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

                                    FORM 10-Q

                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

                                       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 incorporation       (I.R.S. Employer     
   or organization)                                    Identification No.)

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

                                 (408) 481-8000

              (Registrant's telephone number, including area code)

                                 Not Applicable

              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months  (or for such  shorter  periods  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                  Yes      X                No
                   
         As of June 30, 2000,  there were 23,362,535  shares of Common Stock (no
par value) outstanding


                                       1

<PAGE>


                           TRIMBLE NAVIGATION LIMITED

                                      INDEX

                                                                           Page

PART I.  FINANCIAL INFORMATION                                            Number
                                                                          ------


     Item 1.    Financial Statements

                Condensed Consolidated Balance Sheets -
                June 30, 2000 and December 31, 1999                           3

                Condensed Consolidated Statements of Operations -
                Three and Six Months ended June 30, 2000 and July 2, 1999     4

                Condensed Consolidated Statements of Cash Flows -
                Three and Six Months ended June 30, 2000 and July 2, 1999     5

                Notes to Condensed Consolidated Financial Statement        6-15


     Item 2.    Management's Discussion and Analysis of Financial 
                Condition and Results of Operations                       16-27


     Item 3.    Quantitative and Qualitative Disclosure of Market Risk    28-29


PART II. OTHER INFORMATION


     Item 4.   Submission of Matters to a Vote of Security Holders           30



     Item 6.   Exhibits and Reports on Form 8-K                              31


SIGNATURES                                                                   32


                                       2

<PAGE>


   PART I. FINANCIAL INFORMATION

   Item 1. FINANCIAL STATEMENTS


                           TRIMBLE NAVIGATION LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         June 30,          December 31,
                                                                           2000                1999
   -------------------------------------------------------------------------------------------------------
   (In thousands)                                                       (Unaudited)
   <S>                                                                      <C>                 <C>    
    ASSETS
    Current assets:
        Cash and cash equivalents                                            $ 94,438            $ 49,264
        Short term investments                                                 24,900              52,728
        Accounts and other receivable, net                                     45,651              36,005
        Inventories                                                            19,042              16,435
        Other current assets                                                    3,881               4,510
                                                                      ----------------  -----------------
            Total current assets                                              187,912             158,942

        Net property and equipment                                             11,660              12,333
        Intangible assets                                                       1,135               1,238
        Deferred income taxes                                                     350                 387
        Other assets                                                            8,541               8,851
                                                                      ----------------   -----------------
            Total assets                                                    $ 209,598           $ 181,751
                                                                      ================   =================

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
        Current portion of long-term debt                                         $ -             $ 1,388
        Accounts payable                                                       12,438              11,710
        Accrued compensation and benefits                                       8,295               7,011
        Accrued liabilities                                                    14,520              14,091
        Accrued liabilities related to disposal of
           General Aviation                                                     1,389               2,212
        Accrued warranty expense                                                5,989               5,786
        Income taxes payable                                                    2,343               2,983
        Deferred gain on sale of assets                                         1,953               1,953
                                                                      ----------------   -----------------
            Total current liabilities                                          46,927              47,134
                                                                      ----------------   -----------------

    Noncurrent portion of long-term debt and other liabilities                 30,724              30,566
    Noncurrent portion of deferred gain on sale of assets                       2,279               3,255
                                                                      ----------------   -----------------
            Total liabilities                                                  79,930              80,955
                                                                      ----------------   -----------------

    Shareholders' equity:
        Common stock                                                          135,419             126,962
        Accumulated deficit                                                    (4,056)            (25,125)
        Accumulated other comprehensive loss                                   (1,695)             (1,041)
                                                                      ----------------   -----------------
            Total shareholders' equity                                        129,668             100,796
                                                                      ----------------   -----------------
            Total liabilities and shareholders' equity                      $ 209,598           $ 181,751
                                                                      ================   =================
</TABLE>


   See accompanying notes to condensed consolidated financial statements.


                                       3

<PAGE>


                           TRIMBLE NAVIGATION LIMITED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                      Three Months Ended                           Six Months Ended
                                                 June 30,              July 2,             June 30,               July 2,
                                                   2000                  1999                2000                  1999
------------------------------------------------------------------------------------   -----------------------------------------
(In thousands, except per share data)
<S>                                                   <C>                 <C>                 <C>                    <C>   
 Total revenue                                         $ 71,264            $ 70,839            $ 136,404              $ 139,609
                                            --------------------   -----------------   ------------------   --------------------

 Operating expenses:
     Cost of sales                                       29,379              33,228               57,474                 66,431
     Research and development                             9,182               9,444               18,059                 17,951
     Sales and marketing                                 14,033              13,972               26,679                 27,276
     General and administrative                           6,647               8,630               12,947                 18,653
                                            --------------------   -----------------   ------------------   --------------------
          Total operating expenses                       59,241              65,274              115,159                130,311
                                            --------------------   -----------------   ------------------   --------------------
 Operating income                                        12,023               5,565               21,245                  9,298
                                            --------------------   -----------------   ------------------   --------------------
 Nonoperating income (expense):
     Interest income                                      1,725                 694                3,206                  1,385
     Interest expense                                      (858)               (845)              (1,709)                (1,701)
     Other income (expenses), net                           840                  64                  668                     42
                                            --------------------   -----------------   ------------------   --------------------
                                                          1,707                 (87)               2,165                   (274)
                                            --------------------   -----------------   ------------------   --------------------

 Income before income taxes                              13,730               5,478               23,410                  9,024
 Income tax provision                                     1,373                 822                2,341                  1,354
                                            --------------------   -----------------   ------------------   --------------------
 Net income                                            $ 12,357             $ 4,656             $ 21,069                $ 7,670
                                            ====================   =================   ==================   ====================

                                            --------------------   -----------------   ------------------   --------------------
 Basic net income per share                              $ 0.53              $ 0.21               $ 0.92                 $ 0.34
                                            ====================   =================   ==================   ====================
 Shares used in calculating basic
      income per share                                   23,157              22,319               23,003                 22,290
                                            ====================   =================   ==================   ====================

                                            --------------------   -----------------   ------------------   --------------------
 Diluted net income per share                            $ 0.48              $ 0.20               $ 0.83                 $ 0.34
                                            ====================   =================   ==================   ====================
 Shares used in calculating diluted
      income per share                                   25,839              22,769               25,491                 22,437
                                            ====================   =================   ==================   ====================

</TABLE>




See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>


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


<TABLE>
<CAPTION>
                                                                                      Six Months Ended
                                                                              June 30,                July 2,
                                                                                2000                   1999
-------------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                                                               <C>                     <C>    
 Net cash provided by operating activities                                         $ 11,665                $ 9,465
                                                                          ------------------     ------------------
 Cash flow from investing activities:
      Purchase of short term investments                                             (6,320)                (7,374)
      Maturities of short term investments                                           24,898                    752
      Sales of short term investments                                                 9,250                      -
      (Purchase)/sale of equity investments/loans, net                                  475                      -
      Acquisition of property and equipment                                          (2,497)                (3,105)
      Capitalized patent expenditures                                                  (401)                  (523)
                                                                          ------------------     ------------------
         Net cash provided by (used) in investing activities                          25,405                (10,250)
                                                                          ------------------     ------------------
 Cash flow from financing activities:
      Issuance of common stock                                                        8,457                  1,948
      Collections of notes receivable                                                   973                    484
      (Payment)/proceeds from long-term debt and revolving
        credit facilities, net                                                       (1,326)                (1,332)
                                                                          ------------------     ------------------
        Net cash provided by financing activities                                     8,104                  1,100
                                                                          ------------------     ------------------

 Net increase in cash and cash equivalents                                           45,174                    315

 Cash and cash equivalents -- beginning of period                                    49,264                 40,865
                                                                          ------------------     ------------------
 Cash and cash equivalents -- end of period                                        $ 94,438               $ 41,180
                                                                          ==================     ==================

 Supplemental disclosures of cash flow information:
      Cash paid during the period for:
        Interest                                                                      $ 795                  $ 751
        Income taxes, net of refunds                                                $ 2,835                   $ 41
</TABLE>




See accompanying notes to condensed consolidated financial statements.


                                       5

<PAGE>



                           TRIMBLE NAVIGATION LIMITED

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Basis of Presentation:

     The  condensed  consolidated  financial  statements  for the  three and six
months  ended June 30,  2000,  and July 2,  1999,  which are  presented  in this
Quarterly  Report on Form 10-Q are unaudited.  The balance sheet at December 31,
1999,  has been derived from the audited  financial  statements at that date but
does not include all of the  information  and  footnotes  required by  generally
accepted accounting principles for complete financial statements. In the opinion
of management,  these  statements  include all adjustments  (consisting  only of
normal recurring  adjustments) necessary for a fair statement of the results for
the interim periods presented.  The condensed  consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto  included in Trimble's Annual Report on Form 10-K for the year
ended December 31, 1999.

     Trimble has a 52-53 week fiscal year,  which ends on the Friday  nearest to
December  31, which for fiscal 2000 will be December  29,  2000.  The  Company's
fiscal year normally  consists of 52 weeks split into four equal  quarters of 13
weeks  each;  however,  due to the fact that there are not exactly 52 weeks in a
calendar year and that there is at least  slightly more than one  additional day
per calendar year, as compared to a 52-week fiscal year, the Company will have a
fiscal year composed of 53 weeks in certain fiscal years.

     In those  resulting  fiscal  years that have 53 weeks,  one  quarter of the
fiscal  year will have 14 weeks and the  Company  will  record an extra  week of
revenues, costs and related financial activity. Therefore, the financial results
of those fiscal years, and the associated  quarter,  having the extra week, will
not be exactly  comparable to the prior and subsequent 52-week fiscal years, and
the associated  quarters having only 13 weeks.  Thus, due to the inherent nature
of a 52-53 week fiscal year, the Company, analysts, shareholders,  investors and
others will have to make appropriate  adjustments to any analysis performed when
comparing the Company's  activities  and results in fiscal years that contain 53
weeks,  to those that contain only the standard 52 weeks.  The next 53 week year
will be fiscal year 2002.

     The results of operations  for the three and six months ended June 30, 2000
are not necessarily  indicative of the results that may be expected for the year
ending December 29, 2000.

NOTE 2 - Cash Equivalents, Short Term Investments:

     Trimble  considers all highly liquid  investments with an original maturity
of three months or less when purchased to be cash equivalents.  All other liquid
investments are classified as short-term investments. 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.

     At June 30, 2000,  investments  with scheduled  maturities  within one year
were $23.8  million  and for  maturities  between  one to three  years were $1.1
million. 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.

                                       6

<PAGE>


NOTE 3 - Inventories:

     Inventories consist of the following:


                                      June 30,              December 31,
                                        2000                    1999
----------------------------------------------------------------------------
(In thousands)

Raw materials                             $ 5,345                   $ 2,582
Work-in-process                             1,867                     2,232
Finished goods                             11,830                    11,621
                                    --------------       -------------------
                                         $ 19,042                  $ 16,435
                                    --------------       -------------------

NOTE 4 - 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 later  retained.  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.

     As of June 30, 2000,  Trimble has a remaining  provision  of $1.4  million,
which includes $600,000 for the estimated remaining operating losses for service
and warranty  support and remaining  severance  costs, and $800,000 for facility
and certain other contractual costs.

NOTE 5 - Restructuring Charge:

     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  downsized its operations,  including  reducing  headcount and
facilities  space usage,  and canceled its  enterprise-wide  information  system
project and  certain  research  and  development  projects.  The impact of these
decisions  was that  significant  amounts of  Trimble's  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.


                                       7

<PAGE>

     The  activity in fiscal 2000,  1999 and 1998  related to the  restructuring
charges and the amounts  remaining at June 30, 2000 on the balance  sheet are as
follows (in thousands):


<TABLE>
<CAPTION>
                                 Total
                               charged to    Amounts paid/       Amounts paid/        Amounts paid/           Remaining in
                               expense in     written off         written off          written off         accrued liabilites
                              fiscal 1998    in fiscal 1998      in fiscal 1999      in fiscal 2000        as of June 30, 2000
                              ------------- -------------------  -----------------  ------------------  --------------------------
<S>                               <C>                <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)               $ (8)                    $ 1,293
                              ============= ===================  =================  ==================  ==========================
</TABLE>


NOTE 6 - Segment Information:

     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,   and
     construction 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.

     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.

     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,  and
identifiable  assets by Trimble's two Business Units. There is no recognition of
inter-Business  Unit  sales or  transfers.  Operating  income 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.

                                       8

<PAGE>


<TABLE>
<CAPTION>

                                     ----------------------------------------     -----------------------------------------
                                               Three Months Ended                             Six Months Ended
                                                  June 30, 2000                                June 30, 2000
                                     ----------------------------------------     -----------------------------------------
                                                 (in thousands)                                (in thousands)
                                     ----------------------------------------     -----------------------------------------
                                          PPG          MTT         Total              PPG          MTT          Total
                                     ----------------------------------------     -----------------------------------------
<S>                                      <C>          <C>          <C>               <C>          <C>           <C>
External net revenue                      $ 45,457     $ 25,807     $ 71,264          $ 86,005     $ 50,399      $ 136,404
Operating profit before corporate 
  allocations                               15,443        4,282       19,725            29,333        8,947         38,280
Corporate allocations (1)                   (5,808)      (2,580)      (8,388)          (11,616)      (5,159)       (16,775)
                                     ----------------------------------------     -----------------------------------------
Operating profit                           $ 9,635      $ 1,702     $ 11,337          $ 17,717      $ 3,788       $ 21,505

                                                                                  -----------------------------------------
                                                                                                   As of
                                                                                               June 30, 2000
                                                                                  -----------------------------------------
                                                                                               (in thousands)
                                                                                  -----------------------------------------
Assets:                                                                               PPG          MTT          Total
                                                                                  -----------------------------------------
   Accounts recievable (2)                                                            $ 35,326     $ 21,200       $ 56,526
    Inventory                                                                            5,664        8,514         14,178

                                     ----------------------------------------     -----------------------------------------
                                               Three Months Ended                             Six Months Ended
                                                  July 2, 1999                                  July 2, 1999
                                     ----------------------------------------     -----------------------------------------
                                                 (in thousands)                                (in thousands)
                                     ----------------------------------------     -----------------------------------------
                                          PPG          MTT         Total              PPG          MTT          Total
                                     ----------------------------------------     -----------------------------------------
External net revenue                      $ 41,581     $ 29,258     $ 70,839          $ 84,147     $ 55,462      $ 139,609
Operating profit before corporate 
  allocations                               13,510        4,347       17,857            27,895        7,672         35,567
Corporate allocations (1)                   (6,165)      (2,872)      (9,037)          (12,351)      (5,363)       (17,714)
                                     ----------------------------------------     -----------------------------------------
Operating profit                           $ 7,345      $ 1,475      $ 8,820          $ 15,544      $ 2,309       $ 17,853

                                                                                  -----------------------------------------
                                                                                                   As of
                                                                                             December 31, 1999
                                                                                  -----------------------------------------
                                                                                               (in thousands)
                                                                                  -----------------------------------------
Assets:                                                                               PPG          MTT          Total
                                                                                  -----------------------------------------
   Accounts recievable (2)                                                            $ 29,205     $ 20,204       $ 49,409
    Inventory                                                                            6,720        9,715         16,435


-----------------------------------------------------------------------------------------------
<FN>
(1)  For the three and six months ended June 30, 2000 and July 2, 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).

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

</FN>
</TABLE>


                                       9

<PAGE>


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


<TABLE>
<CAPTION>
                                                                 Three Months Ended                   Six Months Ended
                                                           June 30,             July 2,         June 30,          July 2,
Revenues:                                                    2000                1999             2000              1999
--------------------------------------------------------------------------------------------- ---------------------------------
<S>                                                           <C>                  <C>           <C>                <C>    
Total for reportable markets                                   $ 71,264             $ 70,839      $ 136,404          $ 139,609
                                                        ================   ================== ==============  =================

Operating profit:
--------------------------------------------------------
Total for reportable markets                                   $ 11,337              $ 8,820       $ 21,505           $ 17,853
Unallocated corporate expenses                                      686               (3,255)          (260)            (8,555)
                                                        ----------------   ------------------ --------------  -----------------
     Income before income taxes                                $ 12,023              $ 5,565       $ 21,245            $ 9,298
                                                        ================   ================== ==============  =================


                                                                                                           As of
                                                                                              ---------------------------------
                                                                                                June 30,        December 31,
Assets:                                                                                           2000              1999
--------------------------------------------------------                                      --------------  -----------------
Accounts receivable total for reportable markets                                                   $ 56,526           $ 49,409
Unallocated (1)                                                                                     (10,875)           (13,404)
                                                                                              --------------  -----------------
   Total                                                                                           $ 45,651           $ 36,005
                                                                                              ==============  =================

Inventory total for reportable markets                                                             $ 14,178           $ 16,435
Common inventory (2)                                                                                  4,864                  -
                                                                                              --------------  -----------------
   Net inventory                                                                                   $ 19,042           $ 16,435
                                                                                              ==============  =================

</TABLE>



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

(2) Consists of inventory that is common between the Business Unit segments.
     Parts can be used by either segment.

NOTE 7 - Comprehensive Income (Loss):

         The components of other comprehensive income (loss), net of related tax
include:


<TABLE>
<CAPTION>
                                                               Three Months Ended                     Six Months Ended
                                                         June 30,           July 2,             June 30,           July 2,
                                                           2000               1999                2000              1999
------------------------------------------------------------------------------------------    ----------------------------------
(In thousands)
<S>                                                          <C>                 <C>                <C>                <C>   
Net unrealized gain (loss) on short-term investments              22                  (45)               86                 (52)
Cummulative foreign currency translation adjustments            (434)                 (90)             (740)               (203)
                                                       --------------  -------------------    --------------  ------------------
Other comprehensive loss                                      $ (412)              $ (135)           $ (654)             $ (255)
                                                       ==============  ===================    ==============  ==================
</TABLE>



                                       10

<PAGE>


     Accumulated other comprehensive income (loss) on the condensed consolidated
balance sheets  consists of unrealized  gains on available for sale  investments
and foreign  currency  translation  adjustments.  The  components of accumulated
other comprehensive income (loss), net of related tax include:


                                                  June 30,         December 31,
                                                    2000               1999
--------------------------------------------------------------  ---------------
(In thousands)

Net unrealized gains on short-term investments          $ (37)         $ (123)
Cummulative foreign currency translation 
   adjustments                                         (1,658)           (918)
                                                --------------  ---------------
Accumulated other comprehensive loss                 $ (1,695)       $ (1,041)
                                                ==============  ===============
NOTE 8 - 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  ("SEC") issued
Staff  Accounting   Bulletin  ("SAB")  101,  Revenue  Recognition  in  Financial
Statements  which  provides  guidance  related to revenue  recognition  based on
interpretations  and  practices  followed by the SEC. SAB 101 was  effective the
first  fiscal  quarter of fiscal  years  beginning  after  December 15, 1999 and
requires  companies to report any changes in revenue  recognition  as cumulative
change in accounting  principle at the time of implementation in accordance with
Accounting Principles Board Opinion No. 20, "Accounting Changes." In March 2000,
the  SEC  issued  SAB  101A   "Amendment:   Revenue   Recognition  in  Financial
Statements,"  which delays  implementation  of SAB 101 until the Company's first
fiscal quarter of 2000. In June 2000, the SEC issued SAB 101B "Second Amendment:
Revenue Recognition in Financial Statements," which delays the implementation of
SAB 101 until the  Company's  fourth  fiscal  quarter  of 2000.  The  Company is
currently in the process of evaluating the impact,  if any, SAB 101 will have on
its financial position or results of operations.

     In March 2000, the Financial  Accounting  Standards Board issued  Financial
Accounting  Standards  Board  Interpretation  No. 44,  "Accounting  for  Certain
Transactions Involving Stock Compensation--an  interpretation of APB Opinion No.
25" (FIN 44). FIN 44 clarifies the application of APB Opinion No. 25, and, among
other  issues,  clarifies  the  following:  the  definition  of an employee  for
purposes of applying APB Opinion No. 25; the criteria for determining  whether a
plan qualifies as a noncompensatory plan; the accounting  consequence of various
modifications to the terms of previously fixed stock options or awards;  and the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination. FIN 44 is effective beginning July 1, 2000, and certain conclusions
in FIN 44 cover  specific  events  occurring  after either  December 15, 1998 or
January 12,  2000.  The  adoption  of FIN 44 is not  expected to have a material
impact on the Company's consolidated financial statements.

                                       11

<PAGE>


NOTE 9 - Earnings Per Share:

         The following  table sets forth the  computation of Trimble's basic and
diluted earnings per share:


<TABLE>
<CAPTION>
                                                                 Three Months Ended               Six Months Ended
                                                              June 30,         July 2,        June 30,         July 2,
                                                                2000             1999           2000            1999
------------------------------------------------------------------------------------------  ------------------------------
(In thousands, except per share amounts)
<S>                                                            <C>               <C>            <C>             <C>    
Numerator:
    Income available to common shareholders used in
       basic and diluted income per share                        $ 12,357         $ 4,656        $ 21,069         $ 7,670
                                                            ==============   =============  ==============  ==============
Denominator:
     Weighted-average number of common
        shares used in calculating basic income per share          23,157          22,319          23,003          22,290

     Effect of dilutive securities:
          Common stock options                                      2,382             413           2,213             147
          Common stock warrants                                       300              37             275               -
                                                            --------------   -------------  --------------  --------------
     Weighted-average number of common
         shares and dilutive potential common shares
        used in calculating diluted income per share               25,839          22,769          25,491          22,437
                                                            ==============   =============  ==============  ==============

 Basic income per share                                            $ 0.53          $ 0.21          $ 0.92          $ 0.34
                                                            ==============   =============  ==============  ==============

 Diluted income per share                                          $ 0.48          $ 0.20          $ 0.83          $ 0.34
                                                            ==============   =============  ==============  ==============
</TABLE>



                                       12

<PAGE>

NOTE 10 - Contingencies:

     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 are in
the process of finalizing the details of a negotiated settlement, which includes
cross licensing of technology.

     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 all such  disputes,  if any,  would not be material to its overall  financial
position, results of operations, or liquidity.

NOTE 11 - Subsequent Event:

     Effective as of July 14, 2000,  Trimble  completed the  acquisition  of the
Spectra  Precision  wholly owned  businesses  formerly owned by Thermo  Electron
Corporation  ("Thermo  Electron"),  collectively known as the "Spectra Precision
Group" for an aggregate purchase price of approximately  $294 million,  which is
subject to a final  adjustment  in the  purchase  price as  provided  for in the
acquisition  agreements.  The acquisition  includes 100% of the stock of Spectra
Precision  Inc.,  a Delaware  corporation,  Spectra  Precision  SRL,  an Italian
corporation,  Spectra Physics Holdings GmbH, a German  corporation,  and Spectra
Precision  BV, a  Netherlands  corporation.  The  acquisition  also  consists of
certain assets and liabilities of Spectra  Precision AB, a Swedish  corporation,
including  100% of the shares of  Spectra  Precision  SA, a French  corporation,
Spectra Precision  Scandinavia AB, a Swedish  corporation,  Spectra Precision of
Canada Ltd., a Canadian  corporation,  and Spectra Precision  Handelsges mbH, an
Austrian corporation.

     The  acquisition  will  be  accounted  for  as a  purchase  for  accounting
purposes; accordingly, Trimble's consolidated results of operations will include
the operating results of the Spectra Precision Group subsequent to the effective
acquisition  date.  The  acquisition  was  financed  with $80  million in seller
subordinated  debt, $140 million of cash provided  through a syndicate of banks,
and  $74  million  of  the  Company's  available  cash  on  hand.  (See  further
discussions   below  under   "Acquisition   Financing".)  The  Company  acquired
approximately  $133  million of  identifiable  intangible  assets as part of the
acquisition  which the Company  expects to amortize  over  various  time periods
ranging  from 5 to 10 years and expects to record  approximately  $81 million of
goodwill  due to the  acquisition  which will be  amortized  over 20 years.  The
Company  also  expects  to  incur $7 to $8  million  of costs  and  expenses  in
connection with the acquisition.

     Revenues for the Spectra Precision Group for the last six months ended
June 30, 2000,  were  approximately  $117  million.  The  operations  of Spectra
Precision after integration will be combined with current Trimble revenues.

Acquisition Financing:

     In order to finance the acquisition of the Spectra  Precision  Group,  fund
the Company's  on-going working capital  requirements,  and pay related fees and
expenses of the  acquisition,  Trimble (i) obtained a new senior  secured credit
facility,  (ii) issued an $80 million subordinated seller promissory note, (iii)
terminated its existing $50 million unsecured revolving 


                                       13

<PAGE>


credit  facility  and (iv)  prepaid its  existing  $30 million  outstanding
subordinated promissory notes, as briefly summarized below.

 o   New Credit Facilities:  In July 2000, ABN AMRO Bank, N.V. led a syndicate
     of banks  which  underwrote  $200  million of new  senior,  secured  credit
     facilities  for the Company  (the "New Credit  Facilities")  to support the
     acquisition  of  the  Spectra  Precision  Group  and to  refinance  certain
     existing  debt.  The New Credit  Facilities  are comprised of a $50 million
     3-year U.S.  dollar only  revolver;  a $50  million  3-year  multi-currency
     revolver;  and a $100 million 5-year term loan.  Pricing for any borrowings
     under the New  Credit  Facilities  is fixed for the first 6 months at LIBOR
     plus 275 basis  points and is  thereafter  tied to a formula,  based on the
     Company's  leverage  ratio  (which  is  defined  as  all  outstanding  debt
     (excluding the seller subordinated note) over EBITDA).  Trimble immediately
     used  approximately  $170 million available under the New Credit Facilities
     to fund the  acquisition of the Spectra  Precision  Group.  $30 million was
     used to pay off the principal  portion of Company's  existing  subordinated
     notes to John  Hancock (as  described  below) and $140  million was paid in
     cash to the seller.  The  balance of the $294  million  aggregate  purchase
     price was paid by the Company with $74 million of excess  available cash on
     hand and an $80 million  subordinated  seller note was issued to effect the
     acquisition. The New Credit Facilities are secured by all material tangible
     and   intangible   assets  of  the   Company,   subject  to   foreign   tax
     considerations. If Trimble is able to achieve and maintain a leverage ratio
     (Debt/EBITDA) of 2.0x or less for four consecutive  quarters,  the security
     for the New Credit Facilities will be released.  Financial covenants of the
     New Credit Facilities include leverage, fixed charge, and minimum net worth
     tests. In addition,  Trimble is restricted from paying  dividends under the
     terms of the New Credit Facilities.

 o   New Seller Promissory Note: The $80 million promissory note issued by the
     Company to the seller is  subordinated  to the New  Credit  Facilities  and
     carries a 10% coupon,  payable in cash or  additional  seller  paper at the
     Company's  option.  The  subordinated  seller  note has a  stated  two year
     maturity,  but  carries an  automatic  maturity  deferral  provision  which
     effectively  extends  the  maturity  date to that date on which  Trimble is
     allowed to repay the note without triggering a default under the New Credit
     Facilities.  The New Credit  Facilities  allow  Trimble to repay the seller
     note at any  time  (in  part or in  whole),  provided  that  (a)  Trimble's
     leverage  ratio (Debt  (excluding  the seller  note)/EBITDA)  prior to such
     repayment is less than 1.0x and (b) after giving  effect to such  repayment
     Trimble  would have (i) a leverage  ratio (Debt  (excluding  any  remaining
     portion  of the  seller  note)/EBITDA)  of less than 2.0x and (ii) cash and
     unused  availability under the revolvers of the New Credit Facilities of at
     least $35 million. Although the subordinated seller note will carry certain
     limited  covenants and defaults,  the seller will be barred in the event of
     default from pursuing  such rights and remedies for the stated  maturity of
     the New Credit  Facilities (i.e., a five-year  standstill).  The New Credit
     Facilities  also  prohibit  cash  payments of interest or  principal on the
     subordinated seller note during a period of default.

 o   Prepayment  of Existing  $30 million  Subordinated  Notes:  In June 1994,
     Trimble issued $30 million of subordinated promissory notes to John Hancock
     bearing  interest at an annual rate of 10%, with principal and interest due
     on June 15, 2001.  Interest  payments  under such notes were due monthly in
     arrears.  The notes were  subordinated to the Company's  senior debt, which
     was defined as all pre-existing indebtedness for borrowed money and certain
     future  indebtedness  for  borrowed  money  (including,  subject to certain
     restrictions,   secured  bank   borrowings   and  borrowed  money  for  the
     acquisition  of property and capital  equipment) and trade debt incurred in
     the ordinary course of business.  In order to effect the acquisition of the
     Spectra Precision Group and as part of obtaining the New Credit Facilities,
     Trimble  prepaid all such  outstanding  long-term note  obligations to John
     Hancock  for a total of  $31,069,108,  which  consisted  of $30  million in
     principal,  $183,333  in accrued  interest  and  $885,775  as a  prepayment
     penalty.  Pursuant to the terms of such original  notes,  any prepayment of
     any portion of the outstanding principal required Trimble to pay additional
     amounts  if U.S.  Treasury  obligations  of a  similar  maturity  exceed  a
     specified yield.

 o   Termination of Existing $50 million Unsecured  Revolving Credit Facility:
     In August 1997,  Trimble entered into a three-year,  $50,000,000  unsecured
     revolving  credit  facility with four banks (the "Credit  Agreement").  The
     existing  Credit  Agreement  enabled  Trimble to borrow up to  $50,000,000,
     provided that certain  financial and other  covenants  were met. In October
     1999,  Trimble and the lenders agreed to change and amend certain covenants
     for the life of the loan,  which  was set to expire in August of 2000.  The
     Credit Agreement was also subsequently  modified to include Trimble's prior
     separate  $5,000,000 line of credit and to simplify the entire arrangement.
     The Credit  Agreement  required the payment of a commitment fee of 0.25% of
     the available  amount and any 


                                       14

<PAGE>


     borrowings  under such Credit  Agreement  bore  interest  at the  following
     rates:  1% over LIBOR if the total  funded debt to EBITDA were less than or
     equal to 1.0x,  or 0.3%;  1.25% over LIBOR if such ratio were  greater than
     1.0x and less than or equal to 2.0x, or 0.4%;  and 1.75% over LIBOR if such
     ratio were  greater than 2.0x.  In addition to  borrowing at the  specified
     LIBOR  rate,  Trimble  also had the  additional  right to borrow  under the
     Credit  Agreement  with  interest  at the  higher of (i) one of the  bank's
     annual prime rate and (ii) the federal funds rate plus 0.5%.  Trimble never
     made any borrowings under such $50,000,00  unsecured  revolving  portion of
     the Credit Agreement, but had issued certain letters of credit amounting to
     approximately  $1.2  million.  In order to effect  the  acquisition  of the
     Spectra  Precision Group, in July 2000 Trimble  completely  terminated this
     Credit Agreement in favor of obtaining the New Credit Facilities  described
     above.



                                       15

<PAGE>

This report contains  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  Actual results could differ  materially  from
those  indicated in the  forward-looking  statements  due to a number of factors
including,  but not limited to, as a result of the risk  factors set forth below
in this  report as well as the  Company's  Annual  Report on Form 10-K and other
reports  and  documents  that  the  Company  files  from  time to time  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.


I
tem 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
            AND RESULTS OF OPERATIONS

RECENT BUSINESS DEVELOPMENTS

     Effective as of July 14, 2000,  completed  the  acquisition  of the Spectra
Precision wholly owned businesses formerly owned by Thermo Electron  Corporation
("Thermo Electron"),  collectively known as the "Spectra Precision Group" for an
aggregate  purchase price of approximately  $294 million,  which is subject to a
final  adjustment  in the  purchase  price as  provided  for in the  acquisition
agreements.  The increase of $14 million from the previously announced estimated
purchase price is a result of  adjustments  to net working  capital and net debt
from a reference  balance  sheet,  made  pursuant  to the terms of the  original
Agreement and Plan of  Acquisition  signed on May 11, 2000 by and among Trimble,
the Spectra Precision Group and Thermo Electron.  The acquisition  includes 100%
of the  stock  of  Spectra  Precision  Inc.,  a  Delaware  corporation,  Spectra
Precision SRL, an Italian  corporation,  Spectra Physics Holdings GmbH, a German
corporation,   and  Spectra  Precision  BV,  a  Netherlands   corporation.   The
acquisition also consists of certain assets and liabilities of Spectra Precision
AB, a Swedish corporation, including 100% of the shares of Spectra Precision SA,
a French corporation,  Spectra Precision  Scandinavia AB, a Swedish corporation,
Spectra Precision of Canada Ltd., a Canadian corporation,  and Spectra Precision
Handelsges  mbH,  an  Austrian  corporation.  (See the  "Liquidity  and  Capital
Resources"  section of this Item 2 for a description of how this acquisition was
financed.)

     Spectra Precision  products measure distances very accurately by means of a
light beam.  A laser uses energy from a power  source to  stimulate a particular
type of material,  which  creates and emits  photons  (i.e.,  light).  The light
emitted by lasers is more intense and has higher  purity than the light  emitted
by conventional  light sources.  These  characteristics  enable  applications in
several broad markets. The principal factors that distinguish different types of
lasers and determine the particular  laser  suitable for a specific  application
are wavelength (color), output power, repetition rate, cost and operating life.

     The Spectra  Precision Group develops  instruments and systems that provide
positioning solutions for four major customer applications:

1.   Surveying -- Spectra  Precision AB is a leading  supplier of surveying  and
     positioning  systems based on both optical  measurement and GPS technology.
     Products  are used in  highway  construction,  site  development  and other
     infrastructure development projects.

2.   Construction  Site Positioning -- The Spectra  Precision Group is a leading
     supplier of laser-based  positioning  instruments which permit the accurate
     alignment of foundations, sewers, walls, floors and ceilings.

3.   Construction  and  Agricultural  Machine  Control -- The Spectra  Precision
     Group is a leading  supplier of laser systems which correctly  position and
     control heavy  construction  equipment in  construction  site  preparation,
     highway construction and agricultural land leveling.

4.   Software  -- Spectra  Precision  Software  Inc.,  a  subsidiary  of Spectra
     Precision,  Inc., is a leading developer of three-dimensional land modeling
     software  for  the  civil  engineering,  surveying,  construction,  GIS and
     photogrammetry industries.

*      The Company expects that the  acquisition of the Spectra  Precision Group
will  strengthen  Trimble's  position  as  a  leading  provider  of  positioning
solutions  worldwide.  The  acquisition  also  gives  Trimble  one of  the  most
comprehensive  product portfolios in the industry,  strengthens its distribution
network,  and serves as a platform for future growth. The complementary  product
lines and technologies of Trimble and Spectra Precision Group,  should allow the
combined Company to become a leader in the Architecture/Engineering/Construction
(A/E/C),  Agriculture,  and Asset Management  market segments of the positioning
solution  industry.  There is very little overlap  between each of the companies
product 


                                       16

<PAGE>


offerings. In addition, the Spectra Precision Group's  well-established and
extensive  distribution  network should extend Trimble's reach into new segments
of its target market segments both domestically and internationally.

     Trimble's current strategy is to focus on leveraging existing technologies,
distribution,  and marketing  resources and identifying and taking  advantage of
synergies  between the  companies.  The  Company's  initial  priorities  for the
combined  entities are centered around the alignment of  distribution  channels,
definition of basic corporate  organization,  reporting and structure,  branding
and imaging of the  company and  products.  At the  present  time,  there are no
immediate  plans to  integrate  the  manufacturing  of Trimble with those of the
Spectra Precision Group.

*      As part of the acquisition,  Trimble has identified  approximately $15 to
$20 million of potential cost  reductions  which could be achieved over the next
two to three  years;  however,  the  Company  is still in the  early  stages  of
combining Trimble and Spectra Precision Group and this involves certain inherent
risks,  including:  the potential  inability to successfully  integrate acquired
operations  and  businesses or to realize  anticipated  synergies,  economies of
scale or other  value;  diversion of  management's  attention;  difficulties  in
coordinating the management of operations at new sites; and the possible loss of
key employees of acquired operations.  The Company's profitability may suffer if
we are unable to successfully integrate and manage this acquisition, or if we do
not generate sufficient revenue to offset the increased expenses associated with
this acquisition.

*      With the  acquisition  of Spectra  Precision  Group Trimble  continues to
target 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,
optical,  and laser technology we can deliver  value-added  products and enhance
productivity       in       our       targeted       markets.       In       the
Architecture/Engineering/Construction    market,    we   focus   on   centimeter
positioning,  data collection management,  wireless  communication,  and machine
guidance and control.  In the Asset  Management and Tracking  market we focus on
asset tracking, fleet management, intelligent transportation systems, and public
safety  through  integration  of our  technologies,  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.  In the GPS Component  market segment we integrate our GPS technology
into various applications  (automotive  navigation,  timing systems,  commercial
avionics,  and  military  systems)  for various  OEMs.  We intend to continue to
leverage our GPS, optical,  and laser component  technology directly to Original
Equipment Manufacturers (OEMs) for integration into various applications.

     We look to establish and sustain our  leadership  position in each of these
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 its
targeted market segments.

RESULTS OF OPERATIONS

Revenues

     Revenue from  Trimble's  operations for the three and six months ended June
30,  2000  were  $71,264,000  and  $136,404,000   respectively,   compared  with
$70,839,000 and  $139,609,000 in the  corresponding  periods in fiscal 1999. The
table below breaks out Trimble's revenues by business unit:


<TABLE>
<CAPTION>
                                               Three Months Ended                             Six Months Ended
                                  ---------------------------------------------  --------------------------------------------
                                    June 30,         July 2,       Increase/       June 30,        July 2,       Increase/
                                      2000            1999         (Decrease)        2000            1999        (Decrease)
-------------------------------------------------------------------------------  --------------------------------------------
(In thousands)
<S>                                   <C>             <C>                <C>        <C>             <C>                <C>
 Precision Positioning Group           $ 45,457        $ 41,581             9%       $ 86,005        $ 84,147             2%
 Mobile and Timing Technologies          25,807          29,258           (12%)        50,399          55,462            (9%)

                                  --------------  --------------  -------------  -------------   -------------  -------------
 Total                                 $ 71,264        $ 70,839             1%      $ 136,404       $ 139,609            (2%)
                                  --------------  --------------  -------------  -------------   -------------  -------------
</TABLE>



                                       17

<PAGE>


Precision Positioning Group

     The  Precision  Positioning  Group  revenues  increased by 9% for the three
months  ended June 30, 2000,  as compared  with  corresponding  period in fiscal
1999. The increase is due to the following: 

     o An  increase  in  agricultural  market  revenues,  a result  of  maturing
     distribution channel and geographical expansion.

     o Growth in demand for Mapping  products,  especially  our new GEO Explorer
     III used for GIS data collection and data maintenance.

     o Strong growth in Asia for Surveying products.

     The Precision Positioning Group revenues increased by 2% for the six months
ended June 30, 2000, as compared with  corresponding  period in fiscal 1999. The
increase is due to the following: 

     o Growth in demand for  Agriculture and Mapping  products,  particularly in
     Asia and Europe.

Mobile and Timing Technologies

     Mobile and Timing Technologies  revenues for the three and six months ended
June 30, 2000 decreased 12% and 9% respectively,  as compared with corresponding
period in 1999.  The decrease is due to the  following:  

     o Asset  management  and tracking  revenues  were down due to the continued
     delivery problems related to critical part shortages in our supply chain.

     o Trimble's  decision to exit the commercial  marine business in the fourth
     quarter  of 1998 and the sale of the last of such  products  in the  second
     quarter of 1999.

     o These decreases were partially  offset by increased  demand in our timing
     and military markets.

Revenues outside the U.S.

*      Sales to unaffiliated  customers in locations outside the U.S.  comprised
approximately  54% and 49% of the Company's  revenues in the first six months of
fiscal 2000 and 1999, respectively. During the first six months of 2000, Trimble
experienced  strong  demand in Asia,  Europe,  and South  and  Central  America.
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
foreign 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, and on May 1, 2000 eliminated 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.

Gross Margin

*      Gross  margin  varies on a  quarterly  basis due to a number of  factors,
including product mix, domestic versus international  sales,  customer type, the
effects of  production  volumes and fixed  manufacturing  costs on unit  product
costs,  and new product  start-up  costs.  Gross margin as a percentage of total
product revenues was 59% and 58% for the three and six month periods ending June
30, 2000 as compared with 53% and 52% in the  corresponding  1999  periods.  The
increase in gross margin  percentages is primarily due to favorable  product mix
for the quarter of  Precision  Positioning  Group  products,  which yield higher
margins due to integration of software and wireless communications. In addition,
gross margins for the first six months of fiscal 2000 were favorably impacted by
the cost  benefits  of  outsourcing  our  manufacturing.  Because of product mix
changes within and among the industry markets,  market pressures on unit selling
prices,  fluctuations  in  unit  manufacturing  costs,  including  increases  in
component  prices and other  factors,  current  level  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.

                                       18

<PAGE>

Operating Expenses

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


<TABLE>
<CAPTION>
                                          Three Months Ended                                  Six Months Ended
                             ----------------------------------------------    -----------------------------------------------
                                June 30,         July 2,        Increase/         June 30,         July 2,        Increase/
                                  2000             1999         (Decrease)          2000             1999         (Decrease)
------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                               <C>              <C>               <C>            <C>              <C>                <C>
Research and development            $ 9,182          $ 9,444            (3)%         $ 18,059         $ 17,951               1%
Sales and marketing                  14,033           13,972              0%           26,679           27,276             (2)%
General and administrative            6,647            8,630           (23)%           12,947           18,653            (31)%
                             ---------------  ---------------   -----------    ---------------  ---------------  -------------
     Total                         $ 29,862         $ 32,046            (7)%         $ 57,685         $ 63,880            (10)%
                             ---------------  ---------------   -----------    ---------------  ---------------  -------------
</TABLE>


Research and Development

     Research and development  expenses decreased in the three months ended June
30, 2000,  as compared with the  corresponding  period in fiscal 1999 due to the
following:  

     o Decreases in our expenses of approximately $740,000 related to personnel,
     temporary help, and consulting.

     o Decreases in our depreciation expense of approximately $160,000.

     o Trimble's receipt of approximately  $340,000 less from cost reimbursement
     funds for projects in 2000 as compared to 1999 partially  offset  decreases
     mentioned above.

     o  The  above  decreases  were  also  partially   offset  by  increases  of
     approximately $290,000 related to facility costs and other expenses.

     Research  and  Development  expenses  increased  slightly in the six months
ended June 30, 2000,  as compared with the  corresponding  period in fiscal 1999
due to the following:  

     o  Trimble's   receipt  of  approximately   $1.2  million  less  from  cost
     reimbursement funds for projects in 2000 as compared to 1999.

          oIncreases in our expenses of  approximately  $1.0 million  related to
          facility, electronic parts, tooling, and other expenses.

          o  The  above   increases  were  partially   offset  by  decreases  of
          approximately  $1.7 million related to personnel,  temporary help, and
          consulting.

          o Also  partially  offsetting  the  increases  was a  decrease  in our
          depreciation expense of approximately $400,000.

     The  Company  plans  to  continue  its  aggressive  development  of  future
products.

Sales and Marketing

     Sales and marketing expenses increased slightly for three months ended June
30, 2000, as compared with the corresponding  period in fiscal 1999. The primary
reason for the dollar  increase in expenses  from 1999 to 2000 is as follows:  

          oIncreases  in our  expenses  of  approximately  $360,000  related  to
          personnel.

          o Increases  in our  expenses  of  approximately  $160,000  related to
          facility and other expenses.

          o The above  increases  were  partially  offset by a decrease in sales
          commissions of approximately $370,000. The 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.

          o Also  partially  offsetting  the  increases  was a  decrease  in our
          depreciation expense of approximately $90,000.

     Sales and  marketing  expenses  decreased for the six months ended June 30,
2000,  as  compared  with the  corresponding  period in  fiscal  1999 due to the
following:  



                                       19

<PAGE>

          o Decreases in sales  commissions of approximately  $1.1 million.  The
          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.

          o Decreases in our depreciation expense of approximately $200,000.

          o The  above  decreases  were  partially  offset by  increases  in our
          expenses  of  approximately  $380,000  related to  temporary  help and
          consulting.

          o The above  decreases  were also  partially  offset by  increases  of
          approximately $320,000 related to facility costs and other 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 are major  corporations
with  substantially  greater  financial,  technical,  and  marketing  resources.
Increased  competition may result in reduced market share for the Company 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 decreased for the three and six months
ended June 30, 2000, as compared with the corresponding periods for fiscal 1999.
The  primary  reasons  for  the  decreases  are  as  follows:   

          o Increases ofApproximately $1.3 million in the allowance for doubtful
          accounts in the first six months of fiscal 1999  related to  customers
          in South  America,  which was not  repeated in the first six months of
          fiscal 2000.

          o Trimble had decreases of approximately $1.6 million and $3.8 million
          respectively,  in expenses for  personnel,  legal,  equipment  rental,
          facilities and other office supplies in the first three and six months
          of fiscal 2000 as compared to the first three and six months of fiscal
          1999.

          o Trimble's  receipt of $480,000  and $700,000  respectively  of funds
          from subleases.

Nonoperating income(expense), net

     Nonoperating  income (expense),  net, includes interest income and expense,
gains and losses on foreign  currency  transactions and also included during the
quarter ended June 30, 2000, the Company recognized a gain of approximately $1.0
million on the sale of minority  interest.  This  investment  was  accounted for
under the cost  method.  The gain is included in other  income for the three and
six months ended June 30, 2000.

Income Taxes

     The Company's effective income tax rate from continuing  operations for the
three  months ended June 30, 2000 and the six months ended June 30, 2000 was 10%
as compared with the effective income tax rate from continuing operations of 15%
for the  corresponding  periods in 1999.  These  rates are less than the federal
statutory  rate of 35%  primarily  due to the  realization  of the benefits from
prior net operating losses and previously reserved deferred tax assets.

Inflation

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

Liquidity and Capital Resources

*      At June 30, 2000,  Trimble had cash and cash equivalents of $94.4 million
and $24.9 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. Trimble's long-term debt consisted primarily of a $30.0 million note
obligation to John Hancock due in 2001. We had no debt outstanding under our $50
million  unsecured line of credit but had issued certain letters of credit as of
June 30,  2000,  amounting to  approximately  $1.2  million.  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-

                                       20

<PAGE>

term investment  balances,  together with its new credit facility,  will be
sufficient to meet its  anticipated  operating  cash needs for at least the next
twelve months.

*      For the six months  ended June 30, 2000,  the cash  provided by operating
activities  was $11.7  million,  as compared to cash provided of $9.5 million in
the corresponding  period in fiscal 1999. Cash provided by operating  activities
in fiscal  2000 arose from the  Company's  net  income,  plus  depreciation  and
amortization  and offset  partially by increases in inventories and increases in
accounts  receivable.  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 fiscal year 2000  represents  the
proceeds from  purchases  made by employees  pursuant to Trimble's  stock option
plan and  employee  stock  purchase  plan and totaled  $8.5  million for the six
months ended June 30, 2000.

     Effective as of July 14, 2000,  Trimble  completed the  acquisition  of the
Spectra  Precision  wholly owned  businesses  formerly owned by Thermo Electron,
collectively  known as the "Spectra  Precision Group" for an aggregate  purchase
price of approximately  $294 million,  which is subject to a final adjustment in
the purchase price as provided for in the acquisition agreements.

     The  acquisition  will  be  accounted  for  as a  purchase  for  accounting
purposes; accordingly, Trimble's consolidated results of operations will include
the operating results of the Spectra Precision Group subsequent to the effective
acquisition  date.  The  acquisition  was  financed  with $80  million in seller
subordinated  debt, $140 million of cash provided  through a syndicate of banks,
and $74 million of the Company's  available cash on hand.  The Company  acquired
approximately  $133  million of  identifiable  intangible  assets as part of the
acquisition  which the Company  expects to amortize  over  various  time periods
ranging  from 5 to 10 years and expects to record  approximately  $81 million of
goodwill  due to the  acquisition  which will be  amortized  over 20 years.  The
Company  also  expects  to  incur $7 to $8  million  of costs  and  expenses  in
connection with the acquisition.

     In order to finance the acquisition of the Spectra  Precision  Group,  fund
the Company's  on-going working capital  requirements,  and pay related fees and
expenses of the  acquisition,  Trimble (i) obtained a new senior  secured credit
facility,  (ii) issued an $80 million subordinated seller promissory note, (iii)
terminated its existing $50 million unsecured revolving credit facility and (iv)
prepaid its existing $30 million outstanding  subordinated  promissory notes, as
briefly summarized below.

 o        New Credit  Facilities:  In July 2000,  ABN AMRO  Bank,  N.V.  led a
          syndicate  of banks  which  underwrote  $200  million  of new  senior,
          secured   credit   facilities   for  the  Company   (the  "New  Credit
          Facilities") to support the acquisition of the Spectra Precision Group
          and to refinance  certain existing debt. The New Credit Facilities are
          comprised of a $50 million  3-year U.S.  dollar only  revolver;  a $50
          million 3-year multi-currency revolver; and a $100 million 5-year term
          loan.  Pricing for any borrowings  under the New Credit  Facilities is
          fixed  for the first 6 months at LIBOR  plus 275 basis  points  and is
          thereafter  tied to a formula,  based on the Company's  leverage ratio
          (which is  defined  as all  outstanding  debt  (excluding  the  seller
          subordinated   note)   over   EBITDA).    Trimble   immediately   used
          approximately  $170 million  available under the New Credit Facilities
          to fund the acquisition of the Spectra  Precision  Group.  $30 million
          was  used to pay off  the  principal  portion  of  Company's  existing
          subordinated  notes to John  Hancock  (as  described  below)  and $140
          million  was  paid in cash to the  seller.  The  balance  of the  $294
          million  aggregate  purchase  price was paid by the  Company  with $74
          million  of  excess   available  cash  on  hand  and  an  $80  million
          subordinated seller note was issued to effect the acquisition. The New
          Credit  Facilities are secured by all material tangible and intangible
          assets of the  Company,  subject to  foreign  tax  considerations.  If
          Trimble is able to achieve and maintain a leverage ratio (Debt/EBITDA)
          of 2.0x or less for four  consecutive  quarters,  the security for the
          New Credit Facilities will be released. Financial covenants of the New
          Credit  Facilities  include  leverage,  fixed charge,  and minimum net
          worth tests. In addition,  Trimble is restricted from paying dividends
          under the terms of the New Credit Facilities.

 o        New Seller  Promissory Note: The $80 million  promissory note issued
          by the  Company  to the  seller  is  subordinated  to the  New  Credit
          Facilities  and  carries a 10% coupon,  payable in cash or  additional
          seller paper at the Company's option. The subordinated seller note has
          a stated two year maturity, but carries an automatic maturity deferral
          provision which effectively  extends the maturity date to that date on
          which  Trimble  is  allowed  to 


                                       21

<PAGE>

          repay  the note  without  triggering  a default  under the New  Credit
          Facilities.  The New  Credit  Facilities  allow  Trimble  to repay the
          seller  note at any  time  (in part or in  whole),  provided  that (a)
          Trimble's  leverage ratio (Debt  (excluding  the seller  note)/EBITDA)
          prior to such  repayment is less than 1.0x and (b) after giving effect
          to such  repayment  Trimble  would  have (i) a  leverage  ratio  (Debt
          (excluding any remaining  portion of the seller  note)/EBITDA) of less
          than 2.0x and (ii) cash and unused availability under the revolvers of
          the New  Credit  Facilities  of at least  $35  million.  Although  the
          subordinated  seller note will carry  certain  limited  covenants  and
          defaults,  the  seller  will be barred in the  event of  default  from
          pursuing  such rights and remedies for the stated  maturity of the New
          Credit  Facilities  (i.e.,  a  five-year  standstill).  The New Credit
          Facilities also prohibit cash payments of interest or principal on the
          subordinated seller note during a period of default.

 o        Prepayment of Existing $30 million Subordinated Notes: In June 1994,
          Trimble issued $30 million of  subordinated  promissory  notes to John
          Hancock bearing  interest at an annual rate of 10%, with principal and
          interest due on June 15, 2001. Interest payments under such notes were
          due monthly in arrears.  The notes were  subordinated to the Company's
          senior debt,  which was defined as all  pre-existing  indebtedness for
          borrowed  money and certain  future  indebtedness  for borrowed  money
          (including,  subject to certain restrictions,  secured bank borrowings
          and  borrowed  money  for the  acquisition  of  property  and  capital
          equipment) and trade debt incurred in the ordinary course of business.
          In order to effect the acquisition of the Spectra  Precision Group and
          as part of obtaining the New Credit  Facilities,  Trimble  prepaid all
          such  outstanding  long-term  note  obligations  to John Hancock for a
          total of  $31,069,108,  which  consisted of $30 million in  principal,
          $183,333 in accrued  interest and  $885,775 as a  prepayment  penalty.
          Pursuant to the terms of such original  notes,  any  prepayment of any
          portion  of  the  outstanding   principal   required  Trimble  to  pay
          additional amounts if U.S. Treasury  obligations of a similar maturity
          exceed a specified yield.

 o        Termination  of Existing  $50 million  Unsecured  Revolving  Credit
          Facility:   In  August  1997,   Trimble  entered  into  a  three-year,
          $50,000,000  unsecured  revolving credit facility with four banks (the
          "Credit Agreement").  The existing Credit Agreement enabled Trimble to
          borrow up to  $50,000,000,  provided that certain  financial and other
          covenants were met. In October 1999, Trimble and the lenders agreed to
          change and amend certain covenants for the life of the loan, which was
          set to  expire  in  August  of 2000.  The  Credit  Agreement  was also
          subsequently  modified to include Trimble's prior separate  $5,000,000
          line of credit  and to  simplify  the entire  arrangement.  The Credit
          Agreement  required  the payment of a  commitment  fee of 0.25% of the
          available  amount and any borrowings  under such Credit Agreement bore
          interest at the  following  rates:  1% over LIBOR if the total  funded
          debt to EBITDA  were less than or equal to 1.0x,  or 0.3%;  1.25% over
          LIBOR if such ratio were  greater  than 1.0x and less than or equal to
          2.0x,  or 0.4%;  and 1.75% over LIBOR if such ratio were  greater than
          2.0x.  In addition to borrowing at the specified  LIBOR rate,  Trimble
          also had the  additional  right to borrow  under the Credit  Agreement
          with interest at the higher of (i) one of the bank's annual prime rate
          and (ii) the  federal  funds  rate plus 0.5%.  Trimble  never made any
          borrowings under such $50,000,00  unsecured  revolving  portion of the
          Credit  Agreement,  but had issued certain letters of credit amounting
          to approximately  $1.2 million.  In order to effect the acquisition of
          the  Spectra   Precision  Group,  in  July  2000  Trimble   completely
          terminated this Credit  Agreement in favor of obtaining the New Credit
          Facilities described above.

     The  subordinated  promissory  notes issued to John  Hancock (as  described
above) in June 1994 also included the issuance of warrants entitling the holders
to purchase  400,000  shares of the Company's  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 had been  recorded  as  noncurrent  liabilities,  net of
appraised fair value  attributed to the warrants.  The value of the warrants and
the issuance costs were 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 was 11.5%.

     In 1996 and 1998, Trimble approved a discretionary  program whereby up to a
total of 2.2 million 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.  During 1997 and
1998,  Trimble  purchased  a total  of 1.22  million  shares  at a cost of $17.9
million  During  fiscal 1999 and the first six months of fiscal 2000,  no shares
were repurchased under the discretionary program.

*      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


                                       22

<PAGE>

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.

Other Risk Factors

Risks Associated with Sole Suppliers and Limited Sources

     With the  selection of Solectron  as an  exclusive  manufacturing  partner,
Trimble is  substantially  dependent upon a sole supplier for the manufacture of
its  products.  In  addition,  we rely on sole  suppliers  for a  number  of our
critical ASICS. We have experienced  shortages of such supplies in the past. Our
reliance  on sole or a  limited  group  of  suppliers  involves  several  risks,
including  a  potential  inability  to obtain  an  adequate  supply of  required
components  and reduced  control over pricing.  The disruption or termination of
any of these  sources  could have a  material  adverse  effect on our  business,
operating  results and financial  condition.  Any  inability to obtain  adequate
deliveries or any other  circumstance  that would require us to seek alternative
sources  of  supply  or  to  manufacture   such  components   internally   could
significantly  delay  our  ability  to ship our  products,  which  could  damage
relationships  with current and prospective  customers and could have a material
adverse effect on our business, operating results and financial condition.

Fluctuations in Annual and Quarterly Performance.

     Our operating  results have  fluctuated  and can be expected to continue to
fluctuate in the future on a quarterly  and annual basis as a result of a number
of factors, many of which are beyond our control. Results in any period could be
affected by changes in market  demand,  competitive  market  conditions,  market
acceptance  of  new or  existing  products,  fluctuations  in  foreign  currency
exchange  rates,  the  cost and  availability  of  components,  our  ability  to
manufacture and ship products,  the mix of our customer base and sales channels,
the mix of  products  sold,  our  ability  to expand  our  sales  and  marketing
organization  effectively,  our ability to attract and retain key  technical and
managerial  employees  and general  economic  conditions.  Due to the  foregoing
factors,  our operating results in one or more future periods are expected to be
subject to significant  fluctuations.  In the event such fluctuations  result in
our financial performance being below the expectations of public market analysts
and investors, the price of our common stock could decline substantially.

     Our 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 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.

     Despite the  fluctuations in its quarterly  sales  patterns,  the Company's
operating expenses are incurred on an approximately  ratable basis. As a result,
if expected sales are deferred for any reason, the Company's business, operating
results and financial condition could be materially adversely affected.

     Trimble gross margin is affected by a number of factors,  including product
mix, product pricing,  cost of components,  foreign currency  exchange rates and
manufacturing  costs. For example,  since Precision  Positioning  Group products
generally  have  higher  gross  margins  than  Mobile  Timing  and  Technologies
products,  absent other factors,  a shift in sales toward Precision  Positioning
Group  products  would lead to a gross margin  improvement  for Trimble.  On the
other hand, if market conditions in the highly competitive Precision Positioning
market forced us to lower unit prices, we would suffer a decline in gross margin
unless we were able to timely  offset  the price  reduction  by a  reduction  in
production costs or by sales of other products with higher gross margins. Either
of these events could have a material effect on our business,  operating results
and financial condition.

     Our backlog on a given date  consists of written  purchase  orders or other
commitments for products, which are scheduled to be shipped within the following
twelve  months.  Orders in our backlog are firm,  but are  generally  subject to
cancellation or rescheduling  without penalty.  Decisions by customers to reduce
inventory  levels could lead to reductions  in purchases  from Trimble and could
have a material adverse effect on our business,  operating results and financial
condition.

                                       23

<PAGE>

Risks of Managing Future Growth.

     Any  significant  growth in our sales or any  significant  expansion in the
scope of our operations  could strain our management,  financial,  manufacturing
and other  resources  and may require us to  implement  and improve a variety of
operating,  financial and other systems,  procedures and controls. While Trimble
plans significant expansion of its sales, accounting,  manufacturing,  and other
information  systems to meet these  challenges,  there can be no assurance  that
these efforts will succeed,  or that any existing or new systems,  procedures or
controls  will be  adequate  to  support  our  operations  or that our  systems,
procedures  and  controls  will be designed,  implemented  or improved in a cost
effective and timely manner.  Any failure to implement,  improve and expand such
systems,  procedures and controls in a timely and efficient  manner could have a
material  adverse  effect  on our  business,  operating  results  and  financial
condition.

Difficulties in Integrating New Acquisitions Could Adversely Affect Our Business

     Critical to the success of our growth is the ordered, efficient integration
of acquired  businesses into our  organization.  If our integration  efforts are
unsuccessful,  our businesses will suffer. We have recently acquired the Spectra
Precision Group. See description above in New Business Developments in this Item
2. The acquisition presents unique product, marketing, research and development,
facilities,  information  systems,  accounting,  personnel and other integration
challenges.  This transition is in its early stages and involves  certain risks,
including the  following:  the  potential  inability to  successfully  integrate
acquired  operations  and  businesses  or  to  realize  anticipated   synergies,
economies  of  scale  or  other  value;  diversion  of  management's  attention;
difficulties in scaling up production at new sites and  coordinating  management
of  operations at new sites;  and loss of key employees of acquired  operations.
Also,  our  information  systems and those of the companies we acquire are often
incompatible,  requiring  substantial upgrades to one or the other. Further, our
current  senior  combined  management  is a  combination  of  the  prior  senior
management teams of Trimble and the Spectra Precision Group several of whom have
not previously  worked with other members of  management.  The benefits to us of
the acquisition and our success, as a whole, depends upon our succeeding in each
of these and other integration challenges.  Nevertheless, the integration of our
business with another may result in unanticipated operations problems,  expenses
and  liabilities  and the diversion of  management  attention.  Our  integration
efforts may not be successful, and, if so, our operating results would suffer as
a result.

     Our sales  force is and will in the  future be a  combination  of our sales
force  and  the  sales  forces  of the  businesses  we  acquire,  which  must be
effectively  integrated  for us to remain  successful.  Our  acquisition  of the
Spectra Precision Group has resulted in sales forces differing in products sold,
marketing channels used and sales cycles and models applied. Accordingly, we may
experience  disruption in sales and marketing in connection  with our efforts to
integrate  our  various  sales  and  marketing  forces,  and we may be unable to
efficiently or effectively correct any such disruptions or achieve our sales and
marketing  objectives  if we  fail  in  these  efforts.  Furthermore,  it may be
difficult to retain key sales personnel.  As a result,  we may fail to take full
advantage  of the  combined  sales  forces'  efforts,  and one  company's  sales
approaches and  distribution  channels may be  ineffective in promoting  another
entity's  products,  all of which may  materially  harm our business,  financial
condition or operating results.

Competition.

     Trimble's markets are highly competitive.  Our overall competitive position
depends on a number of factors  including the price,  quality and performance of
our products,  the level of customer service,  the development of new technology
and our ability to participate in emerging markets.  Within each of our markets,
we have  encountered  direct  competition  from  other  GPS,  optical  and laser
suppliers and expect  competition  to continue to intensify  from various larger
domestic and  international  competitors and new market entrants,  some of which
may be current Trimble customers.  The increased competition has resulted and is
expected, in the future, to result in price reductions,  reduced margins or loss
of  market  share,  any of which  could  materially  and  adversely  affect  our
business, operating results and financial condition. We believe that our ability
to  compete   successfully  in  the  future  against   existing  and  additional
competitors  will  depend  largely on our  ability to execute  our  strategy  to
provide systems and products with significantly differentiated features compared
to currently available products.  There can be no assurance that we will be able
to implement  this  strategy  successfully,  or that any such  products  will be
competitive  with other  technologies  or products  that may be developed by our
competitors,  many of whom  have  significantly  greater  financial,  technical,
manufacturing,  marketing, sales and other resources than we do. We also believe
that in certain  emerging markets our success will depend on our ability to form
and maintain strategic  alliances with established system providers and industry
leaders.  Our failure to form and maintain such alliances,  or the 


                                       24

<PAGE>

preemption  of such  alliances by actions of other  competitors  or us will
adversely  affect our ability to  penetrate  emerging  markets.  There can be no
assurance that we will be able to compete successfully against current or future
competitors or that  competitive  pressures faced by us will not have a material
adverse effect on our business,  operating results and financial  condition.  We
expect that both direct and indirect  competition  will  increase in the future.
Additional  competition  could adversely affect our business,  operating results
and financial condition through price reductions or loss of market share.

Risks Associated With International Operations and Sales.

     Our  customers  are located  throughout  the world.  In  addition,  we have
significant  offshore  operations,  including  manufacturing  facilities,  sales
personnel  and customer  support  operations.  Our offshore  operations  include
facilities in Australia,  Canada, China, France,  Germany, Great Britain, Japan,
Mexico,  New Zealand,  Sweden,  Russia,  Singapore and others. Our international
presence   exposes  us  to  risks  not  faced  by   wholly-domestic   companies.
Specifically,  we face the following risks, among others,  unexpected changes in
regulatory requirements;  tariffs and other trade barriers; political, legal and
economic instability in foreign markets,  particularly in those markets in which
we maintain manufacturing and research facilities;  difficulties in staffing and
management;  language and cultural  barriers;  seasonal  reductions  in business
activities in the summer months in Europe and some other countries;  integration
of foreign  operations;  longer payment cycles;  greater  difficulty in accounts
receivable  collection;  currency  fluctuations;  and  potentially  adverse  tax
consequences. Although we implemented a program to manage foreign exchange risks
through  hedging  and  other  strategies,  there can be no  assurance  that this
program will be successful and that currency exchange rate fluctuations will not
have a material  adverse  effect on our results of operations.  In addition,  in
certain foreign markets,  there may be reluctance to purchase  products based on
GPS technology, given the control of GPS by the U.S. Government.

Volatility of Stock Price.

     Our  common  stock  has  experienced  and  can be  expected  to  experience
substantial  price  volatility  in response to actual or  anticipated  quarterly
variations in results of operations,  announcements of technological innovations
or new  products by us or our  competitors,  developments  related to patents or
other  intellectual  property  rights,  developments  in our  relationship  with
customers,  suppliers,  or strategic  partners  and other events or factors.  In
addition,  any short fall or changes in revenue,  gross  margins,  earnings,  or
other financial results from analysts' expectations could cause the price of our
common stock to fluctuate  significantly.  Additionally,  certain macro-economic
factors  such as  changes  in  interest  rates  could also have an impact on the
trading price of our stock.

Dependence on Proprietary Technology; Risk of Patent Infringement Claims.

     Trimble's  future  success and  competitive  position is dependent upon its
proprietary  technology,  and we rely on patent,  trade  secret,  trademark  and
copyright law to protect our  intellectual  property.  There can be no assurance
that the patents owned or licensed by us will not be invalidated,  circumvented,
challenged  or  licensed  to others,  that the rights  granted  thereunder  will
provide competitive advantages to us or that any of our pending or future patent
applications will be issued within the scope of the claims sought by Trimble, if
at all.  Furthermore,  there can be no  assurance  that  others will not develop
technologies  that are  similar or  superior to our  technology,  duplicate  our
technology or design around the patents owned by Trimble. In addition, effective
copyright, patent and trade secret protection may be unavailable, limited or not
applied for in certain  foreign  countries.  There can be no assurance  that the
steps   taken  by  Trimble  to  protect   its   technology   will   prevent  the
misappropriation of such technology.

     The value of our 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.  We do not
believe any of our  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 our
revenues  or  profitability.  (See  also Note 10 to the  Condensed  Consolidated
Financial Statements).

                                       25

<PAGE>

Dependence on New Products.

     Trimble's future revenue stream depends to a large degree on our ability to
bring new  products  to  market  on a timely  basis.  We must  continue  to make
significant  investments  in research  and  development  in order to continue to
develop new products, enhance existing products and achieve market acceptance of
such  products.  However,  there  can be no  assurance  that  development  stage
products  will  be  successfully  completed  or,  if  developed,   will  achieve
significant  customer  acceptance.  If we were  unable to  successfully  define,
develop and introduce  competitive new products,  and enhance existing products,
our future results of operations  would be adversely  affected.  Development and
manufacturing  schedules for technology  products are difficult to predict,  and
there can be no assurance that we will achieve timely initial customer shipments
of new products.  The timely  availability of these products in volume and their
acceptance by customers are important to the future success of Trimble.  In some
of our markets -- for example, Architecture/Engineering/Construction and Mapping
and GIS where we currently  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.

Strategic Alliances and External Investments.

     We are  continuously  evaluating  alliances  and  external  investments  in
technologies  related to our  business,  and have  entered  into many  strategic
alliances  including making  relatively small strategic equity  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 our 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.

Dependence on Key Customers.

     We  currently  enjoy  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 we  will  be  able to  continue  to  realize  value  from  these
relationships in the future.

Dependence on Key Markets and Successful Identification of New Markets.

     Trimble's     current     products    serve    many     applications     in
Architecture/Engineering/Construction,    Asset    Management    and   Tracking,
Agriculture,  and GPS Component Technologies markets. No assurances can be given
that these markets will continue to generate  significant  or consistent  demand
for our  products.  Existing  markets could be  significantly  diminished by new
technologies  or products that replace or render obsolete our  technologies  and
products.  Trimble is dependent on successfully  identifying new markets for its
products.  There  can  be  no  assurance  that  the  Company  will  be  able  to
successfully identify new high-growth markets in the future. Moreover, there can
be no  assurance  that new markets  will  develop for Trimble or its  customers'
products, or that our technology or pricing will enable such markets to develop.

Dependence on Retaining and Attracting Highly Skilled Development and Managerial
Personnel.

     The ability of Trimble Navigation 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.

Potential Adverse Impact of Governmental and Other Similar Certifications.

                                       26

<PAGE>

     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, our products that use integrated radio
communication  technology  require  an  end-user  to obtain  licensing  from the
Federal  Communications  Commission (FCC) for frequency-band  usage.  During the
fourth quarter of 1998, the FCC  temporarily  suspended the issuance of licenses
for certain of 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 delays of the FCC could have an adverse effect
on our operating results.

Dependence on Radio Frequency Spectrum.

     Trimble's  GPS   technology  is  dependent  on  the  use  of  the  Standard
Positioning  Service (SPS) provided by the U.S.  Government's Global Positioning
System (GPS).  The GPS SPS operates in radio  frequency  bands that are globally
allocated for radio navigation satellite services.  International allocations of
radio frequency are made by the International  Telecommunications Union (ITU), a
specialized  technical  agency of the  United  Nations.  These  allocations  are
further governed by Radio  Regulations which have treaty status and which may be
subject to modification  every two-three years by the World Radio  communication
Conference.  Any ITU reallocation of radio frequency bands,  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,  unwanted
emissions  from mobile  satellite  services  and other  equipment  operating  in
adjacent  frequency  bands or inband from  licensed and  unlicensed  devices may
materially  and adversely  affect the utility and  reliability  of our products,
which could result in a material  adverse effect on our operating  results.  The
Federal Communications Commission (FCC) continually receives proposals for novel
technologies  and  services  which may seek to operate in, or across,  the radio
frequency bands currently used by the GPS SPS and other public safety  services.
Adverse decisions by the FCC that result in harmful interference to the delivery
of the GPS SPS may materially and adversely  affect the utility and  reliability
of our  products,  which  could  result  in a  material  adverse  effect  on our
operating results.

Reliance on GPS Satellite Network.

     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 free of direct
user fees is specifically  recognized and supported by Presidential  policy.  In
addition,   Presidential   policy  has  been   complemented   by   corresponding
legislation, signed into 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.  For example,  European  governments have expressed
interest  in building  an  independent  satellite  navigation  system,  known as
Galileo.  Depending  on the as yet  undetermined  design and  operation  of this
system,  there may be interference to the delivery of the GPS SPS may materially
and adversely  affect the utility and  reliability of our products,  which could
result in a material adverse effect on our operating results.


                                       27

<PAGE>


I
tem 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

     The  following is a discussion  of Trimble's  exposure to market risk as of
June 30, 2000 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 June 30, 2000, Trimble
had  short-term  investments  of $24.9  million.  These  short-term  investments
consisted  of  $23.8  million  of  highly  liquid  investments,   with  original
maturities  at the date of purchase  between  three and twelve months and a $1.1
million liquid  investment with an original  maturity at the date of purchase of
eighteen  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 June 30, 2000 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.

     Outstanding  Debt  of  the  Company.  As of  June  30,  2000,  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
these  instruments 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.

     In July, 2000 Trimble prepaid the long-term $30.0 million subordinated note
obligation  for a total  of  $31,069,108,  which  consisted  of $30  million  in
principal,  $183,333  in  accrued  interest,  and an  additional  $885,775.  The
prepayment was made using funds from short-term  investments and will be covered
under the  pending  $200.0  million  credit  line.  (See  Liquidity  and Capital
Resources section of Item 2 in Management Discussion and Analysis)

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.

                                       28

<PAGE>

     The following table provides  information  about Trimble's foreign exchange
forward contracts outstanding as of June 30, 2000:


<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                 Sell                  203,000               $ 1,933              $ 1,935
NZD                 Buy                     5,280               $ 2,505              $ 2,473
EURO                Sell                    2,005               $ 1,856              $ 1,913
STERLING            Buy                     1,530               $ 2,314              $ 2,322

</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.


                                       29

<PAGE>


PART II. OTHER INFORMATION


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company's  2000 annual meeting of  shareholders  was held at the Westin
Hotel in Santa  Clara,  located  at 5101 Great  America  Parkway,  Santa  Clara,
California  95054 in the Magnolia Room, on Thursday,  May 11, 2000, at 1:00 p.m.
local time.

     At the annual shareholder  meeting,  an election of directors was held with
the following individuals being elected to the Company's Board of Directors.

                                                  VOTE
                                          FOR            WITHHELD
                                 --------------------------------------

Steven W. Berglund                     19,971,539          525,376
Robert S. Cooper                       19,064,430        1,432,485
John B. Goodrich                       19,002,587        1,494,328
William Hart                           19,969,923          526,992
Ulf J. Johansson                       20,026,847          470,068
Norman Y. Mineta                       19,871,449          625,466
Bradford W. Parkinson                  19,092,259        1,404,656


     Other  matters  voted upon at the  annual  meeting  and the  results of the
voting with respect to each such matter were as follows:

     1.   To approve an  increase  of 925,000  shares in the number of shares of
          Common  Stock  reserved for issuance  under the  Company's  1993 Stock
          Option Plan from 5,000,000 shares to an aggregate of 5,925,000 shares.
          (7,708,323 in favor; 4,864,297 opposed; 110,327 abstentions; 7,813,968
          broker non-votes)

     2.   To approve an  increase  of 200,000  shares in the number of shares of
          Common Stock  available for purchase by eligible  employees  under the
          Company's 1988 Employee  Stock Purchase Plan from 2,950,000  shares to
          an  aggregate  of  3,150,00  shares.  (11,782,990  in  favor;  827,038
          opposed; 72,919 abstentions; 7,813,968 broker non-votes)

     3.   To approve an amendment of the Company's  1990  Director  Stock Option
          Plan to extend the term of such plan by three  years.  (10,421,612  in
          favor;  1,808,327  opposed;  453,008  abstentions;   7,813,968  broker
          non-votes)

     4.   To  approve  an  amendment  of the  Company's  bylaws  to  change  the
          authorized  number of board of directors to a variable  range  between
          five and nine members.  (12,131,249 in favor; 423,895 opposed; 127,803
          abstentions; 7,813,968 broker non-votes)

     5.   To ratify  the  appointment  of Ernst & Young  LLP as the  independent
          auditors of the Company  for the current  fiscal year ending  December
          29, 2000. (20,338,898 in favor; 100,062 opposed; 57,955 abstentions; 0
          broker non-votes)


                                       30

<PAGE>


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits
 3.8    Bylaws of the Company, as amended May 11 2000

 10.59  1993 Stock Option Plan, as amended May 11, 2000 (1)

 10.60  1988 Employee Stock Purchase Plan, as amended May 11, 2000 (1)

 10.7   2Stock and Asset Purchase Agreement,  dated as of May 11, 2000, between
        Trimble  Acquisition  Corp.,  and Spectra Physics  Holdings USA, INC.,
        Spectra Precision AB, and Spectra Precision Europe Holdings, BV. (2)

 10.73  Asset  Purchase   Agreement   dated  May  11,  2000  between   Trimble
        Acquisition Corp. and Spectra Precision AB. (2) . 

 10.74  $200.0 million Credit  Agreement  dated July 14, 2000 between  Trimble
        Navigation  Limited and ABN AMRO Bank N.V.,  Fleet  National Bank, and
        The Bank of Nova Scotia. (2)

 10.75  Subordinated  Seller  Note  dated  July 14,  2000,  for the  principal
        amount of $80,000,000  issued by Trimble Navigation Limited to Spectra
        Precision Holdings, Inc. (2)

 27.1   Financial  Data Schedule for the quarters ended June 30, 2000 and 
        July 2, 1999. 

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

(1)     Incorporated by reference to identically numbered exhibits
        filed  in   response   to  Item  8,   "Exhibits"   of  the
        registrant's  registration  statement on Form S-8 filed on
        June 1, 2000.

(2)     Incorporated by reference to identically numbered exhibits
        filed  in  response  to  Item  7(c),   "Exhibits"  of  the
        registrant's  Current Report on Form 8-K filed on July 28,
        2000.

B.       Reports on Form 8-K

               On May 11, 2000,  the Company filed a report on Form 8-K relating
          to  entering  into a  definitive  agreement  to  acquire  the  Spectra
          Precision  wholly owned  businesses  formerly owned by Thermo Electron
          Corporation, collectively known as the "Spectra Precision Group".

               On July  28,  2000,  the  Company  filed  a  report  on Form  8-K
          reporting the completion of the  acquisition of the Spectra  Precision
          Group effective as of July 14, 2000 for an aggregate purchase price of
          approximately $294 million,  which is subject to a final adjustment in
          the purchase price as provided for in the acquisition agreements.  The
          acquisition  includes 100% of the stock of Spectra  Precision  Inc., a
          Delaware  corporation,  Spectra Precision SRL, an Italian corporation,
          Spectra  Physics  Holdings  GmbH,  a German  corporation,  and Spectra
          Precision BV, a Netherlands corporation. The acquisition also consists
          of certain assets and  liabilities of Spectra  Precision AB, a Swedish
          corporation,  including 100% of the shares of Spectra  Precision SA, a
          French  corporation,  Spectra  Precision  Scandinavia  AB,  a  Swedish
          corporation, Spectra Precision of Canada Ltd., a Canadian corporation,
          and Spectra Precision Handelsges mbH, an Austrian corporation.

               The  financial  statements  and pro  forma  financial  statements
          required  by the  Report  on Form 8-K  filed on July 28,  2000 will be
          subsequently  filed by an  amendment  no later  than 60 days  from the
          effective date of the closing of the acquisition.

                                       31

<PAGE>


                                   SIGNATURES

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

TRIMBLE NAVIGATION LIMITED
(Registrant)



By:     /s/ Mary Ellen Genovese
        -----------------------------------------------------------
         Mary Ellen Genovese
         (Vice President Finance, and Chief Financial Officer and
            Corporate Controller)



DATE:  August 4, 2000

                                       32

<PAGE>









                                   EXHIBIT 3.8

                                     BY-LAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                   (amended and restated through May 11, 2000)



                                       33

<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


                                       34

<PAGE>



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


 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


                                       35

<PAGE>


                                     BY-LAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                   (amended and restated through May 11, 2000)


                                    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 


                                       36

<PAGE>

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.

         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.
                  -------------------------

                                       37

<PAGE>

         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 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 


                                       38

<PAGE>

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.

         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


                                       39

<PAGE>


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.
                  ----------------------

         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 five
(5) nor more than nine (9). The exact  number of  directors  shall be nine (9)
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  


                                       40

<PAGE>

directors  to a number  less than  nine (9) 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.
                  ---------

         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.

                                       41

<PAGE>

         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.
                  ------

         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.

                                       42

<PAGE>

         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.
                  -----------------------

         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.  


                                       43

<PAGE>


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.
                  --------------------

         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 

                                       44

<PAGE>


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 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) 

                                       45

<PAGE>

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.

         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

                                       46

<PAGE>

         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.
                  -------------------------------------

         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.
                  -------------------------------------

                                       47

<PAGE>

         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.

         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.
                  -----------------------------------------

                                       48

<PAGE>

         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.
                  -----------------

         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.

                                       49

<PAGE>

         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.

                                       50

<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>                                   3-MOS                                       3-MOS
<FISCAL-YEAR-END>                               DEC-29-2000                           DEC-31-1999
<PERIOD-END>                                    JUN-30-2000                           JUL-02-1999

<CASH>                                                    94,438                           41,180
<SECURITIES>                                              24,900                           23,643
<RECEIVABLES>                                             45,651                           38,953
<ALLOWANCES>                                                   0                                0
<INVENTORY>                                               19,042                           32,788
<CURRENT-ASSETS>                                         187,912                          139,707
<PP&E>                                                    11,660                           13,762
<DEPRECIATION>                                                 0                                0
<TOTAL-ASSETS>                                           209,598                          162,576
<CURRENT-LIABILITIES>                                     46,927                           48,509
<BONDS>                                                        0                                0
<PREFERRED-MANDATORY>                                          0                                0
<PREFERRED>                                                    0                                0
<COMMON>                                                 135,419                          124,149
<OTHER-SE>                                                (5,751)                         (40,095)
<TOTAL-LIABILITY-AND-EQUITY>                             209,598                          162,576
<SALES>                                                  136,404                          139,609
<TOTAL-REVENUES>                                         136,404                          139,609
<CGS>                                                     57,474                           66,431
<TOTAL-COSTS>                                             57,474                           66,431
<OTHER-EXPENSES>                                          57,685                           63,880
<LOSS-PROVISION>                                               0                                0
<INTEREST-EXPENSE>                                         1,709                            1,701
<INCOME-PRETAX>                                           23,410                            9,024
<INCOME-TAX>                                               2,341                            1,354
<INCOME-CONTINUING>                                       21,069                            7,670
<DISCONTINUED>                                                 0                                0
<EXTRAORDINARY>                                                0                                0
<CHANGES>                                                      0                                0
<NET-INCOME>                                              21,069                            7,670
<EPS-BASIC>                                                 0.92                             0.34
<EPS-DILUTED>                                               0.83                             0.34
        
 


</TABLE>