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

                                    FORM 10-K

          (X) ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended January 2, 2004

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

                   749 North Mary Avenue, Sunnyvale, CA 94085
               (Address of principal executive offices) (Zip Code)

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

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

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

                                  Common Stock
                         Preferred Share Purchase Rights
                                (Title of Class)

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

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant,  based upon the last sale price of the Common Stock  reported on the
Nasdaq National Market on July 3, 2003 was approximately $795 million.

There  were  50,537,119  shares of the  registrant's  Common  Stock  issued  and
outstanding as of March 11, 2004.



<PAGE>



                       DOCUMENTS INCORPORATED BY REFERENCE

Certain parts of Trimble  Navigation  Limited's Proxy Statement  relating to the
annual  meeting  of  stockholders  to be  held  on  May  19,  2004  (the  "Proxy
Statement") are incorporated by reference into Part III of this Annual Report on
Form 10-K.




<PAGE>


                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains  forward-looking  statements within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange Act of 1934, which are subject to the "safe harbor" created
by those sections.  The forward-looking  statements  regarding future events and
the future results of Trimble Navigation Limited ("Trimble" or " The Company" or
"We" or "Our" or "Us") are based on current expectations,  estimates, forecasts,
and projections  about the industries in which Trimble  operates and the beliefs
and  assumptions  of the  management  of Trimble.  Discussions  containing  such
forward-looking statements may be found in "Management's Discussion and Analysis
of   Financial   Condition   and   Results  of   Operations."   In  some  cases,
forward-looking  statements  can be  identified  by  terminology  such as "may,"
"will,"  "should,"  "could,"  "predicts,"  "potential,"  "continue,"  "expects,"
"anticipates,"   "future,"  "intends,"  "plans,"  "believes,"  "estimates,"  and
similar expressions.  These forward-looking statements involve certain risks and
uncertainties that could cause actual results, levels of activity,  performance,
achievements  and  events  to  differ  materially  from  those  implied  by such
forward-looking  statements,  but are not  limited  to those  discussed  in this
Report under the section  entitled  "Other Risk Factors" and  elsewhere,  and in
other reports Trimble files with the Securities and Exchange Commission ("SEC"),
specifically  the most recent reports on Form 8-K and Form 10-Q,  each as it may
be amended from time to time.  These  forward-looking  statements are made as of
the date of this  Annual  Report on Form 10-K.  We  reserve  the right to update
these  statements for any reason,  including the occurrence of material  events.
The risks and  uncertainties  under the  caption  "Management's  Discussion  and
Analysis  of  Financial   Condition   and  Results  of   Operations--Risks   and
Uncertainties"  contained  herein,  among other things,  should be considered in
evaluating our prospects and future financial performance.  We have attempted to
identify  forward-looking  statements  in this report by placing an asterisk (*)
before paragraphs containing such material.




<PAGE>




                           TRIMBLE NAVIGATION LIMITED

                          2003 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS


           PART I

Item 1     Business...........................................................5

Item 2     Properties........................................................17

Item 3     Legal Proceedings.................................................17

Item 4     Submission of Matters to a Vote of Security Holders...............17


           PART II

Item 5     Market for the Registrant's Common Equity and Related 
           Stockholder Matters...............................................18

Item 6     Selected Financial Data...........................................19

Item 7     Management's Discussion and Analysis of Financial Condition and 
           Results of Operations.............................................20

Item 7A    Quantitative and Qualitative Disclosures about Market Risk........42

Item 8     Financial Statements and Supplementary Data.......................45

Item 9     Changes in and Disagreements with Accountants on Accounting and 
           Financial Disclosure..............................................76

Item 9A    Controls and Procedures...........................................76


           PART III

Item 10    Directors and Executive Officers of the Registrant................76

Item 11    Executive Compensation............................................76

Item 12    Security Ownership of Certain Beneficial Owners and
           Management and Related Stockholder Matters........................77

Item 13    Certain Relationships and Related Transactions....................77

Item 14    Principal Accountant Fees and Services............................77


           PART IV

Item 15    Exhibits, Financial Statement Schedules and Reports on 
           Form 8-K.......................................................77-89





                                   TRADEMARKS

Trimble, the globe and triangle logo, EZ-Guide,  Telvisant,  Lassen, SiteVision,
GeoExplorer,  AgGPS,  Thunderbolt,  FirstGPS,  and  CrossCheck are trademarks of
Trimble  Navigation Limited registered in the United States Patent and Trademark
Office and other countries. Force, Galaxy, Placer, TrimTrac and Trimble Toolbox
are  trademarks of Trimble  Navigation  Limited.  All other  trademarks  are the
property of their respective owners.




<PAGE>


                                     PART I



Item 1   Business Overview

Trimble Navigation Limited, a California corporation ("Trimble" or "the Company"
or "we" or "our" or "us"),  provides advanced  positioning  product solutions to
commercial  and  government  users in a large number of markets.  These  markets
include surveying,  construction,  agriculture,  urban and resource  management,
military, transportation, and telecommunications. Our products typically provide
benefits  that  can  include  cost   savings,   improved   quality,   or  higher
productivity.  Examples of our products include  earthmoving  equipment guidance
systems,  surveying  instruments,  fleet management  systems,  components for in
vehicle  navigation and telematics  systems,  farm equipment  guidance  systems,
field data collection handhelds,  and timing modules used in the synchronization
of wireless networks.

Our products typically  integrate  positioning,  communication,  and information
technologies.  Positioning  technologies  used  include  the Global  Positioning
System (GPS),  laser,  optical,  and inertial,  while  communication  techniques
include both public  networks,  such as cellular,  and private  networks such as
business band radio. A significant amount of the differentiation in the products
is provided  through  software;  both  firmware  that  enables  the  positioning
solution and  applications  software that allows the customer to make use of the
positioning information.

We design and market our own products.  Our  manufacturing  strategy  includes a
combination of in house assembly and fabrication as well as subcontracting those
functions  to third  parties.  We  conduct  our  business  globally  with  major
development, manufacturing or logistics operations in the United States, Sweden,
Germany,  New Zealand,  and the Netherlands.  Products are sold through dealers,
representatives,  joint ventures, and other channels throughout the world. These
channels are supported by our sales offices located in more than 20 countries.

We began  operations in 1978 and  incorporated in California in 1981. Our common
stock has been publicly traded on Nasdaq since 1990 under the symbol TRMB.

Technology Overview

A  majority  of our  revenues  is  derived  from  applying  GPS  to  terrestrial
applications.  GPS is a system of 24 orbiting  satellites and associated  ground
control that is funded and  maintained by the U. S.  Government and is available
worldwide free of charge. GPS positioning is based on a technique that precisely
measures  distances from four or more  satellites.  The satellites  continuously
transmit precisely timed radio signals using extremely accurate atomic clocks. A
GPS receiver  measures  distances from the satellites in view by determining the
travel time of a signal from the satellite to the receiver,  and then uses those
distances to compute its position. Under normal circumstances, a stand-alone GPS
receiver is able to calculate its position at any point on earth, in the earth's
atmosphere, or in lower earth orbit, to approximately 10 meters, 24 hours a day.
Much better  accuracies are possible  through a technique  called  "differential
GPS." In addition, GPS provides extremely accurate time measurement.

GPS accuracy is dependent  upon the  locations of the receiver and the number of
GPS  satellites  that are above the horizon at any given time.  Reception of GPS
signals  requires  line-of-sight  visibility  between  the  satellites  and  the
receiver,  which can be blocked by  buildings,  hills,  and dense  foliage.  The
receiver must have a line of sight to at least four  satellites to determine its
latitude, longitude,  attitude (angular orientation),  and time. The accuracy of
GPS may also be limited by distortion of GPS signals from  ionospheric and other
atmospheric conditions.

Our GPS products are based on proprietary receiver  technology.  The convergence
of positioning,  wireless, and information  technologies enables significant new
value  to be  added to  positioning  systems,  thereby  creating  a more  robust
solution for the user. In addition,  recent  developments in wireless technology
and deployments of next generation wireless networks have enabled less expensive
wireless communications.  These developments allow for the efficient transfer of
position data to locations away from the positioning field device,  allowing the
data to be accessed by more users and thereby increasing productivity.

Our laser and optical  products  measure  distances and angles  accurately using
light.  We generally  use  commercially  available  laser diodes to create light
beams for distance measurement. In addition, our proprietary precision mechanics

<page>

and software  algorithms  in these  products  combine to give  robust,  accurate
distance and angle  measurements for a variety of agricultural,  surveying,  and
construction applications.


Business Strategy


Our  business  strategy  leverages  our  expertise  in  positioning  to  provide
solutions for our customers, built around several key elements:

o  Attractive  markets - We focus on markets  that offer  potential  for revenue
growth, profitability, and market leadership.

o Innovative  solutions that provide significant  benefits to our customers - We
seek to apply our technology to applications  for which position data has a high
value.  We  anticipate  that  further  advances in  positioning,  wireless,  and
information  technologies  will enable new classes of  solutions  to emerge that
will create new opportunities.

o  Distribution  channels  to best  access  our  markets - We utilize a range of
distribution  channels  to best  serve the needs of  individual  markets.  These
channels  can  include  independent  dealers,   direct  sales,  OEM  sales,  and
distribution  alliances  with key  partners.  In addition,  we will  continue to
extend our international distribution.

Business Segments and Markets

We are organized  into four main  operating  segments  encompassing  our various
applications and product lines:  Engineering and Construction,  Field Solutions,
Component  Technologies,  and  Mobile  Solutions.  We also  operate  in  smaller
business  areas,   primarily  focused  on  military  and  inertial   integration
technologies,  which  aggregate  into the Portfolio  Technologies  segment.  Our
segments are  distinguished by the markets they serve.  Each segment consists of
businesses  which are responsible  for product  development,  marketing,  sales,
strategy, and financial performance, and is headed by a general manager.

Segment Realignment

In the  first  fiscal  quarter  of  2003,  we  realigned  two of our  reportable
segments.  The  Tripod  Data  Systems  (TDS)  business  is now  included  in the
Engineering  and  Construction  segment.  Previously  it  was  included  in  the
Portfolio  Technologies segment. All comparable  information for earlier periods
has been restated to conform to the new basis.

Engineering and Construction

Products in the Engineering and  Construction  segment improve  productivity and
accuracy  throughout  the entire  construction  process  including  the  initial
survey, planning, design, earthmoving, and building phases. The product emphasis
is aimed at making each individual  task more efficient,  as well as speeding up
the entire process by improving information flow from one step to the next.

We  typically  combine a number of  technologies  into  product  solutions.  The
elements of these  solutions  may  incorporate  GPS,  optical,  laser,  radio or
cellular communications, and software.

An example  of the  customer  benefits  provided  by our  product is our GPS and
robotic  optical  surveying  instruments  which  enable the  surveyor to perform
operations  in  the  field  faster,  more  reliably  and  with a  smaller  crew.
Similarly,  our  construction  machine  guidance  products allow the operator to
achieve the desired  landform by eliminating  stakeout and reducing  rework.  In
turn,  these steps in the  construction  process can be readily linked  together
with data  collection  modules  and  software  to  minimize  the time and effort
required to maintain data accuracy throughout the entire construction process.

We sell and distribute  our products from this segment  through a global network
of  independent  dealers that are supported by our sales force.  This channel is
supplemented by relationships  that create additional  channel breadth including
our joint ventures with  Caterpillar,  Nikon, and private branding  arrangements
with other companies.

<page>

We also design and market handheld data collectors and data collection  software
for field use by surveyors, contractors, and other professionals. These products
are sold directly, through dealers, and other survey manufacturers.  Competitors
in this portion of the business are small and geographically diverse.

Competitors in this segment are typically companies that provide optical, laser,
or GPS positioning  products.  Our principal  competitors are Topcon Corporation
and Leica  Geosystems.  Price points in this segment range from less than $1,000
for  certain  laser  systems to  approximately  $125,000  for a high  precision,
three-dimensional, machine control system.

Representative products sold in this segment include:

5800 RTK Rover - This is an  integrated  unit that  allows the  surveyor to make
centimeter-level  measurements or do construction stakeout with only one person.
Wireless  technology  eliminates cables that could otherwise snag on foliage and
structures.  The rover  weighs  3.5kg for an entire  system on a pole  including
batteries.

5600 Total  Station - This optical  total  station  series  provides a choice of
increasing  levels of automation that allow the surveyor to choose a system that
will best suit his  work.  Depending  on the job,  these  configurations  enable
one-person  stakeout and survey. The included Attachable Control Unit (ACU) also
works  with the 5800 RTK  Rover  providing  complete  measurement  compatibility
regardless of the technology used.

SiteVision(R)  GPS System -  SiteVision  GPS is a  machine-mounted,  positioning
system that guides the  operator by comparing  the actual  position of the blade
with the digitized design that resides in a computer on the machine.  The use of
this  system  enables  faster  machine  speed,  eliminates  the need for placing
stakes,  and  lowers  the  number of passes  needed  to get the  desired  grade.
Applications include road construction and site preparation.

Spectra  Precision(R)  Laser GL 700 Series - This laser product  provides grade
control capability for heavy equipment on a construction site. The level surface
of the laser  light  can be  precisely  controlled,  and  machines  with a laser
receiver can be  controlled  to  establish a precise and uniform  grade over the
desired area.  Applications  include  trenching,  pipe laying,  machine  control
grading, and road construction applications.

TDS  Ranger(TM)  Series - The TDS  Ranger  device is a handheld  data  collector
supporting Microsoft's Windows CE operating system. Running TDS survey software,
this unit can control and collect  data from all major brands of optical and GPS
surveying  instruments.  The  operator  can also run his or her own  application
programs for the Microsoft Windows CE operating system on the platform.

Field Solutions

Our Field Solutions segment addresses the agriculture and geographic information
system (GIS) markets.

Our agriculture products consist of manual and automated navigation guidance for
tractors and other farm equipment used in spraying,  planting,  cultivation, and
harvesting  applications.  The  benefits to the farmer  include  faster  machine
operation,  higher yields,  and lower consumption of chemicals.  We also provide
positioning   solutions   for  leveling   agricultural   fields  in   irrigation
applications  and  aligning  drainage  systems  to better  manage  water flow in
fields.

Our  distribution  to the  agricultural  market is  through  multiple  channels.
Revenue is generated  through  independent  dealers and through partners such as
CNH  Global.  Competitors  in  this  market  are  either  vertically  integrated
implement  companies  such  as  John  Deere,  or  agricultural   instrumentation
suppliers such as Raven, RHS, CSI Wireless, Beeline and Integrinautics.

Our GIS  product  line is  centered  on  handheld  data  collectors  that gather
information in the field to be incorporated  into GIS databases.  Typically this
information includes features, attributes, and positions of fixed infrastructure
and  natural  resource  assets.  An example  would be that of a utility  company
performing a survey of its transmission poles including the age and condition of
each  telephone  pole.  Our handheld  unit enables this data to be collected and
automatically  stored while  confirming the location of the asset.  The data can

<page>

then be downloaded into a GIS database.  This stored data could later be used to
navigate back to any  individual  asset or item for  maintenance or data update.
Our mobile GIS initiative goes one step further by allowing this  information to
be communicated  from the field worker to the  back-office GIS database  through
the combination of wireless  technologies  (Bluetooth and cellular),  as well as
giving the field  worker the ability to download  information  from the database
using these same wireless  technologies.  This capability  provides  significant
advantages to users including improved productivity,  accuracy and access to the
information in the field.

Distribution  for GIS  products is  primarily  through a network of  independent
dealers and business partners, supported by our sales force. Primary markets for
our  GIS  products  and  solutions  include  government,  defense  and  homeland
security,   utility  and  communications   and  natural  resources   management.
Competitors  in this market are  typically  either survey  instrument  companies
having GPS  technology  and/or  consumer GPS  companies.  Two examples are Leica
Geosystems and Thales Navigation.

Approximate  price points in this  segment  range from $3,000 for a GIS handheld
unit to $35,000 for a fully automated, farm equipment control system.

Representative products sold within this segment include:

GeoExplorer(R)  CE Series - Combines a GPS  receiver in a rugged  handheld  unit
running  Microsoft's  Windows CE operating  system that makes it easy to collect
and maintain data about objects in the field.

AgGPS(R) Autopilot System - A GPS-enabled,  agricultural  navigation system that
connects to a tractor's  steering  system and  automatically  steers the tractor
along a precise  path to within  three  centimeters  or less.  This enables both
higher machine  productivity and more precise application of seed and chemicals,
thereby reducing costs to the farmer.

AgGPS(R)  EZ-Guide(R)  System - A  GPS-enabled,  manual  guidance  system  that
provides the tractor operator with steering visual corrections  required to stay
on course to within 25  centimeters.  This system  reduces the overlap or gap in
spraying, fertilizing, and other field applications.

Component Technologies

Our  Component   Technologies   segment   provides   GPS-based   components  for
applications  that require embedded position or time. Our largest markets are in
the  telecommunications  and  automotive  industries  where we  supply  modules,
boards,  custom  integrated  circuits and  software,  or single  application  IP
licenses to the customer  according to the needs of the  application.  Sales are
made directly to original equipment  manufacturers (OEMs) and system integrators
who  incorporate  our  component  into a sub-system  or a complete  system-level
product.

In the telecommunications  infrastructure market, we provide timing modules that
keep wireless networks synchronized and on frequency. For example, CDMA cellular
telephone  networks  require  a high  level  of both  short-term  and  long-term
frequency stability for proper operation  (synchronization of  information/voice
flow to avoid  dropped  calls).  Our timing  modules  meet these needs at a much
lower cost than the atomic standards or other specially prepared components that
would otherwise be required. Customers include wireless infrastructure companies
such as Nortel, Samsung, Nokia, UTStarcom, and Andrew.

In the  automotive  and  embedded  market,  we provide a GPS  component  that is
embedded  into  in-vehicle   navigation   (IVN)  systems.   Our  focus  on  high
reliability,  continuous improvement, and low cost has earned us supplier awards
and  continuing   business  in  this  market.   Customers   include  IVN  system
manufacturers  and  integrators  such as  Siemens  VDO  Automotive  AG,  Hyundai
Automotive  Company,  Robert  Bosch  GmbH,  and Ixfin  Magneti  Marelli  Sistemi
Electronici S.P.A .

* The declining size and power  requirements  for GPS  components,  coupled with
improving  capabilities  allow  GPS to  potentially  be used in a new  class  of
applications  such as  position-aware  cellular  telephones  or  other  wireless
handheld  devices.  We expect our  strength  in GPS  technology  will expand our
participation in this market.

<page>

* Component  Technologies  continues to explore other  positioning  solutions in
addition to GPS. An example of such a solution is the  television  triangulation
technology  developed  by Rosum.  With  Rosum,  we intend to develop a family of
devices  which will greatly  extend the ability to locate both people and assets
in environments that would be difficult or impossible for GPS only solutions.

The  major  competitor  in  the   telecommunication   infrastructure  market  is
Symmetricom.  Competitors in the  automotive and embedded  markets are typically
component  companies with GPS  capability,  including  Japan Radio  Corporation,
Motorola, and SiRF.

Representative products sold by this segment include:

Thunderbolt(R)  GPS Disciplined  Clock - The Thunderbolt clock is used as a time
source for the synchronization of wireless networks. By combining a GPS receiver
with a high-quality quartz oscillator,  the Thunderbolt achieves the performance
of an atomic standard with higher reliability and lower price.

FirstGPS(R)  Technology  -  We  license  our  FirstGPS  technology,  which  is a
host-based,  GPS system  available as two  integrated  circuits  and  associated
software.  The software  runs on a  customer's  existing  microprocessor  system
complementing  the work done by the  integrated  circuit to  generate  position,
velocity,  and time.  This  low-power  technology is  particularly  suitable for
small, mobile, battery-operated applications.

Lassen(R) SQ Module - The Lassen SQ module adds complete GPS functionality to a
mobile  product  in  a  postage  stamp-sized   footprint  with  ultra-low  power
consumption,  consuming  less than 100mW at 3.3V.  This module is  designed  for
portable  handheld,  battery-powered  applications such as cell phones,  pagers,
PDAs, digital cameras, and many others.

TrimTrac(TM)  Locator - Our new  TrimTrac  product is a complete end user device
that  combines  GPS  functionality   with  tri-band  global  system  for  mobile
communications  (GSM)  wireless  communications.  It is intended for high volume
personal  vehicle and commercial  asset  management  applications  that demand a
low-cost locator device.

Mobile Solutions

Our Mobile Solutions segment addresses the market for fleet management  services
by providing a Trimble-hosted  platform  solution that bundles both the hardware
and software needed to run the application.  The software  solution is typically
provided to the user through  Internet-enabled access to our hosted platform for
a monthly  service  fee.  This  bundled  solution  enables  the  fleet  owner to
dispatch,  track,  and  monitor  the  conditions  of  vehicles in the fleet on a
real-time basis. A vehicle-mounted  unit consists of a single module including a
GPS receiver,  sensor interface, and a cellular modem. Our solution includes the
communication  service  from the  vehicle to our data center and access over the
Internet to the application software, relieving the user of the need to maintain
extensive computer operations.

We market our fleet management  services in three primary areas,  leveraging the
core platform.  Our vertical market strategy  targets  opportunities in specific
vertical  markets where we believe we can provide a unique value to the end user
by customizing the hardware and software solution for a particular industry. For
example,  the first vertical we are  addressing is ready mix concrete.  Here, we
combine a suite of sensors into a solution that can automatically  determine the
status of a vehicle without driver intervention.  Our agreement with McNeilus, a
major  manufacturer  of trucks for the ready mix concrete  and waste  management
industries,  facilitates the delivery of a complete management solution to ready
mix concrete fleet operators and refuse  haulers.  McNeilus' sales force markets
our  solution  as  a  retrofit  for  trucks  already  in  the  field,  or  as  a
factory-installed  option.  We plan on leveraging our  technology,  partners and
customers into other verticals,  such as other  construction  material  delivery
vehicles and waste management  trucks,  where a customized  solution can provide
similar benefits as in ready mix.

We also have a horizontal  market  strategy  that  focuses on providing  turnkey
solutions to a broad range of service  fleets and mobile  workers that span over
90 distinct  markets.  Here, we leverage the same general  applications that are
used in our vertical markets, however, the same level of customization,  such as
additional  sensors,  is typically not required.  These products are distributed
through individual dealers and dealer service providers, as well as after-market
automotive electronics suppliers.

<page>

Our enterprise strategy focuses on sales to large, enterprise accounts. Here, in
addition  to a  Trimble-hosted  solution,  we can also  integrate  our  software
directly  into the  customer's  IT  infrastructure,  giving them  control of the
information.  In this market we sell directly to end users and sales cycles tend
to be long due to field trials followed by an extensive decision-making process.

Approximate  prices for the hardware fall in the range of $300 to $3,000,  while
the monthly software service fees range from  approximately $20 to approximately
$55,  depending on the customer  service level.  Competition  comes largely from
service-oriented businesses such as @Road and software companies such as Command
Alkon.

Representative products sold by this division include:

Telvisant(R) System - Our fleet management service offering, Telvisant provides
different  levels  of  service  that run from  snapshots  of fleet  activity  to
real-time  fleet dispatch  capability.  Telvisant  includes truck  communication
service and computer  backbone support of the software.  Variations of Telvisant
are tailored for specific industry applications.

CrossCheck(R) Module - This hardware,  mounted on the vehicle, provides location
and  information  through  its  built-in  cellular  interface.  This module also
includes GPS positioning, sensor interfaces for vehicle conditions, and built-in
intelligence for distributed decision-making.

Portfolio Technologies

Our Portfolio Technologies segment includes various operations that aggregate to
less than 10 percent of our total  revenue.  The  products  in this  segment are
navigation  modules and embedded sensors that are used in avionics,  flight, and
military  applications.  The two  operations in this segment are  Applanix,  and
Military and Advanced Systems (MAS).

Applanix  develops,  manufactures,  sells  and  supports  high-value,  precision
products that combine GPS with inertial sensors for accurate  measurement of the
position and attitude of moving  vehicles.  Sales are made directly by our sales
force to the end users or to systems integrators. Competitors include IGI in the
airborne survey market, and iXsea and VT TSS in the marine survey market.

Our MAS  business  supplies  GPS modules  that use the  military's  GPS advanced
capabilities.  The modules are used for guiding aircraft.  Military products are
sold  directly by our sales force to either the US  Government  or a contractor.
Sales  are also  made to non-US  governments,  with the  sales of the  encrypted
components  taking place through the US  Government.  Competitors in this market
include Rockwell, L3, Raytheon, and Thales.

Representative products sold by this segment include:

Applanix POS/AV - An integrated  GPS/inertial system for airborne surveying that
measures  aircraft  position to an accuracy of a few  centimeters  and  aircraft
attitude (angular  orientation) to an accuracy of 30 arc seconds or better. This
system is typically  interfaced to large format cameras and scanning  lasers for
producing geo-referenced topographic maps of the terrain.

Force 5(TM)  Module - A dual  frequency,  embedded  GPS module that is used in a
variety of military airborne applications.

Acquisitions and Joint Ventures

Our growth strategy is centered around  developing and marketing  innovative and
complete value-added  solutions to our existing customers,  while also marketing
them to new  customers  and  geographic  regions.  To do this,  we believe it is
essential  to  continually  enhance  our  market  position,  which  has  led  to
partnering  with or acquiring  companies  that bring  technologies,  products or
distribution  capabilities  that will  allow us to enter or  penetrate  a market
quicker than if we had done so solely  through  internal  development.  Over the

<page>

past five  years,  this has led us to form two joint  ventures  and  acquire six
companies.  No assurance  can be given that our previous or future  acquisitions
will be  successful  or will  not  materially  adversely  affect  our  financial
condition or operating results.

Applanix Corporation

* On July 7, 2003, we acquired privately held Applanix  Corporation,  a Canadian
developer  of  systems  that  integrate  inertial   navigation  system  and  GPS
technologies.  We expect  the  Applanix  acquisition  to extend  our  technology
portfolio  and  enable  increased  robustness  and  capabilities  in our  future
positioning  products.  Applanix's  performance  is reported under our Portfolio
Technologies segment.

MENSI S.A.

* On December 9, 2003, we acquired privately held MENSI S.A., a French developer
of terrestrial 3D laser scanning technology.  We expect the MENSI acquisition to
enhance  our  technology  portfolio  and expand our product  offerings.  MENSI's
performance is reported under our Engineering and Construction segment.

TracerNET Corporation

* On  March 5,  2004,  we  acquired  privately  held  TracerNET  Corporation  of
Virginia,  a provider  of wireless  fleet  management  solutions.  We expect the
TracerNET  acquisition  to offer more  diverse  and  complete  fleet  management
solutions.  TracerNET's  performance will be reported under our Mobile Solutions
segment.

Nikon-Trimble Co., Ltd.

On March 28, 2003,  Trimble and Nikon  Corporation  entered into an agreement to
form a joint venture in Japan,  Nikon-Trimble  Co., Ltd., which would assume the
operations  of  Nikon  Geotecs  Co.,  Ltd.,  a  Japanese   subsidiary  of  Nikon
Corporation and Trimble Japan KK, our Japanese  subsidiary.  Nikon-Trimble began
operations in July of 2003.

Nikon-Trimble  is 50%  owned by us and 50%  owned by Nikon,  with  equal  voting
rights.  It is focusing on the design and  manufacture of surveying  instruments
including  mechanical total stations and related products.  In Japan, this joint
venture distributes Nikon's survey products as well as our survey,  agriculture,
construction  and  GIS  products.   Outside  of  Japan,  we  are  the  exclusive
distributor of Nikon survey and construction products.

* We  expect  the  joint  venture  to  enhance  our  market  position  in survey
instruments  through  geographic  expansion  and market  penetration.  The Nikon
instruments  will  broaden our survey and  construction  product  portfolio  and
enable us to better access emerging markets such as Russian, Chinese, and Indian
markets.  It will also  provide us with the  ability to sell our GPS and robotic
technology to existing Nikon customers. Additionally,  Nikon-Trimble is expected
to improve our market position in Japan.

Caterpillar Trimble Control Technologies, LLC

On April 1, 2002, we  established  and began  operations of a joint venture with
Caterpillar called Caterpillar Trimble Control Technologies,  LLC, in which each
company  has a 50%  ownership  stake and have equal  voting  rights.  This joint
venture is  developing  new  generations  of machine  control  products  for the
construction  and mining markets for  installation in the factory or as a dealer
option.

* Today, we sell  construction  machine control products to contractors  through
our dealer channel, for installation on bulldozers, motorgraders, and excavators
that are  already in the field (the  "after-market").  However,  both  companies
believe the  adoption  of the  technology  will spur  future  demand for machine
control  products  that can be  integrated  into the  design of new  Caterpillar
machines, while also available for "after-market" installation.

Patents, Licenses and Intellectual Property

We hold  approximately  600 US patents and 108 non-US  patents,  the majority of
which cover GPS technology and applications,  and over 94 of which cover optical
and laser technology and applications.

<page>

We prefer to own the intellectual property used in our products, either directly
or though  subsidiaries.  From time to time we  license  technology  from  third
parties.

There are approximately 60 trademarks registered to Trimble including "Trimble,"
the globe and triangle logo,  "AgGPS,"  "GeoExplorer,"  and  "Telvisant,"  among
others that are  registered to Trimble  Navigation  Limited in the United States
and other countries. Additional trademarks are pending registration.

Sales and Marketing

We currently  have regional sales offices  throughout  North America and Europe.
Offices  serving the rest of the world  include  Australia,  China,  Korea,  New
Zealand, Singapore, and United Arab Emirates. We tailor the distribution channel
to the needs of our products and regional markets.  Therefore,  we have a number
of forms of sales channel solutions around the world.

North America

We sell our products in the United States and Canada primarily  through dealers,
distributors,  and authorized representatives.  This channel is supplemented and
supported by our employees who provide additional sales support.  In some cases,
where third  party  distribution  is not  available,  we utilize a direct  sales
force. We also utilize  distribution  alliances and OEM relationships with other
companies as a means to serve selected markets.

International

We market to end users  through an  extensive  world wide network of dealers and
distributors.  Distributors  carry one or more product  lines and are  generally
assigned a territory.  We occasionally  grant exclusive rights to market certain
products within specified countries. See Note 3 of the Notes to the Consolidated
Financial Statements for financial information regarding joint ventures

Sales  to   unaffiliated   customers   outside  the  United   States   comprised
approximately  51% in 2003, 49% in 2002, and 50% in 2001. During the 2003 fiscal
year,  North and South  America  represented  56%,  Europe,  the Middle East and
Africa represented 31%, and Asia represented 13% of our total revenues.

Support and Warranty

The warranty periods for our products are generally  between one and three years
from date of shipment.  Selected military programs may require extended warranty
periods up to 5.5 years, certain TDS products have a 90-day warranty period, and
certain Nikon  products  have a five-year  warranty  period.  We support our GPS
products  through a circuit  board  replacement  program  from  locations in the
United  Kingdom,   Germany,  Japan,  and  the  United  States.  The  repair  and
calibration  of  our  non-GPS  products  are  available  from  company-owned  or
authorized facilities.  We reimburse dealers and distributors for all authorized
warranty repairs they perform.

While we engage in extensive  product quality programs and processes,  including
actively  monitoring  and  evaluating  the quality of component  suppliers,  our
warranty  obligation is affected by product failure rates,  material usage,  and
service delivery costs incurred in correcting a product  failure.  Should actual
product failure rates, material usage, or service delivery costs differ from the
estimates,  revisions to the estimated warranty accrual and related costs may be
required.

Seasonality of Business

* Our  revenues  are  affected  by  seasonal  buying  patterns  in  some  of our
businesses.  Over half of our  total  revenue  comes  from our  Engineering  and
Construction  business,  which  has the  biggest  seasonal  impact  on our total
revenue. This business, and therefore our total revenue, is seasonally strongest
during the second quarter due to the start of the construction  buying season in
the northern  hemisphere  in spring.  Typically,  we expect the first and fourth
quarters  to be the  seasonal  lows due to the lack of  construction  during the

<page>

winter months. If other factors such as economic conditions or underlying growth
in the business are removed,  the historical  variability in our total quarterly
revenue from seasonality has generally been less than 10 percent.

Backlog

In most of our markets,  the time between order placement and shipment is short.
Therefore,  we believe  that  backlog is not a reliable  indicator of present or
future business conditions.

Manufacturing

Manufacturing of our GPS products is subcontracted to Solectron Corporation.  We
completed the move of all Component  Technologies products to Solectron in China
in the first  quarter of 2003.  During 2003 we started  utilizing  Solectron  in
Mexico for some of our  handheld  products.  We  continue  to utilize  Solectron
California for our high-end GPS products and new product introduction  services.
Solectron is responsible for substantially all material  procurement,  assembly,
and testing.  We continue to manage product  design up through pilot  production
for the  subcontracted  products,  and we are  directly  involved in  qualifying
suppliers and key components used in all our products. Our current contract with
Solectron  continues  in effect  until  either party gives the other ninety days
written notice.

We manufacture  laser and optics-based  products at our plants in Dayton,  Ohio;
Danderyd,  Sweden; and Jena and Kaiserslautern,  Germany. Some of these products
or  portions  of these  products  are also  subcontracted  to third  parties for
assembly.

All of our  manufacturing  sites are  registered to  ISO9001:2000,  covering the
design,  production,  distribution,  and  servicing  of all  our  products.  The
Component  Technologies  segment  is  registered  to QS9000  for its  automotive
products.  QS9000  is  the  automotive  version  of  ISO9000  covering  specific
requirements for the market.

Research and Development

We believe that our competitive  position is maintained  through the development
and  introduction of new products that  incorporate  improved  features,  better
performance,  smaller size and weight,  lower cost, or some combination of these
factors.  We invest  substantially  in the development of new products.  We also
make significant investment in the positioning,  communication,  and information
technologies  that  underlie our products  and will likely  provide  competitive
advantages.

Our research and development expenditures,  net of reimbursed amounts were $67.6
million for fiscal 2003,  $61.2  million for fiscal 2002,  and $62.9 million for
fiscal 2001.

* We expect to continue  investing in research and development  with the goal of
maintaining  or  improving  our  competitive  position,  as well as the  goal of
entering new markets and satisfying new needs for positioning related solutions.
There can be no assurance that we will succeed in doing so.

Employees

As of January 2, 2004, we employed approximately 2,150 employees,  including 30%
in sales and marketing,  29% in  manufacturing,  28% in engineering,  and 13% in
general and  administrative  positions.  Approximately  45% of employees  are in
locations outside the United States.

Our employees are not  represented by unions except for those in Sweden and some
in  Germany.  We also  employ  temporary  and  contract  personnel  that are not
included in the above headcount numbers.  We have not experienced work stoppages
or similar labor actions.

Available Information

The  Company's  annual  reports  on Form 10-K,  quarterly  reports on Form 10-Q,
current  reports on Form 8-K, and all  amendments to those reports are available
free of charge on the Company's website through  www.trimble.com/investors.html,

<page>

as soon as reasonably  practicable after such material is  electronically  filed
with  or  furnished  to the  Securities  and  Exchange  Commission.  Information
contained on our website is not part of this annual report on Form 10-K.

In addition,  you may request a copy of these filings (excluding exhibits) at no
cost by writing or  telephoning  us at our  principal  executive  offices at the
following address or telephone number:

Trimble Navigation Limited
749 North Mary Avenue, Sunnyvale, CA 94085
Attention: Investor Relations
Telephone: 408-481-8000


Executive Officers

The names,  ages, and positions of the Company's  executive officers as of March
1, 2004 are as follows:

Name                      Age    Position
---------------------------------------------------------------------------
Steven W. Berglund        52     President and Chief Executive Officer
Mary Ellen P. Genovese    44     Chief Financial Officer
William C. Burgess        57     Vice President, Human Resources
Joseph F. Denniston, Jr.  43     Vice President, Operations
Bryn A. Fosburgh          41     Vice President and General Manager, 
                                    Geomatics and Engineering
Mark A. Harrington        48     Vice President of Strategy 
                                    and Business Development
John E. Huey              54     Treasurer
Irwin L. Kwatek           64     Vice President and General Counsel
Michael W. Lesyna         43     Vice President and General Manager, 
                                    Mobile Solutions
Bruce E. Peetz            52     Vice President, Advanced Technology and Systems
Christopher J. Shephard   41     Vice President and General Manager, 
                                    Construction Instruments
Anup V. Singh             33     Corporate Controller
Alan R. Townsend          55     Vice President and General Manager, 
                                    Field Solutions
Dennis L. Workman         58     Vice President and General Manager, 
                                    Component Technologies


Steven W.  Berglund - Steven  Berglund  joined  Trimble as  president  and chief
executive  officer in March 1999.  Prior to joining  Trimble,  Mr.  Berglund was
president of Spectra Precision, a group within Spectra Physics AB, and a pioneer
in the  development of laser systems.  He spent 14 years at Spectra Physics in a
variety of senior leadership positions. In the early 1980s, Mr. Berglund spent a
number of years at Varian  Associates  in Palo Alto,  where he held a variety of
planning and  manufacturing  roles.  Mr.  Berglund began his career as a process
engineer at Eastman Kodak in Rochester,  New York. He attended the University of
Oslo and the  University  of  Minnesota  where he  received a B.S.  in  chemical
engineering  in 1974.  He later  received  his  M.B.A.  from the  University  of
Rochester in New York in 1977.

Mary Ellen Genovese - Mary Ellen  Genovese,  chief financial  officer,  has been
responsible  for the overall  financial  activities of Trimble  since  September
2000. Ms.  Genovese was vice president of finance and corporate  controller from
1997 to September  2000. From 1994 to 1997, Ms. Genovese served as business unit
controller   for  Software  and   Component   Technologies,   and  Tracking  and
Communications.  She joined Trimble as controller of manufacturing operations in
December  1992.  Prior to joining  Trimble,  Ms.  Genovese  was chief  financial
officer  for Minton  Co., a  distributing  company  to the  commercial  building
market,  from 1991 to 1992.  Prior to 1991, she worked for 10 years with General
Signal Corp. in several management positions. Ms. Genovese is a certified public
accountant  and received her B.S. in  accounting  from  Fairfield  University in
Connecticut in 1981.

William C. Burgess - William  Burgess  joined  Trimble in August of 2000 as vice
president of Human  Resources.  Prior to joining  Trimble,  Mr. Burgess was vice
president of Human Resources and Management  Information Systems for Sonoma West
Holdings, Inc. From 1993 to 1997, he served as vice president of Human Resources
for Optical Coating Laboratory, from 1990 to 1993, he established and managed

<page>

the human resources function at Teknekron  Communications Systems, and from 1985
to  1990  he  was  vice  president  of  Human   Resources  for  a  $25  billion,
35,000-employee segment of Asea Brown Boveri (ABB), a global technology company.
Mr.  Burgess  received a B.S.  from the  University  of Nebraska  and an M.S. in
organizational development from Pepperdine University.

Joseph F. Denniston,  Jr. - Joseph Denniston joined Trimble as vice president of
operations in April 2001, responsible for worldwide manufacturing,  distribution
and logistics.  Prior to Trimble,  Mr.  Denniston  worked for 3Com  Corporation.
During  his  14-year  tenure,  he  served  as vice  president  of  supply  chain
management  for the  Americas and held  several  positions in test  engineering,
manufacturing engineering and operations.  Previously at Sentry Schlumberger for
seven  years,  he  held  several  positions  including  production  engineering,
production  management  and test  engineering  over  six  years.  Mr.  Denniston
received a B.S. in electrical engineering technology from the Missouri Institute
of Technology  in 1981 and an M.S. in computer  science  engineering  from Santa
Clara University in 1990.

Bryn A.  Fosburgh - Bryn  Fosburgh  was  appointed  vice  president  and general
manager  of  the  Geomatics  and   Engineering   business  in  July  2002,  with
responsibility  for all the  division-level  activities  associated with survey,
construction,  and infrastructure solutions. From October 1999 to July 2002, Mr.
Fosburgh  served as division  vice  president of survey and  infrastructure.  In
1997, Mr. Fosburgh was appointed  director of development for the Company's land
survey  business  unit  where he  oversaw  the  development  of field and office
software  that enabled the  interoperability  of Trimble  survey  products.  Mr.
Fosburgh  joined  Trimble in 1994 as technical  service  manager for  surveying,
mining,  and construction.  Prior to Trimble,  Mr. Fosburgh was a civil engineer
with the Wisconsin  Department of  Transportation  where he was  responsible for
coordinating the planning, data acquisition, and data analysis for statewide GPS
surveying  projects in support of transportation  improvement  projects.  He has
also held various  engineering,  research and  operational  positions for the US
Army Corps of Engineers and Defense Mapping Agency. Mr. Fosburgh received a B.S.
in geology from the  University of Wisconsin in Green Bay in 1985 and an M.S. in
civil engineering from Purdue University in 1989.

Mark A.  Harrington  - Mark  Harrington  joined  Trimble in January 2004 as vice
president of strategy and business  development.  Prior to joining Trimble,  Mr.
Harrington served as vice president of finance at Finisar  Corporation and chief
financial officer for both Cielo Communications, Inc. and Vixel Corporation. His
experience  also  includes  11 years at  Spectra-Physics  where he  served  in a
variety of roles including vice president of finance for Spectra-Physics Lasers,
Inc. and vice  president  of finance for  Spectra-Physics  Analytical,  Inc. Mr.
Harrington began his career at Varian  Associates,  Inc. where he held a variety
of  management  and  individual  positions  in finance,  operations  and IT. Mr.
Harrington  received his B.S. in Business  Administration from the University of
Nebraska-Lincoln.

John E. Huey - John Huey joined Trimble in 1993 as director corporate credit and
collections,  and was promoted to assistant  treasurer in 1995 and  treasurer in
1996. Past experience includes two years with ENTEX Information  Services,  five
years with  National  Refractories  and Minerals  Corporation  (formerly  Kaiser
Refractories),  and thirteen years with Kaiser Aluminum and Chemical Sales, Inc.
He has held positions in credit management,  market research, inventory control,
sales,  and as an assistant  controller.  Mr. Huey  received his B.A.  degree in
Business  Administration in 1971 from Thiel College in Greenville,  Pennsylvania
and an MBA in 1972 from West Virginia University in Morgantown, West Virginia.

Irwin L. Kwatek - Irwin Kwatek has served as vice president and general  counsel
of Trimble since November 2000.  Prior to joining  Trimble,  Mr. Kwatek was vice
president and general counsel of Tickets.com, a ticketing service provider, from
May 1999 to November 2000.  Prior to Tickets.com,  he was engaged in the private
practice  of law for more than six years.  During his  career,  he has served as
vice president and general counsel to several publicly held high-tech  companies
including   Emulex   Corporation,   Western  Digital   Corporation  and  General
Automation,  Inc. Mr. Kwatek received his B.B.A.  from Adelphi College in Garden
City, New York and an M.B.A.  from the  University of Michigan in Ann Arbor.  He
received his J.D. from Fordham University in New York City in 1968.

Michael W. Lesyna - Michael Lesyna has been vice  president and general  manager
of the Mobile  Solutions  segment since  September 2000.  Prior to Trimble,  Mr.
Lesyna spent six years at Booz Allen & Hamilton where he most recently served as
a principal in the operations  management group. Prior to Booz Allen & Hamilton,
Mr. Lesyna held a variety of engineering  positions at Allied Signal  Aerospace.
Mr.  Lesyna  received  his M.B.A.,  as well as an M.S.  and B.S.  in  mechanical
engineering from Stanford University.

<page>

Bruce E. Peetz - Bruce Peetz has served as vice president of Advanced Technology
and  Systems  since 1998 and has been with  Trimble  for 15 years.  From 1996 to
1998,  Mr.  Peetz  served as general  manager of the Survey  Business.  Prior to
joining  Trimble,   Mr.  Peetz  was  a  research  and  development   manager  at
Hewlett-Packard  for 10  years.  Mr.  Peetz  received  his  B.S.  in  electrical
engineering   from   Massachusetts   Institute  of   Technology   in  Cambridge,
Massachusetts in 1973.

Anup V. Singh - Anup  Singh has served as  corporate  controller  since  joining
Trimble  in  December  2001.  Prior  to  joining  Trimble,  Mr.  Singh  was with
Excite@Home  from July 1999 to December 2001.  During his tenure at Excite@Home,
he held the  positions of senior  director of Corporate  Financial  Planning and
Analysis,  and  international  controller.  Before  Excite@Home,  Mr. Singh also
worked for 3Com  Corporation  from December 1997 to July 1999, and Ernst & Young
LLP in San Jose, California and London,  England. Mr. Singh received his B.A. in
1991 and  M.A.  in 1995 in  economics  and  management  science  from  Cambridge
University in England.  He is also a chartered  accountant and was admitted as a
member of the Institute of Chartered Accountants in England and Wales in 1994.

Christopher  J.  Shephard - Chris  Shephard was  appointed  vice  president  and
general manager of the Construction Instruments business area in July 2002 after
serving  as  division  vice   president  of  operations  for   Engineering   and
Construction  since  Trimble's  acquisition of Spectra  Precision  Group in July
2000.  Prior to  Trimble,  Mr.  Shephard  served  from  1998 to 2000 as  Spectra
Precision's  chief  financial  officer.  Mr.  Shephard also worked for more than
eight  years at Booz  Allen &  Hamilton.  Prior to Booz  Allen &  Hamilton,  Mr.
Shephard spent three years at Copeland  Corporation,  a division of Emerson,  in
their  management-training  program.  Mr.  Shephard  received a B.A. in business
studies from Manchester Polytechnic in England in 1985 and an M.M. from the J.L.
Kellogg  Graduate  School of Management at  Northwestern  University,  Evanston,
Illinois in 1990.

Alan R.  Townsend - Alan  Townsend  has  served as vice  president  and  general
manager of the Field Solutions business area since November 2001. He also serves
as the managing director of Trimble Navigation New Zealand Ltd. for which he has
overall site responsibility. From 1995 to 2001, Mr. Townsend was general manager
of Mapping  and GIS.  Mr.  Townsend  joined  Trimble  in 1991 as the  manager of
Trimble  Navigation  New Zealand  Ltd.  Prior to Trimble,  Mr.  Townsend  held a
variety of technical  and senior  management  roles within the Datacom  Group of
companies  in New  Zealand  including  managing  director  of  Datacom  Software
Research Ltd. from 1986 to 1991. In addition,  Mr.  Townsend is a director of IT
Capital Ltd., a venture  capital company based in Auckland,  New Zealand.  He is
also a fellow of the New Zealand Institute of Management and a past president of
the New Zealand Software Exporters Association. Mr. Townsend received a B.S.c in
economics from the University of Canterbury in 1970.

Dennis L.  Workman - Dennis  Workman  has served as vice  president  and general
manager of Trimble's Component  Technologies  segment since September 1999. From
1998 to 1999, Mr. Workman was senior director and chief technical officer of the
newly formed Mobile and Timing  Technologies  (MTT) business group, also serving
as general  manager of Trimble's  Automotive  and Timing group.  In 1997, he was
director of  engineering  for  Software & Component  Technologies.  Mr.  Workman
joined Trimble in 1995 as director of the newly created Timing vertical  market.
Prior to Trimble, Mr. Workman held various  senior-level  technical positions at
Datum Inc.  During his nine year tenure at Datum,  he held the  position of CTO.
Mr. Workman  received a B.S. in mathematics  and physics from St. Mary's College
in 1967 and an M.S. in electrical  engineering from the Massachusetts  Institute
of Technology in 1969.



<PAGE>



I
tem 2            Properties

The  following  table sets forth the  significant  real  property that we own or
lease:


<table>
<caption>

Location                     Segment(s) served            Size in sq.feet Commitment
<s>                         <c>                              <c>         <c>   
Sunnyvale, California        All                              150,000     Leased, expiring 2005
                                                                          4 buildings

Huber Heights (Dayton), Ohio Engineering & Construction,      150,000     Owned, no encumbrances
                             Field Solutions                   57,200     Leased, expiring in 2011
                             Distribution                      32,800     Leased, month to month

Westminster, Colorado        Engineering & Construction,       73,000     Leased, expiring 2006
                             Field Solutions                              2 buildings

Corvallis, Oregon            Engineering & Construction        20,000     Owned, encumbered by $1.7M mortgage
                                                               21,000     Leased, expiring 2006

Chandler, Arizona            Mobile Solutions                  11,500     Leased, expiring 2004

Toronto, Canada              Portfolio Technologies            50,500     Leased, expiring 2004

Danderyd, Sweden             Engineering & Construction        93,900     Leased, expiring 2005

Christchurch, New Zealand    Engineering & Construction,       65,000     Leased, expiring 2011
                             Mobile Solutions, Field                      2 buildings
                             Solutions

Jena, Germany                Engineering & Construction        28,700     Leased, no expiration date
                                                                          12 months notice

Kaiserslautern, Germany      Engineering & Construction        26,000     Leased, expiring 2005

Raunheim, Germany            Sales                             28,700     Leased, expiring 2011
</table>



In addition, we lease a number of smaller offices around the world primarily for
sales functions.  For financial  information regarding obligations under leases,
see Note 10 of the Notes to the Consolidated Financial Statements.

* We believe that our facilities  are adequate to support  current and near-term
operations.



Item 3            Legal Proceedings

* We are from time to time a party to disputes or  litigation  incidental to our
business.  We believe that our ultimate  liability as a result of such disputes,
if any,  would not be  material to our overall  financial  position,  results of
operations, or liquidity.



Item 4            Submission of Matters to a Vote of Security Holders

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of 2003.



<PAGE>



                                     PART II


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


On January 22,  2004,  our Board of  Directors  approved a 3-for-2  split of all
outstanding shares of our common stock, payable March 4, 2004 to stockholders of
record on February 17, 2004. All shares and per share information  presented has
been adjusted to reflect the stock split on a retroactive  basis for all periods
presented.


Our  common  stock is traded on the  Nasdaq  National  Market  under the  symbol
"TRMB." The table below sets forth,  during the periods indicated,  the high and
low per share bid prices for our common stock as reported on the Nasdaq National
Market.

                                       2003                   2002
                                   Sales Price             Sales Price
           Quarter Ended          High      Low           High      Low
           -------------          ----      ---           ----      ---
           First quarter         $14.17     $8.68       $11.43     $7.84
           Second quarter         18.50     12.43        12.33      9.98
           Third quarter          19.57     14.97        10.00      6.85
           Fourth quarter         25.60     13.49         9.65      5.35

As of January 2, 2004, there were  approximately  1,055 holders of record of our
common stock.

We made the following  sales of  unregistered  securities  during the year ended
January 2, 2004.

Our merger agreement with LeveLite provides for us to make earn-out payments not
to exceed an aggregate  $3.9 million (in common stock and cash payment) based on
certain  future  revenues  and  payments  received.  Upon a hearing  before  the
California  Department of  Corporations in which the terms and conditions of the
offer to the LeveLite shareholders were approved,  the shares of Common Stock to
be  issued  in the  transaction  were  exempt  from  registration  by  reason of
qualification under Section 3(a)(10) of the Securities Act of 1933, as amended.

We made the following earn-outs in common stock during fiscal 2003:

           Date of                     Number of
           issuance                  shares issued          Price
           --------                  -------------          -----
           January 22, 2003             35,994             $ 9.35
           April 23, 2003               26,549              13.86
           July 29, 2003                20,679              16.52
           October 27, 2003             19,842              15.25

On June 30, 2003, we issued 349,251 shares of common stock to Nikon-Trimble  Co.
Ltd. We issued these  shares as a  contribution  to capital in the  formation of
Nikon-Trimble  Co. Ltd. as a joint  venture with Nikon  Corporation.  The shares
were valued at $16.95 per share and were exempt from registration  under Section
4(2) of the  Securities  Act of 1933,  as  amended,  based on the  nature of the
purchaser and the nature of the arms-length negotiated transaction.

Dividend Policy

We have not  declared or paid any cash  dividends on our common stock during any
period for which financial information is provided in this Annual Report on Form
10-K.  At this time, we intend to retain  future  earnings,  if any, to fund the
development  and growth of our  business and do not  anticipate  paying any cash
dividends on our common stock in the foreseeable future.

We are allowed to pay dividends and repurchase  shares of our common stock up to
25% of net income in the previous  fiscal year,  under the existing terms of our
credit facilities.

<page>

Equity Compensation Plan Information

The  following  table sets  forth,  as of January 2, 2004,  the total  number of
securities  outstanding  under our stock  option  plans,  the  weighted  average
exercise  price of such options,  and the number of options  available for grant
under such plans.


<table>
<caption>

Plan Category               Number of securities to   Weighted average exercise    Number of securities remaining
                            be issued upon exercise      price of outstanding       available for future issuance
                            of outstanding options,     options, warrants and      under equity compensation plans
                              warrants and rights               rights             (excluding securities reflected
                                                                                           in column (a))
                                      (a)                       (b)                             (c)
                                      ---                       ---                             ---
Equity compensation plans approved by security holders:
<s>                                <c>                        <c>                           <c> 
Stock Option Plans....              7,600,787                  $13.61                        1,643,555
Equity compensation plans
   not approved by
   security holders...                 -                          -                              -
Total.....................          7,600,787                  $13.61                        1,643,555
</table>




Item 6.  Selected Financial Data

The following selected consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations"  and  our  consolidated   financial  statements  and  related  notes
appearing   elsewhere  in  this  annual  report.   Historical  results  are  not
necessarily indicative of future results. In particular,  because the results of
operations and financial  condition  related to our acquisitions are included in
our Consolidated  Statement of Operations and  Consolidated  Balance Sheets data
commencing on those respective acquisition dates,  comparisons of our results of
operations and financial  condition for periods prior to and subsequent to those
acquisitions are not indicative of future results.

We have significant  intangible  assets on our Consolidated  Balance Sheets that
include goodwill and other purchased intangibles related to acquisitions. At the
beginning of fiscal 2002, we adopted Statement of Financial Accounting Standards
No. 141 ("SFAS 141"),  Business  Combinations,  and No. 142,  Goodwill and Other
Intangible Assets ("SFAS 142").  Application of the non-amortization  provisions
of SFAS 142 significantly  reduced amortization expense of purchased intangibles
and goodwill to  approximately  $8.3 million for the fiscal year 2002 from $29.4
million in fiscal year 2001.



<PAGE>



<table>
<caption>

                                                                                                      
                                               January 2,    January 3,  December 28,  December 29,   December 31,
Fiscal Years Ended                                2004          2003        2001           2000           1999
------------------                                ----          ----        ----           ----           ----
(Dollar in thousands, except per share data)

<s>                                          <c>            <c>         <c>           <c>            <c>       
Revenue                                       $  540,903     $ 466,602   $  475,292    $  369,798     $   271,364

Gross margin                                  $  268,030     $ 234,432   $  237,235    $  196,561     $   144,247
Gross margin percentage                              50%           50%          50%           53%             53%
 
Income (loss) from continuing operations      $   38,485     $  10,324   $ (23,492)    $   14,185     $    18,662
Gain on disposal of discontinued operations
   (net of tax)                               $        -     $       -   $      613    $        -     $     2,931

Net income (loss)                             $   38,485     $  10,324   $ (22,879)    $   14,185     $    21,593
Per common share: (1)
Income (loss) from continuing operations

  - Basic                                     $     0.81     $    0.24   $   (0.63)    $     0.40     $      0.55

  - Diluted                                   $     0.77     $    0.24   $   (0.63)    $     0.37     $      0.54
Gain on disposal of discontinued operations
   (net of tax)

  - Basic                                     $        -     $       -   $     0.01    $        -     $      0.09

  - Diluted                                   $        -     $       -   $     0.01    $        -     $      0.09
Net income (loss)

  - Basic                                     $     0.81     $    0.24   $   (0.62)    $     0.40     $      0.64

  - Diluted                                   $     0.77     $    0.24   $   (0.62)    $     0.37     $      0.63
Shares used in calculating basic earnings
   per share (1)                                  47,505        42,860       37,091        35,402          33,636
Shares used in calculating diluted earnings
   per share (1)                                  50,012        43,578       37,091        38,964          34,278
Cash dividends per share                      $        -     $       -   $        -    $        -     $         -


Total assets                                  $  544,903     $ 441,656   $  419,395    $  488,628     $   181,751
Non-current portion of long term debt and
   other liabilities                          $   85,880     $ 114,051   $  131,759    $  143,553     $    33,821

</table>


(1)  Earnings per share and shares used in  calculating  earnings per share have
been restated to reflect a three-for-two stock split in February 2004.



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

The following  discussion  should be read in conjunction  with the  consolidated
financial  statements and the related notes. The following  discussion  contains
forward-looking  statements that reflect our plans,  estimates and beliefs.  Our
actual   results   could  differ   materially   from  those   discussed  in  the
forward-looking  statements.  Factors  that could cause or  contribute  to these
differences  include,  but are not limited to, those  discussed  below and those
listed under "Risks and Uncertainties."


EXECUTIVE LEVEL OVERVIEW

We are a global  provider  of  complete,  integrated  solutions  that  provide a
seamless  flow of position  information  both in the field and between the field
and back  office.  To do this,  we  utilize  advanced  positioning  technologies
(including GPS, optical, inertial and laser technologies) combined with wireless
communications  and  applications  software,  to get data points with accuracies
down to several  millimeters.  This can increase  productivity  through time and
cost  savings,  as the need for labor is reduced,  rework from  mistakes is less
frequent, and the time to complete a job is shortened.

<page>

Our solutions  businesses,  Engineering and Construction,  Field Solutions,  and
Mobile  Solutions  make up over 80% of our  revenue.  We believe our strength in
these  businesses  stems  from our  ability  to  bring  innovative  products  or
solutions  to the  market,  as well as  effectively  train and  manage a global,
third-party  distribution  channel  that is  proficient  in  selling  technology
solutions  into  markets  that have  historically  utilized  manual and low-tech
processes.

In 2003 we  extended  our  market  and  product  capabilities  through  internal
development,  acquisitions,  and  alliances.  In July,  we  established  a joint
venture  with Nikon  Corporation,  which will extend our  presence in the global
construction  positioning market. Our acquisitions of Applanix in July and MENSI
in December added important new technologies which will enable us to develop new
applications  or broaden  current  application  solutions.  We also announced an
alliance with CNH Global, which will significantly extend our distribution reach
for our Autopilot agricultural product line.

Our other  strategic  business,  Component  Technologies,  is different from the
"solution businesses",  as it seeks to either provide GPS technology directly to
third parties,  such as OEM's and system  integrators,  or to integrate GPS into
other  technologies,   such  as  wireless.   These  products  allow  for  higher
functionality  and therefore,  a higher average selling price for our offerings.
Through greater  integration we see potential future growth  opportunities.  For
example, our recently announced TrimTrac product integrates GPS and GSM cellular
technologies into a fully functional location device. It establishes a new asset
tracking or security  capability at an aggressive price point and opens up a new
class of customers and applications which were previously not available to us.

In 2003 we  positioned  ourselves in newer  markets that will serve as important
sources of future growth. Our efforts in China, India, Russia, Korea and Eastern
Europe all reflected  improving  financial results,  with the promise of more in
the future.

With our improving  profitability,  we now have the  opportunity to re-emphasize
revenue growth.  We expect this growth to come from the  continuation of several
trends that we saw in 2003.  These trends include further  penetrating  existing
markets with  current and new  products,  continued  geographic  expansion  into
emerging markets such as Russia,  China, India, Korea and Eastern Europe, taking
advantage  of  market  consolidation,  improving  competitive  position  due  to
offering complete  solutions with a proficient dealer channel,  and entering new
markets with new products such as our TrimTrac (tm) locator and Recon  products,
fleet  management  services,  and our  inertial/GPS  positioning and orientation
systems acquired as part of Applanix.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting  policies are more fully  described in Note 1 of the Notes to the
Consolidated  Financial Statements.  The preparation of financial statements and
related disclosures in conformity with accounting  principles generally accepted
in the United States requires us to make judgments,  assumptions,  and estimates
that affect the amounts  reported in the Consolidated  Financial  Statements and
accompanying  Notes to the Consolidated  Financial  Statements.  We consider the
accounting polices described below to be our critical accounting polices.  These
critical   accounting   policies  are  impacted   significantly   by  judgments,
assumptions, and estimates used in the preparation of the Consolidated Financial
Statements, and actual results could differ materially from the amounts reported
based on these policies.

Revenue Recognition

We recognize product revenue when persuasive  evidence of an arrangement exists,
delivery has occurred,  the fee is fixed or determinable,  and collectibility is
reasonably  assured.  In  instances  where  final  acceptance  of the product is
specified  by the  customer  or is  uncertain,  revenue  is  deferred  until all
acceptance  criteria have been met. Our total deferred  revenue was $7.7 million
and $6.0  million  as of January  2, 2004 and  January  3,  2003,  respectively.
Revenue is reduced by a sales return reserve as described  under  "Allowance for
Doubtful Accounts and Sales Returns."

Revenue from purchased  extended warranty and support agreements is deferred and
recognized ratably over the term of the warranty/support  period.  Substantially
all technology  licenses and research  revenue have consisted of initial license
fees and  royalties,  which were  recognized  when  earned,  provided  we had no
remaining obligations.

<page>

Contracts  and customer  purchase  orders are  generally  used to determine  the
existence of an arrangement.  Shipping documents and customer  acceptance,  when
applicable,  are used to verify delivery.  We assess whether the fee is fixed or
determinable  based on the payment terms  associated  with the  transaction  and
whether  the  sales  price  is  subject  to  refund  or  adjustment.  We  assess
collectibility  based  primarily  on the  creditworthiness  of the  customer  as
determined  by credit  checks and analysis,  as well as the  customer's  payment
history.

Our shipment terms for US orders,  and  international  orders fulfilled from our
European  distribution  center are typically FCA (Free Carrier)  shipping point,
except   certain  sales  to  US  government   agencies  which  are  shipped  FOB
destination.  FCA shipping point means that we fulfill the obligation to deliver
when the goods are handed over,  cleared for export,  and into the charge of the
carrier  named by the buyer at the named place or point.  If no precise point is
indicated by the buyer, we may choose within the place or range stipulated where
the carrier will take the goods into carrier's charge.

Other  international  orders are  shipped  FOB  destination,  which  means these
international  orders  are not  recognized  as  revenue  until  the  product  is
delivered  and title has  transferred  to the buyer or FCA shipping  point.  FOB
destination  means  that we bear all  costs  and  risks of loss or damage to the
goods up to that point. .

Revenue to distributors and resellers is recognized upon delivery,  assuming all
other criteria for revenue recognition have been met. Distributors and resellers
do not have a right of return.

When a sale involves multiple  elements,  the entire fee from the arrangement is
allocated  to each  respective  element  based on its  relative  fair  value and
recognized  when  revenue  recognition  criteria  for each  element are met. The
amount of product revenue  allocated to an individual  element is limited to the
lesser of its relative  fair value or the amount not  contingent on our delivery
of other elements under the  arrangement,  regardless of the  probability of our
performance.

Our software  arrangements  generally consist of a license fee and post-contract
customer support (PCS). We have established  vendor-specific  objective evidence
(VSOE) of fair  value  for our PCS  contracts  based on the  renewal  rate.  The
remaining  value of the  software  arrangement  is  allocated to the license fee
using the residual method, and revenue is primarily recognized when the software
has been delivered and there are no remaining  obligations.  Revenue from PCS is
recognized ratably over the term of the PCS agreement.

Allowance for Doubtful Accounts and Sales Returns

Our accounts  receivable  balance,  net of allowance for doubtful accounts,  was
$96.2  million as of January 2, 2004,  compared with $77.6 million as of January
3, 2003.  The  allowance  for doubtful  accounts as of January 2, 2004 was $10.0
million,  compared  with $9.9  million as of January 3, 2003.  We  evaluate  the
collectibility of our trade accounts receivable based on a number of factors. In
circumstances where we are aware of a specific customer's  inability to meet its
financial obligations to us, a specific allowance for bad debts is estimated and
recorded  which reduces the  recognized  receivable  to the estimated  amount we
believe  will  ultimately  be  collected.   In  addition  to  specific  customer
identification  of potential bad debts,  bad debt charges are recorded  based on
our  recent  past  loss  history  and an  overall  assessment  of past due trade
accounts receivable amounts outstanding.

A reserve for sales returns is established based on historical trends in product
return rates  experienced  in the ordinary  course of business.  The reserve for
sales  returns as of January 2, 2004 and January 3, 2003  included  $3.3 million
and $2.7 million,  respectively, for estimated future returns that were recorded
as a reduction of our accounts  receivable  and  revenue.  If the actual  future
returns were to deviate from the  historical  data on which the reserve had been
established, our revenue could be adversely affected.

Inventory Valuation

Our  inventory  balance was $70.8  million as of January 2, 2004,  compared with
$61.1 million as of January 3, 2003.  Our inventory  allowances as of January 2,
2004 were $25.9 million,  compared with $25.2 million as of January 3, 2003. Our
inventory  is  recorded at the lower of cost or market.  We use a standard  cost
accounting  system to value inventory and these standards are reviewed a minimum
of  once a year  and  multiple  times a year in our  most  active  manufacturing
plants.  We  adjust  the  inventory  value for  estimated  excess  and  obsolete

<page>

inventory  based on our  assessment of future demand and market  conditions.  If
actual  future  demand  or  market  conditions  are less  favorable  than  those
projected by us, additional inventory write-downs may be required.

Income Taxes
 
Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are recognized for deductible temporary differences and deferred liabilities are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred  tax assets are  reduced by a  valuation  allowance  when it is
determined  to be more likely than not that some  portion or all of the deferred
tax  assets  will not be  realized.  In  evaluating  the  need  for a  valuation
allowance,  we consider future taxable income,  resolution of tax  uncertainties
and prudent and feasible tax planning  strategies.  In fiscal year 2003, we have
recorded a deferred tax asset of $7.6 million that is more likely than not to be
realized.  We need to generate  $20.0 million of future US income to realize the
deferred tax asset.

If we determine that we would not be able to realize all or part of our deferred
tax assets in the future,  an adjustment  to the carrying  value of the deferred
tax assets would be charged to income in the period in which such  determination
is made.

Our effective income tax rates from continuing operations for fiscal years 2003,
2002 and 2001 were (8%),  25% and (9%),  respectively.  The 2002 and 2001 income
tax rates differ from the US federal  statutory  rate of 35%,  due  primarily to
non-US taxes and the inability to realize the benefit of net  operating  losses.
The  2003  income  tax rate is less  than the US  federal  statutory  rate,  due
primarily to the  realization  of benefits from net  operating  losses and other
previously reserved deferred tax assets.

Goodwill Impairment

Goodwill as of January 2, 2004 was $241.4 million,  compared with $205.9 million
as of January 3, 2003. We perform  goodwill  impairment tests on an annual basis
for each  reporting  unit.  Based on impairment  tests  performed,  there was no
impairment of our goodwill in fiscal 2003 and 2002.
 
For  goodwill,  the annual  impairment  evaluation  includes a comparison of the
carrying  value of the reporting  unit  (including  goodwill) to that  reporting
unit's fair value.  If the  reporting  unit's  estimated  fair value exceeds the
reporting unit's carrying value, no impairment of goodwill  exists.  If the fair
value of the reporting unit does not exceed the unit's carrying  value,  then an
additional  analysis is performed  to allocate  the fair value of the  reporting
unit to all of the assets and  liabilities of that unit as if that unit had been
acquired  in a  business  combination  and the  fair  value  of the unit was the
purchase  price.  If the excess of the fair value of the reporting unit over the
fair value of the identifiable  assets and liabilities is less than the carrying
value  of the  unit's  goodwill,  an  impairment  charge  is  recorded  for  the
difference.

We cannot predict the  occurrence of certain future events that might  adversely
affect the reported value of goodwill.  Such events include, but are not limited
to, strategic decisions made in response to economic and competitive conditions,
the impact of the  economic  environment  on our  customer  base,  or a material
negative change in our relationships with significant customers.

Accounting  for  the  Long-Lived   Assets  Including   Intangibles   Subject  to
Amortization

Depreciation  and  amortization  of our  long-lived  assets  is  provided  using
straight-line   methods  over  their   estimated   useful   lives.   Changes  in
circumstances  such as the  passage  of new  laws  or  changes  in  regulations,
technological advances, changes to our business model, or changes in the capital
strategy  could  result  in the  actual  useful  lives  differing  from  initial
estimates.  In  those  cases  where  we  determine  that  the  useful  life of a
long-lived  asset should be revised,  we will  depreciate  the net book value in
excess of the estimated  residual value over its revised  remaining useful life.
Factors  such as changes in the planned use of  equipment,  customer  attrition,
contractual  amendments,  or mandated  regulatory  requirements  could result in
shortened useful lives.
 
Long-lived assets and asset groups are evaluated for impairment  whenever events
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable.  The estimated future cash flows are based upon, among other

<page>

things,  assumptions about expected future operating  performance and may differ
from actual cash flows.  Long-lived  assets evaluated for impairment are grouped
with other  assets to the  lowest  level for which  identifiable  cash flows are
largely independent of the cash flows of other groups of assets and liabilities.
If the sum of the projected undiscounted cash flows (excluding interest) is less
than the  carrying  value of the assets,  the assets will be written down to the
estimated fair value in the period in which the determination is made.

Warranty Costs

The  liability  for product  warranties  was $5.1 million as of January 2, 2004,
compared  with $6.4  million as of January 3, 2003.  (See Note 1 of the Notes to
the  Consolidated  Financial  Statements for further  information  regarding our
warranty liability.) The warranty periods for our products are generally between
one and three  years  from date of  shipment.  Selected  military  programs  may
require extended  warranty periods up to 5.5 years,  certain TDS products have a
five year or 90-day warranty period, and certain Nikon products have a five year
warranty period. We accrue for warranty costs as part of our cost of sales based
on associated material costs and technical support labor costs. Material cost is
primarily  estimated  based  upon  historical  trends in the  volume of  product
returns  within  the  warranty  period  and the cost to  repair or  replace  the
equipment.

While we engage in extensive  product quality programs and processes,  including
actively monitoring and evaluating the quality of our component  suppliers,  our
warranty  obligation is affected by product failure rates,  material usage,  and
service delivery costs incurred in correcting a product  failure.  Should actual
product failure rates, material usage, or service delivery costs differ from our
estimates,  revisions to the estimated warranty accrual and related costs may be
required.

Stock Compensation

We apply  Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock
Issued to Employees" (APB 25) and related  interpretations in accounting for our
stock option plans and stock  purchase  plan.  Accordingly,  we do not recognize
compensation  cost for stock  options  granted at a price  equal to fair  market
value. Note 13 of the Notes to the Consolidated  Financial  Statements describes
the  plans we  operate,  and Note 1 of the Notes to the  Consolidated  Financial
Statements  contains a summary of the pro forma  effects to reported  net income
(loss) and earnings  (loss) per share for fiscal 2003,  2002,  and 2001 as if we
had  elected  to  recognize  compensation  cost  based on the fair  value of the
options granted at grant date.

Investment in Joint Ventures

We have  adopted the equity  method of  accounting  for our  investments  in the
Caterpillar and Nikon joint ventures.  This requires that we record our share of
the joint  ventures'  profits or losses in a given fiscal period.  See Note 3 of
the Notes to the Consolidated Financial Statements for joint venture accounting.

Upon the formation of our Caterpillar joint venture in April 2002, we received a
cash  distribution  of  $11.0  million.  We  have  elected  to  treat  the  cash
distribution  as a deferred gain,  being amortized to the extent that losses are
attributable  from  the  Caterpillar  joint  venture  under  the  equity  method
described  above.  When and if the joint  venture is profitable on a sustainable
basis and future operating losses are not anticipated, then we will recognize as
a gain, the portion of the $11.0 million,  which is  unamortized.  To the extent
that it is possible that we will have any future-funding  obligation relating to
the  Caterpillar  joint venture,  then the relevant  amount of the $11.0 million
will be deferred  until such time that the funding  obligation no longer exists.
As of January 2, 2004,  the balance of the  unamortized  deferred  gain was $9.8
million.

RECENT BUSINESS DEVELOPMENTS

Nikon-Trimble Joint Venture

On March 28, 2003,  Trimble and Nikon  Corporation  entered into an agreement to
form a joint venture in Japan, Nikon-Trimble Co., Ltd. ("Nikon-Trimble"),  which
would assume the operations of Nikon Geotecs Co., Ltd., a Japanese subsidiary of
Nikon Corporation and Trimble Japan KK, our Japanese  subsidiary.  Nikon-Trimble
began operations in July of 2003.

<page>

Under the terms of the Nikon-Trimble agreement, Nikon contributed (Y)1.2 billion
(approximately  US$10  million on June 30, 2003) in cash,  while we  contributed
(Y)500  million  (approximately  US$4.1 million as of June 30, 2003) in cash and
(Y)700  million of our common stock or 349,251  shares  valued at  approximately
US$5.9 million on June 30, 2003.  Nikon-Trimble  purchased  certain tangible and
intangible assets from Nikon Geotecs Co., Ltd., and Trimble Japan KK.

Nikon-Trimble  is 50%  owned by us and 50%  owned by Nikon,  with  equal  voting
rights  for  both.  Nikon-Trimble  focuses  on the  design  and  manufacture  of
surveying  instruments including mechanical total stations and related products.
In Japan, this joint venture will distribute  Nikon's survey products as well as
our GPS  survey  products  and  other  Engineering  and  Construction  products,
including  robotic  total  stations.  Outside  Japan,  we will be the  exclusive
distributor of Nikon survey and construction products.

* We  expect  the  joint  venture  to  enhance  our  market  position  in survey
instruments through geographic expansion and market penetration. Nikon's line of
instruments  will  broaden our survey and  construction  product  portfolio  and
enable us to better access  emerging  markets.  It will also provide us with the
ability to sell our GPS and  robotic  technology  to existing  Nikon  customers.
Additionally,  we expect to improve our market  position in Japan because of the
Nikon-Trimble distribution network.

Acquisitions

Applanix Corporation

* On July 7, 2003, we acquired privately held Applanix  Corporation,  a Canadian
developer  of  systems  that  integrate  inertial   navigation  system  and  GPS
technologies.  We expect  the  Applanix  acquisition  to extend  our  technology
portfolio  and  enable  increased  robustness  and  capabilities  in our  future
positioning  products.  Applanix's  performance  is reported under our Portfolio
Technologies segment.

MENSI S.A.

* On December 9, 2003, we acquired privately held MENSI S.A., a French developer
of terrestrial 3D laser scanning technology.  We expect the MENSI acquisition to
enhance  our  technology  portfolio  and expand our product  offerings.  MENSI's
performance is reported under our Engineering and Construction segment.

The combined purchase price of Applanix and MENSI was approximately $25 million.

TracerNET Corporation

* On  March 5,  2004,  we  acquired  privately  held  TracerNET  Corporation  of
Virginia,  a provider  of wireless  fleet  management  solutions.  We expect the
TracerNET  acquisition  to offer more  diverse  and  complete  fleet  management
solutions.  TracerNET's  performance will be reported under our Mobile Solutions
segment.

RESULTS OF OPERATIONS

The  following  table  shows  revenue  and  operating  income by segment for the
periods  indicated  and  should  be  read  in  conjunction  with  the  narrative
descriptions below.  Operating income by segment excludes unallocated  corporate
expenses  which are  comprised  primarily of general and  administrative  costs,
amortization  of purchased  intangibles as well as other items not controlled by
the business  segment.  Segment operating income for fiscal 2002 and fiscal 2001
have been restated to reflect the allocations of certain  corporate  expenses so
as to be comparable with the allocation methodology in fiscal 2003.

At the beginning of fiscal 2003, we realigned  two of our  reportable  segments.
The following  table shows restated  revenue and operating  income by segment to
reflect this  realignment.  The Tripod Data Systems  business is now included in
the  Engineering  and  Construction  segment and was previously  included in the
Portfolio Technologies segment.

<page>

<table>
<caption>

                                                            January 2,       January 3,      December 28,
Fiscal Years Ended                                             2004             2003             2001
------------------                                             ----             ----             ----
(Dollars in thousands)
<s>                                                        <c>              <c>              <c>     
Total consolidated revenue                                  $540,903         $466,602         $475,292
Total consolidated operating income                          $83,586          $62,320          $62,306

Engineering and Construction

   Revenue                                                  $367,058         $319,615         $317,849
   Segment revenue as a percent of total revenue                 68%              68%              67%

   Operating income                                           60,664           53,453           49,849
   Operating income as a percent of segment revenue              17%              17%              16%
Field Solutions

   Revenue                                                    79,879           67,259           68,519
   Segment revenue as a percent of total revenue                 15%              14%              14%

   Operating income                                           14,500            9,676           11,349
   Operating income as a percent of segment revenue              18%              14%              17%
Mobile Solutions

   Revenue                                                    12,981            8,486           13,791
   Revenue as a percent of total consolidated revenue             2%               2%               3%

   Operating loss                                            (6,452)         (12,039)          (9,990)
   Operating loss as a percent of segment revenue              (50%)           (142%)            (72%)
Component Technologies

   Revenue                                                    64,193           59,755           58,083
   Segment revenue as a percent of total revenue                 12%              13%              12%

   Operating income                                           16,560           10,673           10,359
   Operating income as a percent of segment revenue              26%              18%              18%
Portfolio Technologies

   Revenue                                                    16,792           11,487           17,050
   Segment revenue as a percent of total revenue                  3%               2%               4%

   Operating income (loss)                                   (1,686)              557              738
   Operating income (loss) as a percent of segment
     revenue                                                   (10%)               5%               4%

</table>


A  reconciliation  of  our  consolidated  segment  operating  income  (loss)  to
consolidated income before income taxes follows:



<table>
<caption>

                                                  January 2,   January 3,   December 28,
Fiscal Years Ended                                   2004         2003         2001
------------------                                   ----         ----         ----
(In thousands)
<s>                                              <c>          <c>  
Consolidated segment operating income from
  continuing operations                           $ 83,586     $  62,320    $   62,306
Unallocated corporate expense                     (20,320)      (19,098)      (29,137)
Amortization of purchased intangible assets        (7,312)       (8,300)      (29,389)
Restructuring charges                              (2,019)       (1,099)       (3,599)
Non-operating expense, net                        (18,350)      (19,999)      (21,773)
                                                  --------      --------      --------
Consolidated income (loss) before income taxes    $ 35,585     $  13,824    $ (21,592)
                                                  ========     =========    ==========
</table>



<PAGE>


Basis of Presentation

We have a 52-53 week fiscal year,  ending on the Friday  nearest to December 31,
which for fiscal  2003 was January 2, 2004.  Fiscal 2003 was a 52-week  year and
fiscal  2002 a  53-week  year.  As a result of the  extra  week in fiscal  2002,
year-over-year  results are not exactly  comparable.  Thus,  due to the inherent
nature  of  adopting  a  52-53  week  fiscal  year,   the   Company,   analysts,
shareholders, investors, and others will have to make appropriate adjustments to
any analysis performed when comparing our activities and results in fiscal years
that contain 53 weeks to those that  contain the standard 52 weeks.  Fiscal year
2001 comprised 52 weeks.

Impact of Weaker US Dollar on Operating Income in Fiscal 2003

The  depreciation of the US dollar versus major European  currencies  positively
impacted  revenues by  approximately  $15.3 million in fiscal 2003 compared with
fiscal  2002.  As a  result  of  our  significant  manufacturing,  distribution,
research and development,  and selling expenses  incurred outside of the US, the
weaker US dollar negatively  impacted our operating income by approximately $5.9
million in fiscal 2003.

Revenue

In fiscal 2003,  total  revenue  increased  by $74.3  million or 15.9% to $540.9
million  from $466.6  million in fiscal  2002.  The  increase in fiscal 2003 was
primarily due to stronger  performances in all of our operating  segments driven
by the new  product  offerings,  increased  acceptance  of our  products  in the
markets we serve, expanded distribution and selective acquisitions,  as well the
positive  impact  of the  weaker  US dollar on  revenues  generated  in  foreign
currencies,  primarily the Euro.  Total revenue in fiscal 2002 decreased by $8.7
million or 1.8% to $466.6 million from $475.3 million in fiscal 2001,  primarily
due to the reduction of revenue in Mobile  Solutions and Portfolio  Technologies
segments.

International Revenues

* Total revenue outside the United States comprised  approximately  51% in 2003,
49% in 2002,  and 50% in 2001.  During  the 2003  fiscal  year,  North and South
America represented 56%, Europe, the Middle East and Africa represented 31%, and
Asia  represented  13% of total  revenues.  In fiscal  2003,  the United  States
comprised  approximately  49% of total  revenues.  We  anticipate  that sales to
international  customers  will continue to account for a significant  portion of
our  revenue.  For this  reason,  we are subject to the risks  inherent in these
foreign sales, including unexpected changes in regulatory requirements, exchange
rates,  governmental  approval,  tariffs, or other barriers.  Even though the US
Government  announced on March 29, 1996,  that it supports and maintains the GPS
system,  and on May 1, 2000,  stated that it has no intent to restore  Selective
Availability,  a method of degrading  GPS  accuracy,  there may be reluctance in
certain non-US markets to purchase such products given the control of GPS by the
US Government.  Our results of operations could be adversely affected if we were
unable to continue to generate significant sales in locations outside the US.

* No single  customer  accounted for 10% or more of our total revenues in fiscal
2003,  2002,  and 2001.  It is  possible,  however,  that in future  periods the
failure  of one or more large  customers  to  purchase  products  in  quantities
anticipated by us may adversely affect the results of operations.

Gross Margin

Our gross  margin  varies  due to a number of  factors  including  product  mix,
international  sales mix,  customer type, the effects of production  volumes and
fixed manufacturing costs on unit product costs, new product start-up costs, and
foreign  currency  translations.  Gross margin as a percentage of total revenues
was 49.6 % in fiscal 2003 and 50.2% in fiscal 2002. The slight decrease in gross
margin percentage for fiscal 2003,  compared with fiscal 2002, was due primarily
to the introduction of the Nikon products in the third quarter which generated a
lower consolidated gross margin of approximately 0.8%. This was partially offset
by stronger sales of TDS, GIS, wireless infrastructure,  survey products as well
as our ongoing focus on product cost reductions. Shipping and handling costs are
included in cost of goods sold.

<page>

Gross  margin as a  percentage  of total  revenues  was 50.2% in fiscal 2002 and
49.9% in fiscal 2001. The slight increase in gross margin  percentage for fiscal
2002,  compared with fiscal 2001, was due in part to approximately  $3.3 million
of additional  charges  associated with the write down of obsolete  inventory in
fiscal 2001 related to the  rationalization  and simplification of product lines
and inventories in excess of our forecasted 12-month demand.

* Because  of  potential  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.  In addition,  should the global
economic  conditions  deteriorate,  gross  margin  could  be  further  adversely
impacted.

Engineering and Construction

Engineering and Construction  revenues increased by $47.4 million or 14.8% while
segment  operating  income increased by $7.2 million or 13.5% for fiscal 2003 as
compared to fiscal 2002.  Approximately  half of the revenue increase was driven
by new product  introductions and our increased marketing efforts. The remaining
increase was split evenly between geographic  expansion,  especially in Asia and
Russia,  and the  impact  of the  weaker US  dollar.  Segment  operating  income
increased  due to higher  revenues  that  were  partially  offset  by  increased
operating  expenses  outside the United States  (largely driven by the weaker US
dollar),  increased research and development  spending on certain programs as we
continue to invest in developing  next  generation  technology and lower margins
earned on the sale of Nikon products. Overall, segment operating income remained
consistent at 17% of revenues.

Engineering and Construction  revenues  increased by $1.8 million or 0.6% during
fiscal 2002 as compared to fiscal 2001 primarily due to the LeveLite acquisition
which added $3.6  million of  revenues,  and strong  performance  by our machine
control  product  offering as we  continue to  penetrate  the  after-market  for
machine  guidance on earthmoving  equipment.  Increased  revenues were partially
offset by a  reduction  in revenues in several  product  areas due to  continued
difficult global economic conditions. Segment operating income increased by $3.6
million or 7.2% in fiscal 2002 over fiscal 2001  primarily due to a reduction of
$4.2  million of  operating  expenses  due to the  transfer of  employee-related
expenses to Caterpillar Trimble Control Technologies.  Higher revenues and lower
operating  expenses  were  partially  offset by a reduction in gross margin as a
result of product sales mix during fiscal 2002.

Field Solutions

Field Solutions revenues increased by approximately $12.6 million or 18.8% while
segment operating income increased by $4.8 million or 49.9% for fiscal year 2003
as compared to fiscal  2002.  Revenues  were up year over year due to  continued
strong sales of the  GeoExplorer(R)  CE series handhelds  released at the end of
fiscal 2002,  and due to the expansion of our automatic  guidance  products onto
new agricultural vehicles.

Segment  operating  income increased in 2003 from the fiscal year 2002 primarily
due to higher revenues. This increase was partially offset by fractionally lower
gross  margins  and more  investment  in  research  and  development  and  sales
functions. This enabled the segment operating income to increase from 14% to 18%
of revenues.

Field Solutions  experienced a revenue decline in fiscal 2002 of $1.3 million or
1.8% compared with fiscal 2001 primarily due to the decline in the United States
federal,  state, and local government spending and a delay in the release of the
new  GeoExplorer(R) CE Series due to component supply issues.  This decrease was
partially  offset by the increased  demand for both the manual and auto guidance
product lines.  Segment  operating  income decreased by $1.7 million or 14.7% in
fiscal  2002 over  fiscal  2001  primarily  due to the  decrease  in  government
spending  described above and lower gross margin due to product sales mix, which
was more weighted toward the relatively lower margin agricultural business area.

Mobile Solutions

Mobile Solutions  revenues  increased by $4.5 million or 53% in fiscal 2003 over
fiscal 2002 due  primarily to an increase in our  CrossCheck  product  sales and
higher fleet management  services  revenues as a result of an expanded  customer
base.  Segment  operating loss decreased by $5.6 million or 46.4% in fiscal 2003
over  fiscal  2002 due to  increased  revenues  and  lower  operating  expenses.
Operating  expenses  decreased by approximately  $3.0 million primarily due to a
reduction in outside services and our personnel related to the completion of our
Telvisant system.

<page>

Mobile Solutions revenues decreased by $5.3 million or 38.5% in fiscal 2002 over
fiscal 2001 primarily due to the reduction of approximately  $3.0 million in our
satellite communications business as a result of our decision to discontinue the
Galaxy(TM)  Inmarsat-C  product  line in  early  2001,  a slow  down  in  system
integration  projects  due to reduced  spending at  municipalities,  and reduced
sales of wireless  products of $0.9  million due to a  transition  from a sensor
provider to a fully  integrated  service  provider.  Sales of some product lines
were down as a result of the economic slow down and the shift of technology from
analog to digital.

Segment  operating  loss  increased by $2.0 million or 20.5% in fiscal 2002 over
fiscal  2001  primarily  due to the  lower  revenues  as  described  above,  and
increased costs incurred in the development and marketing of a service  platform
to enable a range of asset management solutions.

Component Technologies

Component Technologies revenues increased by $4.4 million or 7.4%, while segment
operating  income increased by $5.9 million or 55.2% for the fiscal year 2003 as
compared to fiscal 2002. The increase in revenues was primarily due to increased
demand from our existing wireless  infrastructure  customers.  Segment operating
income increased from 18% to 26% of revenues.  The increase was primarily due to
a reduction in costs of goods sold due to the transfer of the  manufacturing  of
our products to China,  reduced costs of raw materials,  increased  revenues and
higher margins aided by favorable product mix.

Component Technologies revenues increased by $1.7 million or 2.9% in fiscal 2002
over fiscal 2001 due primarily to a timing products  increase of $4.6 million in
fiscal 2002 over fiscal 2001 due to significant demand during the second half of
fiscal 2002 from new and existing wireless infrastructure customers. IVN revenue
decreased $1.0 million in fiscal 2002 over fiscal 2001 as average selling prices
declined by more than 9%, and license  revenue  decreased $1.7 million in fiscal
2002 over fiscal 2001 due to an expired license contract. Component Technologies
operating income increased by $0.3 million or 3% in fiscal 2002 over fiscal 2001
as a result of higher gross margins resulting from higher revenues and favorable
product  mix,  partially  offset  by higher  operating  expenses,  primarily  in
research and development and marketing.

Portfolio Technologies

Portfolio  Technologies  revenues  increased  by $5.3  million  or 46.2% for the
fiscal year 2003 as compared to fiscal 2002. The increase in revenues was mostly
driven by the inclusion of revenue from Applanix  acquired in 2003, while offset
by  lower  revenue  of  military-related   products.  Segment  operating  income
decreased  by $2.2  million or 402.7% for fiscal 2003 as compared to fiscal 2002
due to weaker operating results from military products.

Portfolio  Technologies  revenues  decreased  by $5.6 million or 32.6% in fiscal
2002 over fiscal 2001 primarily due to lost revenues of $4.4 million as a result
of the sale of our air  transport  product  line to  Honeywell  in fiscal  2001.
Portfolio  Technologies  operating  income decreased by $0.2 million or 24.5% in
fiscal 2002 over fiscal 2001 due to the lower  revenues which was offset by cost
reduction initiatives.




<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>

                                                     January 2,       January 3,     December 28,
Fiscal Years Ended                                     2004             2003            2001
------------------                                     ----             ----            ----
(In thousands)
<s>                                                 <c>              <c>             <c>      
Research and development                             $  67,641        $  61,232       $  62,881
Sales and marketing                                     97,870           89,344         103,778
General and administrative                              39,253           40,634          37,407
Restructuring charges                                    2,019            1,099           3,599
Amortization of goodwill and other purchased
  intangible assets                                      7,312            8,300          29,389
                                                         -----            -----          ------
Total operating expenses                             $ 214,095        $ 200,609       $ 237,054
                                                     =========        =========       =========
</table>


Research and Development

Research and development  expenses increased by $6.4 million to $67.6 million in
fiscal 2003 over  fiscal 2002 due to  continued  investment  in next  generation
technology  primarily in the Engineering and Construction  segment, the weakness
of the US dollar versus major European and New Zealand currencies,  and also the
inclusion of the research  and  development  expenses  from  Applanix  after the
acquisition  in July 2003.  Overall  spending  remained  relatively  constant at
approximately  13% of revenues.  All of our research and development  costs have
been expensed as incurred.

Research and development  spending  decreased by $1.6 million during fiscal 2002
as compared to fiscal 2001 and represented  13% of revenue,  consistent with 13%
in fiscal 2001,  primarily due to the transfer of  employee-related  expenses to
our Caterpillar joint venture of approximately $2.8 million, partially offset by
an increase in engineering  expenses  associated  with the  introduction  of new
products.

* We believe that the development and  introduction of new products are critical
to the our future  success and we expect to continue  active  development of new
products.

Sales and Marketing

Sales and  marketing  expenses  increased  by $8.5  million to $97.9  million in
fiscal 2003 over fiscal 2002 primarily due to higher  revenue,  increased  sales
efforts mostly in emerging geographic areas such as China and Russia, the impact
of the weaker US dollar in  Europe,  and the  inclusion  of  Applanix  sales and
marketing  expenses not  applicable in the prior fiscal year. As a percentage of
revenue, sales and marketing expenses decreased from 19% to 18%.

Sales and  marketing  expenses  decreased  by $14.4  million in fiscal  2002 and
represented  19% of revenue,  compared  with 22% in fiscal 2001.  During  fiscal
2001,  we sold off many of our direct sales offices  which  decreased  sales and
marketing  expenses  by  approximately  $7.0  million  for fiscal  2002,  and we
decreased overall compensation, travel, advertising, promotional, and trade show
expenses  by  approximately  $7.4  million  for  fiscal  2002  compared  to  the
corresponding period in fiscal 2001.

* Our future growth will depend in part on the timely  development and continued
viability of the markets in which we currently compete as well as our ability to
continue to identify and exploit new markets for our products.

General and Administrative

General and administrative  expenses in fiscal 2003 decreased by $1.4 million to
$39.3  million and  represented  7.3% of revenues  compared  with 8.7% in fiscal
2002. In fiscal 2002, we experienced higher bad debt expenses,  primarily due to

<page>

the bankruptcy of a large Japanese  distributor.  In addition, in fiscal 2003 we
incurred $3.0 million less in information  systems  expenses.  These  reductions
were offset in fiscal 2003 by lower  sublease  income  received,  expenses  from
Applanix after the acquisition in July 2003, and higher compensation costs.

General and  administrative  expenses  increased  by $3.2 million in fiscal 2002
representing 9% of revenue,  compared with 8% in fiscal 2001 primarily due to an
increase in bad debt  provisions  related to customers in an uncertain  economic
environment  and bad debt expenses for accounts  written off during the year due
to customer defaults.

Restructuring Charges

Restructuring charges of $2.0 million were recorded in fiscal 2003, $1.1 million
in fiscal  2002,  and $3.6  million  in fiscal  2001,  all of which  related  to
severance  costs,  except for $0.3 in 2003 which  related to lease  costs of our
Japanese  office  closure  due to the Nikon  joint  venture.  As a result of the
restructuring  activities,  our headcount decreased by 77, 49, and 207 in fiscal
2003,  2002, and 2001,  respectively.  As of January 2, 2004, the  restructuring
accrual  balance  was  approximately  $0.4  million  which will be paid over the
remaining term of the lease through 2006.

Amortization of Goodwill, Purchased and Other Intangible Assets

                                           January 2,   January 3,  December 28,
Fiscal Years Ended                            2004         2003         2001
------------------                            ----         ----         ----
(in thousands)
Amortization of goodwill and purchased 
   intangibles(1)                           $   7,312     $  8,300    $ 29,389
Amortization of other intangible assets           604          868         917
                                                  ---          ---         ---
Total amortization of goodwill, purchased,
   and other intangible assets              $   7,916     $  9,168    $ 30,306
                                            =========     ========    ========

(1) Amortization of goodwill in 2001 only.

Amortization expense of purchased and other intangibles decreased in fiscal 2003
by approximately $1.3 million representing 1.5% of revenue,  compared with 2% in
fiscal 2002.  The decrease was due to certain  Spectra  intangibles  being fully
amortized during fiscal 2003.

Amortization expense of goodwill,  purchased, and other intangibles decreased in
fiscal 2002 by approximately $21.1 million representing 2% of revenue,  compared
with 6% in fiscal 2001.  The decrease was  primarily  due to the adoption of FAS
142 in fiscal  2002 that does not  require  the  amortization  of  goodwill  and
intangible assets with indefinite lives.

Non-operating Expense, Net

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

                                         January 2,    January 3,   December 28,
Fiscal Years Ended                          2004          2003          2001
------------------                          ----          ----          ----
(in thousands)

Interest income                          $      465   $     659     $    1,118
Interest expense                           (11,938)    (14,710)       (22,224)
Foreign exchange loss                         (592)       (823)          (237)
Expenses for affiliated operations, net     (6,403)     (3,954)              -
Other income (expense)                          118     (1,171)          (430)
                                                ---     ------           ---- 
Total non-operating expense, net         $ (18,350)   $(19,999)     $ (21,773)
                                         =========    ========      ========= 


Non-operating expense, net decreased by $1.6 million or 8% during fiscal 2003 as
compared with fiscal 2002  primarily  due to a reduction in interest  expense of
$2.8 million  offset by an increase in expenses for affiliated  operations.  The

<page>

increase in expenses for affiliated operations is primarily due to the full year
impact  of  transfer  pricing  effects  on  transactions   between  us  and  our
Caterpillar joint venture, which commenced operations in April 2002. (See Note 3
of the Notes to the Consolidated  Financial Statements for financial information
regarding joint ventures).  In addition, we recorded  approximately $0.3 million
relating to our share of the losses in our Nikon joint  venture  established  in
2003.

In fiscal 2003,  interest expense decreased by approximately $2.8 million due to
continued  debt  repayment  during  the  year of  approximately  $51.8  million,
combined  with the effect of lower  interest  rates.  Offsetting  the lower debt
interest,  during the year, we recorded  approximately  $3.6 million of interest
expense due to the write off of $2.3 million of unamortized  debt issuance costs
as a result  of our  debt  refinancing  in June  2003,  as well as $1.3  million
related to the  unamortized  portion of warrants  associated  with the principal
balance of our  Subordinated  Note. (See Note 9 of the Notes to the Consolidated
Financial Statements for financial information regarding our Subordinated Note.)

Non-operating  expense,  net  decreased  by $1.8 million  during  fiscal 2002 as
compared with fiscal 2001, as a result of a decrease in net interest  expense of
$7.1 million due to  significant  repayment of debt balances  during the year of
approximately  $52 million,  combined with the effect of lower  interest  rates.
This was partially offset by expenses recorded for affiliated operations of $4.0
million as a result of transfer  pricing effects on transactions  between us and
our  Caterpillar  joint  venture,  an increase in foreign  exchange loss of $0.6
million, and a write-down of minority investment of $1.5 million.

Income Tax Provision

Our effective income tax rates from continuing operations for fiscal years 2003,
2002, and 2001 were (8%), 25% and (9%),  respectively.  The fiscal 2002 and 2001
income tax rates differ from the US federal  statutory rate of 35% due primarily
to non-US  taxes and the  inability  to realize  the  benefit  of net  operating
losses.  The 2003  income tax rate is less than the US federal  statutory  rate,
primarily due to the realization of benefits from net operating losses and other
previously reserved deferred tax assets.

Litigation Matters

* From time to time, we are involved in  litigation  arising out of the ordinary
course of our business. There are no known claims or pending litigation that are
expected to have a material effect on our overall financial position, results of
operations, or liquidity.

Off-balance Sheet Financings and Liabilities
 
Other than lease  commitments  incurred in the normal course of business,  we do
not have any off-balance sheet financing arrangements or liabilities,  guarantee
contracts,  retained or  contingent  interests  in  transferred  assets,  or any
obligation  arising out of a material  variable  interest  in an  unconsolidated
entity. We do not have any majority-owned  subsidiaries that are not included in
the consolidated financial statements. Additionally, we do not have any interest
in, or relationship with, any special purpose entities.

LIQUIDITY AND CAPITAL RESOURCES


<table>
<caption>
                                                      January 2,     January 3,   December 28,
As of and for the Fiscal Year Ended                      2004           2003          2001
-----------------------------------                      ----           ----          ----
(dollars in thousands)
<s>                                                  <c>            <c>          <c>     
Cash and cash equivalents                             $  45,416      $  28,679    $  31,078
As a percentage of total assets                            8.3%           6.5%         7.4%
Accounts receivable days sales outstanding (DSO)             60             58           53
Inventory turns per year                                      4              5            4
Total debt                                            $  90,486      $ 138,525    $ 190,565

Cash provided by operating activities                 $  36,460      $  32,316    $  26,370
Cash used by investing activities                     $(22,653)      $ (5,766)    $(11,441)
Cash provided (used) by financing activities          $      54      $(31,729)    $(23,450)
Net increase/(decrease) in cash and cash equivalents  $  16,737      $ (2,399)    $ (9,798)

</table>


Cash and Cash Equivalents

In fiscal 2003,  our cash and cash  equivalents  increased by $16.7 million from
fiscal  2002.  The  increase was  primarily  due to cash  generated by operating
activities, partially offset by cash used in investing activities.

In fiscal 2003,  cash provided by operating  activities  was $36.5  million,  as
compared to $32.3  million in fiscal  2002.  The  increase  of $4.1  million was
primarily  driven by the $28.2 million increase in net income during fiscal 2003
compared  to fiscal  2002  offset by an  increase  in  accounts  receivable  and
inventory and a decrease in accounts  payable.  Also, fiscal 2002 was positively
impacted  by a special  one-time  distribution  of $11.0  million to us from our
Caterpillar  joint  venture.  Our  ability to  continue  to  generate  cash from
operations will depend in large part on  profitability,  the rate of collections
of accounts  receivable,  our inventory  turns,  and our ability to manage other
areas of working  capital.  Our accounts  receivable days for sales  outstanding
increased from 58 days at the end of fiscal 2002 to 60 days at the end of fiscal
2003. Our inventory  turns decreased from five at the end of fiscal 2002 to four
at the end of fiscal 2003.

Cash used in investing  activities were $22.7 million in fiscal 2003 as compared
to $5.8 million in fiscal 2002. The increase was primarily due to  approximately
$4.8  million  invested  in our Nikon joint  venture  upon its  formation,  $2.2
million and $4.3 million cash outlays  related to our  acquisitions  of Applanix
and  MENSI,  respectively,  certain  earn-out  payments  made as a result of our
previous LeveLite  acquisition,  and increased expenditure on capital equipment.
During   fiscal  2003,   we  spent   approximately   $10.9  million  on  capital
expenditures.

Cash  provided by financing  activities,  net,  was neutral in fiscal  2003,  as
compared to $31.7 million cash used in fiscal 2002.  However during fiscal 2003,
we repaid approximately $69 million of debt-related to our previous Subordinated
Note and Credit Facility.  These debt payments were funded primarily by proceeds
from the issuance of common stock to employees pursuant to our stock option plan
and employee stock  purchase plan of  approximately  $13.9  million,  as well as
issuance of common stock under a private equity  placement of $38.3 million.  On
April 14, 2003, we sold 3,148,000  shares of our common stock,  no par value per
share, to an investor at a price of $12.17 per share in an offering  pursuant to
our shelf registration statement. The offering resulted in net proceeds to us of
approximately $36.6 million,  approximately $31 million of which was used to pay
down the principal balance on the Subordinated Note and $5.6 million was used to
pay down the accrued interest on that Note.

* We  believe  that  our cash and cash  equivalents,  together  with our  credit
facilities,  will be sufficient to meet our anticipated operating cash needs for
at least the next twelve  months.  At January 2, 2004,  we had $45.4  million of
cash and cash  equivalents  as well as access to $81  million  of cash under the
terms of our revolver loans.

* We expect fiscal 2004 capital  expenditures to be approximately $12 million to
$14 million, primarily for computer equipment, software, manufacturing tools and
test equipment,  and leasehold improvements  associated with business expansion.
Decisions  related to how much cash is used for investing are  influenced by the
expected amount of cash to be provided by operations.

Debt

At the end of fiscal 2003,  our total debt was  approximately  $90.5  million as
compared  with  approximately  $138.5  million at the end of fiscal  2002.  This
balance  primarily  consists of $43.8 million  outstanding under a term loan and
$44.0 million  outstanding under a senior secured revolving credit facility.  On
June 25, 2003, we obtained a new Credit Facility  (comprising of a term loan and
revolver)  in the  amount  of  $109  million  that  enabled  us to pay  off  our
indebtedness under our previous credit facility and the Subordinated Note.

The new Credit Facility is secured by all material assets of our Company, except
for a portion of assets that are not pledged due to foreign tax  considerations.
Financial  covenants of the Credit Facility include leverage,  fixed charge, and
minimum net worth  tests.  At January 2, 2004 and as of the date of this report,
we are in compliance with all debt covenants. The amortized principal, interest,
and commitment fees due under the Credit Facility are paid quarterly.  Under the

<page>

four-year term loan portion of the Credit Facility,  we are due to make payments
(excluding  interest) of  approximately  $12.5 million in each of the next three
fiscal years (2004, 2005, and 2006), and $6.3 million in fiscal 2007.

Under the terms of the Credit  Facility,  we are  allowed to pay  dividends  and
repurchase  shares of our common  stock up to 25% of net income in the  previous
fiscal year. For  additional  discussion of our debt, see Note 9 of Notes to the
Consolidated Financial Statements.

CONTRACTUAL OBLIGATIONS

The following table summarizes our future payment obligations:



<table>
<caption>
                                         Less than        1-3          3-5        More than
Contractual Obligations       Total        1 year        Years        years        5 years
-----------------------       -----        ------        -----        -----        -------
(in thousands)
<s>                      <c>          <c>           <c>           <c>          <c>      
Total debt including      $   99,941   $   17,310    $   73,570    $   7,851    $   1,210
  interest
Operating leases              28,141       10,129        11,723        3,132        3,157
Purchase obligations          33,062       31,485         1,577            -            -
                              ------       ------         -----                          
Total                     $  161,144   $   58,924    $   86,870    $  10,983    $   4,367
                          ==========   ==========    ==========    =========    =========
</table>



* As of January 2, 2004, $65.9 million of our total debt was subject to variable
quarterly  interest rates.  Per our loan agreement,  we pay a three-month  LIBOR
rate plus a certain  spread that  depends on our leverage  ratio.  Our spread is
expected to be 1.5% over the  remaining  life of our  obligation of the debt. We
have assumed a  three-month  LIBOR rate of 1.20% for each quarter in fiscal 2004
and have  forecasted  an increase of 25 basis  points  quarter over quarter to a
maximum  of  3.25%.  (See  Note 9 of the  Notes  to the  Consolidated  Financial
Statements for further financial information regarding long-term debt)

Purchase obligations  represent open purchase orders for material purchases with
our customers.  Our pension obligation which is not included in the table above,
and is included in "Other non-current  liabilities" on our Consolidated  Balance
Sheets,  is  disclosed  at Note 14 of the  Notes to the  Consolidated  Financial
Statements.

New Accounting Standards

In November of 2002,  the Emerging  Issues Task Force (EITF) reached a consensus
on Issue No. 00-21,  "Revenue  Arrangements  with Multiple  Deliverables."  EITF
Issue No.  00-21  provides  guidance  on how to account  for  arrangements  that
involve the  delivery or  performance  of multiple  products,  services,  and/or
rights to use assets.  The  provisions  of EITF Issue No. 00-21 apply to revenue
arrangements  entered  into in fiscal  periods  beginning  after June 15,  2003.
Adoption of EITF Issue No. 00-21 did not have a material effect on our results.

Financial  Accounting  Standards  Board (FASB)  Interpretation  No. 46 (FIN 46),
"Consolidation of Variable Interest Entities," was issued in January 2003, and a
revised  interpretation of FIN 46 (FIN 46-R) was issued in December 2003. FIN 46
requires  certain variable  interest  entities to be consolidated by the primary
beneficiary of the entity if the equity  investors in the entity do not have the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties. The provisions of FIN 46 are
effective  immediately for all arrangements entered into after January 31, 2003.
Since  January 31, 2003,  we have not  obtained  any  variable  interests in any
entities we believe are variable  interest  entities.  For arrangements  entered
into prior to February 1, 2003,  we are required to adopt the  provisions of FIN
46-R in the first quarter of fiscal 2004.  We are in the process of  determining
the  effect,  if any,  the  adoption  of FIN  46-R  will  have on our  financial
statements.

In April 2003, the FASB issued Statement of Financial Accounting Standard (SFAS)
No. 149,  "Amendment  of Statement  133 on  Derivative  Instruments  and Hedging
Activities."  SFAS  No.  149  amends  and  clarifies  financial  accounting  and
reporting for derivative  instruments,  including certain derivative instruments

<page>

embedded in other contracts  (collectively  referred to as derivatives)  and for
hedging  activities under SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging Activities." SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003,  and for hedging  relationships  designated  after
June 30,  2003.  The  adoption of this  Statement  did not have an effect on our
financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. Many
of these  instruments  were  previously  classified  as equity.  SFAS No. 150 is
effective for financial  instruments entered into or modified after May 31, 2003
and  otherwise  was  effective  at the  beginning  of the first  interim  period
beginning  after June 15, 2003.  The adoption of this  Statement did not have an
effect on our financial statements.

RISKS AND UNCERTAINTIES

You should  carefully  consider the following  risk factors,  in addition to the
other  information  contained  in this Form 10-K and in any other  documents  to
which we refer you in this Form 10-K,  before  purchasing  our  securities.  The
risks and uncertainties described below are not the only ones we face.

Our Inability to Accurately Predict Orders and Shipments May Affect Our Revenue,
Expenses and Earnings per Share.

We have not been able in the past to  consistently  predict  when our  customers
will place orders and request shipments so that we cannot always accurately plan
our manufacturing requirements. As a result, if orders and shipments differ from
what we predict,  we may incur additional  expenses and build excess  inventory,
which may require additional reserves and allowances.  Any significant change in
our customers'  purchasing  patterns could have a material adverse effect on our
operating results and reported earnings per share for a particular quarter.


Our  Operating  Results in Each  Quarter May Be Affected by Special  Conditions,
Such As Seasonality, Late Quarter Purchases, and Other Potential Issues.

Due in part to the buying  patterns of our customers,  a significant  portion of
our quarterly  revenues occurs from orders  received and immediately  shipped to
customers in the last few weeks and days of each quarter, although our operating
expenses  tend  to  remain  fairly  predictable.  Engineering  and  construction
purchases  tend to occur in early  spring,  and  governmental  agencies  tend to
utilize  funds  available  at the  end  of  the  government's  fiscal  year  for
additional purchases at the end of our third fiscal quarter in September of each
year.  Concentrations of orders sometimes also occur at the end of our other two
fiscal quarters.  Additionally,  a majority of our sales force earns commissions
on a quarterly basis which may cause  concentrations of orders at the end of any
fiscal quarter.  If for any reason  expected sales are deferred,  orders are not
received,  or  shipments  are  delayed a few days at the end of a  quarter,  our
operating  results and reported  earnings  per share for that  quarter  could be
significantly impacted.


We Are Dependent on a Sole  Manufacturer  and Assembler for Many of Our Products
and on Sole Suppliers of Critical Parts for Our Products.

We are substantially  dependent upon Solectron Corporation in California,  China
and Mexico as the exclusive  manufacturing  partner for many of our GPS products
previously  manufactured  out of our Sunnyvale  facilities.  Under the agreement
with  Solectron,  we provide to Solectron a  twelve-month  product  forecast and
place purchase orders with Solectron at least thirty calendar days in advance of
the scheduled delivery of products to our customers depending on production lead
time.  Although purchase orders placed with Solectron are cancelable,  the terms
of the agreement  would require us to purchase from  Solectron all inventory not
returnable  or  usable  by  other  Solectron  customers.   Accordingly,   if  we
inaccurately  forecast  demand  for our  products,  we may be  unable  to obtain
adequate  manufacturing  capacity  from  Solectron to meet  customers'  delivery
requirements or we may accumulate  excess  inventories,  if such inventories are
not usable by other Solectron customers.

Our current contract with Solectron continues in effect until either party gives
the other ninety days written notice.

<page>

Solectron is  assembling  all of our Component  Technologies  products in China.
Although this  initiative  in China has brought cost savings over  assembling in
California,  we may experience quality control issues, shipping delays, or other
problems associated with manufacturing in China.

In addition,  we rely on sole suppliers for a number of our critical components.
We have experienced shortages of components in the past. Our current 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. 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 harm our reputation and brand, and could have a
material adverse effect on our business.

Our Annual and Quarterly Performance May Fluctuate.

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:

     o    changes in market demand,
     o    competitive market conditions,
     o    market acceptance of existing or new products,
     o    fluctuations in foreign currency exchange rates,
     o    the cost and availability of components,
     o    our ability to manufacture and ship products,
     o    the mix of our customer base and sales channels,
     o    the mix of products sold,
     o    our   ability   to  expand  our  sales  and   marketing   organization
          effectively,
     o    our  ability  to  attract  and retain  key  technical  and  managerial
          employees,
     o    the  timing of  shipments  of  products  under  contracts  and sale of
          licensing rights, and
     o    general global economic conditions.

In addition,  demand for our products in any quarter or year may vary due to the
seasonal  buying patterns of our customers in the  agricultural  and engineering
and construction industries. Due to the foregoing factors, our operating results
in one or  more  future  periods  are  expected  to be  subject  to  significant
fluctuations.  The price of our common stock could decline  substantially in the
event such  fluctuations  result in our  financial  performance  being below the
expectations of public market analysts and investors,  which are based primarily
on historical models that are not necessarily  accurate  representations  of the
future.

Our Gross Margin Is Subject to Fluctuation.

Our 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,  sales of Nikon products generally have lower
gross margins as compared to our GPS survey  products.  Absent other factors,  a
shift in sales  towards  Nikon  would lead to a reduction  in our overall  gross
margins A decline in gross  margin  could  negatively  impact our  earnings  per
share.

Our  Business  is  Subject to  Disruptions  and  Uncertainties  Caused by War or
Terrorism.

Acts of war or acts of  terrorism  could have a material  adverse  impact on our
business,  operating results, and financial  condition.  The threat of terrorism
and war and  heightened  security and military  response to this threat,  or any
future acts of terrorism, may cause further disruption to our economy and create
further  uncertainties.  To the extent that such  disruptions  or  uncertainties
result in delays or cancellations  of orders,  or the manufacture or shipment of
our products, our business,  operating results, and financial condition could be
materially and adversely affected.

<page>

Our  Substantial  Indebtedness  Could  Materially  Restrict Our  Operations  and
Adversely Affect Our Financial Condition.

We now have, and for the foreseeable  future expect to have, a significant level
of indebtedness. Our substantial indebtedness could:

     o    increase our  vulnerability  to general adverse  economic and industry
          conditions;
     o    limit  our   ability  to  fund   future   working   capital,   capital
          expenditures,  research and  development  and other general  corporate
          requirements, or to make certain investments that could benefit us;
     o    require  us to  dedicate  a  substantial  portion  of our cash flow to
          service interest and principal payments on our debt;
     o    limit our  flexibility  to react to  changes in our  business  and the
          industry in which we operate; and
     o    limit our ability to borrow additional funds.

Our Credit Agreement Contains Financial Covenants.

On June 25, 2003, we executed a Credit Agreement with Scotia Capital and certain
other  banks  which  provides  for  financial  commitments  totaling  up to $175
million.  This credit facility contains  financial  covenants  regarding minimum
fixed charge coverage and maximum  leverage ratio which are extremely  sensitive
to changes in earnings before interest, taxes, depreciation and amortization, or
EBITDA.  In turn,  EBITDA is highly  correlated  to  revenues  and costs.  If we
default  on one or more  covenants,  we will  have to obtain  either  negotiated
waivers or amendments to the Credit Agreement.  If we were unable to obtain such
waivers or amendments,  the banks would have the right to accelerate the payment
of our  outstanding  obligations  under the Credit  Agreement which would have a
material adverse effect on our financial condition and viability as an operating
company.  In  addition,  a default  under one of our debt  instruments  may also
trigger cross  defaults  under our other debt  instruments.  An event of default
under any debt instrument, if not cured or waived, could have a material adverse
effect on us.


We Rely on Key Customers.

We generate a portion of our revenue from large original equipment manufacturers
such as Siemens VDO  Automotive  AG and Nortel.  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.


We Are Dependent on New Products.

Our 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.  We may incur problems in the future in innovating and introducing new
products.  Our development stage products may not be successfully  completed or,
if developed, may not 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 we might not achieve timely initial customer shipments
of new products.  The timely  availability of these products in volume and their
acceptance  by customers  are  important to our future  success.  A delay in new
product  introductions  could  have  a  significant  impact  on our  results  of
operations.

We May Not Be Able to Enter Into or Maintain Important Alliances.

We believe that in certain business opportunities our success will depend on our
ability to form and  maintain  alliances  with  industry  participants,  such as
Caterpillar,  Nikon,  McNeilus, and CNH Global. Our failure to form and maintain
such  alliances,  or the  pre-emption  of such  alliances  by  actions  of other
competitors  or us,  will  adversely  affect our ability to  penetrate  emerging

<page>

markets.  No assurances can be given that we will not  experience  problems from
current  or  future  alliances  or that we will  realize  value  from  any  such
strategic alliances.


We Are  Dependent  on the  Availability  of  Allocated  Bands  Within  the Radio
Frequency Spectrum.

Our GPS technology is dependent on the use of the Standard  Positioning  Service
("SPS")  provided  by the US  Government's  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  that have  treaty  status and which may be subject to  modification
every two to 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.  Many of our products use other radio
frequency  bands,  together  with  the  GPS  signal,  to  provide  enhanced  GPS
capabilities,   such  as  real-time   kinematics   precision.   The   continuing
availability of these non-GPS radio frequencies is essential to provide enhanced
GPS products to our precision survey markets. Any regulatory changes in spectrum
allocation or in allowable  operating  conditions  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 in-band 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  FCC  continually  receives  proposals  for  novel
technologies and services, such as ultra-wideband  technologies,  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 and other radio frequency
spectrum  also used in our  products may  materially  and  adversely  affect the
utility  and  reliability  of our  products,  which  could  result in a material
adverse effect on our business and financial condition.

We Are Subject to the Adverse Impact of Radio Frequency Congestion.

We have  certain  products,  such  as GPS RTK  systems,  surveying  and  mapping
systems,  and Robotic Total Stations,  that use integrated  radio  communication
technology requiring access to available radio frequencies  allocated by the FCC
(or the NTIA in the case of  federal  government  users of this  equipment)  for
which the end user is  required  to obtain a license in order to  operate  their
equipment.  In addition,  access to these frequencies by state agencies is under
management  by  state  radio   communications   coordinators.   Some  bands  are
experiencing  congestion  that excludes their  availability  for access by state
agencies  in  some  states,  including  the  State  of  California.   To  reduce
congestion, the FCC announced that it will require migration of radio technology
from wideband to narrowband operations in these bands. In December 2003, the FCC
stayed the effectiveness of its new rules until it acts on petitions  requesting
a reconsideration of this new requirement.  The stay is indefinite at this point
and the outcome of this  proceeding  is unknown at this time.  An  inability  to
obtain access to these radio  frequencies by end users,  and for new products to
comply  with FCC  requirements,  could have an adverse  effect on our  operating
results.

Many of Our Products Rely on the GPS Satellite System.

The GPS  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 28  satellites  in place,  some have already been in
operation  for 13 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
may 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 US  Government  will  remain
committed to the operation and maintenance of GPS satellites over a long period,
or that the policies of the US Government for the use of GPS without charge will

<page>

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 US 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 our products to select  GPS-based  systems
instead of products based on competing technologies.

Many of our products also use signals from systems that augment GPS, such as the
Wide Area  Augmentation  System  (WAAS)  and  national  Differential  GPS System
(NDGPS).  Many  of  these  augmentation  systems  are  operated  by the  federal
government and rely on continued  funding and maintenance of these systems.  Any
curtailment  of the  operating  capability  of these  systems  could  result  in
decreased user capability thereby impacting our markets.

Any  resulting  change in market  demand for GPS products  could have a material
adverse effect on our 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 and may
materially  and  adversely  affect the utility and  reliability  of our products
which could result in a material  adverse  effect on our business and  operating
results.

We Face Risks in Investing in and Integrating New Acquisitions.

Acquisitions of companies,  divisions of companies,  or products entail numerous
risks, including:

     o    potential inability to successfully  integrate acquired operations and
          products or to realize cost savings or other anticipated benefits from
          integration;
     o    diversion of management's attention;
     o    loss of key employees of acquired operations;
     o    the difficulty of assimilating geographically dispersed operations and
          personnel of the acquired companies; 
     o    the potential disruption of our ongoing business;
     o    unanticipated expenses related to such integration;
     o    the correct  assessment  of the  relative  percentages  of  in-process
          research and development  expense that can be immediately  written off
          as compared to the amount which must be amortized over the appropriate
          life of the asset;
     o    the impairment of relationships with employees and customers of either
          an acquired company or our own business;
     o    the potential unknown  liabilities  associated with acquired business;
          and
     o    inability  to  recover  strategic  investments  in  development  stage
          entities.

As a result  of such  acquisitions,  we have  significant  assets  that  include
goodwill and other purchased intangibles. The testing of these intangibles under
established  accounting  guidelines for impairment  requires  significant use of
judgment  and  assumptions.   Changes  in  business   conditions  could  require
adjustments to the valuation of these assets. In addition,  losses incurred by a
company in which we have an investment may have a direct impact on our financial
statements  or could  result  in our  having  to  write-down  the  value of such
investment.  Any such problems in integration or adjustments to the value of the
assets  acquired  could harm our  growth  strategy  and have a material  adverse
effect on our business, financial condition and compliance with debt covenants.

We Face Competition in Our Markets.

Our markets are highly  competitive  and we expect that both direct and indirect
competition  will  increase in the  future.  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 encounter direct  competition from other GPS, optical and laser suppliers and
competition may intensify from various larger US and non-US  competitors and new
market entrants, some of which may be our current customers.  The competition in
the future, may, in some cases,  result in price reductions,  reduced margins or
loss of market share,  any of which could  materially  and adversely  affect our


<PAGE>

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.  We may not be able to implement this strategy
successfully, and our products may not 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 Are Dependent on Proprietary Technology.

Our future success and  competitive  position is dependent upon our  proprietary
technology,  and we rely on patent, trade secret, trademark and copyright law to
protect our  intellectual  property.  The patents owned or licensed by us may be
invalidated,  circumvented,  and  challenged.  The rights  granted  under  these
patents  may not  provide  competitive  advantages  to us. Any of our pending or
future  patent  applications  may not be issued  within  the scope of the claims
sought by us, if at all.

Others may develop  technologies that are similar or superior to our technology,
duplicate our  technology or design around the patents owned by us. In addition,
effective  copyright,  patent and trade secret  protection  may be  unavailable,
limited  or not  applied  for in  certain  countries.  The steps  taken by us to
protect  our  technology  might  not  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.  We recognize 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.

We Must Carefully Manage Our Future Growth.

Growth in our sales or continued  expansion in the scope of our operations could
strain our current 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. Specifically we have experienced strain
in our  financial  and order  management  system.  We are  expanding  our sales,
accounting,   manufacturing,   and  other  information  systems  to  meet  these
challenges.  These  systems,  procedures,  or  controls  may not be  adequate to
support our  operations and may not 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
harm our growth  strategy  and  adversely  affect our  financial  condition  and
ability to achieve our business objectives.

We Are Dependent on Retaining and  Attracting  Highly  Skilled  Development  and
Managerial Personnel.

Our ability to maintain our competitive technological position will depend, in a
large part, on our 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.

We May Encounter Problems Associated With International Operations and Sales.

Our customers are located throughout the world. Sales to unaffiliated  customers
in non-US locations represented  approximately 51% of our revenues in our fiscal
year 2003,  49% in our  fiscal  year 2002 and 50% in our  fiscal  year 2001.  In
addition, we have significant international operations,  including manufacturing
facilities,  sales  personnel  and customer  support  operations.  We have sales
offices  outside the US. Our non-US  manufacturing  facilities are in Sweden and
Germany,  and we have a  regional  fulfillment  center in the  Netherlands.  Our
non-US presence exposes us to risks not faced by wholly US companies.

<page>

Specifically,  we have  experienced  issues  relating to  integration  of non-US
operations, greater difficulty in accounts receivable collection, longer payment
cycles, and currency  fluctuations.  Additionally,  we face the following risks,
among others:

     o    unexpected changes in regulatory requirements;
     o    tariffs and other trade barriers;
     o    political,   legal  and  economic   instability  in  non-US   markets,
          particularly in those markets in which we maintain  manufacturing  and
          research facilities;
     o    difficulties in staffing and management;
     o    language and cultural barriers;
     o    seasonal  reductions  in business  activities  in the summer months in
          Europe and some other countries;
     o    war and acts of terrorism; and
     o    potentially adverse tax consequences.

In certain non-US markets, there may be reluctance to purchase products based on
GPS technology, given the control of GPS by the US Government.

We Are Exposed to Fluctuations in Currency Exchange Rates.

A significant  portion of our business is conducted  outside the United  States,
and as such, we face exposure to adverse  movements in non-US currency  exchange
rates.  These  exposures may change over time as business  practices  evolve and
could have a material adverse impact on our financial results and cash flows. In
fiscal 2003, the US dollar weakened against several major currencies in which we
do business, adversely impacting our financial results.

Currently, we hedge only those currency exposures associated with certain assets
and liabilities  denominated in non-functional  currencies and periodically will
hedge anticipated foreign currency cash flows. The hedging activities undertaken
by us are  intended  to offset the impact of  currency  fluctuations  on certain
non-functional  currency assets and  liabilities.  Our attempts to hedge against
these  risks may not be  successful  resulting  in an adverse  impact on our net
income.

We Are Subject to the Impact of Governmental and Other Similar Certifications.

We  market  certain  products  that are  subject  to  governmental  and  similar
certifications  before  they can be sold.  For  example,  CE  certification  for
radiated  emissions is required  for most GPS  receiver and data  communications
products sold in the European Union. An inability to obtain such  certifications
in a timely manner could have an adverse effect on our operating results.  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.  These are secondary licenses that are subject to certain
restrictions.  During the fourth quarter of 1998, the FCC temporarily  suspended
the  issuance  of  licenses  for certain of our  real-time  kinematics  products
because of interference  with certain other users of similar radio  frequencies.
An inability or delay in obtaining such  certifications  or changes to the rules
by the FCC could  adversely  affect our ability to bring our  products to market
which could harm our customer  relationships  and have a material adverse effect
on our business.

The Volatility of Our Stock Price Could Adversely  Affect Your Investment in Our
Common Stock.

The market  price of our common stock has been,  and may continue to be,  highly
volatile.  During fiscal 2003,  our stock price ranged from $8.68 to $25.60.  We
believe  that a variety of factors  could cause the price of our common stock to
fluctuate, perhaps substantially, including:

     o    announcements  and rumors of  developments  related to our business or
          the industry in which we compete;
     o    quarterly  fluctuations in our actual or anticipated operating results
          and order levels;
     o    general conditions in the worldwide economy, including fluctuations in
          interest rates;
     o    announcements of technological innovations;
     o    new products or product enhancements by us or our competitors;
     o    developments  in patents  or other  intellectual  property  rights and
          litigation;
     o    developments  in our  relationships  with our customers and suppliers;
          and
     o    any significant acts of terrorism against the United States.

<page>

In  addition,  in recent  years the stock  market in general and the markets for
shares of "high-tech"  companies in particular,  have experienced  extreme price
fluctuations  which have often been  unrelated to the operating  performance  of
affected  companies.  Any such fluctuations in the future could adversely affect
the market price of our common  stock,  and the market price of our common stock
may decline.

We are Subject to  Environmental  Laws and Potential  Exposure to  Environmental
Liabilities.

We are  subject  to  various  federal,  state and local  environmental  laws and
regulations  that govern our operations,  including the handling and disposal of
non-hazardous  and  hazardous  wastes,  and emissions  and  discharges  into the
environment.  Failure to comply with such laws and  regulations  could result in
costs for corrective action,  penalties, or the imposition of other liabilities.
We also are subject to laws and regulations  that impose  liability and clean-up
responsibility for releases of hazardous substances into the environment.  Under
certain of these laws and  regulations,  a current or previous owner or operator
of property may be liable for the costs of remediating  hazardous  substances or
petroleum products on or from its property,  without regard to whether the owner
or operator knew of, or caused, the contamination, as well as incur liability to
third  parties  impacted by such  contamination.  The presence of, or failure to
remediate  properly,  such substances  could adversely  affect the value and the
ability to transfer or encumber  such  property.  Based on  currently  available
information,   although  there  can  be  no  assurance,  we  believe  that  such
liabilities will not have a material impact on our business.

Provisions in Our Charter  Documents and Under  California  Law Could Prevent or
Delay a Change of  Control,  which Could  Reduce the Market  Price of Our Common
Stock.

Certain  provisions of our articles of  incorporation,  as amended and restated,
our bylaws, as amended and restated,  and the California General Corporation Law
may be deemed to have an anti-takeover effect and could discourage a third party
from acquiring, or make it more difficult for a third party to acquire,  control
of us without  approval of our board of directors.  These  provisions could also
limit the price that certain investors might be willing to pay in the future for
shares of our common stock.  Certain  provisions allow the board of directors to
authorize the issuance of preferred  stock with rights  superior to those of the
common stock.

We have adopted a Preferred Shares Rights Agreement, commonly known as a "poison
pill." The  provisions  described  above,  our poison pill and provisions of the
California  General  Corporation  Law may  discourage,  delay or prevent a third
party from acquiring us.



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

We are exposed to market risk  related to changes in interest  rates and foreign
currency  exchange rates.  We use certain  derivative  financial  instruments to
manage  these  risks.  We  do  not  use  derivative  financial  instruments  for
speculative  or  trading  purposes.   All  financial  instruments  are  used  in
accordance with policies approved by our board of directors.

Market Interest Rate Risk

We are exposed to market risk due to the possibility of changing  interest rates
under our  secured  Credit  Facility.  Our Credit  Facility  is  comprised  of a
three-year,  US  dollar-only  revolver  that  expires  on June 25,  2006,  and a
four-year term loan that expires on June 25, 2007.  Borrowings  under the Credit
Facility have interest  payments based on a floating rate of LIBOR plus a number
of basis  points tied to a formula  based on our  Leverage  Ratio.  The revolver
matures  on June  25,  2006  and has an  outstanding  principal  balance  of $44
million,  while the term loan  matures on June 25,  2007 and has an  outstanding
principal  balance of $43.8  million,  as of January 2, 2004 (all in US currency
only).  The three-month  LIBOR  effective rate at January 2, 2004 was 1.155%.  A
hypothetical   10%  increase  in   three-month   LIBOR  rates  could  result  in
approximately  $101,790  annual  increase  in interest  expense on the  existing

<page>

principal balances. We have hedged the market risk with an interest rate swap on
50% of our term loan. The rate on that interest rate swap is 2.517%.

* 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 our 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.

Foreign Currency Exchange Rate Risk

We enter into foreign  exchange  forward  contracts  to minimize the  short-term
impact of  foreign  currency  fluctuations  on certain  trade and  inter-company
receivables and payables,  primarily  denominated in Australian,  Canadian,  New
Zealand,  and  Swedish  currencies,  the  Euro,  and the  British  pound.  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 forward contracts. These instruments are marked
to market through  earnings  every period and generally  range from one to three
months in  original  maturity.  We do not enter into  foreign  exchange  forward
contract for trading purposes.

Foreign exchange forward contracts outstanding as of January 2, 2004 and January
3, 2003 are summarized as follows (in thousands):


                            January 2, 2004                January 3, 2003
                            ---------------                ---------------
                      Nominal Amount  Fair Value   Nominal Amount   Fair Value
                      --------------  ----------   --------------   ----------
Forward contracts:
     Purchased         $ 15,767       $ (1,666)     $  24,414         $ (658)
     Sold              $ 44,236           2,994        24,539             955


* We do not anticipate any material adverse effect on our consolidated financial
position utilizing our current hedging strategy.

From  time to time,  we may also  utilize  forward  foreign  exchange  contracts
designated  as cash flow hedges of  operational  exposures  represented  by firm
backlog  orders to specific  accounts over a specific  period of time. We record
changes  in  the  fair  value  of  cash  flow  hedges  in   accumulated,   other
comprehensive  income (loss),  until the firm backlog  transaction  ships.  Upon
recognition of revenue, we reclassify the gain or loss on the cash flow hedge to
the  statement  of  operations.  The  critical  terms of the cash  flow  hedging
instruments are the same as the underlying forecasted transactions.  The changes
in fair value of the  derivatives are intended to offset changes in the expected
cash  flow  from  the  forecasted  transactions.   All  forward  contracts  have
maturities of less than 12 months. For the fiscal year ended January 3, 2003, we
recorded a gain of  $57,000  reflecting  the net  change  and ending  balance in
relation to a firm backlog hedge. We did not hedge against backlog orders during
fiscal 2003.



<PAGE>


                           TRIMBLE NAVIGATION LIMITED
                          INDEX TO FINANCIAL STATEMENTS



Consolidated Balance Sheets at January 2, 2004 and January 3, 2003...........45

Consolidated Statements of Operations for each of the three fiscal years
   in the period ended January 2, 2004.......................................46

Consolidated Statement of Shareholders' Equity for each of the three
   fiscal years in the period ended January 2, 2004..........................47

Consolidated Statements of Cash Flows for each of the three fiscal years
   in the period ended January 2, 2004.......................................48

Notes to Consolidated Financial Statements...................................49

Report of Ernst & Young LLP, Independent Auditors............................74




<PAGE>



Item 8.         Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS


<table>
<caption>
                                                                                 January 2,      January 3,
As at                                                                               2004            2003
-----                                                                               ----            ----
(in thousands)
<s>                                                                            <c>               <c>    
ASSETS

Current assets:

   Cash and cash equivalents                                                    $    45,416       $  28,679
   Accounts receivable, less allowance for doubtful accounts of $9,953
     and $9,900, respectively                                                       103,350          79,645
   Inventories, net                                                                  70,826          61,144
   Deferred income taxes                                                              4,380              76
   Other current assets                                                               5,659           8,401
                                                                                      -----           -----
        Total current assets                                                        229,631         177,945
Property and equipment, at cost less accumulated depreciation                        27,379          22,037
Goodwill                                                                            241,425         205,933
Other purchased intangible assets, less accumulated amortization                     19,741          23,238
Deferred income taxes                                                                 4,173             417
Other assets                                                                         22,554          12,086
                                                                                     ------          ------
        Total non-current assets                                                    315,272         263,711
                                                                                    -------         -------
        Total assets                                                            $   544,903       $ 441,656
                                                                                ===========       =========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Bank and other short-term borrowings                                         $         -       $   6,556
   Current portion of long-term debt                                                 12,885          24,104
   Accounts payable                                                                  26,019          30,669
   Accrued compensation and benefits                                                 25,950          17,728
   Accrued liabilities                                                               15,599          21,000
   Accrued warranty expense                                                           5,147           6,394
   Deferred income taxes                                                              1,136               -
   Income taxes payable                                                               9,969           6,450
                                                                                      -----           -----
        Total current liabilities                                                    96,705         112,901

Non-current portion of long-term debt                                                77,601         107,865
Deferred gain on joint venture                                                        9,845          10,792
Deferred income tax                                                                   4,229           2,561
Other non-current liabilities                                                         8,279           6,186
                                                                                      -----           -----
        Total liabilities                                                           196,659         240,305
                                                                                    -------         -------
Commitments and Contingencies

Shareholders' equity:
   Preferred stock no par value; 3,000 shares authorized; none outstanding                -               -
   Common stock, no par value; 90,000 shares authorized; 49,988, and 43,965
     shares outstanding, respectively                                               303,015         225,872
   Retained earnings (accumulated deficit)                                           14,990        (23,495)
   Accumulated other comprehensive income (loss)                                     30,239         (1,026)
                                                                                     ------         ------ 
        Total shareholders' equity                                                  348,244         201,351
                                                                                    -------         -------
        Total liabilities and shareholders' equity                              $   544,903       $ 441,656
                                                                                ===========       =========
</table>

See accompanying Notes to the Consolidated Financial Statements.

<page>

CONSOLIDATED STATEMENTS OF OPERATIONS


<table>
<caption>
                                                                  January 2,   January 3,   December 28,
Fiscal Years Ended                                                   2004         2003          2001
------------------                                                   ----         ----          ----
(in thousands, except per share data)

<s>                                                             <c>          <c>           <c>   
Revenue  (1)                                                     $  540,903   $  466,602    $  475,292
Cost of revenue                                                     272,873      232,170       238,057
                                                                    -------      -------       -------
Gross margin                                                        268,030      234,432       237,235

Operating expenses
   Research and development                                          67,641       61,232        62,881
   Sales and marketing                                               97,870       89,344       103,778
   General and administrative                                        39,253       40,634        37,407
   Restructuring charges                                              2,019        1,099         3,599
   Amortization of purchased intangible assets and goodwill           7,312        8,300        29,389
                                                                      -----        -----        ------
Total operating expenses                                            214,095      200,609       237,054
                                                                    -------      -------       -------
Operating income from continuing operations                          53,935       33,823           181
Non-operating income (expense), net

   Interest income                                                      465          659         1,118
   Interest expense                                                (11,938)     (14,710)      (22,224)
   Foreign currency transaction loss, net                             (592)        (823)         (237)
   Expenses for affiliated operations, net                          (6,403)      (3,954)             -
   Other income (expense), net                                          118      (1,171)         (430)
                                                                        ---      ------          ---- 
Total non-operating expense, net                                   (18,350)     (19,999)      (21,773)
                                                                    -------      -------       -------
Income (loss) before income taxes from continuing operations         35,585       13,824      (21,592)
Income tax provision (benefit)                                      (2,900)        3,500         1,900
                                                                    -------        -----         -----
Income (loss) from continuing operations                             38,485       10,324      (23,492)
Gain on disposal of discontinued operations (net of tax)                  -            -           613
                                                                                                   ---
Net income (loss)                                                $   38,485   $   10,324    $ (22,879)
                                                                 ==========   ==========    ==========

Basic earnings (loss) per share from continuing operations       $     0.81   $     0.24    $   (0.63)
Basic earnings per share from discontinued operations                     -                       0.01
                                                                                                  ====
Basic earnings (loss) per share                                  $     0.81   $     0.24    $   (0.62)
                                                                 ==========   ==========    ==========
Shares used in calculating basic earnings per share                  47,505       42,860        37,091

Diluted earnings (loss) per share from continuing operations     $     0.77   $     0.24    $   (0.63)
Diluted earnings per share from discontinued operations                   -            -          0.01
                                                                                                  ====
Diluted earnings (loss) per share                                $     0.77   $     0.24    $   (0.62)
                                                                 ==========   ==========    ==========
Shares used in calculating diluted earnings per share                50,012       43,578        37,091
</table>


(1) Includes sales to related  parties of $4.0 million for fiscal 2003.  None in
fiscal 2001 and 2002.

See accompanying Notes to the Consolidated Financial Statements.



<PAGE>


CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


<table>
<caption>
                                                Common stock and warrants              Accumulative
                                                                          Retained        Other           Total
                                                                          Earnings    Comprehensive    Shareholders'
                                                  Shares       Amount     (Deficit)    Income/(Loss)      Equity
                                                  ------       ------     ---------    -------------      ------
(in thousands)
<s>                                              <c>         <c>         <c>             <c>            <c>   
Balance at December 29, 2000                      36,243      $154,846    $(10,940)       $(8,963)       $134,943
  Components of comprehensive income (loss):
    Net loss                                                               (22,879)                      (22,879)
    Loss on interest rate swap                                                               (203)          (203)
    Unrealized gain on investments                                                              16             16
    Foreign currency translation adjustments                                               (9,766)        (9,766)
                                                                                           ------         ------ 
  Comprehensive loss                                                                                     (32,832)
                                                                                                         ------- 
  Subtotal                                                                                                102,111
  Issuance of stock under employee plans
    and exercise of warrants                       1,376        11,344                                     11,344
  Issuance of stock in private placement           2,675        25,034                                     25,034
                                                   -----        ------                                     ------
Balance at December 28, 2001                      40,294       191,224     (33,819)       (18,916)        138,489

  Components of comprehensive income (loss):
    Net income                                                               10,324                        10,234
    Gain on interest rate swap                                                                 210            210
    Unrealized loss on investments                                                            (17)           (17)
    Foreign currency translation adjustments                                                17,697         17,697
                                                                                            ------         ------
  Comprehensive income                                                                                     28,214
                                                                                                           ------
  Subtotal                                                                                                166,703
  Issuance of stock for
  acquisition                                      1,190        12,033                                     12,033
   Issuance of stock under employee plans
     exercise of warrants                            561         4,091                                      4,091
  Issuance of warrants                                           1,528                                      1,528
  Issuance of stock in private placement           1,920        16,996                                     16,996
                                                   -----        ------                                     ------
Balance at January 3, 2003                        43,965       225,872     (23,495)        (1,026)        201,351

   Components of comprehensive income (loss):
    Net income                                                               38,485                        38,485
    Gain on interest rate swap                                                                 (7)            (7)
    Unrealized gain on investments                                                              74             74
    Foreign currency translation adjustments                                                31,198         31,198
                                                                                            ------         ------
  Comprehensive income                                                                                     69,750
                                                                                                           ------
  Subtotal                                                                                                271,101
  Issuance of stock for
  acquisition                                        825        18,524                                     18,524
  Issuance of stock for Joint Venture with
     Nikon                                           350         5,922                                      5,922
  Issuance of stock under employee plans
     and exercise of warrants                      1,593        13,929                                     13,929
  Issuance of stock for Levelite                     107         1,349                                      1,349
  Issuance of warrants                                             836                                        836
  Issuance of stock in private placement           3,148        36,583                                     36,583
                                                   -----        ------                                     ------
Balance at January 2, 2004                        49,988      $303,015    $  14,990       $ 30,239       $348,244
                                                  ======      ========    =========       ========       ========

</table>

See accompanying Notes to the Consolidated Financial Statements.



<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS


<table>
<caption>
                                                                  January 2,    January 3,   December 28,
Fiscal Years Ended                                                   2004          2003          2001
------------------                                                   ----          ----          ----
(In thousands)
<s>                                                             <c>           <c>          <c>
Cash flow from operating activities:
   Net income (loss)                                             $ 38,485      $ 10,324     $(22,879)
Adjustments to reconcile net income (loss) to cash
   flows provided by operating activities:
   Depreciation expense                                             8,864         9,850        11,218
   Amortization expense                                             7,916         9,168        30,306
   Provision for doubtful accounts                                   (32)         5,443         5,077
   (Gain) loss on sale of fixed assets                                  -           423         (135)
   Amortization of deferred gain                                        -       (1,061)       (1,584)
   Amortization of debt issuance cost                               3,515         1,197           960
   Deferred income taxes                                          (6,532)         1,464         (887)
   Other                                                            2,533           193         (508)
Decrease (increase) in assets:
   Accounts receivable                                           (16,683)      (10,615)         6,842
   Inventories                                                    (4,862)       (7,649)         7,442
   Other current and non-current assets                             (792)       (3,920)         2,393
   Effect of foreign currency translation adjustment                6,895           438       (3,261)
Increase (decrease) in liabilities:
   Accounts payable                                               (6,387)         8,593       (4,954)
   Accrued compensation and benefits                                6,723         3,452       (3,112)
   Deferred gain on joint venture                                   (947)        10,792             -
   Accrued liabilities                                            (6,437)       (4,823)       (2,946)
   Income taxes payable                                             4,201         (953)         2,398
                                                                    -----         ----          -----
Net cash provided by operating activities                          36,460        32,316        26,370
                                                                   ------        ------        ------
Effect of exchange rate changes on cash and cash                    2,876         2,780       (1,277)
  equivalents

Cash flow from investing activities:
   Acquisition of property and equipment                         (10,901)       (7,157)       (7,254)
   Proceeds from sale of assets                                       334         1,407         1,177
   Acquisitions, net of cash acquired                             (6,606)         1,718       (4,430)
   Investment in Nikon-Trimble Joint Venture                      (4,810)             -             -
   Costs of capitalized patents                                     (670)       (1,734)         (934)
                                                                    -----       -------         -----
Net cash used by investing activities                            (22,653)       (5,766)      (11,441)
                                                                 --------       -------      --------
Cash flow from financing activities:
   Issuance of common stock and warrants                           50,514        21,393        36,378
   (Payment)/collection of notes receivable                         1,326       (1,082)           872
   Proceeds from long-term debt and revolving credit lines        138,288        18,000        30,062
   Payments on long-term debt and revolving credit lines        (190,074)      (70,040)      (90,762)
                                                                ---------      --------      --------
Net cash provided (used) by financing activities                       54      (31,729)      (23,450)
                                                                       --      --------      --------
Net increase (decrease) in cash and cash equivalents               16,737       (2,399)       (9,798)
Cash and cash equivalents, beginning of period                     28,679        31,078        40,876
                                                                   ------        ------        ------
Cash and cash equivalents, end of period                         $ 45,416      $ 28,679     $  31,078
                                                                 ========      ========     =========
</table>

See accompanying Notes to the Consolidated Financial Statements.


<page>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of Significant Accounting Policies:


Use of Estimates

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

Basis of Presentation

Trimble has a 52-53 week fiscal year,  ending on the Friday  nearest to December
31, which for fiscal 2003 was January 2, 2004.  Fiscal 2002 was a 53-week  year.
The financial results of fiscal year 2002 have an extra week, and therefore will
not be exactly  comparable  to the prior and  subsequent  52-week  fiscal years.
Fiscal year 2001 comprised 52 weeks.

The  consolidated  financial  statements  include the results of Trimble and its
subsidiaries.  Inter-company  accounts and  transactions  have been  eliminated.
Certain  amounts  from  prior  years  have been  reclassified  to conform to the
current year presentation.

Foreign Currency

Assets and liabilities of the Company's non-US  subsidiaries are translated into
US dollars at year-end  exchange rates, and revenues and expenses are translated
at average rates prevailing  during the year. Local currencies are considered to
be the functional currencies for the Company's non-US subsidiaries.  Translation
adjustments are included in  shareholders'  equity in the  consolidated  balance
sheet caption  "Accumulated other comprehensive income (loss)." Foreign currency
transaction  gains and losses are included in results of  operations as incurred
and have not been significant to the Company's  operating  results in any fiscal
year  presented.  The effect of foreign  currency  rate changes on cash and cash
equivalents  is not material.  Cumulative  translation  adjustment  increased by
approximately  $31.2 million due to weakening US dollar against other currencies
affecting the translation of our assets dominated in non-US currencies.

Cash and Cash Equivalents

Cash and cash  equivalents  include all cash and highly liquid  investments with
insignificant  interest rate risk and  maturities of three months or less at the
date of purchase. The carrying amount of cash and cash equivalents  approximates
fair value because of the short maturity of those instruments.

Concentration of Risk

In entering into forward  foreign  exchange  contracts,  Trimble has assumed the
risk that might arise from the possible inability of counter-parties to meet the
terms of their  contracts.  The  counter-parties  to these  contracts  are major
multinational  investment and commercial  banks, and the Company does not expect
any losses as a result of counter-party defaults (see Note 6 of the Notes to the
Consolidated Financial  Statements).  The Company is also exposed to credit risk
in the  Company's  trade  receivables,  which are derived from sales to end user
customers  in  diversified  industries  as well as  various  resellers.  Trimble
performs ongoing credit  evaluations of its customers'  financial  condition and
limits the amount of credit  extended when deemed  necessary but generally  does
not require collateral.

With the  selection  of  Solectron  Corporation  in August 1999 as an  exclusive
manufacturing partner for many of its GPS products, Trimble became substantially
dependent upon a sole supplier for the  manufacture of many of its products.  In
addition,  the Company  relies on sole  suppliers  for a number of its  critical
components.

<page>

Many of  Trimble's  products  use GPS as the  positioning  technology.  GPS is a
system of 24 orbiting  satellites  established  and funded by the US Government,
which has been fully  operational  since March 1995. A significant  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,  the US  Government  may not remain  committed  to the  operation  and
maintenance  of GPS  satellites  over a long  period,  and the  policy of the US
Government for the use of GPS without charge may change.

Allowance for Doubtful Accounts

Trimble  maintains   allowances  for  doubtful  accounts  for  estimated  losses
resulting from the inability of its customers to make required payments.

Trimble evaluates the collectibility of its trade accounts receivable based on a
number of  factors.  In  circumstances  where the Company is aware of a specific
customer's  inability  to meet  its  financial  obligations  to the  Company,  a
specific  allowance  for bad debts is estimated  and recorded  which reduces the
recognized  receivable to the estimated  amount Trimble believes will ultimately
be collected.  In addition to specific customer  identification of potential bad
debts,  bad debt charges are recorded  based on the  Company's  recent past loss
history and an overall assessment of past due trade accounts  receivable amounts
outstanding.  The amount was not  significant  in fiscal  2003 and the  expenses
recorded for doubtful accounts were $5.4 million in fiscal 2002 and $5.1 million
in fiscal 2001.

Inventories

Inventories  are stated at the lower of standard cost or market (net  realizable
value).  Standard costs  approximate  average  actual costs.  The Company uses a
standard  cost  accounting  system to value  inventory  and these  standards are
reviewed  at a  minimum  of once a year  and  multiple  times a year in the most
active  manufacturing  plants.  The Company provides for the inventory value for
estimated  excess and obsolete  inventory,  based on management's  assessment of
future  demand  and  market  conditions.  If  actual  future  demand  or  market
conditions  are less favorable  than those  projected by management,  additional
inventory write-downs may be required.

Intangible and Non-Current Assets

Intangible assets include goodwill, assembled workforce,  distribution channels,
patents,  licenses,  technology,  and trademarks  which are capitalized at cost.
Intangible assets with definite lives are amortized on the straight-line  basis.
Useful lives  generally  range from five to seven years,  with weighted  average
useful life of 5.7 years.  Prior to December  29, 2001,  goodwill was  amortized
over 20  years,  except  for  goodwill  from the Grid Data  purchase,  which was
amortized over five years.

If facts and circumstances indicate that the goodwill,  other intangible assets,
or property and  equipment may be impaired,  an  evaluation of continuing  value
would  be  performed.  If  an  evaluation  is  required,  the  estimated  future
undiscounted  cash flows associated with these assets would be compared to their
carrying  amount to determine if a write-down to fair market value or discounted
cash flow value is required.  Trimble  performed an impairment  test of goodwill
upon  transition to FAS No. 142 on December 29, 2001,  and an annual  impairment
test at the end of the third fiscal quarter of 2002 and 2003, respectively,  and
found no  impairment.  Trimble  will  continue  to  evaluate  its  goodwill  for
impairment  on an  annual  basis at the end of each  fiscal  third  quarter  and
whenever  events and changes in  circumstances  suggest that the carrying amount
may not be recoverable.

Trimble  adopted SFAS No. 142 on December 29, 2001. As a result,  goodwill is no
longer amortized and intangible  assets with indefinite lives were  reclassified
to goodwill.

Revenue Recognition

Trimble's  revenues are recorded in accordance  with the Securities and Exchange
Commission's   (SEC)  Staff   Accounting   Bulletin  (SAB)  No.  104,   "Revenue
Recognition." The Company recognizes product revenue when persuasive evidence of
an arrangement exists,  delivery has occurred, the fee is fixed or determinable,
and collectibility is reasonably assured. In instances where final acceptance of
the product is specified by the  customer or is  uncertain,  revenue is deferred
until all acceptance criteria have been met.

<page>

Revenues from purchased  extended  warranty and support  agreements are deferred
and  recognized   ratably  over  the  term  of  the   warranty/support   period.
Substantially  all  technology  licenses and research  revenue have consisted of
initial license fees and royalties,  which were recognized when earned, provided
we had no remaining obligations.

Contracts  and customer  purchase  orders are  generally  used to determine  the
existence of an arrangement.  Shipping documents and customer  acceptance,  when
applicable, are used to verify delivery. The Company assesses whether the fee is
fixed or determinable based on the payment terms associated with the transaction
and  whether  the sales  price is subject to refund or  adjustment.  The Company
assesses  collectibility based primarily on the creditworthiness of the customer
as determined by credit checks and analysis,  as well as the customer's  payment
history.

Trimble's shipment terms for US orders, and international  orders fulfilled from
its European  distribution  center are  typically  FCA (Free  Carrier)  shipping
point,  except  certain  sales to US government  agencies  which are shipped FOB
destination.  FCA shipping  point means that Trimble  fulfills the obligation to
deliver when the goods are handed over,  cleared for export, and into the charge
of the  carrier  named by the buyer at the named  place or point.  If no precise
point is  indicated by the buyer,  Trimble may choose  within the place or range
stipulated where the carrier will take the goods into carrier's charge. Shipping
and handling costs are included in the cost of goods sold.

Other  international  orders are  shipped  FOB  destination,  which  means these
international  orders  are not  recognized  as  revenue  until  the  product  is
delivered  and title has  transferred  to the buyer or FCA shipping  point.  FOB
destination  means that  Trimble  bears all costs and risks of loss or damage to
the goods up to that point.

Revenue to distributors and resellers is recognized upon delivery,  assuming all
other criteria for revenue recognition have been met. Distributors and resellers
do not have a right of return.

When a sale involves  multiple  elements the entire fee from the  arrangement is
allocated  to each  respective  element  based on its  relative  fair  value and
recognized  when  revenue  recognition  criteria  for each  element are met. The
amount of product revenue  allocated to an individual  element is limited to the
lesser of its relative fair value or the amount not  contingent on the Company's
delivery of other elements under the arrangement,  regardless of the probability
of the Company's performance.

Trimble's  software  arrangements  generally  consist of a license  fee and post
contract  customer  support  (PCS).  Trimble  has  established   vendor-specific
objective  evidence  (VSOE)  of fair  value for its PCS  contracts  based on the
renewal rate.  The remaining  value of the software  arrangement is allocated to
the license fee using the residual method, which revenue is primarily recognized
when the software  has been  delivered  and there are no remaining  obligations.
Revenue from PCS is recognized ratably over the term of the PCS agreement.

Support and Warranty

The warranty  periods for the Company's  products are generally  between one and
three  years from date of  shipment.  Selected  military  programs  may  require
extended warranty periods up to 5.5 years, certain TDS products have a five year
or 90-day warranty period,  and certain Nikon products have a five year warranty
period.  Trimble supports its GPS products  through a circuit board  replacement
program from locations in the United  Kingdom,  Germany,  Japan,  and the United
States.  The repair and calibration of Trimble's  non-GPS products are available
from company- owned or authorized facilities. The Company reimburses dealers and
distributors for all authorized warranty repairs they perform.

While the Company engages in extensive  product quality  programs and processes,
including actively monitoring and evaluating the quality of component suppliers,
its warranty  obligation is affected by product  failure rates,  material usage,
and service  delivery  costs  incurred in correcting a product  failure.  Should
actual product failure rates,  material usage, or service  delivery costs differ
from the  estimates,  revisions to the  estimated  warranty  accrual and related
costs may be required.

Changes in the Company's product warranty liability during the 12 months,  ended
January 2, 2004 and January 3, 2003, are as follows:

<page>

                                         January 2,      January 3,
Fiscal Years Ended                          2004            2003
------------------                          ----            ----
(In thousands)

Beginning balance                      $    6,394       $    6,827
Warranties accrued                          4,417            2,821
Warranty claims                           (5,664)           (3,254)
                                          ------            ------ 
Ending Balance                         $    5,147       $    6,394
                                       ==========       ==========
 
Guarantees, Including Indirect Guarantees of Indebtedness of Others

In addition to product warranties, the Company, from time to time, in the normal
course  of  business,  indemnifies  other  parties  with  whom  it  enters  into
contractual  relationships,  including customers,  lessors, and parties to other
transactions with the Company,  with respect to certain matters. The Company has
agreed to hold the other party harmless against specified losses,  such as those
arising from a breach of representations  or covenants,  third party claims that
the Trimble's  products  when used for their  intended  purpose(s)  infringe the
intellectual  property  rights of such third party or other  claims made against
certain parties. It is not possible to determine the maximum potential amount of
liability under these indemnification  obligations due to the limited history of
prior  indemnification  claims and the unique facts and  circumstances  that are
likely to be involved in each particular claim.  Historically,  payments made by
the Company under these  obligations  were not material and no liabilities  have
been recorded for these  obligations on the balance sheets as of January 2, 2004
and January 3, 2003.

Advertising Costs

Trimble  expenses  advertising  costs as  incurred.  Advertising  expenses  were
approximately $9.2 million, $6.3 million, and $6.8 million in fiscal 2003, 2002,
and 2001, respectively.

Research and Development Costs

Research  and  development  costs are  charged to expense as  incurred.  Trimble
received third party funding of approximately  $4.9 million,  $5.3 million,  and
$4.1 million in fiscal 2003, 2002, and 2001,  respectively.  The Company offsets
research and development expenses with any third party funding received.

The Company retains the rights to any technology developed.

Stock Compensation

In accordance with the provisions of Statement of Financial Accounting Standards
No. 123 ("SFAS 123"),  "Accounting for Stock-Based  Compensation" and "Statement
of  Financial  Accounting  Standards  No. 148"  ("SFAS  148"),  "Accounting  for
Stock-Based   Compensation  -  Transition  and   Disclosure,"   Trimble  applies
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"  ("APB 25") and related  interpretations  in accounting for its stock
option  plans  and  stock  purchase  plan.  Accordingly,  the  Company  does not
recognize compensation cost for stock options granted at fair market value. Note
13 of the  Consolidated  Financial  Statements  describe  the plans  operated by
Trimble.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options' vesting period, and the estimated fair
value of purchases  under the employee  stock  purchase  plan is expensed in the
year of purchase as well as the stock-based  employee  compensation cost, net of
related tax effects,  that would have been included in the  determination of net
income if the fair value  based  method  had been  applied  to all  awards.  The
effects on pro forma  disclosure  of applying  SFAS No. 123 are not likely to be
representative of the effects on pro forma disclosure of future years.

Pro forma information  regarding net income (loss) and earnings (loss) per share
is required by SFAS No. 123 and has been  determined as if Trimble had accounted
for its employee  stock options and purchases  under the employee stock purchase

<page>

plan  using the fair  value  method  of SFAS  No.123.  The fair  value for these
options was estimated at the date of grant using a Black-Scholes  option-pricing
model with the following weighted-average assumptions for fiscal 2003, 2002, and
2001:

                                          January 2,   January 3,  December 28,
                                             2004        2003          2001
                                             ----        ----          ----

Expected dividend yield                        -            -            -
Expected stock price volatility            59.87%       52.70%       69.59%
Risk free interest rate                     3.34%        3.13%        4.15%
Expected life of options after vesting      1.56         1.18         1.20


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

Trimble's pro forma information is as follows:


<table>
<caption>
                                                      January 2,     January 3,      December 28,
Fiscal Years Ended                                       2004           2003             2001
------------------                                       ----           ----             ----
(dollars in thousands)
<s>                                                  <c>            <c>              <c>   
Net income (loss) - as reported                       $  38,485      $  10,324        $(22,879)
Stock-based employee compensation expense 
   determined under fair value method based for all
   awards, net of related tax effects                    11,549         11,641           12,718
                                                         ------         ------           ------
Net earnings (loss) - pro forma                       $  26,936      $ (1,317)        $(35,597)
Basic earnings (loss) per share - as reported              0.81           0.24           (0.62)
Basic earnings (loss) per share - pro forma                0.57         (0.03)           (0.96)
Diluted earnings (loss) per share - as reported            0.77           0.24           (0.62)
Diluted earnings (loss) per share - pro forma              0.54         (0.03)           (0.96)
</table>


Depreciation

Depreciation  of property and  equipment  owned or under  capitalized  leases is
computed using the straight-line method over the shorter of the estimated useful
lives or the lease terms. Useful lives include a range from two to six years for
machinery and  equipment,  five years for  furniture  and fixtures,  two to five
years  for  computer  equipment  and  software,  and the life of the  lease  for
leasehold improvements.

Income Taxes

Income taxes are accounted for under the liability  method whereby  deferred tax
asset or liability  account  balances are  calculated  at the balance sheet date
using current tax laws and rates in effect for the year in which the differences
are  expected to affect  taxable  income.  A valuation  allowance is recorded to
reduce the  carrying  amounts of  deferred  tax assets if it is more likely than
not, that such assets will not be realized.



<PAGE>


Earnings (Loss) Per Share

Number of shares used in calculation of basic earnings per share  represents the
weighted  average common shares  outstanding  during the period and excludes any
dilutive effects of options,  warrants, and convertible securities. The dilutive
effects of options, warrants, and convertible securities are included in diluted
earnings  per  share.  (See  Note 21 to the  Consolidated  Financial  Statements
regarding a 3 for 2 stock split subsequent to year end.)

New Accounting Standards

In November of 2002,  the EITF reached a consensus on Issue No. 00-21,  "Revenue
Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides guidance
on how to account for  arrangements  that involve the delivery or performance of
multiple products,  services and/or rights to use assets. The provisions of EITF
Issue No. 00-21 apply to revenue arrangements entered into after June, 2003. The
effect of adoption of EITF Issue No.  00-21 on Trimble's  results of  operations
and financial condition was immaterial.

Financial  Accounting  Standards  Board (FASB)  Interpretation  No. 46 (FIN 46),
"Consolidation of Variable Interest Entities," was issued in January 2003, and a
revised  interpretation of FIN 46 (FIN 46-R) was issued in December 2003. FIN 46
requires  certain variable  interest  entities to be consolidated by the primary
beneficiary of the entity if the equity  investors in the entity do not have the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties. The provisions of FIN 46 are
effective  immediately for all arrangements entered into after January 31, 2003.
Since January 31, 2003,  Trimble has not obtained any variable  interests in any
entities it believes are variable interest  entities.  For arrangements  entered
into  prior to  February  1,  2003,  Trimble  would  be  required  to adopt  the
provisions  of FIN 46-R in the first  quarter of fiscal 2004.  Trimble is in the
process of determining the effect, if any, the adoption of FIN 46-R will have on
its financial statements.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS
No. 149 is effective for contracts entered into or modified after June 30, 2003,
and for hedging  relationships  designated  after June 30, 2003. The adoption of
this Statement did not have an effect on Trimble's financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. Many
of these  instruments  were  previously  classified  as equity.  SFAS No. 150 is
effective for financial  instruments entered into or modified after May 31, 2003
and  otherwise  was  effective  at the  beginning  of the first  interim  period
beginning  after June 15,  2003,  which for Trimble,  was the fourth  quarter of
2003.  The  adoption  of this  Statement  did not have an  effect  on  Trimble's
financial statements.

Note 2 - Acquisitions:

The following is a summary of  acquisitions  made by Trimble during fiscal 2003,
2002, and 2001, all of which were accounted for as purchases:

Acquisition     Primary Service or Product                     Acquisition Date
-----------     --------------------------                     ----------------
Grid Data       Wireless application service provider          April 2, 2001
LeveLite        Low-end construction instrument products       August 15, 2002
Applanix        Inertial navigation systems and GPS            July 7, 2003
MENSI           3D laser scanning technology                   December 9, 2003

The  consolidated  financial  statements  include the results of  operations  of
acquired companies commencing on the date of acquisition.  Pro forma information
is not presented,  as these  acquisitions  did not have a material effect on the
Company's results of operations.

<page>

Allocation of Purchase Consideration

The  total  purchase  consideration  for  each  of the  above  acquisitions  was
allocated  to the  assets  acquired  and  liabilities  assumed  based  on  their
estimated fair values as of the date of acquisition.  The following is a summary
of purchase price,  acquisition  costs and purchase price allocation of the Grid
Data, and LeveLite, Applanix, and MENSI acquisitions:


<table>
<caption>

                                         Grid Data        LeveLite          Applanix           MENSI
                                         ---------        --------          --------           -----
(In thousands)
<s>                                      <c>              <c>               <c>              <c>                                  
Purchase price                            $  8,248         $  7,506          $ 17,401         $  4,273
Acquisition costs                               50              144               438              372
Restructuring costs                              -              555                 -                -
                                                                ---                                   
   Total purchase price                   $  8,298         $  8,205          $ 17,839         $  4,645
                                          ========         ========          ========         ========
Purchase price allocation:
    Fair value of tangible net assets
     acquired                                (141)            6,115             3,742            1,434
    Deferred tax                                 -                -           (1,153)                -
    Identified intangible assets:
      Existing technology                        -                -             3,440                -
   Goodwill                                  8,439            2,090            11,810            3,211
                                             -----            -----            ------            -----
Total                                     $  8,298         $  8,205          $ 17,839         $  4,645
                                          ========         ========          ========         ========
</table>


Grid Data, Inc.

On April 2, 2001,  Trimble  acquired  certain  assets of Grid  Data,  an Arizona
corporation,  for  approximately  $3.5  million  in cash and the  assumption  of
certain liabilities. In addition, the purchase agreement provided for Trimble to
make earn-out payments based upon the completion of certain business milestones.
In June 2002, Trimble issued 402,528 shares of common stock in settlement of all
earn-out payments, which resulted in additional goodwill of $4.8 million, with a
final purchase price of approximately $8.3 million.

LeveLite Technology, Inc.

On August 15, 2002,  Trimble acquired  LeveLite  Technology,  Inc., a California
corporation,   for  approximately  $5.7  million.   This  strategic  acquisition
complements  Trimble's  entry-level  construction  instrument  product line. The
purchase price consisted of 655,626 shares of common stock. The merger agreement
provides  for Trimble to make  additional  earn-out  payments not to exceed $3.9
million (in common stock and cash payment) based on future revenues derived from
existing  product  sales  to a  certain  customer  and a share  of the  payments
received from the settlement of potential litigation. As of January 2, 2004, the
total earn-out  amount was  approximately  $1.8 million  resulting in additional
goodwill and a final purchase price of approximately $7.5 million.

Applanix Corporation

* On July 7, 2003,  Trimble  acquired  privately  held Applanix  Corporation  of
Ontario, Canada for approximately $17.8 million.  Applanix develops systems that
integrate  inertial  navigation system (INS) and GPS technologies.  The purchase
price  consisted of 1,154,240  shares of Trimble common stock,  of which 720,404
were  issued.  Former  Applanix  shareholders  have  the  right to  receive  the
remaining  433,836  shares  of  Trimble  common  stock  upon  the  surrender  of
exchangeable  shares of a  Trimble  subsidiary.  Trimble  expects  the  Applanix
acquisition to extend its technology  portfolio and enable increased  robustness
and capabilities in its future positioning products.  Applanix's  performance is
reported under the Company's Portfolio Technologies segment. Trimble's allocated
a portion of the purchase price to existing technology, which is being amortized
over seven years.

<page>

MENSI S.A.

On December 9, 2003, we acquired  privately held MENSI S.A., a French  developer
of terrestrial 3D laser scanning  technology.  This strategic  acquisition  will
enhance our technology portfolio and expand our product offerings.  The purchase
price  consisted of an initial cash  payment of  approximately  Euro 3.5 million
(approximately  US$4.3 million on December 9, 2003).  The acquisition  agreement
provides for Trimble to make  additional  earn-out  cash  payments not to exceed
Euro 3 million  (approximately  US$3.7  million on  December  9, 2003)  based on
future revenue derived from existing product sales. The additional payments,  if
earned,  will result in additional  goodwill.  MENSI's  performance  is reported
under our Engineering and Construction segment.

NOTE 3 - Joint Ventures:

Caterpillar Trimble Control Technologies Joint Venture

On April 1, 2002, Caterpillar Trimble Control Technologies LLC ("CTCT"), a joint
venture  formed by Trimble and  Caterpillar  began  operations.  CTCT,  based in
Dayton,  Ohio, is 50% owned by Trimble and 50% owned by Caterpillar,  with equal
voting  rights.  It develops and markets  next  generation  advanced  electronic
guidance and control  products  for  earthmoving  machines in the  construction,
mining,  and waste industries.  Under the terms of the joint venture  agreement,
Caterpillar contributed $11.0 million cash plus selected technology, for a total
contributed value of $14.5 million,  and Trimble  contributed  selected existing
machine control product technologies valued at $25.5 million. Additionally, both
companies  have  licensed  patents and other  intellectual  property  from their
portfolios to CTCT. During the first fiscal quarter of 2002,  Trimble received a
special cash distribution of $11.0 million from CTCT.

Trimble has recorded the cash  distribution of $11.0 million as a deferred gain,
being amortized to the extent that losses are  attributable  from CTCT under the
equity  method of  accounting.  When and if CTCT is  profitable on a sustainable
basis,  and future  operating  losses are not  anticipated,  then  Trimble  will
recognize  as a gain,  the  un-amortized  portion of the $11.0  million.  To the
extent  that it is  possible  that the  Company  will  have  any  future-funding
obligation  relating to CTCT, then the relevant amount of the $11.0 million will
be deferred until such a time, as the funding obligation no longer exists.  Both
Trimble's share of profits (losses) under the equity method and the amortization
of the $11.0 million  deferred  gain are recorded  under the heading of "Expense
for affiliated operations, net" in Non-operating income (expense).

The expenses for affiliated  operations at CTCT,  net also includes  incremental
costs as a result  of  purchasing  products  from  CTCT at a higher  price  than
Trimble's   original   manufacturing   costs,   partially   offset  by  contract
manufacturing fees charged to CTCT. In addition,  Trimble received reimbursement
of  employee-related  costs  from CTCT for  Trimble  employees  devoted  to CTCT
totaling  $7.9  million  in fiscal  2003 and $3.9  million in fiscal  2002.  The
reimbursements were offset against operating expenses.

                                                         January 2,  January 3,
Fiscal year ended                                           2004        2003
-----------------                                           ----        ----
(In millions)

CTCT incremental pricing effects, net                      $ 5.9        $ 4.0
Trimble's 50% share of CTCT's reported gain (loss)         (0.9)        (0.2)
Amortization of deferred gain                                0.9          0.2
                                                             ---          ---
Total CTCT expense for affiliated operations, net (1)      $ 5.9        $ 4.0
                                                           =====        =====

 (1) Due to the nature of the  relationship  between Trimble and CTCT, a related
party, the impact of these agreements is classified under  non-operating  income
(expense) under the heading of "Expense for affiliated operations, net".

At January 2, 2004,  the net  outstanding  balance  due from CTCT to Trimble was
approximately $0.8 million.

<page>

Nikon-Trimble Joint Venture

On March 28, 2003,  Trimble and Nikon  Corporation  entered into an agreement to
form a joint  venture in Japan,  Nikon-Trimble  Co.,  Ltd.,  which  assumed  the
operations  of  Nikon  Geotecs  Co.,  Ltd.,  a  Japanese   subsidiary  of  Nikon
Corporation   and  Trimble   Japan  KK,  a  Japanese   subsidiary   of  Trimble.
Nikon-Trimble began operations in July 2003.

Under the terms of the Nikon-Trimble agreement, Nikon contributed (Y)1.2 billion
(approximately   US$10  million  on  June  30,  2003)  in  cash,  while  Trimble
contributed  (Y)500 million  (approximately  US$4.1 million on June 30, 2003) in
cash and  (Y)700  million  of its  common  stock or  349,251  shares  valued  at
approximately  US$5.9 million on June 30, 2003. The Nikon-Trimble  joint venture
purchased  certain  tangible and intangible  assets from Nikon Geotecs Co., Ltd.
and Trimble Japan KK.

Nikon-Trimble is 50% owned by Trimble and 50% owned by Nikon,  with equal voting
rights.  It  focuses  on the design and  manufacture  of  surveying  instruments
including  mechanical total stations and related products.  In Japan, this joint
venture will distribute  Nikon's survey products as well as Trimble's GPS survey
products and other  Engineering and  Construction  products,  including  robotic
total  stations.  Outside Japan,  Trimble is the exclusive  distributor of Nikon
survey and construction products.

Trimble  has adopted  the equity  method of  accounting  for its  investment  in
Nikon-Trimble,  with 50% share of profit or loss from this  joint  venture to be
reported by Trimble in the Non-operating  section of the Consolidated  Statement
of Operations  under the heading of "Expenses for affiliated  operations,  net."
During fiscal 2003, and the first year of its operations, Nikon-Trimble reported
a loss of $0.6 million of which Trimble's  share is $0.3 million.  At January 2,
2004,  the   outstanding   balance  from   Nikon-Trimble   due  to  Trimble  was
approximately  $1.4  million  related to the  transfer of certain  tangible  and
intangible assets from Trimble Japan KK, recorded under the heading of "Accounts
and  other  receivables,  net"  and $2.0  million  net  payable  by  Trimble  to
Nikon-Trimble  related  to  the  purchase  and  sale  of  products  from  and to
Nikon-Trimble  recorded under the heading of "Other accrued  liabilities" on the
Consolidated Balance Sheets.

Note 4 - Goodwill and Intangible Assets:

Goodwill and purchased intangible assets consisted of the following:

                                                       January 2,    January 3,
As of                                                     2004          2003
-----                                                     ----          ----
(in thousands)
Intangible assets:
  Intangible assets with definite life:
     Existing technology                              $ 32,389      $ 25,986
     Trade names, trademarks, patents, and other
     intellectual properties                            20,911        21,594
                                                        ------        ------
Total intangible assets with definite life              53,300        47,580
Less accumulated amortization                         (33,559)      (24,342)
                                                      -------       ------- 
Total net intangible assets                           $ 19,741      $ 23,238
                                                      ========      ========
Goodwill:
    Goodwill, Spectra Precision acquisition            205,562       185,277
    Goodwill, other acquisitions                        35,863        20,656
                                                        ------        ------
Total goodwill                                         241,425       205,933
                                                       =======       =======

The increase in goodwill of  approximately  $35.5 million during fiscal 2003 was
primarily due to the  acquisition of Applanix and MENSI of  approximately  $15.0
million and the exchange  rate impact of  approximately  $18.0 million on non-US
currency denominated goodwill assets.

<page>

The  intangible  asset  amortization  expense as of January 2, 2004 for the five
years following fiscal 2003 is projected as follows:

                                 Amortization
                                    Expense
(In thousands)
2004                                 $8,177
2005                                  5,384
2006                                  2,522
2007                                  1,747
2008                                    824
Thereafter                            1,087
                                      -----
Total                              $ 19,741
                                   ========

For  comparative  purposes,  the pro forma  adjusted net income (loss) per share
excluding   amortization  of  goodwill,   distribution  channel,  and  assembled
workforce is as follows:


<table>
<caption>
                                                          January 2,     January 3,     December 28,
Fiscal Years Ended                                           2004           2003            2001
------------------                                           ----           ----            ----
(in thousands, except per share data)
<s>                                                     <c>             <c>            <c> 
Net income (loss)                                        $  38,485       $  10,324      $(22,879)
  Add back SFAS 142 adjustments:
      Amortization of goodwill                                   -              -           7,817
      Amortization of distribution channel                       -              -          11,230
      Amortization of assembled workforce                        -              -           1,834
                                                                                            -----
Adjusted net income (loss)                               $  38,485       $  10,324      $ (1,998)
                                                         =========       =========      =========
Weighted average shares outstanding
     Basic                                                  47,505         42,860          37,091
     Diluted                                                50,012         43,578          37,091
Diluted net income (loss) per share                      $    0.81       $   0.24       $  (0.05)
Pro forma adjusted diluted net income (loss) per share   $    0.77       $   0.24       $  (0.05)
</table>



Note 5 - Certain Balance Sheet Components:

Inventories consisted of the following:

                                     January 2,           January 3,
As of                                   2004                 2003
-----                                   ----                 ----
(in thousands)
Raw materials                       $  20,927            $   21,098
Work-in-process                         3,876                 5,187
Finished goods                         46,023                34,859
                                       ------                ------
                                    $  70,826            $   61,144
                                    =========            ==========


<PAGE>


Property and equipment consisted of the following:

                                            January 2,          January 3,
As of                                          2004                2003
-----                                          ----                ----
(in thousands)

Machinery and equipment                     $  66,634           $  70,660
Furniture and fixtures                          9,085               6,538
Leasehold improvements                          4,502               6,451
Buildings                                       5,236               2,905
Land                                            1,391               1,391
                                                -----               -----
                                               86,848              87,945
Less accumulated depreciation                (59,469)            (65,908)
                                             --------            --------
                                            $  27,379           $  22,037
                                            =========           =========

Other current assets consisted of the following:

                                            January 2,          January 3,
As of                                          2004                2003
-----                                          ----                ----
(in thousands)

Notes receivable                            $     446           $   1,685
Prepaid expenses
                                                4,566               5,495
Other                                             647               1,221
                                                  ---               -----
                                            $   5,659           $   8,401
                                            =========           =========

Other non-current assets consisted of the following:

                                            January 2,          January 3,
As of                                          2004                2003
-----                                          ----                ----
(in thousands)

Debt issuance costs, net                    $   1,691           $   2,493
Nikon-Trimble joint venture investment*        10,717                   -
Other investments                               1,216               1,381
Deposits                                          925               1,196
Demonstration equipment, net                    3,226               2,665
Receivables from employees                        801               1,223
Other                                           3,978               3,128
                                                -----               -----
                                            $  22,554           $  12,086
                                            =========           =========

* Includes transaction costs of approximately $0.7 million.

Note 6 - Derivative Financial Instruments:

Trimble transacts  business in various foreign  currencies and hedges identified
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 certain trade and inter-company  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
and are marked to market through  earnings every period and generally range from
one to three months in original maturity.  These hedge instruments are marked to
market through  earnings every period.  Gains and losses are not material to the
Company's financial position or results of operation.

From time to time,  Trimble may also utilize forward foreign exchange  contracts
designated  as cash flow hedges of  operational  exposures  represented  by firm
backlog  orders to specific  accounts  over a specific  period of time.  Trimble

<page>

records  changes  in the fair  value of cash flow  hedges in  accumulated  other
comprehensive  income (loss),  until the firm backlog  transaction  ships.  Upon
recognition of revenue,  the Company  reclassifies  the gain or loss on the cash
flow hedge to the statement of operations.  For the fiscal year ended January 3,
2003,  Trimble  recorded a gain of $57,000  reflecting the net change and ending
balance in relation to a firm backlog hedge. The critical terms of the cash flow
hedging instruments are the same as the underlying forecasted transactions.  The
changes in fair value of the  derivatives  are intended to offset changes in the
expected cash flow from the forecasted transactions.  All forward contracts have
maturity  of less than 12  months.  As of  January  3,  2003,  the effect of all
outstanding  derivative  instruments  did  not  have a  material  impact  on the
Company's  financial  position or results of operations and none are outstanding
as of January 2, 2004.

Note 7 - The Company, Industry Segment, Geographic, and Customer Information:

Trimble is a designer and distributor of positioning  products and  applications
enabled by GPS,  optical,  laser, and wireless  communications  technology.  The
Company  designs and markets  products,  by  delivering  integrated  information
solutions such as collecting, analyzing, and displaying position data to its end
users. Trimble offers an integrated product line for diverse applications in its
targeted markets.

To achieve  distribution,  marketing,  production,  and technology advantages in
Trimble's targeted markets,  the Company manages its operations in the following
five segments:

o        Engineering and Construction -- Consists of products  currently used by
         survey and construction professionals in the field for positioning data
         collection,  field computing,  data management,  and automated  machine
         guidance and control.  These  products  provide  solutions for numerous
         construction  applications  including surveying,  general construction,
         site  preparation and  excavation,  road and runway  construction,  and
         underground construction.

o        Field  Solutions -- Consists of products  that  provide  solutions in a
         variety of agriculture and fixed asset  applications,  primarily in the
         areas of precise land leveling,  machine  guidance,  yield  monitoring,
         variable-rate  applications  of fertilizers  and  chemicals,  and fixed
         asset  data  collection  for a  variety  of  governmental  and  private
         entities.  This segment is an aggregation of the mapping and geographic
         information  systems  (GIS) and  agriculture  businesses.  Trimble  has
         aggregated these business  operations under a single general manager in
         order to continue to leverage its research and  development  activities
         due to the similarities of products across the segment.

o        Mobile  Solutions  --  Consists  of  products  that enable end users to
         monitor   and   manage   their   mobile    assets   by    communicating
         location-relevant  information  from the field to the  office.  Trimble
         offers a range of  products  that  address a number of  sectors of this
         market including truck fleets, security,  telematics, and public safety
         vehicles.

o        Component Technologies -- Currently,  Trimble markets its GPS component
         products  through  an  extensive  network of OEM  relationships.  These
         products  include  proprietary  chipsets,  modules,  and a  variety  of
         intellectual  property. The applications into which end users currently
         incorporate the component  products  include:  timing  applications for
         synchronizing wireless and computer systems;  in-vehicle navigation and
         telematics (tracking) systems; fleet management; security systems; data
         collection networks; and wireless handheld consumer products.

o        Portfolio  Technologies  -- The various  operations  that comprise this
         segment were aggregated on the basis that no single operation accounted
         for more than 10% of the total  revenue.  During  the first two  fiscal
         quarters of 2003, this segment was comprised solely of the Military and
         Advanced Systems  business.  Beginning with the third quarter of fiscal
         2003, Applanix's performance is reported in this business segment.

At the  beginning  of  fiscal  2003,  Trimble  realigned  two of its  reportable
segments.  The Tripod Data Systems  business is now included in the  Engineering
and  Construction  segment,  while  previously  it was included in the Portfolio
Technologies  segment.  The  following  table has been  restated to reflect this
realignment.

<page>

Trimble  evaluates  each of its segment's  performance  and allocates  resources
based on profit and loss from operations before income taxes, and some corporate
allocations.  Trimble  and  each of its  segments  employ  the  same  accounting
policies.

The following table presents revenues, operating income (loss), and identifiable
assets for the five segments.  The  information  includes the operations of Grid
Data after April 2, 2001, LeveLite after August 15, 2002, Applanix after July 7,
2003 and MENSI after  December 9, 2003.  Operating  income (loss) is net revenue
less  operating  expenses,   excluding  general  corporate  expenses,   goodwill
amortization,  restructuring charges, non-operating income (expense), and income
taxes.  The  identifiable  assets that Trimble's Chief Operating  Decision Maker
views by segment are accounts receivable and inventory.


<table>
<caption>

                               Reporting Segments
                               ------------------

                                 Engineering and      Field       Mobile      Component      Portfolio
Fiscal Years Ended                Construction      Solutions   Solutions   Technologies    Technologies    Total
------------------                ------------      ---------   ---------   ------------    ------------    -----
(In thousands)
<s>                               <c>             <c>          <c>          <c>             <c>           <c>       
January 2, 2004
    External net revenues          $  367,058      $ 79,879     $ 12,981     $  64,193       $  16,792     $ 540,903
    Operating income (loss)
        before corporate
        allocations                    60,664        14,500      (6,452)        16,560         (1,686)        83,586
    Accounts receivable (1)            84,897        16,589        4,103        10,003           7,321       122,913
    Inventories                        56,008         3,398        3,038         2,021           6,361        70,826

January 3, 2003
    External net revenues          $  319,615      $ 67,259     $  8,486     $  59,755       $  11,487     $  466,602
    Operating income (loss)
        before corporate
        allocations                    53,453         9,676     (12,039)        10,673             557         62,320
    Accounts receivable (1)            73,474        11,598        1,960        11,276           1,966        100,274
    Inventories                        46,332         7,337        1,986         2,853           2,636         61,144

December 28, 2001
    External net revenues          $  317,849      $ 68,519     $ 13,791     $  58,083       $  17,050     $  475,292
    Operating income (loss)
        before corporate
        allocations                    49,849        11,349      (9,990)        10,359             738         62,306
    Accounts receivable (1)            64,185        10,191        4,274         7,392           5,535         91,577
    Inventories                        38,921         4,639        1,992         2,490           3,438         51,480
</table>


 (1) As  presented,  accounts  receivable  excludes cash received in advance and
allowances for doubtful accounts, which are not allocated between segments.


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


<table>
<caption>

                                                    January 2,      January 3,      December 28,
Fiscal Years Ended                                     2004            2003             2001
------------------                                     ----            ----             ----
(in thousands)
<s>                                                <c>              <c>              <c> 
Operating income from continuing operations:
Total for reportable divisions (1)                  $   83,586       $  62,320        $  62,306
Unallocated corporate expenses                        (29,651)        (28,497)         (62,125)
                                                      -------         -------          ------- 
   Operating income from continuing operations      $   53,935       $  33,823        $     181
                                                    ==========       =========        =========

</table>


(1) Segment  operating income for fiscal 2002 and fiscal 2001 have been restated
to reflect the allocations of certain corporate  expenses so as to be comparable
with the allocation methodology in fiscal 2003.

<page>

                                                   January 2,     January 3,
As of                                                 2004           2003
-----                                                 ----           ----
(in thousands)
Assets:
Accounts receivable total for reportable segments   $  122,913    $ 100,274
Unallocated (1)                                       (19,563)     (20,629)
                                                      -------      ------- 
   Total                                            $  103,350    $  79,645
                                                    ==========    =========

(1) Includes cash received in advance, other receivables,  and accruals that are
not allocated by segment.


The following table presents revenues by product groups.

                                January 2,       January 3,      December 28, 
Fiscal Years Ended                 2004            2003             2001     
------------------                 ----            ----             ----     
(in thousands)

GPS Products                     $ 320.9         $ 274.5         $ 274.2
Laser and Optical Products         199.7           186.9            93.9
Other                               20.3            13.9             1.7
                                    ----            ----             ---
Total revenue                    $ 540.9         $ 475.3         $ 369.8
                                 =======         =======         =======

The geographic  distribution of Trimble's  revenues and  identifiable  assets is
summarized  in the table  below.  Other  foreign  countries  include  Canada and
countries within South and Central America. Identifiable assets indicated in the
table below exclude  inter-company  receivables,  investments  in  subsidiaries,
goodwill, and intangibles assets.


<table>
<caption>
                                                                     Geographic Area
                                                                     ---------------
                                                        Europe                        Other
                                                      Middle East                     Non-US
Fiscal Years Ended                           US         Africa          Asia         Countries      Eliminations       Total
------------------                           --         ------          ----         ---------      ------------       -----
(In thousands)
<s>                                     <c>           <c>            <c>            <c>             <c>              <c>      
January 2, 2004
   Sales to unaffiliated customers (1)
                                         $ 265,846     $  166,153     $  70,257      $  38,648       $        -       $ 540,903
   Inter-geographic transfers              112,623        116,185             -          3,755        (232,563)               -
                                           -------        -------                        -----        --------                 
   Total revenue                         $ 378,469     $  282,338     $  70,257      $  42,403        (232,563)       $ 540,903

   Identifiable assets                   $ 172,850     $   91,008     $   7,549      $  12,330       $        -       $ 283,737

January 3, 2003
   Sales to unaffiliated customers (1)   $ 235,716     $  136,551     $  60,878      $  33,457       $        -       $ 466,602
   Inter-geographic transfers            $  62,843         73,625             -          4,121        (140,589)               -
                                         ---------         ------                        -----        --------                 
   Total revenue                         $ 298,559     $  210,176     $  60,878      $  37,578        (140,589)       $ 466,602
   Identifiable assets                   $ 127,594     $   70,057     $   9,955      $   5,743       $    (864)       $ 212,485
   
December 28, 2001
   Sales to unaffiliated customers (1)   $ 236,665     $  143,051     $  54,710      $  40,866       $        -       $ 475,292
   Inter-geographic transfers               57,481         49,940         2,137              -        (109,558)               -
                                            ------         ------         -----                       --------                 
   Total revenue                         $ 294,146     $  192,991     $  56,847      $  40,866       $(109,558)       $ 475,292
   Identifiable assets                   $ 120,403     $   71,081     $  10,048      $   3,829       $  (5,494)       $ 199,867

</table>


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

Transfers  between US and non-US  geographic  areas are made at prices  based on
total costs and  contributions  of the supplying  geographic area. The Company's
subsidiaries in Asia, except for Japan, which is a buy/sell entity, have derived
revenue from  commissions  from US operations in each of the periods  presented.
These  commission  revenues and expenses  are  excluded  from total  revenue and
operating income (loss) in the preceding table. The Japanese  entity's  revenues
and expenses are included in total  revenue and  operating  income (loss) in the
preceding table. In fiscal 2002, Germany comprised approximately 16% of sales to
unaffiliated customers. Other than the United States, no other country comprised
more than 10% of sales to  unaffiliated  customers  for any  periods  presented,
except as disclosed above.

No single  customer  accounted  for 10% or more of Trimble's  total  revenues in
fiscal years 2003, 2002, and 2001.

<page>

Note 8  - Restructuring Charges:

Restructuring charges of $2.0 million were recorded in fiscal 2003, $1.1 million
in fiscal  2002,  and $3.6  million  in fiscal  2001,  all of which  related  to
severance  costs,  except  for $0.3 in 2003  which  related  to  lease  costs of
Trimble's Japanese office closure due to the Nikon joint venture. As a result of
the restructuring  activities,  the Company's headcount decreased in fiscal 2003
by 77, 49 and 207 in fiscal 2003, 2002, and 2001, respectively. As of January 2,
2004, the  restructuring  accrual balance was  approximately  $0.4 million which
will be paid over the remaining term of the lease through 2006.

Note 9 - Long-term Debt:

Long-term debt consisted of the following:

                                                   January 2,     January 3,
As of                                                 2004           2003
(In thousands)

 Credit Facilities:
    Term loan                                    $  43,750        $ 32,600
    Revolving credit facility                       44,000          35,000
Subordinated note                                        -          69,136
Promissory notes and other                           2,736           1,789
                                                     -----           -----
                                                    90,486         138,525
Less bank and other short-term borrowings                -           6,556
Less current portion of long-term debt              12,885          24,104
                                                    ------          ------
    Non-current portion                          $  77,601        $107,865
                                                 =========        ========

The  following  summarizes  the  future  cash  payment  obligations   (excluding
interest) as of January 2, 2004:


<table>
<caption>
                                                                                                          2009 and
                                        Total       2004        2005       2006       2007      2008       Beyond
                                        -----       ----        ----       ----       ----      ----       ------
(in thousands)
<s>                                  <c>         <c>         <c>         <c>        <c>        <c>         <c> 
 Credit Facilities:
    Term loan                         $  43,750   $  12,500   $ 12,500    $ 12,500   $ 6,250    $    -      $     -
    Revolving credit facility            44,000           -          -      44,000         -         -            -
 Subordinated note                            -           -          -           -         -         -            -
 Promissory note and other                2,736         385        165         285       110       110        1,681
                                          -----         ---        ---         ---       ---       ---        -----
Total contractual cash obligations    $  90,486   $  12,885   $ 12,665    $ 56,785   $ 6,360    $  110      $ 1,681
                                      =========   =========   ========    ========   =======    ======      =======
</table>




<PAGE>


Credit Facilities

On June 25, 2003, Trimble obtained a $175 million secured Credit Facility ("2003
Credit  Facility") from a syndicate of nine banks to repay the Subordinated Note
and refinance certain existing higher interest credit  facilities,  pay fees and
expenses  related to this new credit  facility,  and for ongoing working capital
and general corporate needs.

At January 2, 2004, Trimble had approximately  $87.8 million of borrowings under
the 2003  Credit  Facility,  comprised  of a $43.8  million  term loan and $44.0
million of a $125 million revolver.  The Company has access to an additional $81
million of cash under the terms of the revolving  credit  facility.  The Company
has  commitment  fees on the unused portion of 0.5% if the Leverage Ratio (which
is  defined  as  total   indebtedness  to  Earnings  before   Interest,   Taxes,
Depreciation and Amortization  (EBITDA), as defined in the related agreement) is
2.0 or greater and 0.375% if the Leverage Ratio is less than 2.0.

Pricing of interest for any borrowings  under the 2003 Credit Facility was fixed
for the first six  months at LIBOR  plus 175 basis  points  (1.5% at  January 2,
2004) and now is thereafter tied to a formula, based on the Leverage Ratio.

The Credit Facility is secured by all of the Company's  material assets,  except
for assets that are subject to foreign tax  considerations.  Financial covenants
of the 2003 Credit  Facility  include  leverage,  fixed charge,  and minimum net
worth tests.  At January 2, 2004,  Trimble was in compliance  with all financial
debt  covenants.  The  amount  due under the  revolver  loan is paid as the loan
matures on June 25, 2006, and the loan  commitment  fees are paid on a quarterly
basis.

Under the terms of the 2003  Credit  Facility,  the  Company  is  allowed to pay
dividends and  repurchase  shares of common stock up to 25% of net income in the
previous fiscal year, under the existing terms of the credit facilities.

In July of 2000,  Trimble  obtained  $200  million  of  senior,  secured  credit
facilities (the "2000 Credit Facility") from a syndicate of banks to support the
acquisition  of  Spectra   Precision  Group  and  its  ongoing  working  capital
requirements and to refinance certain existing debt. At January 3, 2003, Trimble
had  approximately  $67.6 million  outstanding  under the 2000 Credit  Facility,
comprised of $32.6 million under a $100 million five-year term loan, $25 million
under a $50 million US dollar only revolving credit facility  ("revolver"),  and
$10  million  under a $50  million  multi-currency  revolver.  The  Company  had
commitment fees on the unused portion of 0.5% assuming  certain ratios were met.
Pricing  for any  borrowings  under the 2000 Credit  Facility  was fixed for the
first six months at LIBOR plus 275 basis  points  and was  thereafter  tied to a
formula, based on the leverage ratio.

Due to the full repayment of the  Subordinated  Note and the  refinancing of the
2000  Credit  Facility,  the Company  wrote off  approximately  $3.6  million of
unamortized  debt  issuance  costs and warrants  issued in  connection  with the
Subordinated Note, as interest expense in fiscal 2003.

Subordinated Note

In July of 2000, as part of the  acquisition  of Spectra  Precision  Group,  the
Company issued  Spectra-Physics  Holdings USA, Inc., a subordinated  seller note
that had a stated two-year maturity. On March 20, 2002, the Company renegotiated
the terms of the subordinated note. Under the revised agreement, Spectra-Physics
Holdings,  Inc., a subsidiary of Thermo  Electron,  extended the due date of the
note until July 14, 2004, at the current  interest rate of  approximately  10.4%
per year.

As of January 3, 2003 the principal amount  outstanding was approximately  $69.1
million.  As  permitted  by  the  2000  Credit  Facility,   Trimble  repaid  the
subordinated note during fiscal 2003.

Promissory Note and Others

The  promissory  note and others  mainly  consists of a $1.7  million  liability
arising from the purchase of a building for Trimble's Corvallis, Oregon site and
other  government  loans in our foreign  subsidiaries.  The $1.7 million note is
payable in monthly  installments  through April 2015,  bearing a 3.99%  variable
interest rate as of January 2, 2004.




<PAGE>


Weighted Average Cost of Debt

The weighted average cost of debt is approximately 2.9% for fiscal 2003 and 7.6%
for fiscal 2002.


Note 10 - Lease Obligations and Commitments:

Trimble's   principal   facilities   in  the  United  States  are  leased  under
non-cancelable  operating  leases that expire at various dates through 2011. The
Company  has options to renew  certain of these  leases for an  additional  five
years.  Trimble  also leases  facilities  under  operating  leases in the United
Kingdom, Sweden, and Germany that expire in 2005.

Future minimum payments  required under  non-cancelable  operating leases are as
follows:

                            Operating
                          Lease Payments
                          --------------
(In thousands)

2004                               $ 10,129
2005                                  9,401
2006                                  2,322
2007                                  1,643
2008                                  1,489
Thereafter                            3,157
                                      -----
Total                              $ 28,141
                                   --------

Net rent expense under  operating  leases was $13.2 million in fiscal 2003, $5.9
million in fiscal 2002,  and $9.6 million in fiscal  2001.  Sublease  income was
$1.7 million, $4.7 million, and $3.5 million, respectively.


Note 11 - Fair Value of Financial Instruments:

The carrying amounts and fair values of Trimble's  financial  instruments are as
follows:


<table>
<caption>
                                                      Carrying            Fair         Carrying          Fair
                                                       Amount            Value          Amount          Values
                                                       ------            -----          ------          ------
                                                           January 2, 2004                  January 3, 2003
                                                           ---------------                  ---------------
(In thousands)
<s>                                                   <c>            <c>            <c>              <c>      
Assets:
   Cash and cash equivalents (See Note 1)              $ 45,416       $ 45,416       $ 28,679         $ 28,679
   Forward foreign currency exchange contracts            1,412          1,328            125              297
      (See Note 6)
   Accounts receivable                                  103,350        103,350         79,645           79,645

Liabilities:
   Subordinated notes (See Note 9)                            -              -         69,136           65,798
   Credit facilities (See Note 9)                        87,750         87,750         67,600           67,600
   Promissory note and other (See Note 9)                 2,736          2,335          1,789            1,421
   Accounts payable                                      26,019         26,019         30,669           30,669
</table>


The fair value of the subordinated notes, bank borrowings,  and promissory notes
have been  estimated  using an estimate of the interest  rate Trimble would have
had to pay on the issuance of notes with a similar  maturity and discounting the
cash flows at that rate. The fair values do not give an indication of the amount
that Trimble would currently have to pay to extinguish any of this debt.

<page>

The fair value of forward foreign  exchange  contracts is estimated based on the
difference  between  the  market  price and the  carrying  amount of  comparable
contracts. These contracts are adjusted to fair value at the end of every month.

Note 12 - Income Taxes:

Trimble's income tax provision (benefit) consisted of the following:

                                     January 2,    January 3,  December 28,
Fiscal Years Ended                     2004          2003         2001
------------------                     ----          ----         ----
(In thousands)

US Federal:
      Current                        $     513     $     -      $    -
      Deferred                         (7,000)           -           -
                                       -------                        
                                       (6,487)           -           -
                                       -------                        
US State:
      Current                              250         142          58
      Deferred                           (600)           -           -
                                         -----                        
                                         (350)         142          58
                                         -----         ---          --
Non-US:
       Current                           1,594       2,052       2,729
       Deferred                          2,343       1,306       (887)
                                         -----       -----       ---- 
                                         3,937       3,358       1,842
                                         -----       -----       -----
Income tax provision (benefit)       $ (2,900)     $ 3,500      $1,900
                                     =========     =======      ======

The pre-tax US income (loss) from continuing  operations was approximately $39.5
million,  $3.3 million and $(29.3)  million in fiscal years 2003, 2002 and 2001,
respectively.

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



<table>
<caption>
                                               January 2,       January 3,     December 28,
Fiscal Years Ended                                2004             2003            2001
------------------                                ----             ----            ----
(In thousands)
<s>                                          <c>              <c>             <c>
Expected tax from continuing operations at    $   12,455       $  4,839        $(7,557)
   35% in all years 
Change in valuation allowance                   (15,028)        (1,156)           9,704
Non-US tax rate differential                           -          (137)           (855)
Goodwill amortization                                  -              -             747
Other                                              (327)           (46)           (139)
                                                   ----            ---             ----
Income tax provision (benefit)                $  (2,900)       $  3,500        $  1,900
                                              =========        ========        ========
Effective tax rate                                  (8%)            25%            (9%)
                                                    ===             ==             === 
</table>



<page>


The components of deferred taxes consist of the following:

                                                        January 2,   January 3,
As of                                                      2004         2003
-----                                                      ----         ----
(In thousands)

Deferred tax liabilities:
     Purchased intangibles                            $    1,338     $    381
     Depreciation and amortization                         3,776        2,258
    Other individually immaterial items                      251         (78)
                                                             ---         --- 
           Total deferred tax liabilities                  5,365        2,561
                                                           -----        -----
Deferred tax assets:
   Inventory valuation differences                         9,001       12,069
   Expenses not currently deductible                       5,528        5,762
   US Federal credit carryforwards                         9,150        8,172
   Deferred revenue                                        4,280        4,317
   US State credit carryforwards                           6,999        6,215
   Warranty                                                2,374        2,374
   Depreciation and amortization                           2,871        3,184
   US Federal net operating loss (NOL) carryforward            -        4,451
   Other individually immaterial items                     3,106        1,827
                                                           -----        -----
Total deferred tax assets                                 43,309       48,371
Valuation allowance                                     (34,756)     (47,878)
                                                        -------      ------- 
Total deferred tax assets                                  8,553          493
                                                           -----          ---
Total net deferred tax assets/(liabilities)           $    3,188     $(2,068)
                                                      ==========     ======= 

The Company has US Federal credit  carryforwards of  approximately  $9.1 million
that expire  beginning in 2004. The Company has state  research and  development
credit carryforwards of approximately $10.4 million which do not expire.

The change in valuation allowance in 2003 includes net operating losses realized
as well as the  benefit  given to certain  deferred  tax assets in the amount of
$7.6 million based on  management's  assessment  that it is more likely than not
that such assets will be realized.  The valuation  allowance  decreased by $13.1
million  in 2003 and  decreased  by $3.1  million in 2002.  Approximately  $14.1
million  of the  valuation  allowance  at  January  2, 2004  relates  to the tax
benefits  of stock  option  deductions,  which will be credited to equity if and
when realized.

Note 13 - Shareholders' Equity:


3-for-2 Stock Split


Trimble's Board of Directors  approved a 3-for-2 split of all outstanding shares
of the Company's  Common Stock,  payable March 4, 2004 to stockholders of record
on February 17, 2004. Cash will be paid in lieu of fractional  shares. All share
and per share  information  have been  adjusted  to reflect the stock split on a
retroactive basis for all periods presented.


Common Stock

On April 14, 2003,  Trimble sold  3,148,000  shares of its Common Stock,  no par
value per share,  to an  investor  at a price of $12.17 per share in an offering
pursuant  to its shelf  registration  statement.  The  offering  resulted in net
proceeds to Trimble of approximately $36.6 million, approximately $31 million of
which was used to pay down the  principal  balance and $5.6  million was used to
pay down the accrued  interest due on the  Subordinated  Note (see Note 9 to the
Consolidated Financial Statements).

On December 21, 2001,  Trimble completed a private placement of 2,675,006 shares
of its  Common  Stock at a price  of  $10.00  per  share  to  certain  qualified
investors,  resulting in gross  proceeds of  approximately  $26.8 million to the
Company.  On January  15,  2002,  Trimble  had a second  closing of the  private
placement issuing 1,920,006 shares of Common Stock at $10.00 per share resulting
in gross proceeds of an additional $19.2 million.



<PAGE>


2002 Stock Plan

In 2002, Trimble's Board of Directors adopted the 2002 Stock Plan ("2002 Plan").
The  2002  Plan  approved  by the  shareholders  provides  for the  granting  of
incentive and  non-statutory  stock options for up to 3,000,000  shares plus any
shares currently reserved but un-issued to employees, consultants, and directors
of Trimble.  Incentive  stock options may be granted at exercise prices that are
not less  than  100% of the fair  market  value of  Common  Stock on the date of
grant.  Employee stock options granted under the 2002 Plan have 120-month terms,
and  vest  at a rate of 20% at the  first  anniversary  of  grant,  and  monthly
thereafter  at an annual rate of 20%,  with full vesting  occurring at the fifth
anniversary  of the grant.  The exercise  price of  non-statutory  stock options
issued  under the 2002 Plan  must be at least  85% of the fair  market  value of
Common  Stock on the date of grant.  As of January 2, 2004,  options to purchase
2,326,742  shares were  outstanding  and 619,949 were available for future grant
under the 2002 Plan.

1993 Stock Option Plan

In 1992,  Trimble's Board of Directors adopted the 1993 Stock Option Plan ("1993
Plan"). The 1993 Plan, as amended to date and approved by shareholders, provides
for  the  granting  of  incentive  and  non-statutory  stock  options  for up to
9,562,500  shares of Common Stock to  employees,  consultants,  and directors of
Trimble.  Incentive stock options may be granted at exercise prices that are not
less than 100% of the fair  market  value of Common  Stock on the date of grant.
Employee  stock options  granted under the 1993 Plan have 120-month  terms,  and
vest at a rate of 20% at the first anniversary of grant, and monthly  thereafter
at an annual rate of 20%, with full vesting  occurring at the fifth  anniversary
of grant.  The exercise  price of  non-statutory  stock options issued under the
1993 Plan must be at least 85% of the fair market  value of Common  Stock on the
date of grant. As of January 2, 2004,  options to purchase 4,799,045 shares were
outstanding,  and 980,627  shares were available for future grant under the 1993
Plan.

1990 Director Stock Option Plan

In December  1990,  Trimble  adopted a Director Stock Option Plan under which an
aggregate of 570,000  shares of Common Stock have been  reserved for issuance to
non-employee  directors as approved by the  shareholders  to date. At January 2,
2004,  options to purchase 287,501 shares were  outstanding,  and no shares were
available for future grants under the Director Stock Option Plan.

1992 Management Discount Stock Option Plan

In 1992,  Trimble's  Board of Directors  approved the 1992  Management  Discount
Stock  Option  Plan  ("Discount   Plan").   Under  the  Discount  Plan,  450,000
non-statutory  stock options were reserved for grant to management  employees at
exercise prices that may be significantly  discounted from the fair market value
of Common Stock on the dates of grant.  Options are  generally  exercisable  six
months  from the date of grant.  As of  January  2,  2004,  there were no shares
available for future grants. For accounting purposes, compensation cost on these
grants is measured by the excess over the discounted exercise prices of the fair
market  value of  Common  Stock on the  dates of option  grants.  There  were no
discounted  options  granted in the plan in fiscal 2003,  2002,  and 2001. As of
January 2, 2004,  options to purchase 187,500 shares were outstanding  under the
1992 Management Discount Stock Option Plan.

1988 Employee Stock Purchase Plan

In 1988,  Trimble  established  an employee  stock  purchase plan under which an
aggregate  of 5,025,000  shares of Common  Stock have been  reserved for sale to
eligible  employees as approved by the  shareholders  to date.  The plan permits
full-time  employees to purchase Common Stock through payroll  deductions at 85%
of the lower of the fair market value of the Common Stock at the beginning or at
the end of each  six-month  offering  period.  In fiscal 2003 and 2002,  328,044
shares  and  362,412  shares,  respectively,  were  issued  under  the  plan for
aggregate   proceeds  to  the  Company  of  $3.1   million  and  $2.9   million,
respectively.  At  January 2, 2004,  the  number of shares  reserved  for future
purchases by eligible employees was 428,216.




<PAGE>


SFAS 123 Disclosures

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

Exercise prices for options outstanding as of January 2, 2004, ranged from $5.33
to $34.46.  The weighted average remaining  contractual life of those options is
6.91 years. In view of the wide range of exercise prices,  Trimble  considers it
appropriate  to  provide  the  following  additional  information  in respect of
options outstanding:


<table>
<caption>

                                        Options Outstanding                          Options Exercisable
                                        -------------------                          -------------------
                                           Weighted-          Weighted-                            Weighted-
                                            Average            Average                             Average
                           Number        Exercise Price       Remaining          Number         Exercise Price
Range                  Outstanding(1)      per Share      Contractual Life    Exercisable(1)       per Share
-----                 --------------      ---------      ----------------    --------------       ---------
<s>                     <c>               <c>                  <c>             <c>                <c>     
$ 5.33 - 6.63              908              5.70                5.01              873              $  5.71
  6.67 - 8.53              861              7.91                6.03              614                 7.89
  8.75 - 9.33              111              9.10                6.07               65                 8.94
  10.23                    843             10.23                8.47              228                10.23
  10.25 - 11.43            957             10.81                6.13              585                10.66
  11.65 - 11.67            780             11.65                6.74              426                11.65
  11.93 - 15.71            783             13.29                6.18              525                13.13
  16.04                     21             16.04                6.02               17                16.04
  17.00                  1,064             17.00                9.53                5                17.00
  17.55 - 34.46          1,274             26.37                6.86              800                27.01
                         -----             -----                ----              ---                -----
Total                    7,601             13.61                6.91            4,136              $ 12.76
                         =====             =====                ====            =====              =======
</table>


(1) In thousands

Activity  during fiscal 2003,  2002,  and 2001,  under the combined plans was as
follows:



<table>
<caption>
                                         January 2, 2004           January 3, 2003            December 28, 2001
                                         ---------------           ---------------            -----------------
                                                    Weighted                  Weighted                    Weighted
                                                    average                   average                     average
                                                    exercise                  exercise                    exercise
Fiscal Years Ended                    Options        price         Options     price        Options        price
------------------                    -------        -----         -------     -----        -------        -----
(In thousands, except for per
   share data)
<s>                                 <c>          <c>               <c>        <c>            <c>        <c>      
Outstanding at beginning of year       7,691      $  12.35          6,932      $  12.69       6,390      $  12.73
     Granted                           1,298         16.87          1,275          9.88       1,605         11.39
     Exercised                       (1,263)          8.90          (199)          6.67       (436)          8.61
     Cancelled                         (125)         15.51          (317)         13.46       (627)         12.37
                                        ----         -----          -----         -----       ----          -----
Outstanding at end of year             7,601      $  13.61          7,691      $  12.35       6,932      $  12.69
Exercisable at end of year             4,136      $  12.76          4,005      $  11.69       3,009      $  10.84
Available for grant                    1,605                        2,790                     1,565
Weighted-average fair value of
   options granted during year                    $  10.03                     $   5.64                  $   6.39

</table>




<PAGE>


Non-statutory Options

On May 3, 1999,  Trimble  entered  into an  agreement  to grant a  non-statutory
option to purchase up to 45,000  shares of common stock at an exercise  price of
$6.50 per share, with an expiration date of March 29, 2004.

As of January 2, 2004, these non-statutory options have not been exercised.

Warrants

On April 12, 2002, the Company issued to  Spectra-Physics  Holdings USA, Inc., a
warrant to purchase up to 564,350 shares of Trimble's  Common Stock over a fixed
period of time.  Initially,  Spectra-Physics'  warrant  entitles  it to purchase
300,000  shares of Common Stock over a five-year  period at an exercise price of
$10.07 per share. On a quarterly basis beginning July 14, 2002, Spectra-Physics'
warrant  became  exercisable  for an  additional  375 shares of Common Stock for
every $1 million of principal and interest outstanding to Spectra-Physics  until
the  obligation  is paid off in full.  These shares are  purchasable  at a price
equal to the average of Trimble's  closing  price for the five days  immediately
preceding the last trading day of each  quarter.  On July 14, 2002 an additional
26,046 shares became  exercisable  at an exercise  price of $9.64 per share.  On
October 14, 2002 an additional  26,736 shares became  exercisable at an exercise
price of $6.12.  On  January  14,  2003,  an  additional  27,426  shares  became
exercisable  at an exercise  price of $9.03.  On April 14, 2003,  an  additional
14,312 shares became  exercisable at an exercise price of $13.37. The additional
shares are  exercisable  over a 5-year  period.  No  additional  shares  will be
issuable under the warrant to Spectra-Physics  as the underlying  obligation has
been paid off in full.

The approximate  fair value of the warrants of $2.4 million was determined using
the Black-Scholes pricing model with the following assumptions: contractual life
of 5-year  period,  risk-free  interest  rate of 4%;  volatility  of 65%; and no
dividends  during the  contractual  term.  The value of the  warrants  was being
amortized  to interest  expense over the term of the  subordinated  note and the
unamortized  balances  was  written  off to  interest  expense on June 2003 upon
repayment of the note.

On December  21, 2001 and January 15,  2002,  in  connection  with the first and
second closing of the private  placement of the Company's Common Stock,  Trimble
granted  five-year  warrants to purchase an additional  919,008 shares of Common
Stock, subject to certain adjustments, at an exercise price of $12.97 per share.

Common Stock Reserved for Future Issuances

As of  January  2, 2004,  Trimble  had  reserved  11,371,652  common  shares for
issuance upon exercise of options and warrants outstanding and options available
for grant under the 2002 Plan,  the 1993 Plan,  the 1990 Director  Plan, and the
1992  Management  Discount  Plan,  and  available  for  issuance  under the 1988
Employee Stock Purchase Plan.

Note 14 - Benefit Plans:

401(k) Plan

Under Trimble's 401(k) Plan, US employee  participants  (including  employees of
certain  subsidiaries)  may  direct the  investment  of  contributions  to their
accounts  among certain mutual funds and the Trimble  Navigation  Limited Common
Stock  Fund.  The  Trimble  Fund sold net 61,238  shares of Common  Stock for an
aggregate of $0.9 million in fiscal 2003.  Trimble,  at its discretion,  matches
individual  employee 401(k) Plan contributions at a rate of fifty cents of every
dollar  that  the  employee  contributes  to  the  401(k)  Plan  up to 5% of the
employee's  annual  salary to an annual  maximum of $2,500.  Trimble's  matching
contributions  to the 401(k) Plan were $1.8 million in fiscal 2003, $1.8 million
in fiscal 2002, and $1.7 million in fiscal 2001.

Profit-Sharing Plan

In 1995,  Trimble  introduced  an  employee  profit-sharing  plan in  which  all
employees,  excluding executives and certain levels of management,  participate.
The plan distributes to employees approximately 5% of quarterly adjusted pre-tax
income.  Payments  under the plan during  fiscal  2003,  2002 and 2001 were $2.5
million, $1.1 million, and $0.9 million, respectively.

<page>

Defined Contribution Pension Plans

Certain of the Company's  European  subsidiaries  participate in state sponsored
pension  plans.  Contributions  are based on specified  percentages  of employee
salaries.   For  these  plans,   Trimble  contributed  and  charged  to  expense
approximately  $2.0 million for fiscal 2003,  $1.4 million for fiscal 2002,  and
$1.4 million for fiscal 2001.

Defined Benefit Pension Plan

The Swedish and German  subsidiaries  have an unfunded  defined  benefit pension
plan that covered  substantially all of their full-time  employees through 1993.
Benefits are based on a percentage of eligible earnings.  The employee must have
had a projected  period of pensionable  service of at least 30 years as of 1993.
If the period was shorter, the pension benefits were reduced accordingly. Active
employees do not accrue any future benefits; therefore, there is no service cost
and the liability will only increase for interest cost.

Net periodic benefit costs in fiscal 2003, 2002, and 2001 were not material.

The changes in the benefit obligations and plan assets of the significant non-US
defined benefit pension plans for fiscal 2003 and 2002 were as follows:


<table>
<caption>


Fiscal Years Ended                                        January 2, 2004      January 3, 2003(1)
------------------                                        ---------------      -----------------
(in thousands)
<s>                                                            <c>                <c>     
Change in benefit obligation:
Benefit obligation at beginning of year                         $ 4,972            $ 4,105
   Interest cost                                                    328                317
   Benefits paid                                                  (256)              (212)
   Foreign exchange impact                                        1,102                814
   Actuarial (gains) losses                                          58               (52)
                                                                     --               --- 
Benefit obligation at end of year                                 6,204              4,972
                                                                  -----              -----
 Change in plan assets:
 Fair value of plan assets at beginning of year                     787                731
    Actual return on plan assets                                     29                122
    Employer contribution                                           150                121
    Plan participants' contributions                                  -                  -
    Benefits paid                                                 (256)              (212)
    Foreign exchange impact                                         162                 24
 Fair value of plan assets at end of year                           872                786
Benefit obligation in excess of plan assets                       5,332              4,186
                                                                  -----              -----
Unrecognized prior service cost                                       -                  -
Unrecognized net actuarial gain                                      35                 25
                                                                     --                 --
Accrued pension costs (included in accrued liabilities)         $ 5,297            $ 4,161
                                                                -------            -------
</table>


(1) Prior year's disclosure has been restated to correct for a clerical error.


Actuarial  assumptions  used to determine the net periodic pension costs for the
year ended January 2, 2004 were as follows:

                                     Swedish Subsidiary    German Subsidiaries
                                     ------------------    -------------------
Discount rate                                 5.5%                   6.0%
Rate of compensation increase                 2.5%                   1.5%


Note 15 - Earnings Per Share:

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

<page>


<table>
<caption>

                                                                January 2,        January 3,        December 28,
Fiscal Years Ended                                                 2004              2003               2001
------------------                                                 ----              ----               ----
(in thousands, except per share data)
<s>                                                           <c>              <c>                <c>
Numerator:
    Income available to common shareholders:
         Used in basic and diluted earnings (loss) per
            share from continuing operations                   $   38,485       $    10,324        $  (23,492)
         Used in basic and diluted earnings per share
            from discontinued operations                                -                -                 613
                                                                                                           ---
         Used in basic and diluted earnings (loss) per 
            share                                              $   38,485       $    10,324        $  (22,879)
                                                               ==========       ===========        ===========
Denominator:
    Weighted-average number of common shares used in
      basic earnings (loss) per share                              47,505            42,860             37,091
    Effect of dilutive securities (using treasury stock
      method):
        Common stock options                                        2,058               705                  -
        Common stock warrants                                         449                13                  -
    Weighted-average number of common shares and dilutive                                     
       potential common shares used in diluted income per
       share                                                       50,012            43,578             37,091
                                                                   ======            ======             ======

Basic earnings (loss) per share from continuing operations     $     0.81       $      0.24        $    (0.63)
Basic earnings per share from discontinued operations                   -                 -               0.01
Basic earnings (loss) per share                                $     0.81       $      0.24        $    (0.62)
Diluted earnings (loss) per share from continuing
   operations                                                  $     0.77       $      0.24        $    (0.63)
Diluted  earnings per share from discontinued operations                -                 -               0.01
Diluted income (loss) per share                                $     0.77       $      0.24        $    (0.62)

</table>


Due to the fact that the Company reported a net loss in fiscal 2001, options and
warrants  were not included in the  computation  of earnings per share in fiscal
2001.  If the  Company had  reported  net income in 2001,  additional  1,407,000
common equivalent shares related to outstanding  options and warrants would have
been included in the calculation of diluted loss per share.

Note 16 - Comprehensive Income (Loss):

The components of comprehensive income (loss), net of related tax as follows:

                                            January 2,  January 3,  December 28,
Fiscal Years Ended                             2004        2003         2001
------------------                             ----        ----         ----
(in thousands)
Net income (loss)                           $ 38,485     $10,324    $(22,879)
Foreign currency translation adjustments      31,198      17,697      (9,766)
Net gain (loss) on hedging transactions          (7)         210        (203)
Net unrealized gain (loss) on investments         74        (17)           16
                                                  --        ---            --
Comprehensive income (loss)                 $ 69,750     $28,214    $(32,832)
                                            ========     =======    ======== 


<page>


The components of accumulated other comprehensive  (loss), net of related tax as
follows:

                                                        January 2,    January 3,
Fiscal Years Ended                                         2004          2003
------------------                                         ----          ----
(in thousands)
Cumulative foreign currency translation adjustments    $  30,166     $  (1,032)
Net gain on hedging transactions                               -              7
Net unrealized gain (loss) on investments                     73            (1)
                                                              --            -- 
Accumulated other comprehensive income (loss)          $  30,239     $  (1,026)
                                                       =========     ========= 

Note 17 - Related-Party Transactions:

Related-Party Lease

Trimble  currently  leases  office  space in Ohio from an  association  of three
individuals,  one of whom is an employee of one of the US operating units, under
a non-cancelable  operating lease arrangement  expiring in 2011. The annual rent
is  subject to  adjustment  based on the terms of the  lease.  The  Consolidated
Statements of Operations  include  expenses from this  operating  lease of $0.35
million for fiscal 2003, fiscal 2002, and fiscal 2001.

Related -Party Notes Receivable

Trimble has notes receivable from officers and employees of  approximately  $0.8
million as of January 2, 2004 and $1.2 million as of January 3, 2003.  The notes
bear  interest  from 4.49% to 6.62% and have an average  remaining  life of 1.47
years as of January 2, 2004.

See Note 3 to the Notes to the Consolidated  Financial Statements for additional
information  regarding  Trimble's related party  transactions with joint venture
partners.

Note 18 - Statement of Cash Flow Data:


<table>
<caption>
                                                               January 2,    January 3,   December 28,
Fiscal Years Ended                                               2004          2003          2001
------------------                                               ----          ----          ----
(in thousands)
<s>                                                         <c>           <c>           <c>
Supplemental disclosure of cash flow information:

   Interest paid                                             $  10,208     $   12,215    $ 17,363

   Income taxes paid                                         $     688     $    2,635    $    825

Significant non-cash investing activities:
   Issuance of shares related to invest in joint venture     $   5,922     $        -    $      -
   Issuance of shares related to LeveLite earn-out
   payments                                                  $   1,349     $      336    $      -

</table>


Note 19 - Litigation:

From time to time,  the  Company is involved  in  litigation  arising out of the
ordinary course of its business. There are no known claims or pending litigation
expected to have a material effect on the Company's overall financial  position,
results of operations, or liquidity.




<PAGE>


Note 20 - Selected Quarterly Financial Data (unaudited):



<table>
<caption>
                                                    First         Second         Third         Fourth
                                                   Quarter        Quarter       Quarter        Quarter
                                                   -------        -------       -------        -------
(in thousands, except per share data)
<s>                                           <c>            <c>           <c>            <c>
Fiscal 2003
    Revenue                                    $    127,325   $    138,132  $    139,569   $   135,877
    Gross margin                                     61,755         71,095        69,112        66,068
    Net income                                        5,353          8,105         9,936        15,091

    Basic net income per share                         0.12           0.17          0.20          0.30
    Diluted net income per share                       0.12           0.16          0.19          0.28

Fiscal 2002
    Revenue                                    $    104,029   $    123,256  $    114,748   $   124,569
    Gross margin                                     54,333         60,951        57,581        61,567
    Net income (loss)                                 (715)          4,326         2,708         4,005

    Basic net income (loss) per share                (0.02)           0.10          0.06          0.09
    Diluted net income (loss) per share              (0.02)           0.10          0.06          0.09

</table>



Significant  quarterly  items for fiscal 2003 include the following:  (i) in the
first quarter of 2003 a $0.4 million  charge or $0.01 per diluted share relating
to  workforce  reduction;  (ii) in the  second  quarter  of 2003 a $0.7  million
charge,  or $0.01 per diluted  share  relating to work force  reduction and $3.6
million  of  interest  expenses,  or $0.07 per  diluted  share  relating  to the
Company's  debt  refinancing;  (iii) in the third quarter of 2003 a $0.6 million
charge, or $0.01 per diluted share relating to work force reduction; (iv) in the
fourth  quarter of 2003 a $0.3  million  charge,  or less than $0.01 per diluted
share relating to work force reduction.

Significant  quarterly  items for fiscal 2002 include the following:  (i) in the
first quarter of 2002 a $0.3 million  charge or $0.01 per diluted share relating
to  workforce  reduction;  (ii) in the  second  quarter  of 2002 a $0.2  million
charge,  or less than $0.01 per diluted share relating to work force  reduction;
(iii) in the third quarter of 2002 a $0.2 million charge, or less than $0.01 per
diluted share relating to work force  reduction and a $0.2 million gain, or less
than $0.01 per diluted share relating to the sale of an investment;  (iv) in the
fourth  quarter  of 2002 a $0.5  million  charge,  or $0.01  per  diluted  share
relating to work force reduction and a $1.5 million charge, or $0.03 per diluted
share relating to the write-down of an investment.

Note 21 - Subsequent Events


3-for-2 Stock Split


Trimble's Board of Directors  approved a 3-for-2 split of all outstanding shares
of the Company's  Common Stock,  payable March 4, 2004 to stockholders of record
on February 17, 2004. Cash will be paid in lieu of fractional  shares. All share
and per share  information  have been  adjusted  to reflect the stock split on a
retroactive basis for all periods presented.





<PAGE>




REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Board of Directors and Shareholders, Trimble Navigation Limited

We  have  audited  the  accompanying  Consolidated  Balance  Sheets  of  Trimble
Navigation  Limited as of January 2, 2004 and  January 3, 2003,  and the related
Consolidated Statements of Operations,  Shareholders' Equity, and Cash Flows for
each of the three  years in the period  ended  January 2, 2004.  Our audits also
included the financial  statement schedule listed in the index at Item 15(a)(2).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule, based on our audits.

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

In our opinion,  the financial statements and schedule referred to above present
fairly, in all material respects, the consolidated financial position of Trimble
Navigation  Limited at January 2, 2004 and January 3, 2003, and the consolidated
results of its  operations and its cash flows for each of the three years in the
period ended January 2, 2004, in conformity with accounting principles generally
accepted in the United  States.  Also,  in our  opinion,  the related  financial
statement  schedule,  when  considered  in  relation  to the basic  consolidated
financial statements taken as a whole,  presents fairly in all material respects
the information set forth therein.

As  discussed  in Note 1 to the  consolidated  financial  statements,  effective
December  29,  2001,  the company  adopted  Statement  of  Financial  Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."


                                         /s/ Ernst & Young LLP


March 11, 2004

Palo Alto, California






<PAGE>



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

None


Item 9a.  Controls and Procedures

(a) Controls and Procedures.

The  Company's  management,  with  the  participation  of  the  Company's  Chief
Executive Officer and Chief Financial  Officer,  has evaluated the effectiveness
of the Company's  disclosure controls and procedures (as such term is defined in
Rules  13a-15(e) and  15d-15(e)  under the  Securities  Exchange Act of 1934, as
amended (the "Exchange Act") as of the end of the period covered by this report.
Based on such  evaluation,  the  Company's  Chief  Executive  Officer  and Chief
Financial  Officer  have  concluded  that,  as of the  end of such  period,  the
Company's  disclosure  controls  and  procedures  are  effective  in  recording,
processing,  summarizing and reporting, on a timely basis,  information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act.

(b) Internal Control Over Financial Reporting.

There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)  under the
Exchange  Act)  during the fiscal year to which this  report  relates  that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal control over financial reporting.


                                    PART III



Item 10  Directors and Executive Officers of the Registrant

The  information  required  by this item,  insofar  as it  relates to  Trimble's
directors,  will be contained  under the captions  "Election of  Directors"  and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement
and is incorporated herein by reference.  The information  required by this item
relating to  executive  officers is set forth above in Item 1 Business  Overview
under the caption "Executive Officers."

Code of Ethics

The Company's Business Ethics and Conduct Policy that applies,  among others, to
the Company's  Chief  Executive  Officer,  Chief  Financial  Officer,  Corporate
Controller,  and other finance organization  employees.  The Business Ethics and
Conduct Policy is available on the Company's  website at  www.trimble.com  under
the heading "Corporate Governance and Policies" on the Investor Information page
of our website. A copy will be provided,  without charge, to any shareholder who
requests one by written request addressed to General Counsel, Trimble Navigation
Limited, 749 N. Mary Avenue, Sunnyvale, CA 94085.

If any substantive amendments to the Business Ethics and Conduct Policy are made
or any waivers are granted,  including any implicit waiver,  from a provision of
the Business Ethics and Conduct Policy,  to its Chief Executive  Officer,  Chief
Financial Officer or Corporate Controller,  the Company will disclose the nature
of such amendment or waiver on the Company's website at  www.trimble.com or in a
report on Form 8-K.



Item 11  Executive Compensation

The  information  required by this item will be contained in the Proxy Statement
under  the  caption  "Executive  Compensation"  and is  incorporated  herein  by
reference.

<page>


Item 12 Security  Ownership  of Certain  Beneficial  Owners and  Management  and
Related Stockholder Matters

The  information  required by this item will be contained in the Proxy Statement
under  the  caption  "Security   Ownership  of  Certain  Beneficial  Owners  and
Management Related Stockholder Matters" and is incorporated herein by reference.



Item 13 Certain Relationships and Related Transactions

The  information  required by this item will be contained in the Proxy Statement
under the  caption  "Certain  Relationships  and  Related  Transactions"  and is
incorporated herein by reference.


Item 14 Principal Accountant Fees and Services

The  information  required by this item will be contained in the Proxy Statement
under the caption  "Principal  Accountant Fees and Services" and is incorporated
herein by reference.



                                     PART IV


Item 15.  Exhibits, Financial Statement Schedules, and Reports on form 8-K

(a)      1.       Financial Statements

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



                                                                   Page in this
                                                                   Annual Report
                                                                   on Form 10-K


Consolidated Balance Sheets at January 2, 2004 and January 3, 2003...........45

Consolidated Statements of Operations for each of the three 
fiscal years in the period ended January 2, 2004.............................46

Consolidated Statement of Shareholders' Equity for each of the three 
fiscal years in the period ended January 2, 2004.............................47

Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended January 2, 2004..........................................48

Notes to Consolidated Financial Statements ..................................49

Report of Ernst & Young LLP, Independent Auditors............................74


     2.  Financial Statement Schedules



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


                                                                  Page in this
                                                                  Annual Report
                                                                  on Form 10-K

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

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

     3.  Exhibits

Exhibit

Number 

3.1 Restated Articles of Incorporation of the Company filed June 25, 1986. (5)

3.2 Certificate of Amendment of Articles of  Incorporation  of the Company filed
October 6, 1988. (5)

3.3 Certificate of Amendment of Articles of  Incorporation  of the Company filed
July 18, 1990. (5)

3.4 Certificate of Determination of the Company filed February 19, 1999. (5)

3.5 Certificate of Amendment of Articles of  Incorporation  of the Company filed
May 29, 2003. (15)

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

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

4.2 Preferred Shares Rights Agreement dated as of February 18, 1999. (4)

4.3 First Amended and Restated Stock and Warrant Purchase  Agreement between and
among the Company and the investors thereto dated January 14, 2002. (9)

4.4 Form of Warrant to Purchase  Shares of Common Stock dated  January 14, 2002.
(10)

4.5 Form of Warrant dated April 12, 2002. (11)

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

10.32+ 1990 Director Stock Option Plan, as amended, and form of Outside Director
Non-statutory Stock Option Agreement. (3)

10.46+ 1992  Management  Discount Stock Option and form of  Non-statutory  Stock
Option Agreement. (2)

10.59+ 1993 Stock Option Plan, as amended May 11, 2000. (7)

10.60 + 1988 Employee Stock Purchase Plan, as amended May 11, 2000. (7)

10.65+  Standby  Consulting  Agreement  between  the  Company  and  Bradford  W.
Parkinson dated September 1, 1998. (5)

10.66+  Standby  Consulting  Agreement  between the Company and Robert S. Cooper
dated September 1, 1998. (5)

10.67+  Employment  Agreement  between the Company and Steven W. Berglund  dated
March 17, 1999. (5)

10.68+ Nonqualified deferred Compensation Plan of the Company effective February
10, 1994. (5)

10.70***Supply  Agreement dated August 10, 1999 by and among Trimble  Navigation
Limited and Solectron Corporation and Solectron Federal Systems, Inc. (6)

10.77+  Australian  Addendum  to the  Trimble  Navigation  1988  Employee  Stock
Purchase Plan. (8)

10.81+ 2002 Stock Plan, including form of Option. (12)

10.82 Credit Agreement dated June 25, 2003. (14)

10.83 Letter dated May 8, 2002 exercising renewal option of the Supply Agreement
dated  August 10, 1999 by and among  Trimble  Navigation  Limited and  Solectron
Corporation and Solectron Federal Systems, Inc. (13)

21.1 Subsidiaries of the Company. (16)

23.1 Consent of Ernst & Young LLP, independent auditors. (16)

24.1 Power of Attorney included on signature page herein.

31.1  Certification of CEO pursuant to Section 302 of the  Sarbanes-Oxley Act of
2002. (16)

31.2  Certification of CFO pursuant to Section 302 of the  Sarbanes-Oxley Act of
2002. (16)

32.1  Certification of CEO pursuant to Section 906 of the  Sarbanes-Oxley Act of
2002. (16)

32.2  Certification of CFO pursuant to Section 906 of the  Sarbanes-Oxley Act of
2002. (16)

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

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

(1)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's Registration Statement on Form S-1, as amended (File No. 33-35333),
which became effective July 19, 1990.


(2)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's  Registration Statement on Form S-1 (File No. 33-45990),  which was
filed February 18, 1992.

(3)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's  Annual Report on Form 10-K for the fiscal year ended  December 31,
1993.

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

(5)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's  Annual  Report on Form 10-K for the fiscal  year ended  January 1,
1999.

(6)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's Report on Form 8-K, which was filed on August 25, 1999.

(7)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's registration statement on Form S-8 filed on June 1, 2000.

(8)  Incorporated  by  reference  to  identically   numbered   exhibits  to  the
registrant's  Annual Report on Form 10-K for the fiscal year ended  December 29,
2000.

(9) Incorporated by reference to exhibit number 4.1 to the registrant's  Current
Report on Form 8-K filed on January 16, 2002.

(10) Incorporated by reference to exhibit number 4.2 to the registrant's Current
Report on Form 8-K filed on January 16, 2002.

(11)  Incorporated  by  reference  to  exhibit  number  4.1 to the  registrant's
Registration Statement on Form S-3 filed on April 19, 2002.

(12)  Incorporated  by  reference to exhibit  number  10.82 to the  registrant's
Quarterly Report on Form 10-Q for the quarter ended June 28, 2002.

(13)  Incorporated  by  reference to exhibit  number  10.83 to the  registrant's
Annual Report on Form 10-K for the year ended January 3, 2003.

(14)  Incorporated  by  reference  to exhibit  number  10.2 to the  registrant's
Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.

(15)  Incorporated  by  reference  to  exhibit  number  3.5 to the  registrant's
Quarterly Report on Form 10-Q for the quarter ended July 4, 2003.

(16) Filed herewith.


(b)      Reports on Form 8-K.

On October  28,  2003,  the  Company  filed a report on Form 8-K  reporting  the
Company's quarterly earnings for the third fiscal quarter of 2003.


                              SIGNATURES

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

                                    TRIMBLE NAVIGATION LIMITED


                                   By: /s/ Steven W. Berglund                 
                                      -----------------------
                                      Steven W. Berglund,
                                      President and Chief Executive Officer

                                      March 10, 2004


                                POWER OF ATTORNEY

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


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



<table>
<caption>

Signature                     Capacity in which Signed              Date              



<s>                          <c>                                   <c>     
/s/ Steven W. Berglund        President, Chief Executive             
----------------------        Officer, Director                     March 15, 2004      
Steven W. Berglund                                


/s/ Mary Ellen Genovese       Chief Financial Officer and Assistant  
-----------------------       Secretary
Mary Ellen Genovese           (Principal Financial Officer)         March 15, 2004
                                 

/s/ Anup V. Singh             Corporate Controller                   
-----------------             (Principal Accounting Officer)        March 15, 2004  
Anup V. Singh                 



/s/ Robert S. Cooper          Director                              March 9, 2004
--------------------
Robert S. Cooper


/s/ John B. Goodrich          Director                              March 15, 2004
--------------------
John B. Goodrich


/s/ William Hart              Director                              March 9, 2004
----------------
William Hart


/s/ Ulf J. Johansson          Director                              March 9, 2004
--------------------
Ulf J. Johansson


/s/ Bradford W. Parkinson     Director                              March 9, 2004
-------------------------
Bradford W. Parkinson


/s/ Nickolas W. Vande Steeg   Director                              March 9, 2004
---------------------------
Nickolas W. Vande Steeg

</table>


<page>

                                  
                                   SCHEDULE II

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

                                      January 2,      January 3,    December 28,
Allowance for doubtful accounts:         2004            2003          2001

Balance at beginning of period        $  9,900        $  8,540     $  6,538
  Acquired allowance (1)                   752               -            -
  Bad debt expense                        (32)           5,443        5,077
  Write-offs, net of recoveries          (667)         (4,083)      (3,075)
                                         ----          ------       ------ 
Balance at end of period              $  9,953        $  9,900     $  8,540
                                      --------        --------     --------

Inventory allowance:
Balance at beginning of period        $ 25,150        $ 23,274     $ 19,285
  Acquired allowance  (2)                1,292               -            -
  Additions to allowance                 5,762           3,901        7,242
  Write-offs, net of recoveries        (6,319)         (2,025)      (3,253)
                                       ------          ------       ------ 
Balance at end of period              $ 25,885        $ 25,150     $ 23,274
                                      --------        --------     --------


(1)  Includes  $168,000  acquired at July 7, 2003 as part of the  acquisition of
     Applanix  and  $584,000  acquired  at  December  9,  2003  as  part  of the
     acquisition of MENSI.

(2)  Includes  $494,000  acquired at July 7, 2003 as part of the  acquisition of
     Applanix  and  $797,000  acquired  at  December  9,  2003  as  part  of the
     acquisition of MENSI.



<PAGE>




                                  EXHIBIT 3.8


                                     BYLAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                 (amended and restated through January 22, 2004)






<PAGE>


                                TABLE OF CONTENTS



                                    ARTICLE I
CORPORATE OFFICES
1.1      PRINCIPAL OFFICE                                                  5
1.2      OTHER OFFICES                                                     5


                                   ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1      PLACE OF MEETINGS                                                 5
2.2      ANNUAL MEETING                                                    5
2.3      SPECIAL MEETING                                                   6
2.4      NOTICE OF SHAREHOLDERS' MEETINGS                                  6
2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE                      7
2.6      QUORUM                                                            7
2.7      ADJOURNED MEETING; NOTICE                                         7
2.8      VOTING                                                            8
2.9      VALIDATION OF MEETINGS: WAIVER OF NOTICE;                         9
            CONSENT.
2.10     SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING           9
2.11     RECORD DATE FOR SHAREHOLDER NOTICE,  VOTING AND GIVING CONSENTS  10
2.12     PROXIES                                                          10
2.13     INSPECTORS OF ELECTION                                           11


                                   ARTICLE III
DIRECTORS
3.1      POWERS                                                           12
3.2      NUMBER AND QUALIFICATION OF DIRECTORS                            12
3.3      ELECTION AND TERM OF OFFICE OF DIRECTORS                         12
3.4      VACANCIES                                                        12
3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE                         13
3.6      REGULAR MEETINGS                                                 13
3.7      SPECIAL MEETINGS                                                 14
3.8      QUORUM                                                           14
3.9      WAIVER OF NOTICE                                                 14
3.10     ADJOURNMENT                                                      15
3.11     NOTICE OF ADJOURNMENT                                            15
3.12     ACTION WITHOUT MEETING                                           15
3.13     FEES AND COMPENSATION OF DIRECTORS                               15
3.14     APPROVAL OF LOANS TO OFFICERS                                    15

<page>

                                   ARTICLE IV
COMMITTEES
4.1     COMMITTEES OF DIRECTORS                                           15
4.2     MEETINGS AND ACTION OF COMMITTEES                                 16


                                    ARTICLE V
OFFICERS
5.1      OFFICERS
                                                         17
5.2      ELECTION OF OFFICERS                                             17
5.3      SUBORDINATE OFFICERS                                             17
5.4      REMOVAL AND RESIGNATION OF OFFICERS                              17
5.5      VACANCIES IN OFFICES                                             18
5.6      CHAIRMAN OF THE BOARD                                            18
5.7      PRESIDENT                                                        18
5.8      VICE PRESIDENTS                                                  18
5.9      SECRETARY                                                        18
5.10     CHIEF FINANCIAL OFFICER                                          19



                                   ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS                        19
6.2      INDEMNIFICATION OF OTHERS                                        20
6.3      PAYMENT OF EXPENSES IN ADVANCE                                   20
6.4      INDEMNITY NOT EXCLUSIVE                                          20
6.5      INSURANCE INDEMNIFICATION                                        20
6.6      CONFLICTS                                                        21


                                   ARTICLE VII
RECORDS AND REPORTS
7.1      MAINTENANCE AND INSPECTION OF SHARE REGISTER                     21
7.2      MAINTENANCE AND INSPECTION OF BY-LAWS                            22
7.3      MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS            22
7.4      INSPECTION BY DIRECTORS                                          22
7.5      ANNUAL REPORT TO SHAREHOLDERS; WAIVER                            23
7.6      FINANCIAL STATEMENTS                                             23


<page>

                                  ARTICLE VIII
GENERAL MATTERS
8.1      RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING            24
8.2      CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS                        24
8.3      CORPORATE CONTRACTS AND INSTRUMENTS:  HOW EXECUTED               24
8.4      CERTIFICATES FOR SHARES                                          25
8.5      LOST CERTIFICATES                                                25
8.6      CONSTRUCTION AND DEFINITIONS                                     25



                                   ARTICLE IX

AMENDMENTS
9.1      AMENDMENT BY SHAREHOLDERS                                        26
9.2      AMENDMENT BY DIRECTORS                                           26



<PAGE>



                                     BY-LAWS

                                       OF

                           TRIMBLE NAVIGATION LIMITED
                 (amended and restated through January 22, 2004)


                                    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.

<page>

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

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

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

         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.

<page>

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

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

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

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

         2.6      QUORUM.
                  ------

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

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

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

         When  any  meeting  of  shareholders,  either  annual  or  special,  is
adjourned  to another time or place,  notice need not be given of the  adjourned
meeting  if the time  and  place  are  announced  at the  meeting  at which  the
adjournment  is taken,  unless a new record  date for the  adjourned  meeting is

<page>

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.

<page>

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

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

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

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

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

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

         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

<page>

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

<page>

irrevocable  shall  continue in full force and effect  unless (i) revoked by the
person  executing  it,  before the vote  pursuant  to that  proxy,  by a writing
delivered  to the  corporation  stating  that  the  proxy  is  revoked,  or by a
subsequent  proxy executed by the person executing the prior proxy and presented
to the meeting, or as to any meeting by attendance at such meeting and voting in
person by the person  executing the proxy or (ii) written notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the  expiration of eleven (11) months from the date of the proxy,
unless otherwise  provided in the proxy. The revocability of a proxy that states
on its face  that it is  irrevocable  shall be  governed  by the  provisions  of
Sections 705(e) and 705(f) of the Code.

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

         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.

<page>

                                   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 seven (7)
until  changed,  within the limits  specified  above,  by a bylaw  amending this
Section 3.2, duly adopted by the board of directors or by the shareholders.  The
indefinite  number of  directors  may be  changed,  or a definite  number  fixed
without  provision for an indefinite  number, by a duly adopted amendment to the
articles of  incorporation  or by an amendment to this bylaw duly adopted by the
vote or written  consent of holders  of a  majority  of the  outstanding  shares
entitled to vote;  provided,  however,  that an amendment reducing the number or
the minimum number of directors to a number less than 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.

<page>

         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.

<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.

<page>

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

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

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

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

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

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

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

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

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

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

<page>


                                   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  periodic  amount  or  within  a  price  range
               determined by the board of directors; or

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


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

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

<page>

                                    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.

<page>

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

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

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

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

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

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

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

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

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

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

<page>

         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) who is or was  serving at the request of the  corporation  as a director or

<page>

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.

<page>

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

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

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

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


                                   ARTICLE VII

                               RECORDS AND REPORTS

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

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

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

<page>

         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.

<page>

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

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

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

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

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

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

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

         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.

<page>

                                  ARTICLE VIII

                                 GENERAL MATTERS


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

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

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

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

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

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

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

<page>

         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.

         Notwithstanding the above paragraph, the corporation may adopt a system
of issuance, recordation and transfer of its shares by electronic or other means
not involving any issuance of certificates,  including  provisions for notice to
purchasers in substitution  for the required  statements on  certificates  under
sections 417, 418 and 1302 of the GCL, and as may be required by the  California
Corporations Commissioner in administering the Corporate Securities Law of 1968,
which system (1) has been approved by the United States  Securities and Exchange
Commission,  (2) is  authorized in any statute of the United States or (3) is in
accordance  with  Division 8 (commencing  with Section  8101) of the  California
Commercial  Code. Any system so adopted shall not become  effective as to issued
and outstanding  certificated  securities until the  certificates  therefor have
been surrendered to the corporation.

<page>

         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.

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.





                                  EXHIBIT 21.1
                           TRIMBLE NAVIGATION LIMITED
                        LIST OF SUBSIDIARIES AS OF 3/5/04


Name of Subsidiary                                 Jurisdiction of Incorporation

Trimble Navigation Australia Pty Limited                       Australia

Spectra Precision Pty Ltd.                                     Australia

Trimble Austria Handels mbH                                    Austria

Trimble Belgium BVBA                                           Belgium

Trimble Brasil Limitada                                        Brazil

Jamestown Manufacturing Corporation                            California

Trimble Export Limited                                         California

Trimble Navigation International Limited                       California

Trimble Specialty Products, Inc.                               California

TR Navigation Corporation                                      California

Applanix Corporation                                           Canada

Trimble Canada Ltd.                                            Canada

Trimble Exchangeco Ltd.                                        Canada

Trimble Holdings Co.                                           Canada

Trimble Electronic Products (Shanghai) Co. Ltd.                China

Trimble Navigation Technology (Shanghai) Co. Ltd.              China

MENSI, Inc.                                                    Delaware

SPHM Inc.                                                      Delaware

Trimble Middle East WLL                                        Egypt

MENSI, S.A.                                                    France

Trimble France S.A.S.                                          France

Trimble GmbH                                                   Germany

Trimble Holdings GmbH                                          Germany

Trimble Kaiserslautern GmbH                                    Germany

Trimble terraSat GmbH                                          Germany

Trimble Jena GmbH                                              Germany

Trimble Italia SRL                                             Italy

Trimble Navigation Italia s.r.l                                Italy

MENSI, KK                                                      Japan

Trimble Japan K.K.                                             Japan

Spectra Precision de Mexico, SA de CV                          Mexico

Trimble Mexico S de RL                                         Mexico

Trimble
 Europe B.V.                                            Netherlands

Datacom Software Research Limited                              New Zealand

Trimble Navigation New Zealand Limited                         New Zealand

Tripod Data Systems                                            Oregon

Trimble Navigation Singapore PTE Limited                       Singapore

Trimble International Holdings S.L.                            Spain

Trimble Navigation Iberica S.L.                                Spain

Spectra Precision Scandinavia AB                               Sweden

Trimble AB                                                     Sweden

Applanix LLC                                                   Texas

TNL Flight Services, Inc                                       Texas

Trimble Navigation Europe Limited                              United Kingdom

Trimble U.K. Ltd.                                              United Kingdom

Trimble Mobile Solutions, Inc.                                 Virginia




                                  EXHIBIT 23.1
                           TRIMBLE NAVIGATION LIMITED

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the  incorporation  by reference in the  Registration  Statements,
Form  S-8 Nos.  33-37384,  33-39647,  33-45167,  33-45604,  33-46719,  33-50944,
33-57522,  33-62078,  33-78502,   33-84362,  33-91858,   333-04670,   333-28429,
333-53703,  333-84949,  333-38264, 333-65758, 333-65760, 333-97979, and Form S-3
Nos. 333-76986, 333-86656, 333-103676,  333-106893, pertaining to the 1983 Stock
Option  Plan,  the Trimble  Navigation  Savings and  Retirement  Plan,  the 1990
Director  Stock Option Plan,  the "Position Us for Progress" 1992 Employee Stock
Bonus Plan,  the 1992  Management  Discount  Stock Option  Plan,  the 1993 Stock
Option Plan, C. Trimble  Non-statutory  Option Plan, the 2002 Stock Option Plan,
the 1988 Employee Stock  Purchase Plan, and various sales of Trimble  Navigation
Limited common stock, and the related Prospectuses,  of our report dated January
23, 2004 with respect to the consolidated  financial  statements and schedule of
Trimble  Navigation  Limited  included in the Annual  Report (Form 10-K) for the
year ended January 2, 2004.



                                                     /s/ Ernst & Young LLP



March 11, 2004
Palo Alto, California






                                 EXHIBIT 31.1
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER


I, Steven W. Berglund, certify that:

1.       I have reviewed  this annual report on Form 10-K of Trimble  Navigation
         Limited.

2.       Based on my  knowledge,  this Annual Report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this Annual Report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this Annual Report;

4.       The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       Designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly
  during  the
                  period in which this Annual Report is being prepared;

         b)       Evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this Annual Report (the "Evaluation Date");
                  and

         c)       Presented  in this  annual  report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date.

5.       The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

         a)       All  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

         b)       Any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal controls;

6.       The registrant's other certifying officers and I have indicated in this
         Annual  Report  whether  there were  significant  changes  in  internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:      March 10, 2004                            /s/ Steven W. Berglund
                                                     ----------------------
                                                     Steven W. Berglund
                                                     Chief Executive Officer


                                  EXHIBIT 31.2
                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mary Ellen Genovese, certify that:

1.       I have reviewed  this annual report on Form 10-K of Trimble  Navigation
         Limited.

2.       Based on my  knowledge,  this Annual Report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this Annual Report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this Annual Report;

4.       The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       Designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly
  during  the
                  period in which this Annual Report is being prepared;

         b)       Evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this Annual Report (the "Evaluation Date");
                  and

         c)       Presented  in this  annual  report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

         a)       All  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

         b)       Any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal controls;

6.       The registrant's other certifying officers and I have indicated in this
         Annual  Report  whether  there were  significant  changes  in  internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:  March 15, 2004                                /s/ Mary Ellen Genovese
                                                     -----------------------
                                                     Mary Ellen Genovese
                                                     Chief Financial Officer


                                EXHIBIT NO. 32.1


            CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the Annual  Report on Form 10-K of Trimble  Navigation
Limited (the  "Company")  for the period ended January 2, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"),  Steven W.
Berglund, as Chief Executive Officer of the Company, hereby certifies,  pursuant
to  18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

         (1) the Report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934, and

         (2) the  information  contained in the Report fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

/s/  Steven W. Berglund
     ------------------
     Steven W. Berglund
     Chief Executive Officer

     March 10, 2004



This  certification  accompanies  this  Report  pursuant  to Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  be deemed  filed by the  Company  for  purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.







                                EXHIBIT NO. 32.2


            CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the Annual  Report on Form 10-K of Trimble  Navigation
Limited (the  "Company")  for the period ended January 2, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Mary Ellen
Genovese, as Chief Financial Officer of the Company, hereby certifies,  pursuant
to  18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, to the best of her knowledge, that:

         (1) the Report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934, and

         (2) the  information  contained in the Report fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

/s/ Mary Ellen Genovese
-----------------------
    Mary Ellen Genovese
    Chief Financial Officer

    March 15, 2004



This  certification  accompanies  this  Report  pursuant  to Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  be deemed  filed by the  Company  for  purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.