TRIMBLE NAVIGATION LTD /CA/ - 10-K Annual Report

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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 3, 2003
---------------

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
----------
(State or other jurisdiction of incorporation or organization)

94-2802192
----------
(I.R.S. Employer Identification No.)

645 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]

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 June 28, 2002 was approximately $455 million.

There were 29,350,366 shares of the registrant's Common Stock issued and
outstanding as of March 5, 2003.

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 20, 2003 (the "Proxy
Statement") are incorporated by reference into Part III of this Annual Report on
Form 10-K.

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.

TRIMBLE NAVIGATION LIMITED

2002 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..................18

PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters..................................................19
Item 6 Selected Financial Data..............................................20
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................23
Item 7A Quantitative and Qualitative Disclosures about Market Risk...........52
Item 8 Financial Statements and Supplementary Data..........................56
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................................................94

PART III
Item 10 Directors and Executive Officers of the Registrant...................94
Item 11 Executive Compensation...............................................94
Item 12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters..........................................94
Item 13 Certain Relationships and Related Transactions.......................94
Item 14 Controls and Procedures..............................................94

PART IV
Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K..95-108

TRADEMARKS

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

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 products and
solutions to industrial, commercial, governmental entities, and professional
customers in a number of markets including surveying, construction, agriculture,
urban and resource management, military, transportation, and telecommunications.
Customer benefits resulting from our products typically include cost savings or
avoidance, improved quality, higher productivity, and increased efficiency.
Examples of our products and solutions include guidance for earthmoving
operations, surveying instrumentation, fleet management for specialized trucks
such as concrete mixers, positioning technology for vehicle navigation and
telematics products, tractor guidance for farming, field data collection
equipment, and timing technology for synchronization of wireless networks.

Our expertise is focused in positioning, communication, and information
technologies, which form the core of our products. 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. The unique nature of many of our
products and solutions is created through information technologies - 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. Assembly and manufacturing for many
of our products are subcontracted to third parties. We conduct our business
globally with major operations in the United States, Sweden, Germany, New
Zealand, and the Netherlands. Products are sold through dealers,
representatives, partners, and other channels throughout the world. Products are
supported by sales offices in 22 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 major portion 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.

The usefulness of GPS is dependent upon the locations of the receiver and
the GPS satellites that are above the horizon at any given time. 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, altitude, and time. The accuracy of GPS may also be limited
by distortion of GPS signals from ionospheric and other atmospheric conditions,
and intentional or inadvertent signal interference or Selective Availability.
Selective Availability, which was the largest component of GPS distortion, is
controlled by the U.S. Department of Defense and was deactivated on May 1, 2000.

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 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 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 initiatives:

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

o Create innovative solutions that provide significant economic 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 Develop 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 Military and Advanced Systems, and Tripod Data
Systems, which aggregate into the Portfolio Business segment. Our segments are
distinguished by the markets they serve. Each division is responsible for
product development, marketing, sales, strategy, financial performance, and is
headed by a general manager.

Segment Realignment

In the first fiscal quarter of 2002, we realigned two of our reportable
segments. The Agriculture segment was combined with the Mapping and Geographic
Information Systems (GIS) business to form Field Solutions. Mapping and GIS were
previously part of Fleet and Asset Management. The Mobile Positioning business
that was part of Fleet and Asset Management is now Mobile Solutions.

We began breaking out Mobile Solutions as a separate reporting segment
during the first quarter of 2002 to address the growing importance of the mobile
asset management business and its impact on our profitability. At the same time,
we combined our GIS and Agriculture businesses to create a new segment called
Field Solutions in order to recognize the synergies and similar product
requirements between the two businesses.

Engineering and Construction

We employ GPS, optical, lasers, communications, and information technology
to pursue the opportunities in the Engineering and Construction industry
segment. Products in this segment increase productivity and accuracy for the
entire construction process including the initial survey, planning, design,
earthmoving, and building phases. These products are 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, and facilitating faster
redesign when needed.

For example, our GPS and robotic optical technology allows surveying tasks
to be completed faster and with a smaller crew. Similarly, construction machine
guidance products allow the operator to achieve the desired landform by
eliminating stakeout and reducing rework. These steps in the operation can be
readily linked together with data collection modules and software to minimize
the time and effort required to get the job done accurately.

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

Competition in this segment comes from 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(TM) 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.

Field Solutions

Our Field Solutions division addresses the two business areas of
Agriculture and Geographical Information System (GIS). Products and solutions
from the GIS business area are targeted at collecting feature and attribute
information in the field to be used within GIS databases and providing
position-related information directly to a person working in the field in the
mobile GIS market. The manner in which information is presented or collected is
of key importance to the customer, as well as the applicability and value of the
information itself.

In the agricultural market, our products provide 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, CSI Wireless, and Integrinautics.

The other principle market within Field Solutions is GIS. Our products
enable the efficient acquisition of features, attributes, and positions of fixed
infrastructure and natural resource assets. An example of the type of data being
collected 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 collected data can 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.

Distribution for GIS applications is primarily through a network of
independent dealers and business partners, supported by an internal sales staff.
Competitors in this market are typically either survey instrument companies
having GPS technology and/or consumer GPS companies. Two examples are Leica
Geosystems and Garmin.

Approximate price points in this segment range from $2,500 for a 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(TM) 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 components for applications
that require embedded position or time, primarily based on GPS technology. 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 telecommunication 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, UTStarcom, and Grayson
Wireless.

In the automotive market, we provide a GPS component that is embedded into
in-vehicle navigation 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, Blaupunkt, and Magnetti Marelli.

* 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.

Competitors in the telecommunication infrastructure market include
Symmetricom. Competitors in the automotive market 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 much higher reliability and much 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(TM) SQ Module - Our new 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.

Mobile Solutions

Our Mobile Solutions segment addresses the market for fleet management by
providing a bundled solution including both hardware and software needed to run
the application. In almost all cases, the software solution is provided to the
user through Internet-enabled access for a monthly service fee. The 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.

Our agreement with McNeilus Companies, Inc., a major manufacturer of trucks
for the ready mix concrete and waste management industries, facilitates the
delivery of a complete management solution when a new fleet is acquired.
McNeilus' sales team will market our solution, which includes our GPS-enabled
hardware and hosted software provided for a monthly service fee to its customers
as a retrofit for trucks already in the field, or as a factory-installed option.

Our Mobile Solutions segment maintains multiple distribution channels
including independent dealers, key accounts and strategic partners such as
McNeilus. Approximate prices for the hardware fall in the range of $300 to
$3000, 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, @Track, Aether Systems,
and Minorplanet.

Representative products sold by this division include:

Telvisant(TM) 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 Business

Our Portfolio Business segment includes various operations that each equal
less than 10 percent of our total operating revenue. The products in this
segment are data collection products as well as navigation modules and embedded
sensors that are used in avionics, flight, and military applications. The two
most significant components in this segment are Tripod Data Systems (TDS), and
Military and Advanced Systems (MAS).

TDS designs and markets handheld data collectors and data collection
software for field use by surveyors and other professionals. Products are sold
directly, through dealers, and other survey manufacturers. Competitors in this
portion of the business are small and geographically diverse.

Our MAS business supplies GPS modules that use the military's GPS Precise
Positioning Service. These modules are most often used in aviation or
ground-based military equipment. Military products are sold directly by our
sales force to either the U.S. Government or a contractor. Sales are also made
to foreign governments, with the sales of the encrypted components taking place
through the U.S. Government. Competitors in this market include Rockwell, L3,
Raytheon, and Thales.

Representative products sold by this segment include:

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.

Force(TM) 5 Module - The Force 5 GPS Receiver Application Module (GRAM) is
a dual-frequency, GPS module that is used in a variety of military GPS signal
embedded airborne and ground applications.

Acquisitions and Joint Ventures

The markets in which we compete require a wide variety of technologies,
products, and capabilities. Through acquisitions, investments, and joint
development agreements or alliances, we are able to deliver products and
services to customers in target markets. We employ the following strategies to
satisfy the need for new or enhanced products and solutions: develop new
technologies and products internally; enter into joint ventures with strategic
partners; resell another company's product; or acquire all or part of another
company.

Acquisitions

* We have acquired a number of companies in the past and we expect to make
acquisitions in the future. Mergers and acquisitions of high-technology
companies are inherently risky. 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. The risks associated with
acquisitions are more fully discussed in the "Risks and Uncertainties" section
contained in Part II, Item 7 of this Report.

LeveLite - On August 15, 2002, we acquired LeveLite Technology, Inc. This
was a strategic acquisition for us, as it not only extended the product
portfolio of our commercial construction business in the entry-level market for
laser-levels, but it also strengthened our presence in certain distribution
channels, such as the construction supply houses and power tool manufacturers.

Caterpillar Joint Venture

On April 1, 2002, Trimble and Caterpillar established and began operations
of a joint venture called Caterpillar Trimble Control Technologies, LLC, in
which each company has a 50% ownership stake and have equal voting rights. The
purpose of this joint venture is to develop the next generation of machine
control products for the construction and mining markets.

* 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 that this "after-market" solution will spur future demand for
a machine control product that can be integrated into the design of new
Caterpillar machines, while also still being available for "after-market"
installation.

Patents, Licenses and Intellectual Property

We hold 582 U.S. patents and 114 foreign patents, the majority of which
cover GPS technology and applications, and over 100 of which cover optical and
laser technology and applications.

We prefer to own the intellectual property used in our products, either
directly or though subsidiaries. Although this is not a significant factor in
our business, from time to time we license technology from third parties.

There are 74 trademarks registered to Trimble and its subsidiaries.
Specifically, "Trimble" with the sextant logo, "AgGPS", "GeoExplorer," and "GPS
Total Station," are examples of trademarks of Trimble Navigation Limited
registered in the United States and other countries. Additional trademarks are
pending registration.

Although we believe that our patents and trademarks have value, we cannot
be sure that those patents and trademarks, or any additional patents and
trademarks that may be obtained in the future, will provide meaningful
protection from competition. We actively develop and protect our intellectual
property through a program of patenting, enforcement, and licensing.

We do not believe that any of our products infringe patent or other
proprietary rights of third parties, but we cannot be certain that they do not
do so. (See Note 20 of the Notes to the Consolidated Financial Statements.) If
infringement is alleged, legal defense costs could be material, and there can be
no assurance that the necessary licenses could be obtained on terms or
conditions that would not have a material adverse effect on our profitability.

Sales and Marketing

We currently have regional sales offices throughout North America and
Europe. Offices serving the rest of the world include Australia, China, Japan,
Philippines, New Zealand, Singapore, and United Arab Emirates. We tailor the
distribution channel to the needs of the product and regional market. 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 a network of dealers and distributors in
more than 85 countries. Distributors carry one or more product lines and are
generally limited to selling either in one country or in a portion of a country.
We occasionally grant exclusive rights to market certain products within
specified countries.

Sales to unaffiliated customers outside the United States comprised
approximately 49% in 2002, 50% in 2001, and 52% in 2000. During the 2002 fiscal
year, North and South America represented 55%, and Europe, the Middle East and
Africa represented 32%, and Asia represented 13%. In fiscal 2002, the United
States comprised approximately 51% and Germany 16% of sales to unaffiliated
customers.

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, and certain products sold by our TDS subsidiary have a 90-day
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
business areas. 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 and farming
during the 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.

Working Capital

Our working capital needs are typically for inventories, accounts
receivable, and short-term debt. As the business is generally dependent upon a
steady stream of new products, some amount of working capital is devoted to the
ramp up and ramp down of product volumes as new products get introduced and
older models are taken out of production.

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 for most of our GPS products is subcontracted to Solectron
Corporation. 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.
During the fourth quarter of 2002, Solectron began assembling some of our
Component Technologies products in China. Our current contract with Solectron is
due to expire in August 2003.

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.

Most of the components used in our products are standard parts readily
available from more than one supplier. A few components are from sole suppliers
or are custom parts unique to our company. While custom parts make our products
hard to imitate, they also represent a manufacturing risk due to the lack of
alternative suppliers. If these parts became unavailable, redesign or
modification of our products could be required. In addition, suppliers may cease
manufacturing common components, replacing them with newer parts, which require
requalification. These risks could cause an interruption in our ability to
provide a steady stream of products to our customers.

Research and Development

We believe that our competitive position is maintained through the
development and introduction of new products having 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.

Recent developments have produced small, low-power, OEM GPS receivers,
accurate and versatile rotating lasers for construction use, and light weight
and compact GPS surveying rovers.

Our research and development expenditure, net of reimbursed amounts was
$61.2 million for fiscal 2002, $62.9 million for fiscal 2001, and $46.5 million
for fiscal 2000.

* 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.

Employment

As of January 3, 2003, we employed a total of 2,050 employees, including
686 in sales and marketing, 631 in manufacturing, 505 in engineering, and 228 in
general and administrative positions. Of these employees, 607 were located in
Europe and in the Middle East (primarily in Germany and Sweden), 252 were
situated in the Asia Pacific region (primarily in New Zealand), and 1,191
employed in the Americas (primarily in the United States).

Our employees are not represented by unions except for those in Sweden and
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

Our Internet address is www.trimble.com. Information contained on our
website is not part of this annual report on Form 10-K. We make available free
of charge on www.trimble.com, our annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after we electronically file such material with, or
furnish it to, the SEC.

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

Trimble Navigation Limited
645 North Mary Avenue, Sunnyvale, CA 94088
Attention: Investor Relations
Telephone: 408-481-8000

Executive Officers

The names, ages, and positions of the Company's executive officers as of
March 5, 2003 are as follows:

Name Age Position
- -------------------------------------------------------------------------
Steven W. Berglund.......51 President and Chief Executive Officer
Mary Ellen P. Genovese...43 Chief Financial Officer
William C. Burgess.......56 Vice President, Human Resources
Joseph F. Denniston, Jr..42 Vice President, Operations
Bryn A. Fosburgh.........40 Vice President and General Manager,
Geomatics and Engineering
John E. Huey.............53 Treasurer
Irwin L. Kwatek..........63 Vice President and General Counsel
Michael W. Lesyna........42 Vice President and General Manager,
Mobile Solutions
Bruce E. Peetz...........51 Vice President, Advanced Technology and Systems
Christopher J. Shephard..40 Vice President and General Manager,
Construction Instruments
Anup V. Singh............32 Corporate Controller
Alan R. Townsend.........54 Vice President and General Manager,
Field Solutions
Dennis L. Workman........57 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, Inc., a pioneer in the development of laser
systems. He spent 14 years at Spectra Precision 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, with global responsibility for 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 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 strategy. Prior to Trimble, 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, 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 (G&E) business area 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 U.S.
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.

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 business area 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.

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 (CI) 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 Datacomm group of
companies in New Zealand including Managing Director of Datacomm 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 business area 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 9-year tenure at Datum, he held the position of CTO. Mr.
Workman received a B.S. in mathematics and physics from St. Marys College in
1967 and an M.S. in electrical engineering from the Massachusetts Institute of
Technology in 1969.

Item 2 Properties

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

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

In addition, we lease a number of smaller offices around the world
primarily for sales.

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

Item 3 Legal Proceedings

In January of 2001, Philip M. Clegg instituted a lawsuit in the United
States District Court for the District of Utah, Central Division, against
Spectra-Physics Laserplane, Inc., Spectra Precision AB and Trimble Navigation
Limited. On January 29, 2003, we settled this patent infringement lawsuit with
Mr. Clegg whereby we have purchased a fully paid-up, non-exclusive license under
U.S. Patent No. 4,807,131 from Mr. Clegg.

* In November of 2001, Qualcomm Inc. filed a lawsuit against us in the
Superior Court of the State of California. The complaint alleges claims for an
unspecified amount of money damages arising out of Qualcomm's perceived lack of
assurances in early 1999 that our products purchased by Qualcomm would work
properly after a scheduled week number rollover event that took place in August
of 1999. Qualcomm is the only customer to make a claim against us based on the
week number rollover event. In the opinion of management, the resolution of this
lawsuit is not expected to have a material adverse effect on our overall
financial position.

* We are also a party to other disputes 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 2002.

PART II

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

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.

2002 2001
---- ----
High Low High Low
--------------------------------------
First Quarter $17.14 $11.76 $28.50 $16.50
Second Quarter 18.50 14.97 21.25 12.75
Third Quarter 15.00 10.28 19.80 13.06
Fourth Quarter 14.47 8.02 18.41 12.89

As of January 3, 2003, there were approximately 1,132 holders of record of
our common stock. We made no sales of unregistered securities during the
year-ended January 3, 2003.

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 currently restricted from paying dividends and are limited as to the
amount of our common stock that we can repurchase under the terms of our credit
facilities. We are allowed to pay dividends and repurchase shares of our common
stock up to 25% of net income in the previous fiscal year.

Equity Compensation Plan Information

The following table sets forth, as of January 3, 2003, 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.

Item 6. Selected Financial Data

HISTORICAL FINANCIAL REVIEW

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 balance sheet 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 balance sheet 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. We reclassified identifiable intangible assets with
indefinite lives, with a net book value of $73.6 million, as defined by SFAS
142, to goodwill at the date of adoption.

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

Summary Consolidated Statements of Operations Data

Other Operating Data:

Selected Consolidated Balance Sheet Data:

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

(1) EBITDA consists of earnings from continuing operations before interest
income, interest expense, income taxes, depreciation and amortization. Our
EBITDA is presented because it is a widely accepted financial indicator.
EBITDA is not a measure of financial performance in accordance with
generally accepted accounting principles and should not be considered in
isolation or as an alternative to net income (loss) as an indicator of our
performance or to cash flows from operating activities as a measure of
liquidity. Our EBITDA may not be comparable to similarly titled measures as
defined by other companies.

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

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."

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting estimates and the related assumptions are evaluated
periodically as conditions warrant, and changes to such estimates are recorded
as new information or changed conditions require revision. Application of the
critical accounting policies requires management's judgments, often as the
result of the need to make estimates of matters that are inherently uncertain.
If actual results were to differ materially from the estimates made, the
reported results could be materially affected. For a summary of all of our
significant accounting policies, including critical accounting policies
discussed below, see Note 1 - "Summary of Significant Accounting Policies" of
the Notes to the Consolidated Financial Statements.

Revenue Recognition

Our revenues are recorded in accordance with the Securities and Exchange
Commission's (SEC) Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition." Prior to recognizing revenue, we require the following: (i)
execution of a written customer order, (ii) delivery of the product, (iii) a
fixed or determinable fee, and (iv) probable collectibility of the proceeds. We
recognize revenue from product sales when the products are shipped to the
customer, title has transferred, and no significant obligations remain. We defer
revenue if there is uncertainty about customer acceptance. We reduce product
revenue for estimated customer returns and for any discounts that may occur
under programs we have with our customers and partners.

Our shipment terms are either FOB shipping point or FCA shipping point. FOB
(Free on Board) shipping point term means that the seller fulfills the
obligation to deliver when the goods have passed over the ship's rail at the
named port of shipment. This means that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point. The FOB term requires
the seller to clear the goods for export. FCA (Free Carrier) shipping point term
means that the seller 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, the seller may choose within the place or range stipulated where the
carrier shall take the goods into carrier's charge.

Our shipment terms for domestic orders are typically FOB shipping point.
International orders fulfilled from our European distribution center are
typically shipped FCA shipping point. Other international orders are shipped FOB
destination, and accordingly these international orders are not recognized as
revenue until the product is delivered and title has transferred.

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.

Sales to distributors and resellers are recognized upon shipment providing
that there is evidence of such an arrangement through a distribution agreement
or purchase order, title has transferred, no remaining performance obligations
exist, the price and terms of the sale are fixed, and collection is probable.
Distributors and resellers do not have a right of return.

Our software arrangements 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 price of 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 period of the PCS agreement.

Allowance for Doubtful Accounts

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.

Inventory Valuation

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 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.

Deferred 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. 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 was made.

Goodwill and Other Purchased Intangible Assets

We have significant intangible assets on our balance sheet 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 the prior year. We reclassified identifiable intangible assets with
indefinite lives and net book value of $73.6 million, as defined by SFAS 142, to
goodwill at the date of adoption.

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

January 3, December 28, December 29,
2003 2001 2000
- ------------------------------------------ ------------ ------------ -----------
(In thousands)

Net income (loss) $ 10,324 $ (22,879) $ 14,185
Add back SFAS 142 adjustments:
Amortization of goodwill 7,817 3,116
Amortization of distribution channel 11,230 5,176
Amortization of assembled workforce 1,834 1,225
----- -----

Adjusted net income (loss) $ 10,324 $ (1,998) $ 23,702
======== ========== =========

Weighted average shares outstanding
Basic 28,573 24,727 23,601
Diluted 29,052 24,727 25,976
Diluted net income (loss) per share $ 0.36 $ (0.93) $ 0.55
Pro forma adjusted diluted net income
(loss) per share $ 0.36 $ (0.08) $ 0.92
======== ========== =========

In assessing the recoverability of goodwill and indefinite life intangible
assets, we must make assumptions about the estimated future cash flows and other
factors to determine the fair value of these assets. Assumptions about future
revenue and cash flows require significant judgment because of the current state
of the economy, the fluctuation of actual revenue, and the timing of expenses.

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.

Similarly, the impairment evaluation for indefinite life intangible assets
includes a comparison of the asset's carrying value to the asset's fair value.
When the carrying value exceeds fair value an impairment charge is recorded for
the amount of the difference. An intangible asset is determined to have an
indefinite useful life when there are no legal, regulatory, contractual,
competitive, economic or any other factors that may limit the period over which
the asset is expected to contribute directly or indirectly to the future cash
flows of our company. In each reporting period, we also evaluate the remaining
useful life of an intangible asset that is not being amortized to determine
whether events and circumstances continue to support an indefinite useful life.
If an intangible asset that is not being amortized is determined to have a
finite useful life, the asset will be amortized prospectively over the estimated
remaining useful life and accounted for in the same manner as intangible assets
subject to amortization.

We tested goodwill for impairment using the process prescribed in SFAS No.
142. The first step is a screen for potential impairment, while the second step
measures the amount of the impairment, if any. No impairment charge resulted
from the impairment tests. For comparative purposes that depict the effect of
adopting SFAS No. 141 and 142 above, we have included the pro forma adjusted net
income per share excluding amortization of goodwill, distribution channel, and
assembled workforce.

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

We adopted Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets," at the beginning of fiscal
2002. The effect of adopting SFAS 144 did not have a material impact on our
financial position or results of operations.

Depreciation and amortization of our long-lived assets is provided using
accelerated and 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 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.

Warranties

We provide for the estimated cost of product warranties at the time revenue
is recognized. 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

As permitted by the provisions of Statement of Financial Accounting
Standards (SFAS) No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure," and Statement of Financial Accounting Standards ("SFAS 123")
No. 123, "Accounting for Stock-Based 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 14 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 2002, 2001, and 2000 as if we had elected to
recognize compensation cost based on the fair value of the options granted at
grant date, as prescribed by SFAS No. 123.

Investment in the Caterpillar Trimble Control Technologies LLC (CTCT or "Joint
Venture")

We have adopted the equity method of accounting for our investment in the
Joint Venture. This requires that we record our share of the Joint Venture
profits or losses in a given fiscal period. During fiscal year 2002, the Joint
Venture reported a loss of $0.4 million of which our share is $0.2 million,
which was recorded as a Non-operating expense under the heading of "Expense for
affiliated operations, net," but which was offset by the amortization of an
equal amount of the original deferred gain on the sale of technology to the
Joint Venture.

We have elected to treat the cash distribution of $11.0 million as a
deferred gain, being amortized to the extent that losses are attributable from
the 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 un-amortized. To the extent that it is possible that we will have any
future-funding obligation relating to the Joint Venture, then the relevant
amount of the $11.0 million will be deferred until such time, the funding
obligation no longer exists. Both our share of profits (losses) under the equity
method and the amortization of our $11.0 million deferred gain are recorded
under the heading of "Expense for affiliated operations, net" in Non-operating
income (expense).

For further information, see `Recent Business Developments - Caterpillar
Joint Venture' section of Item 7 in this Report.

RECENT BUSINESS DEVELOPMENTS

Caterpillar Joint Venture

On April 1, 2002, Caterpillar Trimble Control Technologies LLC, a Joint
Venture formed by Trimble and Caterpillar, began operations. The Joint Venture,
50 percent owned by Trimble and 50 percent owned by Caterpillar, with equal
voting rights, is developing and marketing next generation advanced electronic
guidance and control products for earthmoving machines in the construction,
mining, and waste industries. The Joint Venture is based in Dayton, Ohio. 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 we 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 the Joint Venture. During the
first fiscal quarter of 2002, we received a special cash distribution of $11.0
million from the Joint Venture.

During fiscal year 2002, we recorded approximately $4.0 million of expenses
under the heading of "Expense for affiliated operations, net" in Non-operating
income (expense) related to certain transactions between the Joint Venture and
us. This was comprised of approximately $4.9 million of incremental costs
incurred by us as a result of purchasing products from the Joint Venture at a
higher transfer price than our original manufacturing costs, offset by
approximately $0.9 million of contract manufacturing fees charged to the Joint
Venture by us. Due to the nature of the transfer price agreements between
Trimble and the Joint Venture, a related party, the impact of these agreements
is classified under Non-operating income (expense).

In addition, during fiscal year 2002, we recorded lower operating expenses
of approximately $4.2 million due to the transfer of employee-related expenses
for research and development ($2.8 million), and sales, marketing and
administrative functions ($1.4 million) to the Joint Venture. These employees
are devoted to the Joint Venture and are primarily engaged in developing next
generation products and technology for that entity.

Acquisition of LeveLite Technology, Inc

On August 15, 2002, we acquired LeveLite Technology, Inc. ("LeveLite"), a
California corporation, for approximately $5.7 million. This strategic
acquisition complements our entry-level construction instrument product line.
The purchase price consisted of 437,084 shares of our 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. On January 22, 2003,
we issued the first earn-out payment (stock and cash combination) with a fair
market value of approximately $0.4 million, related to the earn-out for the
quarter ended January 3, 2003. Also, if we receive any proceeds from a pending
litigation, a portion will be paid to the former shareholders of LeveLite. The
additional payments, if earned, will result in additional goodwill.

RESULTS FROM CONTINUING OPERATIONS EXCLUDING INFREQUENT, AND ACQUISITION RELATED
ADJUSTMENTS

Income (loss) from continuing operations include certain infrequent and
acquisition-related charges that management believes are not reflective of
on-going operations. The following table, which does not purport to present the
results of continuing operations in accordance with generally accepted
accounting principles, reflects results of operations to exclude the effects of
such items as follows (in thousands):

RESULTS OF CONTINUING OPERATIONS

Our annual revenues from continuing operations decreased from $475.3
million in fiscal 2001 to $466.6 million in fiscal 2002. In fiscal 2001, our
annual revenues from continuing operations increased to $475.3 million from
$369.8 million in fiscal 2000. In fiscal 2002, we had net income from continuing
operations of $10.3 million, or $0.36 diluted earnings per share, compared to a
net loss of $23.5 million, or $0.95 loss per share, in fiscal 2001, and a net
income from continuing operations of $14.2 million, or $0.55 diluted earnings
per share, in fiscal 2000. The total net income for fiscal 2002, including
discontinued operations, was $10.3 million, or $0.36 diluted earnings per share,
compared to a total net loss for 2001, including discontinued operations of
$22.9 million, or $0.93 loss per share, and a total net income for fiscal 2000,
including discontinued operations of $14.2 million, or $0.55 diluted earnings
per share. A summary of financial data by business segment is as follows.

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 goodwill and other purchased intangibles, as well as other items
not controlled by the business segment.

In the first fiscal quarter of fiscal 2002, we realigned two of our
reportable segments and therefore the following table shows restated revenue and
operating income by segment to reflect this realignment. The Agriculture segment
was combined with the Mapping and GIS business to form Field Solutions. Mapping
and GIS were previously part of Fleet and Asset Management. The Mobile
Positioning business that was part of Fleet and Asset Management is now Mobile
Solutions.

We began breaking out Mobile Solutions as a separate reporting segment
during the first quarter of 2002 to address the growing importance of the mobile
asset management business and its impact on our profitability. At the same time,
we combined our GIS and Agriculture businesses to create a new segment called
Field Solutions in order to recognize the synergies and similar product
requirements between the two businesses.

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

Basis of Presentation

We have a 52-53 week fiscal year, ending on the Friday nearest to December
31, which for fiscal 2002 was January 3, 2003. Fiscal 2002 was a 53-week year
and as a result, we recorded an extra week of revenues, costs, and related
financial activities.

Therefore, the financial results of fiscal year 2002, having the extra
week, will not be exactly comparable to the prior and subsequent 52-week fiscal
years. Thus, due to the inherent nature of adopting a 52-53 week fiscal year,
Trimble, analysts, shareholders, investors and others will have to make
appropriate adjustments to any analysis performed when comparing our activities
and results in fiscal years that contain 53 weeks, to those that contain the
standard 52 weeks. Fiscal years 2001 and 2000 were both comprised of 52-weeks.

Revenue

In fiscal 2002, total revenue decreased by $8.7 million or 1.8% to $466.6
million from $475.3 million in fiscal 2001. The decrease in fiscal 2002 was
primarily due to the reduction of revenue in Mobile Solutions and Portfolio
Technologies. Total revenue in fiscal 2001 increased by $105.5 million or 28.5%
to $475.3 million from $369.8 million in fiscal 2000, primarily due to the
full-year revenue effect of the Spectra Precision Group, acquired in July 2000.

Engineering and Construction

Revenue

Engineering and Construction revenues increased by $1.5 million or 0.5%
during fiscal 2002 as compared to fiscal 2001 due to the following:

o Revenues increased due to the LeveLite acquisition by $3.6 million;

o Strong performance by our machine control product offering as we continue
to penetrate the after-market for machine guidance on earthmoving
equipment;

o Increased revenues were partially offset by a reduction in revenues in
several other product areas due to continued difficult global economic
conditions.

Engineering and Construction revenues increased by $108.8 million or 56% in
fiscal 2001 over fiscal 2000 due to the following:

o In fiscal 2001, we recorded a full year of revenues generated from the
Spectra Precision Group compared to approximately half-year results in
fiscal 2000, which accounted for approximately $85.0 million;

o Strong demand for our land survey product line primarily due to the
introduction of the Trimble Toolbox(TM) in the first fiscal quarter of
2001;

o Higher demand for GPS machine guidance equipment.

Operating Income

Engineering and Construction operating income increased by $3.3 million or
6.4% in fiscal 2002 over fiscal 2001 due to the following:

o A reduction of $4.2 million of operating expenses, due to the transfer of
employee-related expenses to Caterpillar Trimble Control Technologies;

o 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.

Engineering and Construction operating income increased by $7.7 million or
17% in fiscal 2001 over fiscal 2000 due to the following:

o Fiscal 2001 included a full year of revenue from the Spectra Precision
Group acquisition and the benefits of the consolidation of product lines in
the Engineering and Construction business areas;

o The worldwide cost reduction program, implemented as part of Trimble and
the Spectra Precision Group integration, also favorably impacted operating
income.

Field Solutions

Revenue

Field Solutions experienced a revenue decline in fiscal 2002 of $1.3
million or 1.9% compared with fiscal 2001 due to the following:

o Overall revenue decreased during the year 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;

o This decrease was partially offset by the increased demand for both the
manual and auto guidance product lines.

Field Solutions revenue decreased by $2.1 million or 3% in fiscal 2001 over
fiscal 2000 due to the following:

o Small decrease in GIS revenues due to lower demand in the second half of
fiscal 2001;

o Significant decrease in price points in the Agriculture market on flat
demand.

Operating Income

Field Solutions operating income decreased by $1.3 million or 9.2% in
fiscal 2002 over fiscal 2001 due to the following:

o Lower revenues primarily from the decrease in government spending described
above;

o Lower gross margin due to product sales mix, which was more weighted toward
the relatively lower margin Agricultural business area.

Field Solutions operating income decreased by $6.2 million or 31.2% in
fiscal 2001 over fiscal 2000 due to the following:

o A product mix shift toward lower-priced products with a general reduction
in prices;

o Overall weak demand in the agricultural market in fiscal 2001;

o The startup development, selling, and support costs associated with the
ramp up of the Autopilot product line.

Mobile Solutions

Revenue

Mobile Solutions revenues decreased by $5.3 million or 39% in fiscal 2002
over fiscal 2001 due to the following:

o Revenue reduction of approximately $3 million in our satellite
communications business as a result of our decision to discontinue the
Galaxy(TM) Inmarsat-C product line in early 2001;

o Slow down in system integration projects due to reduced spending at
municipalities;

o Reduced sales of wireless products of $0.9 million due to a transition from
a sensor provider to a fully integrated service provider;

o Sales of some product lines were down as a result of the economic slow down
and the shift of technology from analog to digital.

Mobile Solutions revenues decreased by $6.7 million or 33% in fiscal 2001
over fiscal 2000 due to the following:

o A reduction of approximately $3.7 million in our GalaxyT Inmarsat-C line
due to the announcement of our intention to discontinue certain of these
product lines in early 2001, Mexico's satellite communications systems
capacity limitations, and the general economic slow-down;

o Sales of the CrossCheck and Placer(TM) receiver product lines were down by
approximately $3.0 million as a result of the economic slow down.

Operating Loss

Mobile Solutions operating loss increased by $1.9 million or 21% in fiscal
2002 over fiscal 2001 due to the following:

o Lower revenues as described above;

o Increased costs incurred in the development and marketing of a service
platform to enable a range of asset management solutions.

Mobile Solutions operating loss increased by $8.6 million in fiscal 2001
over fiscal 2000 due to the following:

o Lower revenues as described above;

o Decrease in margins due to the sell-off of existing Satcom inventory at
reduced prices;

o Significant costs incurred in the development of a service platform to
enable a range of asset management solutions including an Internet
delivered, cellular-based solution for vehicle fleet management.

Component Technologies

Revenue

Component Technologies revenues increased by $1.7 million or 3% in fiscal
2002 over fiscal 2001 due to the following:

o Timing revenue increased $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;

o In-vehicle navigation revenue decreased $1.0 million in fiscal 2002 over
fiscal 2001 as average selling prices declined by more than 9%;

o License revenue decreased $1.7 million in fiscal 2002 over fiscal 2001 due
to an expired license contract.

Component Technologies revenues decreased by $2.1 million or 4% in fiscal
2001 over fiscal 2000 due to the following:

o Embedded product lines were down approximately $2.7 million due to the
economic slowdown;

o Timing product lines were down by $1.5 million due to reduced spending in
the telecommunications market;

o In-vehicle navigation sales increased by approximately $0.9 million. Volume
grew by 29%, which was offset by a decrease of 19% in an average selling
price of these products during the year.

Operating Income

Component Technologies operating income increased by $0.4 million or 4% in
fiscal 2002 over fiscal 2001 due to the following factors:

o Higher gross margins resulting from higher revenues and favorable product
mix;

o This increase was partially offset by higher operating expenses, primarily
in research & development and marketing.

Component Technologies operating income decreased by $4.0 million or 27% in
fiscal 2001 over fiscal 2000 due to the following:

o Lower revenue as described above;

o Higher expenses primarily due to new product development and channel
development.

Portfolio Technologies

Revenue

Portfolio Technologies revenues decreased by $5.3 million or 17 % in fiscal
2002 over fiscal 2001 due to the following:

o Reduction of $4.4 million due to the sale of our air transport product line
to Honeywell in fiscal 2001;

o Revenues from the military business declined by $1.1 million.

Portfolio Technologies revenues increased by $7.7 million or 33% in fiscal
2001 over fiscal 2000 due to the following:

o In fiscal 2001, Trimble experienced a full year of revenues generated from
the purchase of Tripod Data Systems as compared to one and one-half months
in fiscal 2000, which accounted for an increase of approximately $12.2
million;

o The above increase was partially offset by a $4.5 million reduction in our
commercial aviation product line during fiscal 2001. The sale of the air
transport product line to Honeywell was completed in March 2001.

Operating Income

Portfolio Technologies operating income increased by $1 million or 26% in
fiscal 2002 over fiscal 2001 due to the following:

o Increased operating performance from Tripod Data Systems business.

Portfolio Technologies operating income increased by $3.1 million or 318%
in fiscal 2001 over fiscal 2000 primarily due to the following:

o An incremental increase resulting from a full years operating results of
Tripod Data Systems acquired on November 14, 2000.

International Revenues

Sales to unaffiliated customers outside the United States comprised
approximately 49% in 2002, 50% in 2001, and 52% in 2000. During the 2002 fiscal
year, North and South America represented 55%, Europe, the Middle East and
Africa represented 32%, and Asia represented 13%. In fiscal 2002, the United
States comprised approximately 51% and Germany 16% of sales to unaffiliated
customers. 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 U.S. 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 ever again use Selective Availability (SA), a
method of degrading GPS accuracy, there may be reluctance in certain foreign
markets to purchase such products given the control of GPS by the U.S.
Government. Our results of operations could be adversely affected if we were
unable to continue to generate significant sales in locations outside the U.S.

No single customer accounted for 10% or more of our total revenues in
fiscal 2002, 2001, and 2000. 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

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, and new product start-up costs.
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 partially to approximately $3.3 million
of additional charges associated with the write-down of excess and obsolete
inventory in fiscal 2001, related to the rationalization and simplification of
product lines, and partially due to 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 further, gross margin could be further adversely
impacted.

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:

January 3, December 28, December 29,
Fiscal Years Ended 2003 2001 2000
- --------------------------------------------------------------------------------
(In thousands)

Research and development $ 61,232 $ 62,881 $ 46,520
Sales and marketing 89,344 103,778 79,901
General and administrative 40,634 37,407 30,514
Restructuring charges 1,099 3,599 --
Amortization of goodwill and other
purchased intangible assets 8,300 29,389 13,407
-------------- ------------- -------------
Total $ 200,609 $ 237,054 $ 170,342
============ ============= =============

Research and Development

Research and development spending decreased by $1.6 million during fiscal
2002 and represented 13% of revenue, consistent with 13% in fiscal 2001 due
primarily to:

o The transfer of employee-related expenses to the Caterpillar joint venture
of approximately $2.8 million, partially offset by an increase in
engineering expenses associated with the introduction of new products.

Research and development spending increased by $16.4 million during fiscal
2001, and represented 13% of revenue, consistent with 13% in fiscal 2000 due
primarily to the following:

o In fiscal 2001, we experienced a full year of operations of the Spectra
Precision Group compared with half a year in fiscal 2000, which accounted
for approximately $11.7 million of the increase;

o The increase was also due to approximately $5.0 million related to a full
year of operations of Tripod Data Systems in fiscal 2001 compared with one
and one-half months for fiscal 2000, as well as the inclusion of Grid Data
for approximately nine months in fiscal 2001.

* We believe that the development and introduction of new products are
critical to the Company's future success and expects to continue its active
development of new products.

Sales and Marketing

Sales and marketing expense decreased by $14.4 million in fiscal 2002 and
represents 19% of revenue, compared with 22% in fiscal 2001 due primarily to the
following:

o 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;

o A decrease in overall compensation, travel, advertising, promotional, and
trade show expenses of approximately $7.4 million for fiscal 2002 compared
to the corresponding period in fiscal 2001.

Sales and marketing expense increased by $23.9 million in fiscal 2001 and
represents 22% of revenue, consistent with 22% in fiscal 2000 primarily due to
the following:

o Inclusion of a full year of operations of the Spectra Precision Group as
compared with half a year in fiscal 2000, which accounted for approximately
$23.1 million of the increase.

* 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 expense increased by $3.2 million in fiscal 2002
representing 9% of revenue, compared with 8% in fiscal 2001 primarily due to the
following:

o Increase in bad debt provisions related to customers in an uncertain
economic environment;

o Bad debt expenses for accounts written off during the year due to customer
defaults.

General and administrative expense increased by $6.9 million in fiscal 2001
representing 8% of revenue, consistent with 8% in fiscal 2000 due primarily to
the following:

o In fiscal 2001, we experienced a full year of operations of the Spectra
Precision Group as compared with half a year in fiscal 2000, which
accounted for approximately $5.6 million of the increase;

o The increase was also due to approximately $0.9 million related to a full
year of operations of Tripod Data Systems in fiscal 2001, as compared with
one and one-half months for fiscal 2000.

Restructuring Charges

Restructuring charges of $1.1 million were recorded in fiscal 2002 and $3.6
million were recorded in fiscal 2001, which related to severance costs. As a
result of these actions, our headcount decreased in fiscal 2002 by 49 and in
fiscal 2001 by 207 individuals. As of January 3, 2003, all of the restructuring
charges have been paid.

Amortization of Goodwill, Purchased and Other Intangible Assets:

We adopted SFAS No. 142 on January 1, 2002. As a result, goodwill is no
longer amortized and intangible assets with indefinite lives with net book value
of $73.6 million were reclassified to goodwill.

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 that does not require the amortization of goodwill and intangible
assets with indefinite lives.

Amortization expense of goodwill and other purchased intangibles increased
in fiscal 2001 by approximately $16.0 million representing 6% of revenue,
compared with 4% in fiscal 2000. The increase was primarily due to the
acquisition of the Spectra Precision Group in July 2000, which resulted in a
year- over-year increase of approximately $15.0 million in goodwill and
intangibles amortization.

Non-operating Expense, Net

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

January 3, December 28, December 29,
Fiscal Years Ended 2003 2001 2000
- --------------------------------------------------------------------------------
(in thousands)

Interest income $ 659 $ 1,118 $ 4,478
Interest expense (14,710) (22,224) (14,438)
Foreign exchange loss (823) (237) (376)
Expenses for affiliated
operations, net (3,954) - -
Other expense (1,171) (430) (123)
------ ---- ----
Total $(19,999) $(21,773) $(10,459)
======== ======== ========

Non-operating expense, net decreased by $1.8 million during fiscal 2002 as
compared with fiscal 2001. The primary reasons for the decrease were as follows:

o 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;

o This was partially offset by expenses recorded for affiliated operations of
$4.0 million as a result of transfer pricing effects on transactions
between Trimble and CTCT, an increase in foreign exchange loss of $0.6
million, and a write-down of minority investment of $1.5 million.

Non-operating expense, net increased by $11.3 million during fiscal 2001 as
compared with fiscal 2000. The primary reasons for the increase were as follows:

o Increase in interest expenses related to loans and credit facilities
incurred primarily to finance the acquisition of the Spectra Precision
Group accounted for approximately $7.8 million;

o Decreased interest income resulting from the sale and maturities of
short-term investments used to finance the acquisition of the Spectra
Precision Group accounted for approximately $3.4 million.

Income Tax Provision

Our effective income tax rates from continuing operations for fiscal years
2002, 2001, and 2000 were 25%, (9%) and 10%, respectively. The fiscal 2002 and
2001 income tax rates differ from the federal statutory rate of 35%, due
primarily to foreign taxes and the inability to realize the benefit of net
operating losses. The fiscal 2000 income tax rate is less than the federal
statutory rate due primarily to the realization of the benefits from prior net
operating losses and previously reserved deferred tax assets.

Litigation Matters

* In November 2001, Qualcomm Inc. filed a lawsuit against Trimble in the
Superior Court of the State of California. The complaint alleges claims for an
unspecified amount of money damages arising out of Qualcomm's perceived lack of
assurances in early 1999 that our products purchased by Qualcomm would work
properly after a scheduled week number rollover event that took place in August
of 1999. Qualcomm is the only customer to make a claim against us based on the
week number rollover event. In our opinion, the resolution of this lawsuit is
not expected to have a material adverse effect on our overall financial
position.

* We are also a party to other disputes 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.

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. 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

In fiscal 2002, our cash and cash equivalents decreased by $2.4 million
from fiscal 2001. We repaid $52.1 million of our debt outstanding. This was
financed by the issuance of common stock of approximately $21.4 million and cash
generated from operating activities of approximately $35.1 million. We also used
approximately $7.2 million for capital expenditures.

At January 3, 2003, our debt mainly consisted of $67.6 million outstanding
under senior secured credit facilities, and $69.1 million outstanding under the
subordinated promissory note related to the acquisition of the Spectra Precision
Group. We have relied primarily on cash provided by operating activities to fund
capital expenditures and other investing activities.

On March 20, 2002, we used $21.4 million of net proceeds from our private
placement to retire accrued interest and principal under our subordinated note
with Spectra-Physics Holdings, Inc., a subsidiary of Thermo Electron
Corporation, reducing the outstanding principal amount to $68.7 million. In
addition, we renegotiated the terms of the subordinated note. Under the revised
agreement, the maturity of the note was extended until July 14, 2004, at the
current interest rate of approximately 10.4% per year. In connection with the
amendment, on March 20, 2002 we agreed to issue to Thermo Electron a five-year
warrant to purchase 200,000 shares of our common stock at an exercise price of
$15.11. Under the five-year warrant, the total number of warrants issued will
not exceed 376,233 shares. On a quarterly basis beginning July 14, 2002,
Spectra-Physics' warrant became exercisable for an additional 250 shares of
common stock for every $1 million of principal and interest outstanding until
the note is paid off in full. These shares are purchasable at a price equal to
the average of our stock's closing price for the five days immediately preceding
the last trading day of each quarter. On July 14, 2002 an additional 17,364
shares became exercisable at an exercise price of $14.46 per share. On October
14, 2002 an additional 17,824 shares became exercisable at an exercise price of
$9.18. On January 14, 2003 an additional 18,284 shares became exercisable at an
exercise price of $13.54. These additional shares are exercisable over a 5-year
period. The approximate fair value of the warrants of $1.5 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 is
amortized to interest expense over the term of the subordinated note.

* In fiscal 2002, cash provided by operating activities was $35.1 million,
as compared to $25.1 million in fiscal 2001. The increase of $10 million was
primarily due to a one-time special cash distribution of $11 million from
Caterpillar Trimble Control Technologies upon its formation in the first quarter
of fiscal 2002. Trimble's ability to continue to generate cash from operations
will depend in large part on revenues, the rate of collections of accounts
receivable, and profitability. Both the inventory turns and accounts receivable
days sales outstanding metrics were similar at the end of fiscal 2002 to the
fiscal 2001 level.

Cash flows used in investing activities were $5.8 million in fiscal 2002 as
compared to $11.4 million in fiscal 2001, mostly due to investment activities
associated with the acquisition of an additional 25 percent equity interest in
Terrasat, a German Corporation, and the acquisition in property and equipment
partially offset by cash acquired through LeveLite acquisition. Cash used in
investing activities in fiscal 2001 included amounts paid for the Grid Data
acquisition.

Cash used in financing activities was $31.7 million in fiscal 2002, as
compared to $23.5 million in fiscal 2001. During fiscal 2002, we made $52.1
million of payments against our debt outstanding. These payments were offset by
proceeds from the issuance of common stock to employees pursuant to our stock
option plan and employee stock purchase plan of $4.1 million, as well as
issuance of common stock under a private equity placement of $17 million.

In July 2000, we obtained $200 million of senior, secured credit facilities
(the "Credit Facilities") from a syndicate of banks to support our acquisition
of the Spectra Precision Group, the Company's ongoing working capital
requirements, and to refinance certain existing debt (see Note 10 of the Notes
to the to the Consolidated Financial Statements). The Credit Facilities
consisted of $100 million available as a term loan and $100 million available
under two revolvers. On January 14, 2003, Trimble executed an Amended and
Restated Credit Agreement, which restructured the $100 million revolver into
four Tranches. Tranches A and C belong to the $50 million U.S. dollar revolver
and Tranches B and D belong to the $50 million multi-currency revolver.
Allocated to Tranche A is $12,500,000 with an expiration date of July 14, 2003
and allocated to Tranche C is $37,500,000 with an expiration date of April 7,
2004. Allocated to Tranche B is $1,500,000 with an expiration date of July 14,
2003 and allocated to Tranche D is $48,500,000 with an expiration date of April
7, 2004. As a result, the $100 million revolver will remain in effect through
July 14, 2003 and be reduced to $86 million for the period starting July 15,
2003 through April 7, 2004. As of January 3, 2003, outstanding balance under the
revolver was $35 million and under the term loan was $32.6 million.

The Credit Facilities are secured by all material assets of our company,
except for assets that are subject to foreign tax considerations. Financial
covenants of the Credit Facilities include leverage, fixed charge, and minimum
net worth tests and all were amended during the third quarter of fiscal 2002. At
January 3, 2003, and as of the date of this report, we are in compliance with
debt covenants. The amounts due under the revolver loans are paid as the loans
mature, and the loan commitment fees are paid on a quarterly basis. Under the
five-year term loan portion of the Credit Facility, we are due to make payments
(excluding interest) of approximately $24 million in fiscal 2003 and the
remaining $8.6 million in fiscal 2004.

* 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 3, 2003, we had $28.7 million of
cash and cash equivalents, as well as access to $65 million of cash under the
terms of our revolver loans.

Under the terms of the Credit Facilities, we are currently restricted from
paying dividends and are limited as to the amount of our common stock that we
can repurchase. We are allowed to pay dividends and repurchase shares of our
common stock up to 25% of net income in the previous fiscal year. We have
obligations under non-cancelable operating leases for our office facilities (see
Note 11 of the Notes to the Consolidated Financial Statements). In fiscal 2003,
the payments under these non-cancelable operating leases are expected to be
approximately $12.1 million.

* We expect fiscal 2003 capital expenditures to be approximately $8 million
to $11 million, primarily for computer equipment, software, 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.

The following table summarizes our future repayment obligations (excluding
interest):

Our future minimum payments required under non-cancelable operating leases
are follows:

Operating
Lease Payments
(In thousands)
2003 $ 12,067
2004 7,438
2005 6,958
2006 1,795
2007 1,461
Thereafter 5,115
-----
Total $ 34,834
==========

New Accounting Standards

We adopted Statement of Financial Accounting Standards ("SFAS") No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets,
at the beginning of fiscal 2002. Application of the non-amortization provisions
of SFAS No. 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 the prior year. We reclassified identifiable intangible
assets with indefinite lives with net book value of $73.6 million, as defined by
SFAS No. 142, to goodwill at the date of adoption. We tested goodwill for
impairment using the two-step process prescribed in SFAS No. 142. The first step
is a screen for potential impairment, while the second step measures the amount
of the impairment, if any. No impairment charge resulted from the impairment
tests.

In October of 2001, the FASB issued SFAS No.144, "Accounting for the
Impairment or Disposal of Long-lived Assets," which amends accounting guidance
on asset impairment and provides a single accounting model for long-lived assets
to be disposed of. Among other provisions, the new rules change the criteria for
classifying an asset as held-for-sale. The standard also broadens the scope of
businesses to be disposed of that qualify for reporting as discontinued
operations, and changes the timing of recognizing losses on such operations. We
adopted SFAS No. 144 at the beginning of fiscal 2002. The effect of adopting
SFAS No. 144 did not have a material impact on our financial position or results
of operations.

In July of 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses the
financial accounting and reporting for obligations associated with an exit
activity, including restructuring, or with a disposal of long-lived assets. Exit
activities include, but are not limited to, eliminating or reducing product
lines, terminating employees and contracts, and relocating plant facilities or
personnel. SFAS No. 146 specifies that a company will record a liability for a
cost associated with an exit or disposal activity only when that liability is
incurred and can be measured at fair value. Therefore, commitment to an exit
plan or a plan of disposal expresses only our intended future actions and,
therefore, does not meet the requirement for recognizing a liability and the
related expense. SFAS No. 146 is effective prospectively for exit or disposal
activities initiated after December 31, 2002, with earlier adoption encouraged.
We do not anticipate that the adoption of SFAS No. 146 will have a material
effect on our financial position or results of operations.

In November of 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN No. 45 requires that a
liability be recorded in the guarantor's balance sheet upon issuance of a
guarantee. In addition, FIN No. 45 requires disclosures about the guarantees
that an entity has issued, including a roll-forward of the entity's product
warranty liabilities. We will apply the recognition provisions of FIN No. 45
prospectively to guarantees issued after December 31, 2002.

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.

Changes in our product warranty liability during the 12 months, ended
January 3, 2003 are as follows:

(in thousands)
--------------
Balance at December 28, 2001 $ 6,827
Warranties accrued 2,821
Warranty claims (3,254)
------
Balance at January 3, 2003 $ 6,394
========

Our product warranty liability is classified as accrued warranty in the
accompanying balance sheet.

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 will apply to revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. We are currently
evaluating the effect that the adoption of EITF Issue No. 00-21 will have on our
results of operations and financial condition.

In December of 2002, FASB issued FASB No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 amends FASB No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for an entity that changes to the fair value method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure provisions of SFAS No. 123 to require expanded and more prominent
disclosure of the effects of an entity's accounting policy with respect to
stock-based employee compensation. This disclosure is required in the summary of
significant accounting policies footnote or its equivalent in annual and interim
financial statements. SFAS No. 148 does not amend SFAS No. 123 to require
companies to account for their stock-based employee awards using the fair value
method. As discussed in Note 1 of the Notes to the Consolidated Financial
Statements, for purposes of pro forma disclosures, we amortized the estimated
fair value of the options 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.

In January of 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities." FIN No. 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. The consolidation
requirements of FIN No. 46 apply immediately to variable interest entities
created after January 31, 2003. The consolidation requirements apply to older
entities in the first fiscal year or interim period beginning after June 15,
2003. We are currently evaluating the provisions of FIN No. 46, however, we do
not believe as of January 3, 2003, the Company has any investments in variable
interest entities.

RISKS AND UNCERTAINTIES

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 accruals. 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.

Since August 1999, we have been substantially dependent upon Solectron
Corporation 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 sixty calendar days in advance of the
scheduled delivery of products to our customers. Although purchase orders placed
with Solectron are cancelable, the terms of the agreement would require us to
purchase from Solectron all material 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 expires in August of 2003.

During the fourth quarter of 2002, Solectron began assembling some of our
Component Technology products in China. Although we believe that this initiative
in China will bring significant cost savings, we cannot predict potential
effects that may result from this program.

In addition, we rely on sole suppliers for a number of our critical
components. We have experienced shortages of components in the past. As an
example, we were affected by the inability of a display supplier to provide
adequate quantities to meet our requirements in the third fiscal calendar
quarter of 2002 that resulted in the deferral of $2.4 million in orders into the
fourth quarter of 2002. 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, which 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, especially in our Mobile
Solutions business

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, since our Engineering and Construction (E&C)
and Geographic Information Systems (GIS) products generally have higher gross
margins than our Component Technologies (CT) products, absent other factors, a
shift in sales toward E&C and GIS products would lead to a gross margin
improvement. On the other hand, if market conditions in the highly competitive
E&C and GIS market segments forced us to lower unit prices, we would suffer a
decline in gross margin unless we were able to timely offset the price reduction
by a reduction in production costs or by sales of other products with higher
gross margins. 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.

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 Stringent Financial Covenants.

Two of the financial covenants in our Credit Agreement with The Bank of
Nova Scotia and certain other banks, dated July 14, 2000 as amended (the "Credit
Agreement"), minimum fixed charge coverage and maximum leverage ratio, are
extremely sensitive to changes in earnings before interest, taxes, depreciation
and amortization ("EBITDA"). In turn, EBITDA is highly correlated to revenues
and costs. Due to uncertainties associated with the downturn in the worldwide
economy, our future revenues by quarter are more difficult to forecast and we
have put in place various cost cutting measures, including the consolidation of
service functions and centers, offices, and of redundant product lines and
reductions in staff. If revenues should decline at a faster pace than the rate
of these cost cutting measures, on a quarter-to-quarter basis we may not be in
compliance with the two above-mentioned financial covenants. 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.
In September of 2002, we reached an agreement to ease our financial covenants..
These revised covenants will remain in effect through the term of the current
credit facility. On January 14, 2003, Trimble executed an Amended and Restated
Credit Agreement, which restructured the $100 million revolver into four
Tranches. Tranches A & C belong to the $50 million US dollar revolver and
Tranches B & D belong to the $50 million multi-currency revolver. Allocated to
Tranche A is $12,500,000 with an expiration date of July 14, 2003 and allocated
to Tranche C is $37,500,000 with an expiration date of April 07, 2004. Allocated
to Tranche B is $1,500,000 with an expiration date of July 14, 2003 and
allocated to Tranche D is $48,500,000 with an expiration date of April 07, 2004.
As a result, the $100 million revolver will remain in effect through July 14,
2003 and be reduced to $86 million for the period starting July 15, 2003 through
April 7, 2004.

We Are Dependent on Key Customers.

An increasing amount of our revenue is generated from large original
equipment manufacturers such as Siemens VDO Automotive AG, Nortel, McNeilus,
Caterpillar, CNH Global, DeWalt, Hilti, and Blaupunkt. 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 Face Risks of Entering Into and Maintaining Alliances.

We believe that in certain emerging markets our success will depend on our
ability to form and maintain alliances with established system providers and
industry leaders. Our failure to form and maintain such alliances, or the
preemption of such alliances by actions of other competitors or us will
adversely affect our ability to penetrate emerging 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 U.S. Government's Global Positioning System
(GPS). The GPS SPS operates in radio frequency bands that are globally allocated
for radio navigation satellite services. International allocations of radio
frequency are made by the International Telecommunications Union (ITU), a
specialized technical agency of the United Nations. These allocations are
further governed by radio regulations 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 real-time kinematics products, such as our Land Survey
5700, that use integrated radio communication technology requiring access to
available radio frequencies allocated by the FCC. 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. An inability to obtain access to these radio frequencies 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 U.S. Government will remain
committed to the operation and maintenance of GPS satellites over a long period,
or that the policies of the U.S. Government for the use of GPS without charge
will remain unchanged. However, a 1996 Presidential Decision Directive marks the
first time in the evolution of GPS that access for civilian use free of direct
user fees is specifically recognized and supported by Presidential policy. In
addition, Presidential policy has been complemented by corresponding
legislation, signed into law. Because of ever-increasing commercial applications
of GPS, other U.S. Government agencies may become involved in the administration
or the regulation of the use of GPS signals. Any of the foregoing factors could
affect the willingness of buyers of our products to select GPS-based systems
instead of products based on competing technologies.

Any resulting change in market demand for GPS products could have a
material adverse effect on 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.

We are continuously evaluating external investments in technologies related
to our business, and have made relatively small strategic equity investments in
a number of GPS-related and laser-related technology companies. 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. 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 domestic and
international 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 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 foreign 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, as a result of
our acquisitions. 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 foreign locations represented approximately 49% of our revenues in
our fiscal year 2002, 50% in our fiscal year 2001 and 52% in our fiscal year
2000. In addition, we have significant international operations, including
manufacturing facilities, sales personnel and customer support operations. Our
international sales organization contains offices in 21 foreign countries. Our
international manufacturing facilities are in Sweden and Germany, and we have a
regional fulfillment center in the Netherlands. Our international presence
exposes us to risks not faced by wholly domestic companies. Specifically, we
have experienced issues relating to integration of foreign 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 foreign markets, particularly
in those markets in which we maintain manufacturing and research
facilities;

o difficulties in staffing and management;

o language and cultural barriers; 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.

Although we implemented a program to attempt to manage foreign exchange
risks through hedging and other strategies, there can be no assurance that this
program will be successful and that currency exchange rate fluctuations will not
have a material adverse effect on our results of operations. In addition, in
certain foreign markets, there may be reluctance to purchase products based on
GPS technology, given the control of GPS by the U.S. Government.

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-U.S. 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. Compared to fiscal 2001, in fiscal 2002, the US currency has
weakened against other currencies.

Currently, we hedge only those currency exposures associated with certain
assets and liabilities denominated in nonfunctional 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 nonfunctional currency assets and liabilities. Our attempts to hedge
against these risks may not be successful resulting in an adverse impact on our
net income.

The affect of the movement in foreign exchange rates has been reflected in
the Cumulative Translation Adjustment included in the Accumulative Other
Comprehensive Loss under Shareholders' Equity on our Consolidated Balance Sheet
Statement located in this Report.

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.

Our Stock Price May Be Volatile.

The price of our common stock can be expected to fluctuate substantially as
it has in the past. The price could react to actual or anticipated quarterly
variations in results of operations, announcements of technological innovations
or new products by us or our competitors, developments related to patents or
other intellectual property rights, developments in our relationship with
customers, suppliers, or strategic partners and other events or factors. In
addition, any shortfall or changes in revenue, gross margins, earnings, or other
financial results from analysts' expectations could cause the price of our
common stock to fluctuate significantly. Additionally, macro-economic factors as
well as market climate for the high-technology sector could also impact the
trading price of our stock.

Item 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 senior secured credit facilities. Our credit facilities are
comprised of a U.S. dollar-only revolver, a multi-currency revolver both
expiring April 7, 2004, and a five-year term loan expiring July 14, 2004.
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. As of January 3, 2003, our senior debt to EBITDA (senior
leverage ratio) was approximately 1.41. At this leverage ratio our pricing on
the Credit Facility is LIBOR plus 125 basis points. The U.S. dollar and the
multi-currency revolvers run through April 2004 and have outstanding principal
balances at January 3, 2003 of $25.0 million and $10.0 million, respectively. As
of January 3, 2003, we have borrowed from the Multi-Currency revolver in U.S.
currency only. The term loan expires on July 14, 2004 and has an outstanding
principal balance of $32.6 million at January 3, 2003. The three-month LIBOR
effective rate at January 3, 2003 was 1.38%. A hypothetical 10% increase in
three-month LIBOR rates could result in approximately $93,000 annual increase in
interest expense on the existing principal balances.

In addition, we have a $1.8 million promissory note, of which $110,000 was
classified as a current liability at the end of fiscal 2002. The note is payable
in monthly installments, bearing a variable interest rate of 5.4% as of January
3, 2003. A hypothetical 10% increase in interest rates would not have a material
impact on the results of our operations.

* 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 transact 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. We utilize
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. These hedge
instruments are marked to market through earnings every period. 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. 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. 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.

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

The following table provides information about our foreign exchange forward
contracts outstanding as of January 3, 2003:

Foreign Currency Contract Value Fair Value in
Amount USD USD
Currency Buy/Sell (in thousands) (in thousands) (in thousands)

CAD Sell 1,630 $ 1,033 $ 1,039
MXN Sell 5,000 469 475
JPY Sell 751,668 6,259 6,302
EUR Buy (6,200) (6,348) (6,024)
EUR Sell 14,939 14,652 15,534
NZD Buy (2,017) (967) (1,060)
SEK Buy (158,572) (17,099) (17,988)
SEK Sell 19,836 2,126 2,144
$ 125 $ 422
=========== =========

The following table provides information about our foreign exchange forward
contracts outstanding as of December 28, 2001:

Foreign Currency Contract Value Fair Value in
Amount USD USD
Currency Buy/Sell (in thousands) (in thousands) (in thousands)
EURO Sell 3,769 $ 3,365 $ 3,332
EURO Buy (800) (716) (712)
STERLING Buy (298) (423) (433)
YEN Sell 225,000 1,903 1,714
YEN Buy (44,000) (363) (335)
$ 3,766 $ 3,566
========== ==========

TRIMBLE NAVIGATION LTD
INDEX TO FINANCIAL STATEMENTS

Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

*See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

*See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Common stock
and warrants
-------------------------

*See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

*See accompanying Notes to the Consolidated Financial Statements.

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 2002 was January 3, 2003. Fiscal 2002 was a
53-week year and as a result, the Company has included an extra week of
revenues, costs and related financial activities.

Therefore, the financial results of those fiscal years (as this fiscal year
2002) having the extra week will not be exactly comparable to the prior and
subsequent 52-week fiscal years. Fiscal years 2001 and 2000 were both comprised
of 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. Accrued interest expense and Deferred gain on sale of
assets have been reclassified to Accrued liability in the Consolidated Balance
Sheet at December 28, 2001. Certain previously allocated corporate charges to
the Portfolio Technologies business segment have been reclassified to
unallocated corporate charges in fiscal 2001 and fiscal 2000 to conform to
current year presentation.

Foreign Currency

Assets and liabilities of the Company's foreign subsidiaries are translated
into U.S. dollars at year-end exchange rates, and revenues and expenses are
translated at average rates prevailing during the year. Local currencies are
considered to be the functional currencies for the Company's non-U.S.
subsidiaries. Translation adjustments are 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.

Cash and Cash Equivalents

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

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.

Many of Trimble's products use GPS as the positioning technology. GPS is a
system of 24 orbiting satellites established and funded by the U.S. 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 U.S. Government may not remain committed to the operation and
maintenance of GPS satellites over a long period, and the policy of the U.S.
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 expenses recorded for doubtful accounts were approximately $5.4
million in fiscal 2002, $5.1 million in fiscal 2001, and $1.2 million in fiscal
2000.

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 2 to 10 years, with
weighted average useful life of 5.5 years. Prior to January 1, 2002, goodwill
was amortized over 20 years, except for goodwill from the Grid Data purchase,
which was amortized over 5 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 January 1, 2002, and an annual impairment test
on September 30, 2002, 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 January 1, 2002. 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. 101, "Revenue
Recognition." The Company requires the following: (i) execution of a written
customer order, (ii) delivery of the product, (iii) fee is fixed or
determinable, and (iv) collectibility of the proceeds is probable. The Company
recognizes revenue from product sales when the products are shipped to the
customer, title has transferred, and no significant obligations remain. Trimble
defers revenue if there is uncertainty about customer acceptance. Deferred
revenue is included in accrued liabilities on the consolidated balance sheet.
Trimble reduces product revenue for estimated customer returns, and any
discount, which may occur under programs it has with its customers and partners.

The Company's shipment terms are either FOB shipping point or FCA shipping
point. FOB (Free on Board) - shipping point term means that the seller fulfills
the obligation to deliver when the goods have passed over the ship's rail at the
named port of shipment. This means that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point. The FOB term requires
the seller to clear the goods for export. FCA (Free Carrier) shipping point term
means that the seller 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, the seller may choose within the place or range stipulated where the
carrier shall take the goods into carrier's charge.

The Company's shipment terms for domestic orders are typically FOB shipping
point. International orders fulfilled from the European distribution center are
typically shipped FCA shipping point. Other international orders are shipped FOB
destination, and accordingly these international orders are not recognized as
revenue until the product is delivered and title has transferred.

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
the Company has no remaining obligations.

Sales to distributors and resellers are recognized upon shipment providing
that there is evidence of the arrangement through a distribution agreement or
purchase order, title has transferred, no remaining performance obligations
exist, the price and terms of the sale are fixed, and collection is probable.
Distributors and resellers do not have a right of return.

Software arrangements 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 price of the renewal rate. The
remaining value of the software arrangement is allocated to the license fee
using the residual method, under 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 period 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, and certain products sold by Trimble's TDS business
have a 90-day 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 3, 2003 are as follows:

(in thousands)
-----------------
Balance at December 28, 2001 $6,827
Warranties accrued 2,821
Warranty claims (3,254)
Balance at January 3, 2003 $6,394

The Company's warranty liability is classified as accrued warranty in the
accompanying balance sheet.

Guarantees, Including Indirect Guarantees of Indebtedness of Others

In November of 2002, the FASB issued FIN No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." FIN No. 45 requires that a liability be recorded in the
guarantor's balance sheet upon issuance of a guarantee. In addition, FIN No. 45
requires disclosures about the guarantees that an entity has issued including a
roll-forward of the entity's product warranty liabilities. Trimble will apply
the recognition provisions of FIN No. 45 prospectively to guarantees issued
after December 31, 2002.

Advertising Costs

Trimble's expenses advertising costs as incurred. Advertising expenses were
approximately $6.3 million, $6.8 million, and $7.9 million in fiscal 2002, 2001,
and 2000, respectively.

Research and Development Costs

Research and development costs are charged to expense when incurred.
Trimble received third party funding of approximately $5.3 million, $4.1
million, and $4.8 million in fiscal 2002, 2001, and 2000, respectively. Trimble
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
14 of the Notes to the Consolidated Financial Statements describes the plans
operated by Trimble.

In December of 2002, the Financial Accounting Standards Board issued SFAS
No. 148, which amends SFAS No. 123, to provide alternative methods of transition
for an entity that changes to the fair value method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure provisions of SFAS No. 123 to require expanded and more prominent
disclosure of the effects of an entity's accounting policy with respect to
stock-based employee compensation.

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 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
2002, 2001, and 2000:

January 3, December 28, December 29,
2003 2001 2000
----------- ------------- -------------
Expected dividend yield - - -
Expected stock price volatility 52.70% 69.59% 66.41%
Risk free interest rate 3.13% 4.15% 6.21%
Expected life of options after vesting 1.18 1.20 1.22

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:

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 four years
for machinery and equipment, four to five years for furniture and fixtures, and
four to five years 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.

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.

New Accounting Standards

Trimble adopted SFAS No. 144, at the beginning of fiscal 2002. The effect
of adopting SFAS No. 144 did not have a material impact on the Company's
financial position or results of operations.

Trimble adopted SFAS No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets , at the beginning of fiscal 2002.
Application of the non-amortization provisions of SFAS No. 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 the
prior year. The Company reclassified identifiable intangible assets with
indefinite lives with net book value of $73.6 million, as defined by SFAS No.
142, to goodwill at the date of adoption. The Company tested goodwill for
impairment using the two-step process prescribed in SFAS No. 142. The first step
is a screen for potential impairment, while the second step measures the amount
of the impairment, if any. No impairment charge resulted from the impairment
tests.

In October of 2001, the FASB issued SFAS No.144, "Accounting for the
Impairment or Disposal of Long-lived Assets," which amends accounting guidance
on asset impairment and provides a single accounting model for long-lived assets
to be disposed of. Among other provisions, the new rules change the criteria for
classifying an asset as held-for-sale. The standard also broadens the scope of
businesses to be disposed of that qualify for reporting as discontinued
operations, and changes the timing of recognizing losses on such operations.

In July of 2002, the FASB approved SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses the
financial accounting and reporting for obligations associated with an exit
activity, including restructuring, or with a disposal of long-lived assets. Exit
activities include, but are not limited to, eliminating or reducing product
lines, terminating employees and contracts and relocating plant facilities or
personnel. SFAS No. 146 specifies that a company will record a liability for a
cost associated with an exit or disposal activity only when that liability is
incurred and can be measured at fair value. Therefore, commitment to an exit
plan or a plan of disposal expresses only management's intended future actions
and, therefore, does not meet the requirement for recognizing a liability and
the related expense. SFAS No. 146 is effective prospectively for exit or
disposal activities initiated after December 31, 2002, with earlier adoption
encouraged. The Company does not anticipate that the adoption of SFAS No. 146
will have a material effect on its financial position or results of operations.

In November of 2002, the FASB issued FIN No. 45 "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." FIN No. 45 requires that a liability be recorded in the
guarantor's balance sheet upon issuance of a guarantee. In addition, FIN No. 45
requires disclosures about the guarantees that an entity has issued, including a
roll-forward of the entity's product warranty liabilities. Trimble will apply
the recognition provisions of FIN No. 45 prospectively to guarantees issued
after December 31, 2002. The disclosure provisions of FIN No. 45 are effective
for financial statements of Trimble's fiscal year 2002.

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 will apply to revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. Trimble is currently
evaluating the effect that the adoption of EITF Issue No. 00-21 will have on its
results of operations and financial condition.

In January of 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities." FIN No. 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. The consolidation
requirements of FIN No. 46 apply immediately to variable interest entities
created after January 31, 2003. The consolidation requirements apply to older
entities in the first fiscal year or interim period beginning after June 15,
2003. The Company is currently evaluating the provisions of FIN No. 46, however,
it does not believe as at January 3, 2003, that the Company has any investment
in variable interest entities.

Note 2 - Acquisitions:

The following is a summary of acquisitions made by Trimble during fiscal
2002, 2001, and 2000, all of which were accounted for as purchases:

The consolidated financial statements include the results of operations of
acquired companies commencing on the date of acquisition. 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 Grid Data transaction was an asset purchase.

Allocation of Purchase Consideration

The following is a summary of purchase price, acquisition costs and
purchase price allocation of the Spectra Precision Group, Tripod Data Systems,
Grid Data, and LeveLite acquisitions:

Spectra Precision Group

Spectra Precision, a group of wholly-owned businesses, formerly owned by
Thermo Electron Corporation, collectively known as the "Spectra Precision
Group," was acquired on July 14, 2000. The acquisition was completed for an
aggregate purchase price, excluding acquisition and restructuring costs, of
approximately $293.8 million. Subsequently, in March 2002, the purchase price
was adjusted by $1.1 million as a result of the completion of final negotiations
with Thermo Electron relating to certain assets and liabilities acquired. This
adjustment subsequently decreased the purchase price to approximately $292.7
million and goodwill to approximately $118.6 million. The acquisition included
100% of the stock of Spectra Precision Inc., a Delaware corporation; Spectra
Precision SRL, an Italian corporation; Spectra Physics Holdings GmbH, a German
corporation; and Spectra Precision BV, a Netherlands corporation. The
acquisition also included certain assets and liabilities of Spectra Precision
AB, a Swedish corporation; including 100% of the shares of Spectra Precision SA,
a French corporation; Spectra Precision Scandinavia AB, a Swedish corporation;
Spectra Precision of Canada Ltd., a Canadian corporation; and Spectra Precision
Handelsges GmbH, an Austrian corporation.

Spectra Precision Group Restructuring Activities

At the time the Company acquired the Spectra Precision Group, the
management formulated a restructuring plan and provided approximately $9.0
million for costs to close certain duplicative office facilities, combine
operations including redundant domestic and foreign legal entities, reduce
workforce in overlapping areas, and relocate certain employees. These costs were
accrued for as part of the allocation of the purchase price. Included in the
total cost was approximately $2.7 million related to the discontinuance of
overlapping product lines, which was included in the accrual for excess and
obsolete inventory. The facility consolidation and employee relocations resulted
primarily from combining certain office facilities and duplicative functions,
including management functions, of the Spectra Precision Group.

In fiscal 2002, the Company used approximately $1.9 million of the accrual,
which consisted of $1.5 million for legal and tax consulting expenses relating
to consolidation of legal entities and, $0.4 million for facilities and direct
sales office closures. As of January 3, 2003, the accrual was fully utilized.

In fiscal 2001, the Company had used approximately $3.3 million of the
accrual, which consisted of $0.9 million for legal and tax consulting expenses
relating to consolidation of legal entities, $1.3 million for severance
expenses, $0.7 million for facilities and direct sales office closures, $0.3
million for an underfunded pension plan, and other costs of $0.1 million. The
Company revised its final estimates for costs to complete the remaining planned
activities and accordingly reduced its restructuring accrual by approximately
$1.1 million, with a corresponding adjustment to goodwill, in the fourth quarter
of fiscal 2001.

The elements of the restructuring accrual, which are included in accrued
liabilities in the balance sheet, are as follows:

Employee Severance Facility Closure, Total
and Relocation Legal and Tax Expense
(In thousands)

Total accrual $ 1,945 $ 4,370 $ 6,315
Amounts paid (1,685) (1,610) (3,295)
Revision to estimates (260) (812) (1,072)
Balance as of December 28, 2001 $ - $ 1,948 $ 1,948
Amounts paid - (1,948) (1,948)
Balance as of January 3, 2003 $ - $ - $ -

Tripod Data Systems

Tripod Data Systems, Inc., an Oregon corporation, was purchased on November
14, 2000 for an aggregate final purchase price of approximately $15.0 million.
The purchase price consisted of 576,726 shares of Trimble's common stock valued
at the average closing price for the five trading days preceding the closing
date.

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 268,352 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.
("LeveLite"), a California corporation, for approximately $5.7 million. This
strategic acquisition complements our entry-level construction instrument
product line. The purchase price consisted of 437,084 shares of our 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. On
January 22, 2003, Trimble issued the first earn-out payment (stock and cash
combination) with a fair market value of approximately $0.4 million, related to
the earn-out for the quarter ended January 3, 2003. Also, if Trimble receives
any proceeds from a pending litigation, a portion will be paid to the former
shareholders of LeveLite. The additional payments, if earned, will result in
additional goodwill.

Note 3 - Unaudited Pro Forma Information:

The consolidated statements of operations of Trimble presented throughout
this report include the operating results of the acquired companies from the
date of the respective acquisitions. The following pro forma information for
fiscal 2002, 2001, and 2000 presents net revenue, net loss from continuing
operations, and net loss for each of these periods as if the transactions with
Spectra Precision Group were consummated on January 1, 2000. The following pro
forma information does not include Tripod Data Systems, Grid Data, and Levelite,
as these acquisitions were not material to the Company. This unaudited pro forma
data does not purport to represent the Company's actual results of operations
had the Spectra Precision Group acquisition occurred on January 1, 2000, and
should not serve as a forecast of the Company's operating results for any future
periods.

Note 4 - Goodwill and Intangible Assets:

Goodwill and purchased intangible assets consisted of the following:

January 3, December 28,
2003 2001
(In thousands) Intangible assets:
Intangible assets with indefinite life:
Distribution channel $ - $ 73,363
Assembled workforce - 17,773
------ ------
Total intangible assets with indefinite life - 91,136
Intangible assets with definite life:
Existing technology 25,986 23,907
Trade names, trademarks, patents, and
other intellectual properties 21,594 18,394
------ ------
Total intangible assets with definite life 47,580 42,301
------ ------
Total intangible assets 47,580 $133,437
Less accumulated amortization (24,342) (33,185)
------- -------
Total net intangible assets $ 23,238 $100,252
=========== ========
Goodwill:
Goodwill, Spectra Precision acquisition* 185,277 116,001
Goodwill, other acquisitions* 20,656 14,710
------ ------
Total goodwill 205,933 130,711
Less accumulated amortization * - (10,659)
------ -------
Total net goodwill $ 205,933 $ 120,052
========== =========
- --------------------------------------------------------------------------------

* Goodwill as of January 3, 2003 includes assembled workforce and
distribution channel amounts, which were reclassified to goodwill in accordance
with SFAS 142. Also, January 3, 2003 amounts are shown net of accumulated
depreciation from December 28, 2001.

The intangible asset amortization expense as of January 3, 2003 for the
five years following fiscal 2002 is projected as follows:

Year (In thousands)
---- --------------

2003 $ 7,126
2004 7,084
2005 5,327
2006 1,892
2007 1,116
Thereafter 693
---
Total $ 23,238
==========

Trimble adopted SFAS No. 142 on January 1, 2002. As a result, goodwill is
no longer amortized and intangible assets with indefinite lives were
reclassified to goodwill.

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

Note 5 - Certain Balance Sheet Components:

Inventories consisted of the following:

January 3, December 28,
2003 2001
(in thousands)
Raw materials $ 21,098 $ 25,790
Work-in-process 5,187 7,177
Finished goods 34,859 18,843
------ ------
$ 61,144 $ 51,810
========== ==========

Property and equipment consisted of the following:

January 3, December 28,
2003 2001
(in thousands)
Machinery and equipment $ 70,660 $ 66,265
Furniture and fixtures 6,538 6,367
Leasehold improvements 6,451 5,882
Buildings 2,905 3,979
Land 1,391 1,657
----- -----
87,945 84,150
Less accumulated depreciation (65,908) (56,608)
-------- --------
$ 22,037 $ 27,542
========= =========

Other current assets consisted of the following:

January 3, December 28,
2003 2001
(in thousands)
Notes receivable $ 1,685 $ 2,130
Prepaid expenses 5,495 4,150
Other 1,297 256
----- ---
$ 8,477 $ 6,536
========== =========

Other non-current assets consisted of the following:

January 3, December 28,
2003 2001
(in thousands)
Debt issuance costs, net $ 2,493 $ 3,046
Other investments 1,381 2,737
Deposits 1,196 1,241
Demo inventory, net 2,665 1,961
Receivables from employees 1,223 955
Other 3,128 122
----- ---
$ 12,086 $ 10,062
========= ========

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. These hedge instruments are marked to market through earnings every
period. 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
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 does not have a material impact on the
Company's financial position or results of operations.

In July 2002, Trimble expanded its worldwide hedging program to include
inter-company transactions among the former Spectra Precision Group entities in
order to minimize the impact of changes in foreign exchange rates on earnings.
The forward foreign currency exchange contracts mature over the next twelve
months. As of January 3, 2003, the effect of all outstanding derivative
instruments does not have a material impact on the Company's financial position
or results of operations.

Note 7 - Disposition of Line of Business and Assets:

Disposition of Line of Business:

On March 6, 2001, the Company sold certain product lines of its Air
Transport Systems to Honeywell Inc. for approximately $4.5 million in cash.
Under the asset purchase agreement, Honeywell International, Inc. purchased
product lines that included the HT 1000, HT 9000, HT 9100 and Trimble's TNL
8100. As part of this sale, during the third quarter of fiscal 2001, the Company
also sold other product lines and discontinued its manufacturing operations in
Austin, Texas. The Company also incurred severance costs of approximately $1.7
million, which are included in restructuring charges, related to the termination
of employees associated with the product lines disposed of in fiscal 2001.

At January 3, 2003, the Company had an accrual of approximately $1.1
million for related liabilities associated with the disposition of these product
lines and the discontinuance of its manufacturing operations.

Note 8 - 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 GIS operation and the Agriculture operation.
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 systems; 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. These markets include the operations of the
Military and Advanced Systems business and Tripod Data Systems.

In the first fiscal quarter of fiscal 2002, Trimble realigned two of its
reportable segments and therefore the following table shows restated revenue and
operating income by segment to reflect this realignment. The Agriculture segment
was combined with the Mapping and GIS business to form Field Solutions. Mapping
and GIS were previously part of Fleet and Asset Management. The Mobile
Positioning business that was part of Fleet and Asset Management is now Mobile
Solutions.

The Company began breaking out Mobile Solutions as a separate reporting
segment during the first quarter of 2002 to address the growing importance of
the mobile asset management business and its impact on Trimble's profitability.
At the same time, the Company combined its GIS and Agriculture businesses to
create a new segment called Field Solutions in order to recognize the synergies
and similar product requirements between the two businesses.

Trimble evaluates each of these segment's performance and allocates
resources based on profit and loss from operations before income taxes, and some
corporate allocations.

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

The following table presents revenues, operating income (loss), and
identifiable assets for the five segments. The information includes the
operations of Spectra Precision Group after July 14, 2000, Tripod Data Systems
after November 14, 2000, Grid Data after April 2, 2001, and LeveLite Technology,
Inc. after August 15, 2002. 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.

(1) In fiscal 2002 and 2001, Trimble did not allocate corporate expenses to its
individual business segments. In fiscal 2000, the Company determined the
amount of corporate allocations charged to each of its segments based on a
percentage of the segments' monthly revenue, gross profit, and controllable
spending (research and development, sales and marketing, and general and
administrative).

(2) 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:

January 3, December 28,
2003 2001
-------------- ---------------
(in thousands)
Assets:
Accounts receivable total for reportable
segments $ 100,274 $ 91,577
Unallocated (1) (20,629) (19,897)
Total $ 79,645 $ 71,680
========== =========

Inventory total for reportable segments $ 61,144 $ 51,480
Common inventory (2)
- 330
- ---
Total $ 61,144 $ 51,810
========== =========

- ----------

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

(2) Consists of common inventory that can be used by multiple segments.

The following table presents revenues by product groups.

January 3, December 28, December 29,
Fiscal Years Ended 2003 2001 2000
- ---------------------------- --------------- ------------- -------------
(in thousands)

GPS products $269,835 $274,439 $274,215
Laser and optical products 182,650 186,948 93,879
Other 14,117 13,905 1,704
------ ------ -----
Total revenue $466,602 $475,292 $369,798
======== ======== ========

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.

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

Transfers between U.S. and foreign geographic areas are made at prices
based on total costs and contributions of the supplying geographic area. The
Company's subsidiaries in Asia, except for Japan, which is a buy/sell entity,
have derived revenue from commissions from domestic operations in each of the
periods presented. These commission revenues and expenses are excluded from
total revenue and operating income (loss) in the preceding table. The Japanese
entity's revenue and expenses are included in total revenue and operating income
(loss) in the preceding table. In fiscal 2002, the United States comprised
approximately 51% and Germany 16% of sales to unaffiliated customers.

No single customer accounted for 10% or more of Trimble's total revenues in
fiscal years 2002, 2001, and 2000.

Note 9 - Restructuring Charges:

Restructuring charges of $1.1 million were recorded in fiscal 2002 and $3.6
million was recorded in fiscal 2001, which related to severance costs. As a
result of these actions, Trimble's headcount decreased in fiscal 2002 by 49 and
in fiscal 2001 by 207 individuals. As of January 3, 2003, all of the
restructuring charges have been paid.

Note 10 - Long-term Debt:

Trimble's long-term debt consists of the following:

January 3, December 28,
2003 2001
(In thousands)

Credit Facilities:
Five-year term loan $ 32,600 $ 61,300
U.S. and multi-currency revolving
credit facility 35,000 40,000
Subordinated note 69,136 84,000
Promissory notes and other 1,789 5,265
138,525 190,565
------- -------
Less Bank and other short-term borrowings 6,556 40,025
Less current portion of long-term debt 24,104 23,443
------ ------
Non-current portion $ 107,865 $ 127,097
========= ==========

The following summarizes the future cash payment obligations (excluding
interest):

Credit Facilities

In July of 2000, Trimble obtained $200 million of senior, secured credit
facilities (the "Credit Facilities") 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
has approximately $67.6 million outstanding under the Credit Facilities,
comprised of $32.6 million under a $100 million five-year term loan, $25 million
under a $50 million U.S. dollar only revolving credit facility ("revolver"), and
$10 million under a $50 million multi-currency revolver. The Company has access
to an additional $65 million of cash under the terms of the revolver loans. The
Company has commitment fees on the unused portion of 0.5% if the leverage ratio
(which is defined as all outstanding debt, excluding the seller subordinated
note, over 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 for any borrowings under the Credit Facilities was fixed for the
first six months at LIBOR plus 275 basis points and is thereafter tied to a
formula, based on the leverage ratio. The weighted average interest rate under
the Credit Facilities was 4.9% for the month of December ending January 3, 2003.

The Credit Facilities are secured by all of the Company's material assets,
except for assets that are subject to foreign tax considerations. Financial
covenants of the Credit Facilities include leverage, fixed charge, and minimum
net worth tests, all of which were amended during the third quarter of 2002. At
January 3, 2003, Trimble was in compliance with these debt covenants. The
amounts due under the revolver loans are paid as the loans mature, and the loan
commitment fees are paid on a quarterly basis.

Two of the financial covenants, minimum fixed charge coverage and maximum
leverage ratios are sensitive to EBITDA. EBITDA is correlated to Trimble's
results of operations. Due to uncertainties associated with the downturn in the
worldwide economy and other factors, future revenues by quarter are difficult to
forecast. Cost cutting measures have been put in place by the management team;
however, if revenues should decline at a higher rate than cost cutting measures
on a quarter-to-quarter basis, Trimble may violate the two above-mentioned
financial covenants.

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 ($40 million was due in fiscal 2001 and $40
million in fiscal 2002). 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. To the extent that interest and principal due on the maturity
date becomes delinquent, an additional 4% interest rate per annum will apply.

The Credit Facilities allow Trimble to repay the subordinated note at any
time (in part or in whole), provided that (a) Trimble's leverage ratio (Debt
(excluding the seller note)/EBITDA) prior to such repayment is less than 1.0x
and (b) after giving effect to such repayment Trimble would have (i) a leverage
ratio (Debt (excluding any remaining portion of the subordinated note)/EBITDA)
of less than 2.0x and (ii) cash and unused availability under the revolvers of
the Credit Facilities of at least $35 million. The note, by its terms, is
subordinated to the Credit Facilities.

Promissory Note

The promissory note consists of a $1.8 million liability arising from the
purchase of a building for Trimble's Corvallis, Oregon site. The note is payable
in monthly installments through April 2015, bearing a variable interest rate
(5.4% as of January 3, 2003).

Weighted Average Cost of Debt

The weighted average cost of debt is approximately 7.6% for fiscal 2002 and
8.0% for fiscal 2001.

Note 11 - 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)

2003 $ 12,067
2004 7,438
2005 6,958
2006 1,795
2007 1,461
Thereafter 5,115
-----
Total $ 34,834
==========

Rent expense under operating leases was $11.6 million in fiscal 2002, $13.1
million in fiscal 2001, and $10.6 million in fiscal 2000.

Note 12 - Fair Value of Financial Instruments:

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

* See the Notes to the Consolidated Financial Statements

The fair value of the subordinated notes, bank borrowings, promissory note,
and the long-term commitment 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.

The fair value of forward foreign exchange contracts is estimated, based on
quoted market prices of comparable contracts. These contracts are adjusted to
fair value at the end of every month.

Note 13 - Income Taxes:

Trimble's income tax provision consists of the following:

January 3, December 28, December 29,
Fiscal Years Ended 2003 2001 2000
(in thousands)

Federal:
Current $ - $ - $ 1, 408
Deferred - - -
- - 1,408
State:
Current 142 58 144
Deferred - -
142 58 144
Foreign:
Current 2,052 2,729 931
Deferred 1,306 (887) (908)
3,358 1,842 23

Income tax provision $ 3,500 $ 1,900 $ 1,575

The domestic (loss) income from continuing operations before income taxes
was approximately $3.3 million, $(29.3) million and $14.4 million in fiscal
years 2002, 2001 and 2000, respectively.

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

The components of deferred taxes consist of the following:

January 3, December 28,
2003 2001
(in thousands)
Deferred tax liabilities:
Purchased intangibles $ 381 $ 6,933
Depreciation and amortization 2,258 -
Other items (78) 300
Total deferred tax liabilities 2,561 7,233
Deferred tax assets:
Inventory valuation differences 12,069 11,741
Expenses not currently deductible 5,762 5,103
Federal credit carry forwards 8,172 7,300
Deferred revenue 4,317 808
State credit carry forwards 6,215 5,377
Warranty 2,374 2,596
Depreciation and amortization 3,184 6,091
Federal net operating loss (NOL) carry forward 4,451 1,086
Other items 1,827 1,147
Total deferred tax assets 48,371 51,249
Valuation allowance (47,878) (50,974)
Total deferred tax assets 493 275
Total net deferred tax liabilities $ (2,068) $ (6,958)

The Company has $12.7 million federal net operating loss carry forwards,
which expire beginning in 2022. The total federal credit carry forwards of $8.2
million expire beginning in 2005. The Company has state research and development
credit carry forwards of approximately $6.2 million, which do not expire.

Valuation allowances reduce the deferred tax assets to that amount that,
based upon all available evidence, is more likely than not to be realized. The
valuation allowance decreased by $3.1 million in 2002 and increased by $13.1
million in 2001. Approximately $12.1 million of the valuation allowance at
January 3, 2003 relates to the tax benefits of stock option deductions, which
will be credited to equity if and when realized.

Note 14 - Shareholder's Equity:

Common Stock

On December 21, 2001, Trimble completed a private placement of 1,783,337
shares of its common stock at a price of $15.00 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 1,280,004 shares of common stock at $15.00 per share resulting
in gross proceeds of an additional $19.2 million.

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 2,000,000 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 3, 2003, options to purchase
782,715 shares were outstanding and 1,217,285 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
6,375,000 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 3, 2003, options to purchase 4,009,585 shares were
outstanding, and 606,955 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 380,000 shares of Common Stock have been reserved for issuance
to non-employee directors as approved by the shareholders to date. At January 3,
2003, options to purchase 208,333 shares were outstanding, and 35,416 shares
were available for future grants under the Director Stock Option Plan.

1992 Management Discount Stock Option Plan

In 1992, Trimble's Board of Directors approved the 1992 Management Discount
Stock Option Plan ("Discount Plan"). Under the Discount Plan, 300,000
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 3, 2003, 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 grant. There were no
discounted options granted in the plan in fiscal 2002, 2001, and 2000. As of
January 3, 2003, options to purchase 126,000 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 3,350,000 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 2002 and 2001, 241,608
shares and 208,154 shares, respectively, were issued under the plan for
aggregate proceeds to the Company of $2.9 million and $3.1 million,
respectively. At January 3, 2003, the number of shares reserved for future
purchases by eligible employees was 504,203.

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.

For purposes of pro forma disclosure assumptions, see the related SFAS 123
information in Note 1 of the Notes to the Consolidated Financial Statements.

Exercise prices for options outstanding as of January 3, 2003, ranged from
$8.00 to $51.69. The weighted average remaining contractual life of those
options is 7.13 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:

Activity during fiscal 2002, 2001, and 2000, under the combined plans was as
follows:

Non-statutory Options

On May 3, 1999, Trimble entered into an agreement to grant a non-statutory
option to purchase up to 30,000 shares of common stock at an exercise price of
$9.75 per share, with an expiration date of March 29, 2004.

As of January 3, 2003, these non-statutory options have not been exercised.

Warrants

On December 21, 2001, Trimble granted five-year warrants to purchase
356,670 shares of common stock at an exercise price of $19.475 per share. These
warrants were granted to investors as part of a private placement of the
Company's common stock.

On January 15, 2002, in connection with the second closing of the December
21, 2001 private placement of the Company's common stock, Trimble granted
five-year warrants to purchase an additional 256,002 shares of common stock,
subject to certain adjustments, at an exercise price of $19.475 per share.

On April 12, 2002, the Company issued to Spectra-Physics Holdings USA,
Inc., a warrant to purchase up to 376,233 shares of Trimble's common stock over
a fixed period of time. Initially, Spectra-Physics' warrant entitles it to
purchase 200,000 shares of common stock over a five-year period at an exercise
price of $15.11 per share. On a quarterly basis beginning July 14, 2002,
Spectra-Physics' warrant became exercisable for an additional 250 shares of
common stock for every $1 million of principal and interest outstanding until
the note 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 17,364
shares became exercisable at an exercise price of $14.46 per share. On October
14, 2002 an additional 17,824 shares became exercisable at an exercise price of
$9.18. On January 14, 2003, an additional 18,284 shares became exercisable at an
exercise price of $13.54. The additional shares are exercisable over a 5-year
period.

The approximate fair value of the warrants of $1.5 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 is
amortized to interest expense over the term of the subordinated note.

Common Stock Reserved for Future Issuances

As of January 3, 2003, Trimble had reserved 8,478,397 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 15 - Benefit Plans:

401(k) Plan

Under Trimble's 401(k) Plan, U.S. 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 23,813 shares of Common Stock for
an aggregate of $291,565 in fiscal 2002. 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 2002, $1.7 million
in fiscal 2001, and $0.8 million in fiscal 2000.

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 2002, 2001 and 2000 were $1.1
million, $0.9 million, and $2.1 million, respectively.

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 $1.4 million for fiscal 2002, $1.4 million for fiscal 2001, and
$0.3 million for fiscal 2000.

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 2002 and 2001 were not material. The fair
value of the plan assets were as follows:

January 3, December 28,
2003 2001
- -----------------------------------------------------------------------------
(in thousands)

Fair value of plan assets at beginning of year $ 503 $ 465
Actual return on plan assets 60 56
Employer contribution - -
Plan participants' contributions 23 33
Benefits paid - -
Translation adjustment 76 (51)
-- ---
Fair value of plan assets at end of year $ 662 $ 503
===== =====

The defined benefit plan activity was as follows:

January 3, 2003 December 28, 2001
(in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year $ 4,706 $ 4,811
Interest cost 131 134
Translation adjustment (237) (312)
Actuarial (gain) loss 282 73
Benefit obligation at end of year $ 4,318 $ 4,706
------- -------
Unrecognized prior service cost - -
Unrecognized net actuarial gain - -
Accrued pension costs (included in accrued
liabilities) $ 4,318 $ 4,706
======= =======

Actuarial assumptions used to determine the net periodic pension costs for
the year ended January 3, 2003 were as follows:

Swedish Subsidiary German Subsidiaries
---------------------- ----------------------
Discount rate 5.5% 6.25%
Rate of compensation increase 2.5% 1.5%

Note 16 - 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 dilutive
potential Common Stock.

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
938,000 common equivalent shares related to outstanding options and warrants
would have been included in the calculation of diluted loss per share.

Note 17 - Comprehensive Income (Loss):

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

Accumulated other comprehensive income (loss) on the consolidated balance sheets
consists of unrealized gains on available for sale investments and foreign
currency translation adjustments.

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

January 3 December 28,
2003 2001
(in thousands)
Cumulative foreign currency translation adjustments $ (1,032) $ (18,729)
Unrealized gain-hedges of forecasted transactions 7 0
Net gain (loss) on interest rate swap (203)
-
Net unrealized gain (loss) on investments (1) 16
--- --
Accumulated other comprehensive loss $ (1,026) $ (18,916)
========= ============

Note 18 - 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 U.S. 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 $0.345
million for fiscal 2002, $0.345 million for fiscal 2001, and $0.172 million for
fiscal 2000.

Related-Party Notes Receivable

Trimble has notes receivable from officers and employees of approximately
$1.2 million as of January 3, 2003 and $955,000 as of December 28, 2001. The
notes bear interest from 4.49% to 6.62% and have an average remaining life of
2.89 years as of January 3, 2003.

Caterpillar Joint Venture

On April 1, 2002, Caterpillar Trimble Control Technologies LLC (CTCT, or
"Joint Venture"), a Joint Venture formed by Trimble and Caterpillar began
operations. The Joint Venture, 50 percent owned by Trimble and 50 percent owned
by Caterpillar, with equal voting rights, is developing and marketing next
generation advanced electronic guidance and control products for earthmoving
machines in the construction, mining, and waste industries. The Joint Venture is
based in Dayton, Ohio. 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 the Joint Venture. During the first fiscal quarter of 2002,
Trimble received a special cash distribution of $11.0 million from the Joint
Venture.

Trimble has elected to treat the cash distribution of $11.0 million as a
deferred gain, being amortized to the extent that losses are attributable from
the 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 Trimble will recognize as a gain, the portion of the $11.0
million, which is un-amortized. To the extent that it is possible that the
Company will have any future-funding obligation relating to the Joint Venture,
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 our $11.0
million deferred gain are recorded under the heading of "Expense for affiliated
operations, net" in Non-operating income (expense).

During fiscal year 2002, Trimble recorded approximately $4.0 million of
expenses under the heading of "Expense for affiliated operations, net" in
Non-operating income (expense) related to certain transactions between the Joint
Venture and Trimble. This was comprised of approximately $4.9 million of
incremental costs incurred by Trimble as a result of purchasing products from
the Joint Venture at a higher transfer price than its original manufacturing
costs, offset by approximately $0.9 million of contract manufacturing fees
charged to the Joint Venture by Trimble. Due to the nature of the transfer price
agreements between Trimble and the Joint Venture, a related party, the impact of
these agreements is classified under Non-operating income (expense).

In addition, during fiscal year 2002, Trimble recorded lower operating
expenses of approximately $4.2 million due to the transfer of employee related
expenses for research and development ($2.8 million), and sales, marketing, and
administrative functions ($1.4 million) to the Joint Venture. These employees
are devoted to the Joint Venture and are primarily engaged in developing next
generation products and technology for that entity.

Trimble has adopted the equity method of accounting for its investment in
the Joint Venture. This requires that the Company records its share of the Joint
Venture profits or losses in a given fiscal period. During fiscal year 2002, the
Joint Venture reported a loss of $0.4 million of which Trimble's share is $0.2
million, which was recorded as a Non-operating expense under the heading of
"Expense for affiliated operations, net", but which was offset by the
amortization of an equal amount of the original deferred gain on the sale of
technology to the Joint Venture.

Note 19 - Statement of Cash Flow Data:

January 3, December 28, December 29,
Fiscal Years Ended 2003 2001 2000
(in thousands)
Supplemental disclosure of cash
flow information:
Interest paid $ 12,215 $ 17,363 $ 9,037
Income taxes paid $ 2,635 $ 825 $ 3,835

Note 20 - Litigation:

In January of 2001, Philip M. Clegg instituted a lawsuit in the United
States District Court for the District of Utah, Central Division, against
Spectra-Physics Laserplane, Inc., Spectra Precision AB and Trimble Navigation
Limited. On January 29, 2003, Trimble and Mr. Clegg settled this patent
infringement lawsuit whereby Trimble has purchased a fully paid up,
non-exclusive license under U.S. Patent No. 4,807,131 from Mr. Clegg.

In November of 2001, Qualcomm Inc. filed a lawsuit against Trimble in the
Superior Court of the State of California. The complaint alleges claims for an
unspecified amount of money damages arising out of Qualcomm's perceived lack of
assurances in early 1999 that Trimble's products purchased by Qualcomm would
work properly after a scheduled week number rollover event that took place in
August of 1999. Qualcomm is the only customer to make a claim against Trimble
based on the week number rollover event. In the opinion of management, the
resolution of this lawsuit is not expected to have a material adverse effect on
the Company's overall financial position.

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

Note 21 - Selected Quarterly Financial Data (unaudited):

Significant quarterly items 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 $0.01 per
diluted share relating to work force reduction (iii) in the third quarter of
2002 a $0.2 million charge, or $0.01 per diluted share relating to work force
reduction and a $0.2 million gain, or $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 $0.02 per diluted share relating to work force reduction and a $1.5 million
charge, or $0.05 per diluted share relating to the write-down of an investment.

Significant quarterly items include the following: (i) in the first quarter
of 2001 a $2.0 million charge or $0.08 per diluted share relating to loss on
sale of Air Transport business and the exiting of certain product lines; (ii) in
the second quarter of 2001 a $0.9 million charge, or $0.04 per diluted share
relating to work force reduction; and $0.2 million in income or $0.01 per
diluted share relating to a gain on the sale of a minority investment; (iii) in
the third quarter of 2001 a $0.4 million charge, or $0.01 per diluted share
relating to work force reduction; (iv) in the fourth quarter of 2001 a $0.5
million charge, or $0.02 per diluted share relating to work force reduction; a
$0.1 million gain, or $0.01 per diluted share on sale of business; and a $0.1
million charge, or $0.01 per diluted share relating to the write-down of an
investment.

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 3, 2003 and December 28, 2001, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended January 3, 2003. Our audits also
included the financial statement schedule listed in the index at Item 14(a)(2).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule, based on our audits.

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

In our opinion, the financial statements and schedule referred to above
present fairly, in all material respects, the consolidated financial position of
Trimble Navigation Limited at January 3, 2003 and December 28, 2001, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended January 3, 2003, 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.

s/ Ernst & Young LLP

January 24, 2003
Palo Alto, California

TRIMBLE NAVIGATION LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

None

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 Beneficial Ownership Reporting Compliance" in the Proxy Statement
and is incorporated herein by reference.

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.

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 Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our chief executive officer and chief financial officer evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-14(c) and 15(d)-14(c) under the Securities Exchange Act of 1934, as amended)
within 90 days of the filing of this Form 10-K (the "Evaluation Date") and,
based on that evaluation, concluded that, as of the Evaluation Date, our
disclosure controls and procedures are effective to timely alert management to
material information relating to Trimble during the period when our periodic
reports are being prepared.

(b) Changes in internal controls.

Since the Evaluation Date, there have not been any significant changes to
our internal controls or in other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

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."

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.
(6)

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

3.3 Certificate of Amendment of Articles of Incorporation of the Company
filed July 18, 1990. (6)

3.4 Certificate of Determination of the Company filed February 19, 1999.
(6)

3.8 Amended and Restated Bylaws of the Company. (15)

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. (5)

4.3 First Amended and Restated Stock and Warrant Purchase Agreement
between and among the Company and the investors thereto dated January
14, 2002. (10)

4.4 Form of Warrant to Purchase Shares of Common Stock dated January 14,
2002. (11)

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

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. (4)

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

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

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

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

10.46+ 1992 Management Discount Stock Option and form of Nonstatutory Stock
Option Agreement. (3)

10.59+ 1993 Stock Option Plan, as amended May 11, 2000. (8)

10.60+ 1988 Employee Stock Purchase Plan, as amended May 11, 2000. (8)

10.65+ Standby Consulting Agreement between the Company and Bradford W.
Parkinson dated September 1, 1998. (6)

10.66+ Standby Consulting Agreement between the Company and Robert S.
Cooper dated September 1, 1998. (6)

10.67+ Employment Agreement between the Company and Steven W. Berglund
dated March 17, 1999. (6)

10.68+ Nonqualified deferred Compensation Plan of the Company effective
February 10, 1994. (6)

10.70***Supply Agreement dated August 10, 1999 by and among Trimble
Navigation Limited and Solectron Corporation and Solectron Federal
Systems, Inc. (7)

10.77+ Australian Addendum to the Trimble Navigation 1988 Employee Stock
Purchase Plan. (9)

10.80 Amended and Restated Subordinated Promissory Note dated March 20,
2002. (13)

10.81+ 2002 Stock Plan, including form of Option. (14)

10.82 Amended and Restated Credit Agreement dated January 14, 2003. (16)

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.
(16)

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.

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

99.2 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 1990.

(3) 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.

(4) 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.

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

(6) 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.

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

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

(9) 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.

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

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

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

(13) Incorporated by reference to exhibit number 10.80 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 29, 2002.

(14) 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.

(15) Incorporated by reference to exhibit number 3.8 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 27,
2002.

(16) Filed herewith.

(b) Reports on Form 8-K.

On October 24, 2002, the Company filed a report on Form 8-K reporting
the Company's quarterly earnings for the third fiscal quarter of 2002.

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 6, 2003

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:

Signature Capacity in which Signed Date

/s/ Steven W. Berglund President, Chief Executive March 6, 2003
- ----------------------- Officer, Director
Steven W. Berglund

/s/ Mary Ellen Genovese Chief Financial Officer and Assistant March 7, 2003
- ------------------------ Secretary (Principal Financial Officer)
Mary Ellen Genovese

/s/ Anup V. Singh Corporate Controller March 7, 2003
- ------------------- (Principal Accounting Officer)
Anup V. Singh

/s/ Robert S. Cooper Director March 4, 2003
- -----------------------
Robert S. Cooper

/s/ John B. Goodrich Director March 7, 2003
- ----------------------
John B. Goodrich

/s/ William Hart Director March 6, 2003
- ----------------
William Hart

/s/ Ulf J. Johansson Director March 4, 2003
- ---------------------
Ulf J. Johansson

/s/ Bradford W. Parkinson Director March 4, 2003
- -------------------------
Bradford W. Parkinson

CERTIFICATIONS
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 6, 2003 /s/ Steven W. Berglund
----------------------

Steven W. Berglund
Chief Executive Officer

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 7, 2003 /s/ Mary Ellen Genovese
-----------------------

Mary Ellen Genovese
Chief Financial Officer

SCHEDULE II

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

January 3, December 28, December 29,
Allowance for doubtful accounts: 2003 2001 2000
---------------------------------------
Balance at beginning of period $ 8,540 $ 6,538 $ 2,949
Acquired allowance (1) - - 4,445
Bad debt expense 5,443 5,077 1,198
Write-offs, net of recoveries (4,083) (3,075) (2,054)
----------- ---------- --------------
Balance at end of period $9,900 $8,540 $6,538
----------- ---------- --------------

Inventory allowance:
Balance at beginning of period $23,274 $19,285 $14, 109
Acquired allowance (2) - - 7,672
Additions to allowance 3,901 7,242 188
Write-offs, net of recoveries (2,025) (3,253) (2,684)
----------- ---------- --------------
Balance at end of period $25,150 $23,274 $19,285
----------- ---------- --------------

(1) Includes $4,419,000 acquired at July 14, 2000 as part of the
acquisition of Spectra Precision Group and $26,000 acquired at November 14, 2000
as part of the acquisition of Tripod Data Systems.

(2) Includes $7,659,000 acquired at July 14, 2000 as part of the
acquisition of Spectra Precision Group and $13,000 acquired at November 14, 2000
as part of the acquisition of Tripod Data Systems.