    $ 10,042        $ 16,251        $ 26,293

                                                         -------------------------------------------------
                                                                          January 2, 1998
                                                         -------------------------------------------------
                                                               PPG              MTT            Total
                                                         -------------------------------------------------
External  net revenue                                           $ 142,449       $ 123,993       $ 266,442
Operating profit/(loss) before corporate allocations               11,644          18,608          30,252
Corporate allocations (1)                                         (10,872)         (6,869)        (17,741)
                                                         -------------------------------------------------
Operating profit from continuing operations                         $ 772        $ 11,739        $ 12,511
Assets:
   Accounts receivable (2)                                       $ 31,301        $ 28,215        $ 59,516
    Inventory                                                    $ 13,782        $ 17,499        $ 31,281

<FN>
-------------------------------------------------------------------------
(1)  For the fiscal year ended December 31, 1999, the Company determined
the amount of corporate  allocations  charged to each of its Business  Units
based on a percentage of the Business Units' monthly revenue,  gross profit, and
controllable  spending  (research and  development,  marketing,  and general and
administrative).  For the fiscal 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 each of the respective fiscal years.

(2)  As presented, the accounts receivable number excludes cash in advance
and reserves, which are not allocated between Business Unit segments.

</FN>
</TABLE>



                                       36

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                           Fiscal Years ended
                                                                  ---------------------------------------------------------------
                                                                         December 31,          January 1,            January 2,
Revenues:                                                                   1999                  1999                  1998
---------------------------------------------------------------------------------------   ------------------     ----------------
<S>                                                                        <C>                   <C>                  <C>   
Total for reportable markets                                                $ 271,364             $ 268,323            $ 266,442
                                                                  ====================    ==================     ================
Operating income/(loss) from continuing operations:
------------------------------------------------------------------
Total for reportable markets                                                 $ 31,702               $ 2,198             $ 12,511
Unallocated Corporate expenses                                                (11,241)              (26,112)(1)            6,193 (2)
                                                                  --------------------    ------------------     ----------------
     Income/(loss) before income taxes from continuing operations            $ 20,461             $ (23,914)            $ 18,704
                                                                  ====================    ==================     ================
Assets:
------------------------------------------------------------------
Accounts receivable total for reportable markets                             $ 49,409              $ 47,034             $ 59,516
Unallocated (3)                                                               (13,404)              (13,603)             (10,415)
                                                                  --------------------    ------------------     ----------------
   Total                                                                     $ 36,005              $ 33,431             $ 49,101
                                                                  ====================    ==================     ================

Inventory total for reportable markets                                       $ 16,435              $ 26,293             $ 31,281
Common inventory (4)                                                                -                10,873               11,104
                                                                  --------------------    ------------------     ----------------
  Net inventory                                                              $ 16,435              $ 37,166             $ 42,385
                                                                  ====================    ==================     ================
<FN>
------------------------------------------------------------------------------------------
(1) Includes approximately $10.3 million of restructuring charges.
(2) For the fiscal 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 fiscal 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 cash in advance and reserves that are not allocated by segment.
(4) Consists of inventory that is common between the Business Unit segments.
     Parts can be used by either segment.

</FN>
</TABLE>


                                       37

<PAGE>

     The geographic  distribution of Trimble's revenues and identifiable  assets
by fiscal year-end 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>            <C>       
  1999
       Sales to unaffiliated customers   (1)   $ 131,395      $ 68,301       $ 37,707     $ 33,961           $ -        $ 271,364
       Intergeographic transfers                  56,024             -          1,480            -       (57,504)               -
                                             -------------------------------------------------------------------------------------
       Total revenue                           $ 187,419      $ 68,301       $ 39,187     $ 33,961     $ (57,504)       $ 271,364
                                             -------------------------------------------------------------------------------------

       Identifiable assets                     $ 155,163      $ 16,119       $ 10,550         $ 92        $ (173)       $ 181,751

  1998
       Sales to unaffiliated customers   (1)   $ 143,828      $ 66,446       $ 34,712     $ 23,337           $ -        $ 268,323
       Intergeographic transfers                  79,416             -          1,153            -       (80,569)               -
                                             -------------------------------------------------------------------------------------
       Total revenue                           $ 223,244      $ 66,446       $ 35,865     $ 23,337     $ (80,569)       $ 268,323
                                             -------------------------------------------------------------------------------------

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

  1997
       Sales to unaffiliated customers   (1)   $ 144,817      $ 59,071       $ 39,810     $ 22,744           $ -        $ 266,442
       Intergeographic transfers                  29,481         2,482          1,198            -       (33,161)               -
                                             -------------------------------------------------------------------------------------
       Total revenue                           $ 174,298      $ 61,553       $ 41,008     $ 22,744     $ (33,161)       $ 266,442
                                             -------------------------------------------------------------------------------------

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

</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.

     No single customer accounted for 10% or more of Trimble's total revenues in
fiscal 1999, 1998 or 1997.

Note 6 - Discontinued operations:

     On October 2,  1998,  Trimble  adopted a plan to  discontinue  its  General
Aviation division.  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 original  estimated loss on the disposal of the discontinued  operation
in fiscal  1998 was $19.9  million,  but was  adjusted in March 1999 for certain
product lines that were retained (see further  discussion  below).  The adjusted
estimated  loss on the  disposal  is $20.3  million.  The  original  fiscal 1998
estimate  included 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  adjusted  fiscal 1999  estimate  included the
write-off  of net assets of $12.7  million and a provision  of $7.6  million for
costs of  disposal,  including  severance  costs,  facility  and  certain  other
contractual  costs, and anticipated  operating losses through the estimated date
of disposal.

                                       38

<PAGE>

     The net assets, which were written off in 1998, are summarized as follows:


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

Inventory                                                  $ 7,283
Other current assets                                           451
Plant and equipment, net                                     3,241
Other noncurrent assets                                      1,754
Less write-offs                                            (12,729)
                                                 ------------------
   Net assets of discontinued operations                       $ -
                                                 ==================

     As of December 31, 1999, in connection  with the  discontinued  operations,
Trimble had incurred  cumulative  net expenses of  approximately  $6.1  million,
consisting of $6.6 million for operating losses for the  discontinued  operation
through the estimated  date of disposal,  including  severance  costs and net of
receipts of $543,000 related to the sale of particular inventory items and fixed
assets.  In the third  quarter of 1999  Trimble  had revised its accrual for the
remaining  costs now  expected to be  incurred,  based on current  status of the
related  liabilities.  This resulted in a reversal of approximately $2.9 million
of prior amounts accrued, related to the discontinued operations.  Trimble has a
remaining  provision  of $2.2  million,  which  includes  $1.1  million  for the
estimated operating losses for service and warranty support, including remaining
severance  costs,  and $1.1 million for facility and certain  other  contractual
costs.

     On March 31,  1999,  Trimble made the  decision to retain  certain  product
lines  included  within the  General  Aviation  division  which were part of the
previously planned  discontinued  operation.  The basis of the decision was that
these  products  use common raw  materials  and labor  which are  necessary  for
Trimble's Air Transport products and, therefore,  these particular product lines
could be retained without adding additional overhead from the overhead currently
required for the Air Transport  products.  The revenues and costs related to the
products  retained have been included in the results of operations of continuing
operations in the periods presented.

     The net revenues of the  discontinued  operation -- revenues that have been
restated  to exclude  the  retained  product  lines -- are not  included  in net
revenues of continuing operations in the accompanying  statements of operations.
The operating  results for the fiscal years ended January 1, 1999 and January 2,
1998, of the discontinued operation are summarized as follows:

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

Net revenues                                     $ 6,807             $ 5,866
Income (loss) before tax provision                (5,760)             (8,277)
Income tax provision (benefit)                         -                (176)
                                       ------------------   -----------------
Net loss                                        $ (5,760)           $ (8,101)
                                       ==================   =================
Basic net loss per share                         $ (0.26)            $ (0.36)
Diluted net income loss per share                $ (0.26)            $ (0.35)

Note 7 - Bank line of credit:

     In August 1997,  Trimble entered into a three-year,  $50,000,000  unsecured
revolving credit facility with four banks (the "Credit  Agreement").  The Credit
Agreement  enables  Trimble to borrow up to  $50,000,000,  provided that certain
financial and other covenants are met. As of October 20, 1999, the Company,  the
Agent and the  Lenders  agreed to change  and amend  certain  covenants  for the
remaining  life of the loan,  which expires in August of 2000.  The  $50,000,000
revolving  credit  facility was modified to include the Company's prior separate
$5,000,000  line of credit and to simplify  the entire  arrangement.  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,  Trimble
has the right to borrow  with  interest  at the  


                                       39

<PAGE>

higher of (i) one of the  bank's  annual  prime  rate and (ii) the  federal
funds  rate  plus  0.5%.  To date,  Trimble  has made no  borrowings  under  the
$50,000,000 unsecured revolving credit facility,  but has issued certain letters
of credit as of December  31,  1999  amounting  to  approximately  $283,000.  In
addition,  Trimble is restricted  from paying  dividends  under the terms of the
Credit Agreement.

Note 8 - Restructuring charges:

     In fiscal 1998,  Trimble  recorded  restructuring  charges  totaling  $10.3
million in operating expenses.

     These charges were a result of Trimble's reorganization activities, through
which the Company has downsized its operations, including reducing headcount and
facilities space usage, and has canceled its enterprise-wide  information system
project and  certain  research  and  development  projects.  The impact of these
decisions  was that  significant  amounts of  Trimble's  fixed  assets,  prepaid
expenses,  and purchased  technology have been impaired and certain  liabilities
incurred.  Trimble wrote down the related assets to their net realizable  values
and made provisions for the estimated liabilities.

     The activity in fiscal 1999 and 1998 related to the  restructuring  and the
amounts  remaining at December 31, 1999, on the balance sheet are as follows (in
thousands):

<TABLE>
<CAPTION>
                                       Total
                                     charged to         Amounts paid/            Amounts paid/              Remaining in
                                     expense in          written off              written off            accrued liabilites
                                    fiscal 1998        in fiscal 1998            in fiscal 1999       as of December 31, 1999
                                   --------------- ------------------------  ----------------------- --------------------------
<S>                                   <C>              <C>                      <C>                            <C>  
Employee termination benefits          $ 2,864          $ (1,200)                  $ (371)                      $ 1,293
Facility space reductions                1,061                 -                 $ (1,053)                            8
ERP system abandonment                   6,360            (4,895)                $ (1,465)                            -
                                   ------------ ---------------------------  ----------------------- --------------------------
     Subtotal                         $ 10,285          $ (6,095)                $ (2,889)                      $ 1,301
                                   ============ ============================ ======================= ==========================
</TABLE>


     The  cash  expenditures  associated  with  the  remaining  obligations  are
expected to occur primarily in fiscal 2000.

Note 9 - Long-term debt and other noncurrent liabilities:

 Long-term debt consists of the following:

                                       December 31,         January 1,
                                          1999                 1999
-------------------------------------------------------------------------
 (In thousands)

 Subordinated notes                        $ 29,819              $29,703
 Installment loan obligations                 1,388                2,776
 Other                                          747                  549
                                   -----------------     ----------------
                                             31,954               33,028
 Less current portion                         1,388                1,388
                                   -----------------     ----------------
 Noncurrent portion                        $ 30,566              $31,640
                                   =================     ================

     In June 1994, Trimble 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  preexisting  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  Trimble  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,  Trimble is
restricted from paying dividends.

     The  issuance  of the  subordinated  promissory  notes  also  included  the
issuance of 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 net
proceeds of the notes were $29.3  million.  The notes are recorded as noncurrent
liabilities,  net of appraised fair value attributed to the warrants.  The value
of the warrants and the issuance costs are being amortized to 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,  Trimble  is  required  to meet a minimum  

                                       40

<PAGE>


consolidated  net worth  requirement.  If Trimble  falls  below the minimum
consolidated net worth requirement we could be in default of our loan covenants.
Such events could have a material  adverse  effect on Trimble's  operations  and
liquidity.

     Other  long-term  debt  represents   deferred  rent   obligations,   rental
inducements on certain of Trimble's leased facilities, and installment loans for
a fixed  asset  purchase.  There are  three  installment  loans for  capitalized
software,  which in total have two annual  payments of $1.4  million.  The first
installment  loan  consists of two payments of $129,500.  The first  payment was
made on May 30, 1999,  and the second payment is due on May 30, 2000. The second
installment  loan  consists of two payments of $942,800.  The first  payment was
made on May 30, 1999,  and the second  payment is due on May 30, 2000. The third
installment  loan  consists of two payments of $315,900.  The first  payment was
made on May 1,  1999,  and the second  payment is due on May 1, 2000.  The lease
agreements  provide for scheduled  increases in lease payments over the terms of
the leases.

Note 10 - Lease obligations and commitments:

     Trimble's  principal  facilities  in the United  States  are  leased  under
noncancelable  operating  leases that expire at various  dates from 2000 through
2004.  Trimble 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 2005.

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

 2000                                                                 $ 8,889
 2001                                                                   9,724
 2002                                                                   9,472
 2003                                                                   9,104
 2004                                                                   4,831
 Thereafter                                                             5,450
                                                   ---------------------------
 Total                                                               $ 47,470
                                                   ===========================

     Rent expense under  operating  leases was $8.1 million in fiscal 1999, $6.3
million in 1998, and $5.5 million in 1997.

Note 11 - 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 currently
practicable to estimate such value.  None of the financial  instruments are held
or  issued  for  trading  purposes.  The  carrying  amounts  and fair  values of
Trimble's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                        Carrying                         Fair
                                                         Amount                          Value
                                                    ----------------               -----------------
                                                                   December 31, 1999
---------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                       <C>                            <C>    
 Assets:
 Cash and cash equivalents (See Note 1)                    $ 49,264                        $ 49,264
 Short-term investments (See Note 1 & 2)                   $ 52,728                        $ 52,728
 Forward foreign exchange contracts (See Note 1)               $ 58                        $     58

 Liabilities:
 Subordinated notes (See Note 9)                           $ 29,819                        $ 29,194

</TABLE>


     The fair  value of the  subordinated  notes  has  been  estimated  using an
estimate of the interest  rate Trimble  would have had to pay on the 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 Trimble would currently
have to pay to extinguish any of this debt.

                                       41

<PAGE>

     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 12 - Income taxes:

     Trimble's income tax provision consists of the following (in thousands):

                                                 Fiscal Years Ended
                         -------------------------------------------------------
                             December, 31         January, 1          January, 2
                                 1999                1999                1998

Federal:
         Current                $ 1,089             $ 233               $ 1,344
         Deferred                     -                 -                     -
                         -------------------------------------------------------
                                  1,089               233                 1,344
                         -------------------------------------------------------
State:
         Current                    196                20                    10
         Deferred                     -                 -                     -
                         -------------------------------------------------------
                                    196                20                    10
                         -------------------------------------------------------
Foreign:
         Current                    770             1,195                 1,116
         Deferred                    18               (48)                   26
                         -------------------------------------------------------
                                    788             1,147                 1,142
                         -------------------------------------------------------
Income tax provision            $ 2,073           $ 1,400               $ 2,496
                         -------------------------------------------------------

     The domestic income (loss) from continuing  operations  before income taxes
(including   royalty   income   subject  to  foreign   withholding   taxes)  was
approximately $19.7 million,  ($26.2 million), and $18.8 million in fiscal years
1999, 1998 and 1997, respectively.


                                       42

<PAGE>

         The income tax provision  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):

<TABLE>
<CAPTION>
                                                                  Fiscal Years ended
                                                  ---------------------------------------------------
                                                  December, 31         January, 1          January, 2
                                                      1999                1999                1998
<S>                                                <C>               <C>                   <C>    
Expected tax from continuing operations at 35%
          in all years                              $ 7,258           $(8,827)              $ 7,356

Tax account valuation adjustments                         -                 -                (4,100)

Operating loss not utilized (utilized)               (6,176)            9,178                (1,410)

Foreign withholding taxes                               299               467                   403

Foreign tax rate differential                           109               329                   (28)
                                                                               
Other                                                   583               253                   275
                                               -----------------------------------------------------

Income tax provision                                $ 2,073           $ 1,400               $ 2,496
                                               -----------------------------------------------------
         Effective tax rate                             10%               (6%)                  12%
                                               =====================================================

</TABLE>


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

                                                      December, 31   January, 1
                                                         1999           1999

Deferred tax liabilities:
    Other individually immaterial items                 $ 246         $ 178
                                                     ------------------------
        Total deferred tax liabilities                    246           178
                                                     ------------------------


Deferred tax assets:
    Inventory valuation differences                    9,437        10,423
    Expenses not currently deductible                  7,461         9,907
    Federal credit carryforwards                       6,108         7,252
    Deferred revenue                                   3,243           968
    State credit carryforwards                         3,786         3,138
    Warranty                                           2,352         2,090
    Depreciation                                       1,770         3,689
    Federal net operating loss (NOL) carryforward          -         3,023
    Other individually immaterial items                1,763         1,692
                                                    ------------------------
        Total deferred tax assets                     35,920        42,182

Valuation allowance                                  (35,287)      (41,599)
                                                    -------------------------
Total deferred tax assets                                633           583
                                                    -------------------------

Total net deferred tax assets                          $ 387         $ 405
                                                    -------------------------

     The NOL and credit carryforwards listed above expire in 2000 through 2019.

     The  valuation   allowance   increased  by  $22  million  in  fiscal  1998.
Approximately  $7.4  million of the  valuation  allowance  at December 31, 1999,
relates to the tax benefits of stock option  deductions,  which will be credited
to equity when realized.


                                       43

<PAGE>


Note 13 - Shareholder's Equity:

     1993 Stock Option Plan. In 1992,  Trimble's Board of Directors  adopted the
1993 Stock  Option  Plan  (1993  Plan).  The 1993  Plan,  as amended to date and
approved  by   shareholders,   provides  for  the  granting  of  incentive   and
nonstatutory  stock  options  for up to  5,000,000  shares  of  Common  Stock to
employees,  consultants  and  directors  of Trimble.  At  Trimble's  2000 annual
meeting of shareholders to be held on May 11, 2000, the  shareholders  are being
asked to approve and increase of 925,000  shares under the 1993 Plan.  Incentive
stock  options may be granted at 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 under the 1993 Plan 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 December 31, 1999,  options to purchase 3,685,321 shares were outstanding and
631,822 shares were available for future grant under the 1993 Stock Option Plan.

     1990  Director  Stock  Option Plan.  In December  1990,  Trimble  adopted a
Director  Stock Option Plan under which an aggregate of 380,000 shares of Common
Stock have been  reserved  for  issuance  to date to  nonemployee  directors  as
approved by the shareholders.  At December 31, 1999, options to purchase 198,333
shares were outstanding and 95,833 shares were available for future grants under
the Director Stock Option Plan.

     1992  Management  Discount  Stock Option Plan. In 1992  Trimble'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 may be
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 December 31, 1999,  there were 4,974 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 fiscal  1999,  1998,  and 1997  amounted to $0, $0, and  $275,000,
respectively. As of December 31, 1999, 125,000 shares were outstanding.

     1988 Employee Stock Purchase Plan. In 1988, Trimble established an employee
stock purchase plan under which an aggregate of 2,950,000 shares of Common Stock
have been  reserved  for sale to eligible  employees  to date as approved by the
shareholders. At Trimble's 2000 annual meeting of shareholders to be held on May
11, 2000,  the  shareholders  are being asked to approve and increase of 200,000
shares under the  employee  stock  purchase  plan.  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 fiscal 1999,  317,210  shares were
issued under the plan for aggregate proceeds to the Company of $2.5 million.  At
December  31,  1999,  the number of shares  reserved  for future  purchases  was
685,632.

     As stated in Note 1 to the Consolidated  Financial Statements,  Trimble 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 Trimble'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 Trimble 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 fiscal 1999, 1998, and 1997:

<TABLE>
<CAPTION>
                                                 December 31,                 January 1,                 January 2,
                                                     1999                        1999                       1998
                                             ----------------------      ----------------------     ----------------------
<S>                                                        <C>                         <C>                        <C>   
Expected dividend yield                                          -                           -                          -
Expected stock price volatility                             59.58%                      55.65%                     58.07%
Risk-free interest rate                                      6.34%                       5.76%                      6.36%
Expected life of options after vesting                        1.21                        1.20                       1.19

</TABLE>



                                       44

<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  Trimble'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  effects  on pro  forma  disclosure  of
applying FAS 123 are not likely to be representative of the effects on pro forma
disclosure of future years. Trimble's pro forma information (in thousands except
for per share data) is as follows:


<TABLE>
<CAPTION>
                                                      December 31,                 January 1,                 January 2,
                                                          1999                        1999                       1998
                                                  ----------------------      ----------------------     ----------------------
<S>                                                           <C>                        <C>                          <C>   
Net income (loss) - as reported                                $ 21,593                   $ (53,394)                   $ 9,279

Net income (loss) - pro forma                                  $ 16,377                   $ (58,661)                   $ 2,899

Basic income (loss) per share - as reported                      $ 0.96                     $ (2.38)                    $ 0.42

Basic income (loss) per share - pro forma                        $ 0.73                     $ (2.61)                    $ 0.13

Diluted income (loss) per share - as reported                    $ 0.95                     $ (2.38)                    $ 0.40

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

</TABLE>


     Exercise  prices for options  outstanding  as of December 31, 1999,  ranged
from $8.00 to $29.63.  The weighted average remaining  contractual life of those
options is 7.81  years.  In view of the wide range of exercise  prices,  Trimble
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 - $8.0000               430               $8.00                         8.63            30                    $8.00
$8.0625 - $8.6563               401               $8.43                         7.75            60                    $8.57
$8.8750 - $9.9375               477               $9.83                         7.53           198                    $9.69
$10.0000 - $11.5625             425              $10.80                         6.77           204                   $10.28
$11.6250 - $11.6250             150              $11.63                         9.64             -                    $0.00
$11.9375 - $11.9375             568              $11.94                         9.59             2                   $11.94
$12.0000 - $13.9375             373              $12.76                         7.03           185                   $12.71
$15.3750 - $15.3750             562              $15.38                         6.82           328                   $15.38
$16.8750 - $18.4375             424              $17.70                         7.52           223                   $17.69
$18.6250 - $29.6250             199              $20.09                         7.54           104                   $20.36
------------------------------------------------------------------------------------------------------------------------------------
$8.0000 - $29.6250            4,009              $12.36                         7.81         1,334                   $13.68

</TABLE>



                                       45

<PAGE>

     Activity  during fiscal 1999, 1998 and 1997 under the combined plans was as
follows:

<TABLE>
<CAPTION>
                                              December 31,                 January 1,                    January 2,
                                                 1999                        1999                          1998
                                     ---------------------------------------------------------------------------------------
                                                 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       3,026         $13.64            2,696       $15.10            2,577      $13.06
     Granted                           1,813          10.22            1,117        11.40              962       16.45
     Exercised                          (135)         11.64             (132)       11.41             (635)       8.78
     Canceled                           (695)         14.03             (655)       16.30             (208)      15.40
                                     --------                  --------------                --------------

Outstanding at end of year             4,009         $12.36            3,026       $13.64            2,696      $15.10

Exercisable at end of year             1,334         $13.68            1,110       $13.91              700      $13.20

Weighted-average fair value of options
    granted during year                               $5.51                         $5.21                        $8.30
</TABLE>


     401(k) Plan.  Under Trimble'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
47,066 shares of Common Stock for an aggregate of $504,000 in 1999.  Trimble, at
its discretion, matches individual employee 401(k) Plan contributions up to $100
per month. Trimble's matching contributions to the 401(k) Plan were $1.0 million
in fiscal 1999, $1.2 million in 1998, and $1.0 million in 1997.

     Profit-Sharing Plan. In 1995, Trimble introduced an employee profit-sharing
plan in  which  all  employees,  excluding  executives  and  certain  levels  of
management,  participate.  The plan distributes to employees approximately 5% of
quarterly income before taxes. Payments under the plan during fiscal 1999, 1998,
and 1997 were $1.2 million, $138,000, and $549,000, respectively.

     Warrants.  On May 3, 1999 Trimble  granted  30,000  warrants at an exercise
price of $9.75,  which  expire on March 29,  2004.  As of  December  31, 1999 no
warrants had been exercised.

     Common  shares  reserved  for future  issuances.  As of December  31, 1999,
Trimble had  reserved  5,426,915  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.


                                       46

<PAGE>


Note 14 - Earnings per share:

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." Trimble adopted
this standard,  as required for its January 2, 1998, Financial  Statements.  For
the years presented, Trimble 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.

<TABLE>
<CAPTION>
                                                                      December 31,           January 1,           January 2,
                                                                          1999                  1999                 1998
-----------------------------------------------------------------------------------------------------------------------------------
(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                                       $ 18,662              $ (27,355)             $17,380
        Used in basic and diluted income (loss) per share from 
                discontinued operations                                        2,931                (26,039)              (8,101)
                                                                    -----------------    -------------------   ------------------
        Used in basic and diluted income (loss) per share                   $ 21,593              $ (53,394)             $ 9,279
                                                                    -----------------    -------------------   ------------------
Denominator:
      Weighted-average number of common
         shares used in basic income (loss) per share                         22,424                 22,470               22,293

      Effect of dilutive securities:
           Common stock options                                                  382                      -                  530
           Common stock warrants                                                  46                      -                  124
                                                                    -----------------    -------------------   ------------------
      Weighted-average number of common
          shares and dilutive potential common shares
          used in diluted income (loss) per share                             22,852                 22,470               22,947
                                                                    =================    ===================   ==================

 Basic income (loss) per share from continuing operations                     $ 0.83                $ (1.22)              $ 0.78
 Basic loss per share from discontinued operations                              0.13                  (1.16)               (0.36)
                                                                    -----------------    -------------------   ------------------
 Basic income (loss) per share                                                $ 0.96                $ (2.38)              $ 0.42
                                                                    =================    ===================   ==================

 Diluted income (loss) per share from continuing operations                   $ 0.82                $ (1.22)              $ 0.75
 Diluted loss per share from discontinued operations                            0.13                  (1.16)               (0.35)
                                                                    -----------------    -------------------   ------------------
 Diluted income (loss) per share                                              $ 0.95                $ (2.38)              $ 0.40
                                                                    =================    ===================   ==================
</TABLE>


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

Note 15 - Comprehensive income (loss):

     As of January 3, 1998,  Trimble adopted  Statement of Financial  Accounting
Standards  No.  130  (SFAS  130),  "Reporting  Comprehensive  Income."  SFAS 130
establishes new rules for the reporting and displaying of comprehensive  income.
SFAS 130 requires unrealized gains or losses on the Company's available-for-sale
securities   and   cumulative   translation   adjustments   to  be  included  in
comprehensive  income. The components of accumulated other comprehensive  income
(loss), net of related tax include:

<TABLE>
<CAPTION>
                                                        December 31,       Janaury 1,         January 2,
Fiscal Years ended                                        1999                1999               1998
-----------------------------------------------------------------------------------------------------------
(In thousands)
 <S>                                                         <C>                 <C>               <C>   
 Cumulative translation adjustments                           $ (107)             $ (255)           $ (949)
 Net unrealized gain (loss) on short-term investments           (142)                 11               (12)
                                                     ----------------    ----------------   ---------------
     Accumulated other comprehensive income (loss)            $ (249)             $ (244)           $ (961)
                                                     ================    ================   ===============
</TABLE>


                                       47

<PAGE>

Note 16 - Statement of cash flow data:

<TABLE>
<CAPTION>

                                                         December 31,       January 1,         January 2,
Fiscal Years ended                                          1999              1999                1998
----------------------------------------------------------------------------------------------------------
 (In thousands)
<S>                                                         <C>                <C>               <C>   
 Supplemental disclosure of cash flow information:

 Interest paid                                               $3,391             $3,377             $3,313
                                                       -------------     --------------     --------------
 Income taxes paid                                            $ 866             $1,585              $ 167
                                                       -------------     --------------     --------------
</TABLE>


Note 17 - Litigation:

     Settled 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  sought
recissory or compensatory  damages with interest thereon,  as well as reasonable
attorneys'  fees and  extraordinary  equitable  and/or  injunctive  relief.  The
parties  negotiated a definitive  stipulation of settlement,  which was formally
approved,  by  the  court  on  September  23,  1999.  The  final  court-approved
settlement  was funded by insurance  proceeds and payment by the Company of $1.8
million.  The entire  amount of the  Company's  obligation  has been  previously
reserved,  and the final  settlement  did not  adversely  effect  the  Company's
financial position or results of operations.

     Pending Matters. 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.  Trimble and SiRF have a
negotiated a settlement which includes cross licensing.

     Other  Matters.   Western  Atlas,  a  Houston-based  supplier  to  the  oil
exploration  business,  has accused  the  Company  and other GPS  manufacturers,
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  were filed in federal  district  court in  Houston,  Texas
against Rockwell  International  Corp. and Garmin  International  Inc., and both
have  settled.  Although  Trimble  has not  been  sued by  Western  Atlas on the
foregoing  patents,  the  Company  has  instructed  its  counsel  thoroughly  to
investigate the infringement  threat.  At the present time, the Company does not
expect this threat to have adverse consequences on the Company's business.

     On January 31,  1997,  counsel for one Philip M. Clegg wrote to the Company
asserting that a license under Mr. Clegg's U.S. Patent No. 4,807,131,  which was
issued  February 21, 1989,  would be required by the Company  because of a joint
venture  that  the  Company  had  previously   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  believes  that  there  will be no  adverse
consequences to the Company as a result of this inquiry.

     The Company is also a party to other  disputes  incidental to its business.
The Company  believes that 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.


                                       48

<PAGE>

Note 18 - 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>             <C>    
1999
        Total revenue                                                      $ 68,770        $ 70,839       $ 69,636        $ 62,119
        Gross margin                                                         35,567          37,611         36,979          34,090
        Operating income                                                      3,733           5,565          5,812           5,351
        Net income from continuing operations                                 3,014           4,656          5,124           5,868
        Net income from discontinued operations                                   -               -          2,931               -
        Net income                                                            3,014           4,656          8,055           5,868

        Basic net income per share from continuing operations                  0.14            0.21           0.23            0.26
        Basic net income per share from discontinued operations                   -               -           0.13               -
                                                                      --------------  --------------   ------------   -------------
        Basic net income                                                     $ 0.14          $ 0.21         $ 0.36          $ 0.26
                                                                      ==============  ==============   ============   =============

        Diluted net income per share from continuing operations                0.14            0.20           0.22            0.25
        Diluted net income per share from discontinued operations                 -               -           0.13               -
                                                                      --------------  --------------   ------------   -------------
        Diluted net income                                                   $ 0.14          $ 0.20         $ 0.35          $ 0.25
                                                                      ==============  ==============   ============   =============

1998
        Total revenue                                                      $ 74,161        $ 73,536       $ 59,973        $ 60,653
        Gross margin                                                         38,326          36,259         25,528          27,135
        Operating income (loss)                                               4,282           1,695        (13,741)        (16,150)
        Net income (loss) from continuing operations                          4,002           1,892        (15,536)        (17,713)
        Net income (loss) from discontinued operations                       (2,087)         (1,637)       (21,898)           (417)
        Net income (loss)                                                     1,915             255        (37,434)        (18,130)

        Basic net income (loss) per share from continuing operations           0.18            0.08          (0.70)          (0.80)
        Basic net income (loss) per share from discontinued operations        (0.09)          (0.07)         (0.98)          (0.02)
                                                                      --------------  --------------   ------------   -------------
        Basic net income (loss)                                              $ 0.08          $ 0.01        $ (1.68)        $ (0.82)
                                                                      ==============  ==============   ============   =============

        Diluted net income (loss) per share from continuing operations         0.17            0.08           (0.70)         (0.80)
        Diluted net income (loss) per share from discontinued operations      (0.09)          (0.07)          (0.98)         (0.02)
                                                                       --------------- --------------  -------------- -------------
        Diluted net income (loss)                                            $ 0.08           $ 0.01         $ (1.68)      $ (0.82)
                                                                       =============== ==============  ============== =============

</TABLE>


     Significant quarterly items include the following: (i) in the third quarter
of 1998 Trimble recorded a $2.5 million restructuring charge, (ii) in the fourth
quarter of 1998 Trimble recorded a $7.8 million restructuring charge.


                                       49

<PAGE>



                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders, Trimble Navigation Limited

     We have audited the  accompanying  consolidated  balance  sheets of Trimble
Navigation Limited as of December 31, 1999, and January 1, 1999, and the related
consolidated statements of operations,  shareholders' equity, and cash flows for
each of the three years in the period ended  December 31, 1999.  Our audits also
included the financial  statement schedule listed in the index at Item 14(a)(2).
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  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial  statements  and schedule  referred to above
present fairly, in all material respects, the consolidated financial position of
Trimble  Navigation  Limited at December 31, 1999,  and January 1, 1999, and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  31, 1999,  in  conformity  with  accounting
principles  generally accepted in the United States.  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.

                                                 /s/ ERNST & YOUNG LLP

Palo Alto, California
January 25, 2000


                                       50

<PAGE>



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

         Not applicable.


                                    PART III


Item 10.        Directors and Executive Officers of the Registrant

     The  section  titled  "Nominees"  and the  section  titled  "Section  16(a)
Beneficial Ownership Reporting  Compliance" in the Company's Proxy Statement for
its 2000  annual  meeting of  shareholders  to be held on May 11,  2000  ("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 Company."


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.

                                       51

<PAGE>


                                     PART IV


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

(a)     1.      Financial Statements

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

                                                                    Page In This
                                                                   Annual Report
                                                                    On Form 10-K

Consolidated Balance Sheets at December 31, 1999, and January 1, 1999       26

Consolidated Statements of Operations for each of the three fiscal years
in the period ended December 31, 1999                                       27

Consolidated Statement of Shareholders' Equity for the three fiscal years
ended December 31, 1999                                                     28

Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended December 31, 1999                                       29

Notes to Consolidated Financial Statements                               30-49

        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.

        3.      Exhibits

Exhibit
Number

3.1     Restated Articles of Incorporation of the Company filed 
        June 25, 1986. (17)

3.2     Certificate of Amendment of Articles of Incorporation of the Company 
        filed October 6, 1988. (17)

3.3     Certificate of Amendment of Articles of Incorporation of the Company 
        filed July 18, 1990. (17)

3.4     Certificate of Determination of the Company filed February 19, 1999.(17)

3.8     Amended and Restated Bylaws of the Company. (21)

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. (16)

                                       52

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       53

<PAGE>

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

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

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

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

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

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

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

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

10.49** Memorandum of Understanding dated December 24, 1992, between the Company
        and Pioneer 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)



10.58   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. (18)

10.60   1988 Employee Stock Purchase Plan, as amended. (18)

10.61   Revolving Credit Agreement - Loan - Third Amendment. (17)

10.62+  Employment Agreement between the Company and Bradford W. Parkinson dated
        September 1, 1998. (17)

10.63+  Employment Agreement between the Company and Robert S. Cooper dated 
        September 1, 1998. (17)

10.64+  Consulting Agreement between the Company and Bradford W. Parkinson dated
        September 1, 1998. (17)

10.65+  Standby Consulting Agreement between the Company and Bradford W. 
        Parkinson dated September 1, 1998. (17)

                                       54

<PAGE>

10.66+  Consulting Agreement between the Company and Robert S. Cooper dated S
        eptember 1, 1998. (17)

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

10.68+  Nonqualified deferred Compensation Plan of the Company effective 
        February 10, 1994. (17)

10.69***Asset  Purchase  Agreement  dated  August 10, 1999 by and among  Trimble
        Navigation  Limited  and  Solectron  Corporation  and Solectron Federal 
        Systems, Inc. (19)

10.70***Supply  Agreement  dated August 10, 1999 by and among  Trimble  
        Navigation  Limited and  Solectron  Corporation  and  Solectron
        Federal Systems, Inc. (19)

10.71   Revolving Credit Agreement - Loan - Fourth Amendment. (20)

21.1    Subsidiaries of the Company. (21)

23.1    Consent of Ernst & Young LLP, independent auditors (see page 79).

24.1    Power of Attorney (included on page 57).

27.1    Financial Data Schedule (21).

*       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.

***     Confidential  treatment  has been granted for certain  portions of this
        exhibit pursuant to an order dated effective October 5, 1999.

+       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.

(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.

                                       55

<PAGE>

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

(17)    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 January 1, 1999.

(18)    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 July 2, 1999.

(19)    Incorporated  by reference to  identically  numbered  exhibits filed in
        response to Item 7(c),  "Exhibits," of the registrant's  Report on Form
        8-K, which was filed on August 25, 1999.

(20)    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 October 1, 1999.

(21)    Filed herewith.

(b)     Reports on Form 8-K.

     No  reports  on Form 8-K were  filed by the  registrant  during  the fourth
quarter ended December 31, 1999.


                                       56

<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 27, 2000


                                POWER OF ATTORNEY

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


                                       57

<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 27, 2000
----------------------------- Officer, Director
Steven W. Berglund            


/s/ Mary Ellen Genovese       Vice President Finance, and        March 27, 2000
----------------------------- Chief Financial Officer
Mary Ellen Genovese           (principal financial
                              and principal accounting officer)


/s/ Robert S. Cooper          Director                           March 15, 2000
-----------------------------
Robert S. Cooper

/s/ John B. Goodrich          Director                           March 15, 2000
-----------------------------
John B. Goodrich

/s/ William Hart              Director                           March 15, 2000
-----------------------------
William Hart

/s/ Ulf J. Johansson          Director                           March 20, 2000
-----------------------------
Ulf J. Johansson

/s/ Norman Y. Mineta          Director                           March 15, 2000
-----------------------------  
Norman Y. Mineta

/s/ Bradford W. Parkinson     Director                           March 14, 2000
----------------------------- 
Bradford W. Parkinson


                                       58

<PAGE>
                                                                SCHEDULE II



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


<TABLE>
<CAPTION>
                                         Balance at                                                 Balance at
                                        beginning of        (Reductions)                              end of
Allowance for doubtful accounts:           period            Additions       Write-offs **            period
                                      ------------------  -----------------  -----------------   -----------------
  <S>                                            <C>               <C>                <C>                  <C>    
   Year ended January 2, 1998                     2,393                205                134               2,464
   Year ended January 1, 1999                     2,464                458                702               2,220
   Year ended December 31, 1999                   2,220              1,901              1,172               2,949



                                         Balance at                                                 Balance at
                                        beginning of        (Reductions)                              end of
Inventory Reserves:                        period            Additions       Write-offs **            period
                                      ------------------  -----------------  -----------------   -----------------
   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
   Year ended December 31, 1999                  14,119              1,607              1,617              14,109
</TABLE>

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

** Net of recoveries





















                                       S-1


                                       59

<PAGE>


                                INDEX TO EXHIBITS

                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER            EXHIBIT                                               PAGE
--------------------------------------------------------------------------------

3.8               Amended and Restated Bylaws of the Company           61-77

21.1              Subsidiaries of the Company                             78

23.1              Consent of Ernst & Young LLP, Independent Auditors      79

27.1              Financial Data Schedule for the years ended
                  December 31, 1999, and January 1, 1999                  80


                                       60

<PAGE>







                                   EXHIBIT 3.8

                                     BY-LAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                 (amended and restated through October 13, 1999)




                                       61

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I CORPORATE OFFICES...................................................1


    1.1      PRINCIPAL OFFICE.................................................1
    1.2      OTHER OFFICES....................................................1




ARTICLE II MEETINGS OF SHAREHOLDERS...........................................1


    2.1      PLACE OF MEETINGS................................................1
    2.2      ANNUAL MEETING...................................................1
    2.3      SPECIAL MEETING..................................................2
    2.4      NOTICE OF SHAREHOLDERS' MEETINGS.................................2
    2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.....................2
    2.6      QUORUM...........................................................3
    2.7      ADJOURNED MEETING; NOTICE........................................3
    2.8      VOTING...........................................................4
    2.9      VALIDATION OF MEETINGS: WAIVER OF NOTICE; CONSENT................4
    2.10     SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING .........5
    2.11     RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING CONSENTS...5
    2.12     PROXIES..........................................................6
    2.13     INSPECTORS OF ELECTION...........................................6




ARTICLE III DIRECTORS.........................................................7


    3.1      POWERS...........................................................7
    3.2      NUMBER AND QUALIFICATION OF DIRECTORS............................7
    3.3      ELECTION AND TERM OF OFFICE OF DIRECTORS.........................8
    3.4      VACANCIES........................................................8
    3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE.........................9
    3.6      REGULAR MEETINGS.................................................9
    3.7      SPECIAL MEETINGS.................................................9
    3.8      QUORUM...........................................................9
    3.9      WAIVER OF NOTICE................................................10
    3.10     ADJOURNMENT.....................................................10
    3.11     NOTICE OF ADJOURNMENT...........................................10
    3.12     ACTION WITHOUT MEETING..........................................10
    3.13     FEES AND COMPENSATION OF DIRECTORS..............................10
    3.14     APPROVAL OF LOANS TO OFFICERS...................................11




ARTICLE IV COMMITTEES........................................................11


    4.1      COMMITTEES OF DIRECTORS.........................................11
    4.2      MEETINGS AND ACTION OF COMMITTEES...............................11




ARTICLE V OFFICERS...........................................................12


                                       62

<PAGE>

    5.1      OFFICERS........................................................12

    5.2      ELECTION OF OFFICERS............................................12
    5.3      SUBORDINATE OFFICERS............................................12
    5.4      REMOVAL AND RESIGNATION OF OFFICERS.............................12
    5.5      VACANCIES IN OFFICES............................................13
    5.6      CHAIRMAN OF THE BOARD...........................................13
    5.7      PRESIDENT.......................................................13
    5.8      VICE PRESIDENTS.................................................13
    5.9      SECRETARY.......................................................13
    5.10     CHIEF FINANCIAL OFFICER.........................................14




ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND

                  OTHER AGENTS...............................................14

    6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS.......................14
    6.2      INDEMNIFICATION OF OTHERS.......................................15
    6.3      PAYMENT OF EXPENSES IN ADVANCE..................................15
    6.4      INDEMNITY NOT EXCLUSIVE.........................................15
    6.5      INSURANCE INDEMNIFICATION.......................................15
    6.6      CONFLICTS.......................................................16




ARTICLE VII RECORDS AND REPORTS..............................................16


    7.1      MAINTENANCE AND INSPECTION OF SHARE REGISTER....................16
    7.2      MAINTENANCE AND INSPECTION OF BY-LAWS...........................17
    7.3      MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS...........17
    7.4      INSPECTION BY DIRECTORS.........................................17
    7.5      ANNUAL REPORT TO SHAREHOLDERS; WAIVER...........................17
    7.6      FINANCIAL STATEMENTS............................................18




ARTICLE VIII GENERAL MATTERS.................................................18


    8.1      RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING...........18
    8.2      CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.......................19
    8.3      CORPORATE CONTRACTS AND INSTRUMENTS:  HOW EXECUTED..............19
    8.4      CERTIFICATES FOR SHARES.........................................19
    8.5      LOST CERTIFICATES...............................................20
    8.6      CONSTRUCTION AND DEFINITIONS....................................20




ARTICLE IX AMENDMENTS........................................................20


    9.1      AMENDMENT BY SHAREHOLDERS.......................................20
    9.2      AMENDMENT BY DIRECTORS..........................................20


                                       63

<PAGE>

                                     BY-LAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                 (amended and restated through October 13, 1999)


                                    ARTICLE I

                                CORPORATE OFFICES

        1.1     PRINCIPAL OFFICE.
                ----------------

     The board of directors  shall fix the location of the  principal  executive
office  of the  corporation  at  any  place  within  or  outside  the  State  of
California. If the principal executive office is located outside such state, and
the  corporation  has one or more business  offices in such state,  the board of
directors  shall fix and designate a principal  business  office in the State of
California.

        1.2      OTHER OFFICES.
                 -------------

     The board of  directors  may at any time  establish  branch or  subordinate
offices  at any  place or  places  where  the  corporation  is  qualified  to do
business.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

        2.1      PLACE OF MEETINGS.
                 -----------------

     Meetings of  shareholders  shall be held at any place within or outside the
State of California designated by the board of directors.  In the absence of any
such  designation,  shareholders'  meetings  shall  be  held  at  the  principal
executive office of the corporation.

        2.2      ANNUAL MEETING.
                 --------------

     The annual meeting of shareholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such designation,
the annual meeting of shareholders shall be held on the fourth Thursday of April
in each year at 4:00 p.m.  However,  if such day falls on a legal holiday,  then
the meeting shall be held at the same time and place on the next succeeding full
business day. At the meeting,  directors shall be elected,  and any other proper
business may be transacted.

        2.3      SPECIAL MEETING.
                 ---------------

     A  special  meeting  of the  shareholders  may be called at any time by the
board of directors,  or by the chairman of the board, or by the president, or by
one or more  shareholders  holding shares in the aggregate  entitled to cast not
less than ten percent (10%) of the votes at that meeting.

     If a special  meeting  is called by any  person or  persons  other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business  proposed to be  transacted,  and
shall be delivered  personally or sent by registered  mail or by  telegraphic or
other facsimile  transmission to the chairman of the board,  the president,  any
vice president or the secretary of the  corporation.  The officer  receiving the
request shall cause notice to be promptly given to the shareholders  entitled to
vote,  in  accordance  with  the  provisions  of  Sections  2.4 and 2.5 of these
by-laws,  that a meeting  will be held at the time  requested  by the  person or
persons calling the meeting,  not less than thirty-five (35) nor more than sixty
(60) days after the receipt of the  request.  If the notice is not given  within
twenty (20) days after receipt of the request,  the person or persons requesting
the meeting may give the notice.  Nothing  contained  in this  paragraph of this
Section 2.3 shall be construed as limiting,  fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.

                                       64

<PAGE>

        2.4      NOTICE OF SHAREHOLDERS' MEETINGS.
                 --------------------------------

     All notices of meetings of shareholders shall be sent or otherwise given in
accordance  with  Section  2.5 of these  by-laws not less than ten (10) nor more
than sixty (60) days before the date of the meeting.  The notice  shall  specify
the  place,  date  and  hour of the  meeting  and (i) in the  case of a  special
meeting,  the general nature of the business to be transacted (no business other
than that  specified in the notice may be transacted) or (ii) in the case of the
annual  meeting,  those  matters  which the board of  directors,  at the time of
giving the notice, intends to present for action by the shareholders. The notice
of any meeting at which  directors  are to be elected  shall include the name of
any nominee or nominees whom, at the time of the notice,  management  intends to
present for election.

     If action is  proposed  to be taken at any  meeting  for  approval of (i) a
contract or transaction  in which a director has a direct or indirect  financial
interest,  pursuant to Section 310 of the  Corporations  Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation,  pursuant to Section
1201 of the Code, (iv) a voluntary  dissolution of the corporation,  pursuant to
Section 1900 of the Code, or (v) a  distribution  in  dissolution  other than in
accordance with the rights of outstanding preferred shares,  pursuant to Section
2007 of the  Code,  the  notice  shall  also  state the  general  nature of that
proposal.

        2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
                 --------------------------------------------

     Notice of any meeting of shareholders  shall be given either  personally or
by  first-class  mail or  telegraphic  or other written  communication,  charges
prepaid,  addressed  to the  shareholder  at the  address  of  that  shareholder
appearing on the books of the  corporation  or given by the  shareholder  to the
corporation  for the  purpose  of  notice.  If no such  address  appears  on the
corporation's  books or is given,  notice  shall be deemed to have been given if
sent to that  shareholder  by  first-class  mail or telegraphic or other written
communication to the corporation's  principal  executive office, or if published
at least once in a newspaper  of general  circulation  in the county  where that
office is  located.  Notice  shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.

     If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the  corporation is returned to the corporation by the
United  States Postal  Service  marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address,  all
future  notices  or  reports  shall be deemed to have  been duly  given  without
further  mailing if the same shall be  available to the  shareholder  on written
demand of the shareholder at the principal  executive  office of the corporation
for a period of one (1) year from the date of the giving of the notice.

     An  affidavit  of the  mailing  or other  means of giving any notice of any
shareholders'  meeting,  executed by the secretary,  assistant  secretary or any
transfer  agent of the  corporation  giving  the  notice,  shall be prima  facie
evidence of the giving of such notice.

        2.6      QUORUM.
                 ------

     The  presence  in person or by proxy of the  holders of a  majority  of the
shares  entitled to vote thereat  constitutes  a quorum for the  transaction  of
business at all meetings of  shareholders.  The  shareholders  present at a duly
called or held  meeting at which a quorum is present may continue to do business
until  adjournment,  notwithstanding  the withdrawal of enough  shareholders  to
leave less than a quorum,  if any  action  taken  (other  than  adjournment)  is
approved by at least a majority of the shares required to constitute a quorum.

        2.7      ADJOURNED MEETING; NOTICE.
                 -------------------------

     Any shareholders'  meeting,  annual or special,  whether or not a quorum is
present,  may be adjourned  from time to time by the vote of the majority of the
shares  represented  at that meeting,  either in person or by proxy,  but in the
absence of a quorum, no other business may be transacted at that meeting, except
as provided in Section 2.6 of these by-laws.

     When any meeting of shareholders, either annual or special, is adjourned to
another time or place,  notice need not be given of the adjourned meeting if the
time and place are announced at the meeting at which the  adjournment  is taken,
unless a new  record  date for the  adjourned  meeting  is fixed,  or unless the
adjournment  is for more  than  forty-five  (45)  days from the date set for the
original meeting,  in which case notice of the adjourned 

                                       65

<PAGE>


meeting shall be given. Notice of any such adjourned meeting shall be given
to each  shareholder  of record  entitled  to vote at the  adjourned  meeting in
accordance with the provisions of Sections 2.4 and 2.5 of these by-laws.  At any
adjourned  meeting the  corporation  may transact any business  which might have
been transacted at the original meeting.

        2.8      VOTING.
                 ------

     The shareholders  entitled to vote at any meeting of shareholders  shall be
determined in accordance  with the  provisions of Section 2.11 of these by-laws,
subject  to the  provisions  of  Sections  702 to 704,  inclusive,  of the  Code
(relating to voting shares held by a fiduciary,  in the name of a corporation or
in joint ownership).

     The  shareholders'  vote  may be by  voice  vote  or by  ballot;  provided,
however,  that any election for  directors  must be by ballot if demanded by any
shareholder before the voting has begun.

     On any matter other than the election of  directors,  any  shareholder  may
vote part of the shares in favor of the  proposal  and  refrain  from voting the
remaining  shares or vote them  against the  proposal,  but, if the  shareholder
fails  to  specify  the  number  of  shares  which  the  shareholder  is  voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares which the shareholder is entitled to vote.

     If a quorum is present,  the affirmative vote of the majority of the shares
represented and voting at a duly-held meeting (which shares voting affirmatively
also constitute at least a majority of the required  quorum) shall be the act of
the shareholders,  unless the vote of a greater number, or voting by classes, is
required by the Code or by the articles of incorporation.

     At a  shareholders'  meeting  at  which  directors  are to be  elected,  no
shareholder  shall be entitled to cumulate votes (i.e.  cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) unless the candidates' names have been placed in nomination
prior to  commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's  intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates  placed in nomination and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which that shareholder's  shares are entitled,  or distribute
the  shareholder's  votes  on  the  same  principle  among  any  or  all  of the
candidates,  as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.

        2.9      VALIDATION OF MEETINGS: WAIVER OF NOTICE; CONSENT.
                 -------------------------------------------------

     The transactions of any meeting of shareholders,  either annual or special,
however called and noticed,  and wherever held,  shall be as valid as though had
at a meeting  duly held after  regular  call and notice,  if a quorum be present
either in person or by proxy,  and if, either before or after the meeting,  each
person  entitled  to vote,  who was not  present in person or by proxy,  signs a
written  waiver of  notice or a consent  to the  holding  of the  meeting  or an
approval  of the  minutes  thereof.  The  waiver of notice or  consent  need not
specify  either the  business to be  transacted  or the purpose of any annual or
special meeting of  shareholders,  except that if action is taken or proposed to
be taken for approval of any of those matters  specified in the second paragraph
of Section 2.4 of these by-laws, the waiver of notice or consent shall state the
general nature of the proposal.  All such waivers,  consents and approvals shall
be  filed  with  the  corporate  records  or made a part of the  minutes  of the
meeting.

     Attendance  by a person  at a meeting  shall  also  constitute  a waiver of
notice of that meeting,  except when the person objects, at the beginning of the
meeting,  to the transaction of any business because the meeting is not lawfully
called or convened,  and except that  attendance at a meeting is not a waiver of
any right to object to the  consideration of a matter not included in the notice
of the meeting, if that objection is expressly made at the meeting.

        2.10     SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
                 -------------------------------------------------------

     Any  action  which  may be  taken  at any  annual  or  special  meeting  of
shareholders  may be taken  without a meeting and  without  prior  notice,  if a
consent in writing,  setting forth the action so taken, is signed by the holders
of  outstanding  shares  having not less than the  minimum  number of votes that
would be  necessary  to  authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.

     In the case of election of  directors,  such a consent  shall be  effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors.

                                       66

<PAGE>

     All such  consents  shall  be  maintained  in the  corporate  records.  Any
shareholder giving a written consent,  or the shareholder's  proxy holders, or a
transferee of the shares, or a personal  representative  of the shareholder,  or
their respective proxy holders,  may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.

     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
solicited  in  writing,  and if  the  unanimous  written  consent  of  all  such
shareholders  shall not have been  received,  the  secretary  shall give  prompt
notice of the corporate action approved by the  shareholders  without a meeting.
Such  notice  shall be given in the manner  specified  in  Section  2.5 of these
by-laws.  In the case of approval of (i) a contract  or  transaction  in which a
director has a direct or indirect financial interest, pursuant to Section 310 of
the Code, (ii)  indemnification of a corporate "agent",  pursuant to Section 317
of the Code, (iii) a reorganization of the corporation, pursuant to Section 1201
of the Code,  and (iv) a distribution  in  dissolution  other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of the
Code,  the notice shall be given at least ten (10) days before the  consummation
of any action authorized by that approval.

        2.11     RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING CONSENTS.
                 --------------------------------------------------------------

     For  purposes of  determining  the  shareholders  entitled to notice of any
meeting or to vote  thereat or  entitled  to give  consent to  corporate  action
without a meeting,  the board of directors  may fix, in advance,  a record date,
which  shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such  meeting  nor more than  sixty  (60) days  before  any such
action without a meeting,  and in such event only  shareholders of record on the
date so fixed are  entitled  to notice and to vote or to give  consents,  as the
case may be,  notwithstanding  any  transfer  of any  shares on the books of the
corporation after the record date, except as otherwise provided in the Code.

     If the board of directors does not so fix a record date:

                  (a) the record date for determining  shareholders  entitled to
notice  of or to vote at a  meeting  of  shareholders  shall be at the  close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and

                  (b) the record date for determining  shareholders  entitled to
give consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken,  shall be the day on which the first written
consent is given or (ii) when prior action by the board has been taken, shall be
the day on which the board adopts the resolution relating to that action, or the
sixtieth (60th) day before the date of such other action, whichever is later.

     The record date for any other  purpose shall be as provided in Article VIII
of these by-laws.

        2.12     PROXIES.
                 --------

     Every person entitled to vote for directors,  or on any other matter, shall
have the right to do so either in person or by one or more agents  authorized by
a  written  proxy  signed by the  person  and filed  with the  secretary  of the
corporation.  A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting,  telegraphic, electronic
transmission   or   otherwise)   by  the   shareholder   or  the   shareholder's
attorney-in-fact.  A validly  executed  proxy  which  does not state  that it is
irrevocable  shall  continue in full force and effect  unless (i) revoked by the
person  executing  it,  before the vote  pursuant  to that  proxy,  by a writing
delivered  to the  corporation  stating  that  the  proxy  is  revoked,  or by a
subsequent  proxy executed by the person executing the prior proxy and presented
to the meeting, or as to any meeting by attendance at such meeting and voting in
person by the person  executing the proxy or (ii) written notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the  expiration of eleven (11) months from the date of the proxy,
unless otherwise  provided in the proxy. The revocability of a proxy that states
on its face  that it is  irrevocable  shall be  governed  by the  provisions  of
Sections 705(e) and 705(f) of the Code.

        2.13     INSPECTORS OF ELECTION.
                 ----------------------

                                       67

<PAGE>

     Before any meeting of  shareholders,  the board of directors may appoint an
inspector or inspectors of election to act at the meeting or its adjournment. If
no inspector of election is so  appointed,  the chairman of the meeting may, and
on the request of any  shareholder or a  shareholder's  proxy shall,  appoint an
inspector  or  inspectors  of  election  to act at the  meeting.  The  number of
inspectors  shall be either one (1) or three (3). If inspectors are appointed at
a meeting  pursuant to the request of one (1) or more  shareholders  or proxies,
the  holders of a majority  of shares or their  proxies  present at the  meeting
shall determine whether one (1) or three (3) inspectors are to be appointed.  If
any person  appointed as  inspector  fails to appear or fails or refuses to act,
the chairman of the meeting may,  and upon the request of any  shareholder  or a
shareholder's proxy shall, appoint a person to fill that vacancy.

     Such inspectors shall:

                  (a) Determine the number of shares  outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, and the authenticity, validity and effect of proxies;

                  (b)      Receive votes, ballots or consents;

                  (c)      Hear and determine all challenges and questions in 
any way arising in connection with the right to vote;

                  (d)      Count and tabulate all votes or consents;

                  (e)      Determine when the polls shall close;

                  (f)      Determine the result; and

                  (g)      Do any other acts that may be proper to conduct the 
election or vote with fairness to all shareholders.

                                   ARTICLE III

                                    DIRECTORS

        3.1      POWERS.
                 ------

     Subject to the  provisions of the Code and any  limitations in the articles
of incorporation and these by-laws relating to action required to be approved by
the shareholders or by the outstanding  shares,  the business and affairs of the
corporation  shall be managed and all corporate  powers shall be exercised by or
under the direction of the board of directors.

        3.2      NUMBER AND QUALIFICATION OF DIRECTORS.
                 -------------------------------------

     The number of directors of the corporation  shall be not less than four (4)
nor more than seven (7). The exact number of directors  shall be seven (7) until
changed,  within the limits  specified  above,  by a bylaw amending this Section
3.2,  duly  adopted  by the  board  of  directors  or by the  shareholders.  The
indefinite  number of  directors  may be  changed,  or a definite  number  fixed
without  provision for an indefinite  number, by a duly adopted amendment to the
articles of  incorporation  or by an amendment to this bylaw duly adopted by the
vote or written  consent of holders  of a  majority  of the  outstanding  shares
entitled to vote;  provided,  however,  that an amendment reducing the number or
the  minimum  number of  directors  to a number  less than  seven (7)  cannot be
adopted if the votes cast against its adoption at a meeting of the shareholders,
or the shares not consenting in the case of action by written consent, are equal
to more than sixteen and two-thirds  percent (16-2/3%) of the outstanding shares
entitled to vote thereon.  No amendment may change the stated  maximum number of
authorized  directors to a number  greater than two (2) times the stated minimum
number of directors minus one (1).

        3.3      ELECTION AND TERM OF OFFICE OF DIRECTORS
                 ----------------------------------------

     Directors  shall be elected at each annual meeting of  shareholders to hold
office until the next such annual meeting.  Each director,  including a director
elected to fill a vacancy,  shall hold office until the  expiration  of the term
for which elected and until a successor has been elected and qualified.

        3.4      VACANCIES.
                 ---------

                                       68

<PAGE>

     Vacancies  in the board of  directors  may be filled by a  majority  of the
remaining directors, though less than a quorum, or by a sole remaining director,
except  that a vacancy  created  by the  removal  of a  director  by the vote or
written consent of the  shareholders or by court order may be filled only by the
vote  of  a  majority  of  the  outstanding  shares  entitled  to  vote  thereon
represented  at a duly  held  meeting  at which a quorum is  present,  or by the
unanimous written consent of all shares entitled to vote thereon.  Each director
so elected shall hold office until the next annual  meeting of the  shareholders
and until a successor has been elected and qualified.

     A vacancy or vacancies  in the board of directors  shall be deemed to exist
in the event of the death,  resignation  or removal of any  director,  or if the
board of directors by  resolution  declares  vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized  number of directors is increased,  or if the  shareholders
fail,  at any meeting of  shareholders  at which any director or  directors  are
elected, to elect the number of directors to be elected at that meeting.

     The  shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the  directors,  but any such election  other
than to fill a vacancy created by removal, if by written consent,  shall require
the consent of the holders of a majority of the  outstanding  shares entitled to
vote thereon.

     Any director may resign  effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become  effective.  If the
resignation  of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.

        3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE
                 -----------------------------------------

     Regular  meetings of the board of directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the board. In the absence of such a designation,  regular meetings
shall be held at the  principal  executive  office of the  corporation.  Special
meetings  of the board may be held at any place  within or outside  the State of
California  that has been  designated  in the notice of the  meeting  or, if not
stated in the notice or if there is no notice, at the principal executive office
of the corporation.

     Any meeting,  regular or special,  may be held by  conference  telephone or
similar communication  equipment,  so long as all directors participating in the
meeting  can hear one  another;  and all such  directors  shall be  deemed to be
present in person at the meeting.

        3.6      REGULAR MEETINGS.
                 ----------------

     Regular  meetings of the board of directors  may be held without  notice if
the times of such meetings are fixed by the board of directors.

        3.7      SPECIAL MEETINGS.
                 ----------------

     Special  meetings of the board of directors for any purpose or purposes may
be called at any time by the  chairman  of the board,  the  president,  any vice
president, the secretary or any two directors.

     Notice  of the  time and  place  of  special  meetings  shall be  delivered
personally  or by  telephone  to each  director or sent by  first-class  mail or
telegram, charges prepaid, addressed to each director at that director s address
as it is shown on the records of the  corporation.  If the notice is mailed,  it
shall be deposited  in the United  States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally, or by
telephone or telegram,  it shall be delivered  personally  or by telephone or to
the  telegraph  company at least  forty-eight  (48) hours before the time of the
holding of the meeting.  Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director.  The notice need not specify the purpose or the place of the
meeting,  if the meeting is to be held at the principal  executive office of the
corporation.

        3.8      QUORUM.
                 ------

                                       69

<PAGE>

     A majority of the authorized  number of directors shall constitute a quorum
for the  transaction of business,  except to adjourn as provided in Section 3.10
of these  by-laws.  Every  act or  decision  done or made by a  majority  of the
directors  present at a duly held meeting at which a quorum is present  shall be
regarded  as the act of the board of  directors,  subject to the  provisions  of
Section 310 of the Code (as to approval of contracts or  transactions in which a
director has a direct or indirect material financial  interest),  Section 311 of
the Code (as to appointment of committees) and Section 317(e) of the Code (as to
indemnification of directors).

     A meeting at which a quorum is  initially  present may continue to transact
business  notwithstanding  the  withdrawal of directors,  if any action taken is
approved by at least a majority of the required quorum for that meeting.

        3.9      WAIVER OF NOTICE.
                 ----------------

     The  transactions of any meeting of the board of directors,  however called
and noticed or wherever held,  shall be as valid as though had at a meeting duly
held after  regular call and notice if a quorum is present and if, either before
or after the meeting,  each of the directors not present signs a written  waiver
of notice,  a consent to holding  the  meeting  or an  approval  of the  minutes
thereof.  The waiver of notice or consent  need not  specify  the purpose of the
meeting.  All such  waivers,  consents  and  approvals  shall be filed  with the
corporate  records  or made a part of the  minutes of the  meeting.  Notice of a
meeting  shall also be deemed  given to any  director  who  attends  the meeting
without  protesting,  before or at its commencement,  the lack of notice to that
director.

        3.10     ADJOURNMENT.
                 -----------

     A majority of the directors present,  whether or not constituting a quorum,
may adjourn any meeting to another time and place.

        3.11     NOTICE OF ADJOURNMENT.
                 ---------------------

     Notice of the time and place of holding an  adjourned  meeting  need not be
given,  unless the meeting is adjourned for more than twenty-four (24) hours, in
which case  notice of the time and place  shall be given  before the time of the
adjourned meeting,  in the manner specified in Section 3.7 of these by-laws,  to
the directors who were not present at the time of the adjournment.

        3.12     ACTION WITHOUT MEETING.
                 ----------------------

     Any action  required or permitted to be taken by the board of directors may
be taken without a meeting,  if all members of the board shall  individually  or
collectively  consent in writing to that action.  Such action by written consent
shall  have the same  force  and  effect  as a  unanimous  vote of the  board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.

        3.13     FEES AND COMPENSATION OF DIRECTORS.
                 ----------------------------------

     Directors and members of committees may receive such compensation,  if any,
for their  services,  and such  reimbursement  of  expenses,  as may be fixed or
determined by resolution of the board of directors.  This Section 3.13 shall not
be construed to preclude any director from serving the  corporation in any other
capacity as an officer, agent, employee or otherwise, and receiving compensation
for those services.

        3.14     APPROVAL OF LOANS TO OFFICERS.
                 -----------------------------

     The board of directors is authorized, without further shareholder approval,
to approve loans from this  corporation to officers of this  corporation for the
purpose  of  assisting  in  the  acquisition  of  their  primary   residence  in
exceptional  housing  markets  where such  location  is for the  benefit of this
corporation; provided that such loans are secured by such real property.

                                   ARTICLE IV

                                   COMMITTEES

        4.1      COMMITTEES OF DIRECTORS.
                 -----------------------

                                       70

<PAGE>


     The board of  directors  may,  by  resolution  adopted by a majority of the
authorized  number of  directors,  designate  one (1) or more  committees,  each
consisting of two or more directors,  to serve at the pleasure of the board. The
board may  designate  one (1) or more  directors  as  alternate  members  of any
committee,  who may replace any absent  member at any meeting of the  committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the  authorized  number of  directors.  Any  committee,  to the
extent provided in the resolution of the board,  shall have all the authority of
the board, except with respect to:

                  (a)      the approval of any action which,  under the Code, 
also requires  shareholders'  approval or approval of the outstanding shares;

                  (b)      the filling of vacancies in the board of directors or
in any committee;

                  (c)      the fixing of compensation of the directors for 
serving on the board or any committee;

                  (d)      the amendment or repeal of these by-laws or the 
adoption of new by-laws;

                  (e)      the  amendment or repeal of any  resolution  of the 
board of directors  which by its express terms is not so amendable or 
repealable;

                  (f)      a distribution to the shareholders of the 
corporation,  except at a rate or in a periodic amount or within a price range 
determined by the board of directors; or

                  (g)      the appointment of any other committees of the board 
of directors or the members of such committees.

        4.2      MEETINGS AND ACTION OF COMMITTEES.
                 ---------------------------------

     Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these by-laws,  Section 3.5
(place of  meetings),  Section 3.6  (regular  meetings),  Section  3.7  (special
meetings  and  notice),  Section 3.8  (quorum),  Section 3.9 (waiver of notice),
Section 3.10  (adjournment),  Section 3.11 (notice of  adjournment)  and Section
3.12 (action without meeting), with such changes in the context of those by-laws
as are  necessary to  substitute  the committee and its members for the board of
directors  and its  members,  except  that  the  time  of  regular  meetings  of
committees  may be determined  either by resolution of the board of directors or
by  resolution of the  committee;  special  meetings of  committees  may also be
called by resolution of the board of directors;  and notice of special  meetings
of committees shall also be given to all alternate  members,  who shall have the
right to attend all meetings of the committee.  The board of directors may adopt
rules for the government of any committee not  inconsistent  with the provisions
of these by-laws.

                                    ARTICLE V

                                    OFFICERS

        5.1      OFFICERS.
                 --------

     The officers of the corporation  shall be a president,  a secretary,  and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant  secretaries,  one or more assistant  treasurers,  and such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these by-laws. Any number of offices may be held by the same person.

        5.2      ELECTION OF OFFICERS.
                 --------------------

     The officers of the  corporation,  except such officers as may be appointed
in  accordance  with the  provisions  of  Section  5.3 or  Section  5.5 of these
by-laws,  shall be chosen by the board,  subject to the  rights,  if any,  of an
officer under any contract of employment.

        5.3      SUBORDINATE OFFICERS.
                 --------------------

                                       71

<PAGE>

     The board of  directors  may  appoint,  or may  empower  the  president  to
appoint,  such other  officers as the business of the  corporation  may require,
each of whom shall hold office for such period,  have such authority and perform
such duties as are provided in these  by-laws or as the board of  directors  may
from time to time determine.

        5.4      REMOVAL AND RESIGNATION OF OFFICERS.
                 -----------------------------------

     Subject  to the  rights,  if any,  of an  officer  under  any  contract  of
employment,  any officer may be removed,  either with or without  cause,  by the
board of directors at any regular or special  meeting of the board or, except in
case of an officer  chosen by the board of  directors,  by any officer upon whom
such power of removal may be conferred by the board of directors.

     Any  officer  may  resign  at any  time by  giving  written  notice  to the
corporation.  Any  resignation  shall take  effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall  not be
necessary to make it  effective.  Any  resignation  is without  prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

        5.5      VACANCIES IN OFFICES.
                 --------------------

     A  vacancy  in  any  office   because  of  death,   resignation,   removal,
disqualification  or any other cause shall be filled in the manner prescribed in
these by-laws for regular appointments to that office.

        5.6      CHAIRMAN OF THE BOARD.
                 ---------------------

     The  chairman  of the  board,  if such an  officer be  elected,  shall,  if
present,  preside at meetings of the board of directors and exercise and perform
such other powers and duties as may be from time to time  assigned to him by the
board of directors or prescribed by these by-laws. If there is no president, the
chairman  of  the  board  shall  also  be the  chief  executive  officer  of the
corporation  and shall have the powers and duties  prescribed  in Section 5.7 of
these by-laws.

        5.7      PRESIDENT.
                 ---------

     Subject to such supervisory powers, if any, as may be given by the board of
directors  to the  chairman  of the  board,  if  there be such an  officer,  the
president  shall be the chief  executive  officer of the  corporation and shall,
subject to the  control of the board of  directors,  have  general  supervision,
direction  and control of the business and the officers of the  corporation.  He
shall  preside at all  meetings of the  shareholders  and, in the absence of the
chairman  of the board,  or if there be none,  at all  meetings  of the board of
directors.  He shall have the general  powers and duties of  management  usually
vested in the office of  president of a  corporation,  and shall have such other
powers  and  duties  as may be  prescribed  by the board of  directors  or these
by-laws.

        5.8      VICE PRESIDENTS.
                 ---------------

     In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors  or, if not ranked,  a
vice  president  designated  by the board of  directors,  shall  perform all the
duties of the  president and when so acting shall have all the powers of, and be
subject to all the restrictions  upon, the president.  The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors,  these by-laws,  the
president or the chairman of the board.

        5.9      SECRETARY.
                 ---------

     The secretary  shall keep or cause to be kept,  at the principal  executive
office of the  corporation,  or such other place as the board of  directors  may
direct,  a book of minutes of all meetings and actions of directors,  committees
of  directors,  and  shareholders,  with the time and place of holding,  whether
regular or special (and, if special,  how authorized and the notice given),  the
names of those present at directors meetings or committee  meetings,  the number
of shares present or represented at shareholders'  meetings, and the proceedings
thereof.

     The secretary  shall keep, or cause to be kept, at the principal  executive
office of the corporation or at the office of the  corporation's  transfer agent
or registrar,  as  determined  by resolution of the board of directors,  a share
register,  or a duplicate share register,  showing the names of all shareholders
and their  addresses,  the number and 



                                       72

<PAGE>


classes  of  shares  held by each,  the  number  and  date of  certificates
evidencing  such  shares,  and the  number  and  date of  cancellation  of every
certificate surrendered for cancellation.

     The secretary  shall give, or cause to be given,  notice of all meetings of
the shareholders  and of the board of directors  required by these by-laws or by
law to be  given,  and he  shall  keep the  seal of the  corporation,  if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.

        5.10     CHIEF FINANCIAL OFFICER.
                 -----------------------

     The chief  financial  officer shall keep and maintain,  or cause to be kept
and  maintained,  adequate  and  correct  books and  records of  accounts of the
properties and business  transactions of the corporation,  including accounts of
its  assets,  liabilities,  receipts,  disbursements,  gains,  losses,  capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director.

     The chief financial  officer shall deposit all money and other valuables in
the name and to the credit of the corporation  with such  depositaries as may be
designated  by the  board of  directors.  He  shall  disburse  the  funds of the
corporation  as may be ordered by the board of  directors,  shall  render to the
president  and  directors,  whenever  they  request it, an account of all of his
transactions  as chief financial  officer and of the financial  condition of the
corporation,  and shall have such other  powers and perform such other duties as
may be prescribed by the board of directors or these by-laws.

                                   ARTICLE VI

               INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
                                AND OTHER AGENTS

        6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS
                 -----------------------------------------

     The corporation shall, to the maximum extent and in the manner permitted by
the Code,  indemnify  each of its  directors and officers  against  expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and other
amounts  actually and reasonably  incurred in connection with any proceeding (as
defined in Section 317(a) of the Code),  arising by reason of the fact that such
person is or was an agent of the corporation. For purposes of this Article VI, a
"director" or "officer" of the corporation includes any person (i) who is or was
a  director  or officer of the  corporation,  (ii) who is or was  serving at the
request  of the  corporation  as a director  or officer of another  corporation,
partnership,  joint  venture,  trust or  other  enterprise,  or (iii)  who was a
director or officer of a corporation which was a predecessor  corporation of the
corporation  or of  another  enterprise  at  the  request  of  such  predecessor
corporation.

        6.2      INDEMNIFICATION OF OTHERS.
                 -------------------------

     The  corporation  shall  have the  power,  to the  extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers)  against  expenses (as defined in Section  317(a) of the
Code), judgments, fines, settlements,  and other amounts actually and reasonably
incurred in connection  with any proceeding (as defined in Section 317(a) of the
Code),  arising by reason of the fact that such person is or was an agent of the
corporation.  For purposes of this Article VI, an  "employee"  or "agent" of the
corporation (other than a director or officer) includes any person (i) who is or
was an employee or agent of the  corporation,  (ii) who is or was serving at the
request of the  corporation  as an  employee  or agent of  another  corporation,
partnership,  joint  venture,  trust or other  enterprise,  or (iii)  who was an
employee or agent of a corporation  which was a predecessor  corporation  of the
corporation  or of  another  enterprise  at  the  request  of  such  predecessor
corporation.

        6.3      PAYMENT OF EXPENSES IN ADVANCE.
                 ------------------------------

     Expenses  incurred in defending any civil or criminal  action or proceeding
for which  indemnification  is  required  pursuant  to Section  6.1 or for which
indemnification  is permitted  pursuant to Section 6.2  following  authorization
thereof by the Board of Directors shall be paid by the corporation in advance of
the  final  disposition  of  such  action  or  proceeding  upon  receipt  of  an
undertaking by or on behalf of the indemnified  party to repay such amount if it
shall ultimately be determined that the indemnified  party is not entitled to be
indemnified as authorized in this Article VI.

                                       73

<PAGE>

        6.4      INDEMNITY NOT EXCLUSIVE.
                 -----------------------

     The  indemnification  provided  by this  Article  VI  shall  not be  deemed
exclusive  of any other  rights to which those  seeking  indemnification  may be
entitled  under any bylaw,  agreement,  vote of  shareholders  or  disinterested
directors  or  otherwise,  both as to action in an official  capacity  and as to
action in another  capacity  while holding such office,  to the extent that such
additional  rights  to  indemnification   are  authorized  in  the  Articles  of
Incorporation.

        6.5      INSURANCE INDEMNIFICATION.
                 -------------------------

     The corporation shall have the power to purchase and maintain  insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation against any liability asserted against or incurred by such person in
such capacity or arising out of such person's status as such, whether or not the
corporation  would have the power to indemnify him against such liability  under
the provisions of this Article VI.

        6.6      CONFLICTS.
                 ---------

     No  indemnification  or advance shall be made under this Article VI, except
where such indemnification or advance is mandated by law or the order,  judgment
or decree of any court of competent  jurisdiction,  in any circumstance where it
appears:

                  (1) That it  would be  inconsistent  with a  provision  of the
Articles of Incorporation,  these bylaws, a resolution of the shareholders or an
agreement  in  effect at the time of the  accrual  of the  alleged  cause of the
action  asserted in the  proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or

                  (2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.

                                   ARTICLE VII

                               RECORDS AND REPORTS

        7.1      MAINTENANCE AND INSPECTION OF SHARE REGISTER.
                 --------------------------------------------

     The corporation  shall keep at its principal  executive  office,  or at the
office  of its  transfer  agent or  registrar,  if either  be  appointed  and as
determined  by   resolution  of  the  board  of  directors,   a  record  of  its
shareholders,  giving the names and addresses of all shareholders and the number
and class of shares held by each shareholder.

     A shareholder  or  shareholders  of the  corporation  holding at least five
percent  (5%)  in  the  aggregate  of  the  outstanding  voting  shares  of  the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of  directors,  may (i)  inspect and copy the records of  shareholders'
names and addresses and  shareholdings  during usual  business hours on five (5)
days' prior  written  demand on the  corporation,  (ii) obtain from the transfer
agent of the  corporation,  on written demand and on the tender of such transfer
agent's  usual  charges for such list, a list of the names and  addresses of the
shareholders  who are entitled to vote for the election of directors,  and their
shareholdings,  as of the most  recent  record date for which that list has been
compiled or as of a date specified by the shareholder  after the date of demand.
Such list shall be made available to any such  shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date  specified in the demand as the date as of which the list is
to be compiled.

     The record of shareholders shall also be open to inspection on the
written demand of any  shareholder or holder of a voting trust  certificate,  at
any time during usual business hours,  for a purpose  reasonably  related to the
holder's  interests  as a  shareholder  or  as  the  holder  of a  voting  trust
certificate.

     Any inspection and copying under this Section 7.1 may be made in person
or by an agent or  attorney  of the  shareholder  or  holder  of a voting  trust
certificate making the demand.

        7.2      MAINTENANCE AND INSPECTION OF BY-LAWS.
                 -------------------------------------

                                       74

<PAGE>

     The corporation  shall keep at its principal  executive  office,  or if its
principal  executive office is not in the State of California,  at its principal
business  office in such  state,  the  original  or a copy of these  by-laws  as
amended to date,  which by-laws shall be open to inspection by the  shareholders
at all reasonable  times during office hours. If the principal  executive office
of the corporation is outside the State of California and the corporation has no
principal  business office in such state, the secretary shall,  upon the written
request of any shareholder,  furnish to that shareholder a copy of these by-laws
as amended to date.

        7.3      MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
                 -----------------------------------------------------

     The  accounting  books and records,  and the minutes of  proceedings of the
shareholders  and the board of directors  and any committee or committees of the
board of  directors,  shall be kept at such  place or places  designated  by the
board  of  directors  or,  in  absence  of such  designation,  at the  principal
executive office of the  corporation.  The minutes shall be kept in written form
and the accounting  books and records shall be kept either in written form or in
any other form capable of being converted into written form.

     The minutes and  accounting  books and records  shall be open to inspection
upon  the  written  demand  of any  shareholder  or  holder  of a  voting  trust
certificate,  at any reasonable time during usual business hours,  for a purpose
reasonably  related to the holder's  interests as a shareholder or as the holder
of a voting trust  certificate.  The  inspection  may be made in person or by an
agent or attorney,  and shall include the right to copy and make extracts.  Such
rights of inspection shall extend to the records of each subsidiary  corporation
of the corporation.

        7.4      INSPECTION BY DIRECTORS.
                 -----------------------

     Every  director  shall have the absolute  right at any  reasonable  time to
inspect  all  books,  records  and  documents  of every  kind  and the  physical
properties of the  corporation  and each of its  subsidiary  corporations.  Such
inspection  by a director may be made in person or by an agent or attorney,  and
the  right of  inspection  includes  the  right to copy  and  make  extracts  of
documents.

        7.5      ANNUAL REPORT TO SHAREHOLDERS; WAIVER.
                 -------------------------------------

     The  board of  directors  shall  cause an  annual  report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal  year  adopted by the  corporation.  Such  report  shall be sent at least
fifteen (15) days before the annual  meeting of  shareholders  to be held during
the next fiscal year and in the manner specified in Section 2.5 of these by-laws
for giving notice to shareholders of the corporation.

     The annual report shall contain a balance sheet as of the end of the fiscal
year and an income statement and statement of changes in financial  position for
the fiscal year,  accompanied  by any report of independent  accountants  or, if
there  is no such  report,  the  certificate  of an  authorized  officer  of the
corporation  that the statements were prepared  without audit from the books and
records of the corporation.

     The  foregoing  requirement  of an annual report shall be waived so long as
the shares of the corporation are held by less than one hundred (100) holders of
record.

        7.6      FINANCIAL STATEMENTS.
                 --------------------

     A copy of any annual  financial  statement and any income  statement of the
corporation for each quarterly  period of each fiscal year, and any accompanying
balance  sheet of the  corporation  as of the end of each such period,  that has
been  prepared  by the  corporation  shall  be kept  on  file  in the  principal
executive  office of the  corporation  for  twelve  (12)  months;  and each such
statement  shall  be  exhibited  at all  reasonable  times  to  any  shareholder
demanding an  examination of any such statement or a copy shall be mailed to any
such shareholder.

     If a shareholder or shareholders  holding at least five percent (5%) of the
outstanding  shares  of any  class of stock of the  corporation  makes a written
request to the  corporation  for an income  statement of the corporation for the
three-month,  six-month or  nine-month  period of the then  current  fiscal year
ended  more than  thirty  (30) days  before the date of the  request,  and for a
balance  sheet  of the  corporation  as of the end of  that  period,  the  chief
financial  officer  shall cause that  statement to be  prepared,  if not already
prepared,  and shall deliver  personally or mail that statement or statements to
the person  making the request  within thirty (30) days after the receipt of the
request.  If the corporation has not sent to the  shareholders its annual report
for the last fiscal year,  such report shall  likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.

                                       75

<PAGE>

     The corporation shall also, on the written request of any shareholder, mail
to the  shareholder a copy of the last annual,  semi-annual or quarterly  income
statement  which  it has  prepared,  and a  balance  sheet as of the end of that
period.

     The quarterly  income  statements  and balance  sheets  referred to in this
section  shall  be  accompanied  by the  report,  if  any,  of  any  independent
accountants  engaged by the  corporation  or the  certificate  of an  authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

                                  ARTICLE VIII

                                 GENERAL MATTERS

        8.1      RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
                 -----------------------------------------------------

     For purposes of determining the shareholders entitled to receive payment of
any  dividend or other  distribution  or  allotment of any rights or entitled to
exercise any rights in respect of any other lawful  action (other than action by
shareholders by written  consent without a meeting),  the board of directors may
fix, in  advance,  a record  date,  which shall not be more than sixty (60) days
before  any such  action,  and in that case only  shareholders  of record at the
close of  business on the date so fixed are  entitled  to receive the  dividend,
distribution or allotment of rights, or to exercise such rights, as the case may
be,  notwithstanding  any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Code.

     If the board of directors  does not so fix a record  date,  the record date
for  determining  shareholders  for any such  purpose  shall be at the  close of
business on the day on which the board adopts the  applicable  resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

        8.2      CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
                 -----------------------------------------

     All checks,  drafts, or other orders for payment of money,  notes, or other
evidences of indebtedness,  issued in the name of or payable to the corporation,
shall be signed or  endorsed  by such  person or persons  and in such manner as,
from time to time, shall be determined by resolution of the board of directors.

        8.3      CORPORATE CONTRACTS AND INSTRUMENTS:  HOW EXECUTED.
                 --------------------------------------------------

     The board of directors,  except as otherwise provided in these by-laws, may
authorize  any  officer  or  officers,  or agent or  agents,  to enter  into any
contract  or  execute  any  instrument  in the  name  of and  on  behalf  of the
corporation,  and  such  authority  may  be  general  or  confined  to  specific
instances;  and,  unless so  authorized or ratified by the board of directors or
within the agency power of an officer, no officer,  agent or employee shall have
any power or authority to bind the  corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.

        8.4      CERTIFICATES FOR SHARES.
                 -----------------------

     A certificate or certificates for shares of the corporation shall be issued
to each  shareholder  when any of such shares are fully  paid,  and the board of
directors may authorize  the issuance of  certificates  or shares as partly paid
provided that these  certificates shall state the amount of the consideration to
be paid for them and the amount paid.  All  certificates  shall be signed in the
name of the  corporation  by the  chairman of the board or vice  chairman of the
board or the president or a vice president and by the chief financial officer or
an assistant  treasurer or the secretary or an assistant  secretary,  certifying
the number of shares and the class or series of shares owned by the shareholder.
Any or all of the signatures on the certificate may be facsimile.

     In case any officer,  transfer  agent or registrar  who has signed or whose
facsimile  signature  has been placed on a  certificate  shall have ceased to be
that officer,  transfer agent or registrar before that certificate is issued, it
may be issued by the corporation  with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.

        8.5      LOST CERTIFICATES.
                 -----------------

                                       76

<PAGE>

     Except as provided in this  Section  8.5,  no new  certificates  for shares
shall be issued to replace a previously issued  certificate unless the latter is
surrendered  to the  corporation  and  canceled  at the same time.  The board of
directors  may,  in case any  share  certificate  or  certificate  for any other
security is lost,  stolen or destroyed,  authorize  the issuance of  replacement
certificates  on such terms and  conditions as the board may require,  including
provision  for  indemnification  of the  corporation  secured by a bond or other
adequate security  sufficient to protect the corporation  against any claim that
may be made against it,  including any expense or  liability,  on account of the
alleged loss,  theft or  destruction  of the  certificate or the issuance of the
replacement certificate.

        8.6      CONSTRUCTION AND DEFINITIONS.
                 ----------------------------

     Unless the context requires  otherwise,  the general  provisions,  rules of
construction  and definitions in the Code shall govern the construction of these
by-laws.  Without limiting the generality of this provision, the singular number
includes  the plural,  the plural  number  includes the  singular,  and the term
"person" includes both a corporation and a natural person.

                                   ARTICLE IX

                                   AMENDMENTS

        9.1      AMENDMENT BY SHAREHOLDERS.
                 -------------------------

     New by-laws  may be adopted or these  by-laws may be amended or repealed by
the vote or written consent of holders of a majority of the  outstanding  shares
entitled to vote;  provided,  however,  that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
the  authorized  number of  directors  may be changed  only by an  amendment  as
required by applicable law.

        9.2      AMENDMENT BY DIRECTORS.
                 ----------------------

     Subject to the rights of the  shareholders  as  provided  in Section 9.1 of
these by-laws, by-laws, other than a by-law or an amendment of a by-law changing
the  authorized  number of  directors  (except to fix the  authorized  number of
directors  pursuant to a by-law  providing for a variable  number of directors),
may be adopted, amended, or repealed by the board of directors.


                                       77

<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 Deutschland 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)


                                       78

<PAGE>



                                  EXHIBIT 23.1

                           TRIMBLE NAVIGATION LIMITED

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

     We consent to the use of our report dated  January 25, 2000, in this Annual
Report (Form 10-K) of Trimble Navigation Limited for the year ended December 31,
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,  333-53703 and  333-84949)  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 25, 2000 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  December
31, 1999.

                                            /s/ ERNST & YOUNG LLP


Palo Alto, California
March 24, 2000

                                       79

<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>                                        DEC-31-1999                                  JAN-01-1999
<PERIOD-END>                                             DEC-31-1999                                  JAN-01-1999
<CASH>                                                              49,264                                 40,865
<SECURITIES>                                                        52,728                                 16,269
<RECEIVABLES>                                                       36,005                                 33,431
<ALLOWANCES>                                                             0                                      0
<INVENTORY>                                                         16,435                                 37,166
<CURRENT-ASSETS>                                                   158,942                                131,904
<PP&E>                                                              12,333                                 15,104
<DEPRECIATION>                                                           0                                      0
<TOTAL-ASSETS>                                                     181,751                                156,279
<CURRENT-LIABILITIES>                                               47,134                                 49,948
<BONDS>                                                                  0                                      0
<PREFERRED-MANDATORY>                                                    0                                      0
<PREFERRED>                                                              0                                      0
<COMMON>                                                           126,962                                122,201
<OTHER-SE>                                                         (26,166)                               (47,510)
<TOTAL-LIABILITY-AND-EQUITY>                                       181,751                                156,279
<SALES>                                                            271,364                                268,323
<TOTAL-REVENUES>                                                   271,364                                268,323
<CGS>                                                              127,117                                141,075
<TOTAL-COSTS>                                                      127,117                                141,075
<OTHER-EXPENSES>                                                   123,786                                151,162
<LOSS-PROVISION>                                                         0                                      0
<INTEREST-EXPENSE>                                                   3,394                                  3,396
<INCOME-PRETAX>                                                     20,735                                (25,955)
<INCOME-TAX>                                                         2,073                                  1,400
<INCOME-CONTINUING>                                                 18,662                                (27,355)
<DISCONTINUED>                                                       2,931                                (26,039)
<EXTRAORDINARY>                                                          0                                      0
<CHANGES>                                                                0                                      0
<NET-INCOME>                                                        21,593                                (53,394)
<EPS-BASIC>                                                         0.96                                  (2.38)
<EPS-DILUTED>                                                         0.95                                  (2.38)
        
 


</TABLE>