TRIMBLE NAVIGATION LTD /CA/ - 10-Q Quarterly Report

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

FORM 10-Q

(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended OCTOBER 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 94-2802192
---------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

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

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

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 whether the registrant is an accelerated
filer (as defined under in Rule 12b-2 of the Exchange Act).

Yes [ X ] No [ ]

As of November 6, 2003, there were 33,051,287 shares of Common Stock
(no par value) outstanding.

TRIMBLE NAVIGATION LIMITED

FORM 10-Q

INDEX

Page
Number

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements:

Consolidated Condensed Balance Sheets --
October 3, 2003 and January 3, 2003 (unaudited) ............... 3

Consolidated Condensed Statements of Operations --
Three and Nine Months Ended October 3, 2003
and September 27, 2002 (unaudited)............................ 4

Consolidated Condensed Statements of Cash Flows --
Nine Months Ended October 3, 2003
and September 27, 2002 (unaudited)............................ 5

Notes to Consolidated Condensed Financial Statements............. 6-17

ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 18-33

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk...... 33-34

ITEM 4. Controls and Procedures......................................... 34-35

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings................................................. 35

ITEM 6. Exhibits and Reports on Form 8-K............................ 35-36,42

Signatures............................................................... 37-41

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

TRIMBLE NAVIGATION LIMITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)

(1) Derived from the January 3, 2003 audited consolidated financial statements
included in the Annual Report on Form 10-K of Trimble Navigation Limited
for fiscal year 2002.

* See accompanying Notes to Consolidated Condensed Financial Statements.

TRIMBLE NAVIGATION LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

* See accompanying Notes to Consolidated Condensed Financial Statements.

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

* See accompanying Notes to Consolidated Condensed Financial Statements.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - UNAUDITED

NOTE 1 -- Basis of Presentation and New Accounting Standards:

Basis of Presentation

The Consolidated Condensed Financial Statements of Trimble Navigation
Limited and subsidiaries, ("Trimble" or the "Company") for the three and nine
month periods ended October 3, 2003 and September 27, 2002, which are presented
in this Quarterly Report on Form 10-Q are unaudited. The balance sheet at
January 3, 2003, has been derived from the audited financial statements at that
date but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, these statements include all adjustments (consisting
of normal recurring adjustments) necessary for a fair statement of the results
for the interim periods presented. Certain amounts from prior years have been
reclassified to conform to the current year presentation. The Consolidated
Condensed Financial Statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in Trimble's Annual
Report on Form 10-K for the fiscal year ended January 3, 2003.

The results of operations for the three and nine month periods ended
October 3, 2003 are not necessarily indicative of the results that may be
expected for the fiscal year ending January 2, 2004.

New Accounting Standards

In November of 2002, the EITF reached a consensus on Issue No. 00-21,
"Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides
guidance on how to account for arrangements that involve the delivery or
performance of multiple products, services and/or rights to use assets. The
provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. The effect of adopting
EITF Issue No. 00-21 did not and is not expected to have a material impact on
the Company's financial condition or results of operations.

In January of 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities." FIN No. 46 requires a variable interest entity
("VIE") to be consolidated by a company if that company is considered to be the
primary beneficiary in a VIE. Primary beneficiary is the party 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
requirements of FIN No. 46 apply immediately to VIE's created after January 31,
2003. The consolidation requirements apply to older entities in the first fiscal
year or interim period ending after December 15, 2003. The Company is currently
evaluating the provisions of FIN No. 46.

In May of 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments With Characteristics of both Liabilities and Equity" which
requires freestanding financial instruments such as mandatory redeemable shares,
forward purchase contracts and written put options to be reported as liabilities
by their issuers as well as related new disclosure requirements. The provisions
of SFAS No. 150 are effective for instruments entered into or modified after May
31, 2003 and pre-existing instruments as of the beginning of the first interim
period that commences after June 15, 2003. The effect of adopting SFAS No. 150
did not have a material impact on the Company's financial condition or results
of operations.

Stock Compensation and SFAS 123 Disclosures

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.

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 at October
3, 2003 and September 27, 2002:

October 3, September 27,
2003 2002
---- ----
Expected stock price volatility 59.71% 51.62%
Risk free interest rate 3.09% 3.13%
Expected life of options after vesting 1.54 1.54
Expected dividend yield - -

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:

NOTE 2 - Acquisitions:

The consolidated condensed financial statements include the results of
operations of acquired companies commencing on the date of acquisition. The
total purchase consideration for each of the below acquisitions was allocated to
the assets acquired and liabilities assumed based on their estimated fair values
as of the date of acquisition.

Applanix Corporation

* On July 7, 2003, Trimble acquired privately held Applanix Corporation
("Applanix") of Ontario, Canada for approximately $18.7 million. Applanix
develops systems that integrate inertial navigation system (INS) and Global
Positioning System (GPS) technologies. The purchase price consisted of 769,493
shares of Trimble common stock, of which 480,269 were issued. Former Applanix
shareholders have the right to receive the remaining 289,224 shares of Trimble
common stock upon the surrender of exchangeable shares of a Trimble subsidiary.
Trimble expects the Applanix acquisition to extend its technology portfolio and
enable increased robustness and capabilities in its future positioning products.

Applanix's performance is reported under the Company's Portfolio Technologies
business segment. Trimble's preliminary allocation of the excess of the purchase
price over the fair market value of the net tangible and intangible assets
acquired resulted in goodwill of approximately $10.6 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 Trimble's entry-level construction instrument
product line. The purchase price consisted of 437,084 shares of common stock.
The merger agreement provides for Trimble to make additional earn-out payments
not to exceed $3.9 million (in common stock and cash payment) based on future
revenues derived from existing product sales to a certain customer and a share
of the payments received from the settlement of litigation. The additional
payments, if earned, result in additional goodwill. As of October 3, 2003, the
total earn-out amount was approximately $1.5 million.

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 shares 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.

NOTE 3 - Joint Ventures:

Caterpillar Trimble Control Technologies Joint Venture

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

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

The expenses for affiliated operations at CTCT, net is comprised of
incremental costs as a result of purchasing products from CTCT at a higher price
than Trimble's original manufacturing costs, partially offset by contract
manufacturing fees charged to CTCT:

Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 3, Sept. 27, Oct.3, Sept. 27,
2003 2002 2003 2002
---- ---- ---- ----
(in millions)
Total CTCT expenses for
affiliated operations, net* $ 1.8 $ 1.5 $ 4.9 $ 2.7

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

Reimbursement of costs from CTCT of employee-related costs for
Trimble's employees devoted to CTCT:

Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 3, Sept. 27, Oct.3, Sept. 27,
2003 2002 2003 2002
---- ---- ---- ----
(in millions)
Total reimbursed costs from CTCT $ 1.9 $ 1.2 $ 5.7 $ 2.4

Trimble has adopted the equity method of accounting for its investment
in CTCT. This requires that the Company records its share of CTCT profits or
losses in a given fiscal period, partially offset by the amortization of an
equal amount of the original deferred gain on the sale of technology to CTCT.
These transactions are recorded as a Non-operating expense under the heading of
"Expense for affiliated operations, net":

Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 3, Sept. 27, Oct.3, Sept. 27,
2003 2002 2003 2002
---- ---- ---- ----
(in millions)
CTCT's reportable gain (loss) $ (0.3) $ (0.2) $ (1.1) $ 0.1
Trimble's share of CTCT's
reportable gain (loss) $ (0.1) $ (0.1) $ (0.6) $ 0.1

At October 3, 2003, the net outstanding balance due from CTCT to
Trimble was approximately $0.8 million.

Nikon-Trimble Joint Venture

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

Under the terms of the Nikon-Trimble agreement, Nikon contributed (Y)1.2
billion (approximately US$10 million on June 30, 2003) in cash, while Trimble
contributed (Y)500 million (approximately US$4.1 million on June 30, 2003) in
cash and (Y)700 million of its common stock (232,834 shares valued at
approximately US$5.9 million on June 30, 2003). The Nikon-Trimble joint venture
purchased certain tangible and intangible assets from Nikon Geotecs Co., Ltd.
and Trimble Japan KK.

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

Trimble has adopted the equity method of accounting for its investment in
Nikon-Trimble, with 50% share of profit or loss from this joint venture to be
reported by Trimble in the Non-operating section of the Consolidated Condensed
Statement of Operations under the heading of "Expenses for affiliated
operations, net." During the third quarter of fiscal 2003 and the first quarter
of its operations, Nikon-Trimble reported a loss of $428,000 of which Trimble's
share is $214,000. At October 3, 2003, the outstanding balance from
Nikon-Trimble due to Trimble was approximately $1.4 million related to the
purchase of certain tangible and intangible assets from Trimble Japan KK,
recorded under the heading of "Other non-current assets" on the Consolidated
Condensed Balance Sheets.

NOTE 4 - Goodwill and Intangible Assets:

Goodwill and purchased intangible assets consisted of the following:

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)

Goodwill:
Goodwill, Spectra Precision acquisition 199,038 185,277
Goodwill, other acquisitions 30,797 20,656
------ ------
Total goodwill* $ 229,835 $ 205,933
========== ==========
Other intangible assets:
Intangible assets with definite life:
Technology 31,457 25,986
Trade names, trademarks, patents,
and other intellectual property 20,588 21,594
------ ------
Total intangible assets 52,045 47,580
Less accumulated amortization (30,905) (24,342)
------- -------
Total Other intangible assets, net $ 21,140 $ 23,238
========== ==========

* The increase in goodwill during the nine-months of 2003 was primarily due
to the acquisition of Applanix with $10.6 million of goodwill in the third
quarter and due to the weakening of the US dollar versus Euro and Swedish Krona
of approximately $10.8 million.

NOTE 5 -- Certain Balance Sheet Components:

Inventories, net consisted of the following:

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)
Raw materials $ 22,606 $ 21,098
Work-in-process 4,407 5,187
Finished goods 45,686 34,859
------ ------
$ 72,699 $ 61,144
========== ==========

Other current assets, net consisted of the following:

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)

Notes receivable $ 1,190 $ 1,685
Prepaid expenses 5,787 5,495
Other 1,238 1,297
----- -----
$ 8,215 $ 8,477
========= ==========

Property and equipment consisted of the following:

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)

Machinery and equipment $ 68,046 $ 64,964
Furniture and fixtures 9,934 9,779
Leasehold improvements 5,131 6,558
Buildings 5,253 5,253
Land 1,391 1,391
----- -----
89,755 87,945
Less accumulated depreciation and amortization (65,408) (65,908)
------- -------
$ 24,347 $ 22,037
======== ========

Other non-current assets consisted of the following:

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)

Debt issuance costs, net $ 1,765 $ 2,493
Nikon-Trimble joint venture investment* 10,530 -
Other investments 1,180 1,381
Deposits 1,071 1,196
Demonstration equipment, net 3,633 2,665
Receivables from employees 1,021 1,223
Other 3,191 3,128
----- -----
$ 22,391 $ 12,086
======== ========

* Includes transaction costs of approximately $0.5 million.

NOTE 6 -- Derivative Financial Instruments:

Trimble transacts business in various foreign currencies and hedges
certain 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.

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

Foreign Currency Contract Value Fair Value in
Amount USD USD
Currency Buy/Sell (in thousands) (in thousands) (in thousands)
- -------- -------- -------------- -------------- --------------
AUD Buy 1,950 $ (1,263) $ (1,314)
CAD Buy 6,871 (4,932) (5,099)
MXN Buy 2,400 (227) (213)
NZD Buy 4,050 (2,352) (2,393)
SEK Buy 139,667 (17,153) (17,958)
CAD Sell (1,000) 712 742
EUR Sell (31,574) 35,993 36,476
JPY Sell (70,746) 608 638
MXN Sell (5,000) 460 442
SEK Sell (13,375) 1,634 1,732
----- -----
$ 13,480 $ 13,052

NOTE 7 -- Long-Term Debt:

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

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(in thousands)

Credit Facilities:
Term loan $ 46,875 $ 32,600
Revolving credit facility 59,000 35,000
Subordinated note - 69,136
Promissory notes and other 2,122 1,789
----- -----
107,997 138,525

Less bank and other short-term borrowings - (6,556)
Less current portion of long-term debt (12,767) (24,104)
------- -------
Non-current portion $ 95,230 $ 107,865
========== ==========

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

Credit Facility

On June 25, 2003, Trimble obtained a $175 million secured credit
facility, ("the Credit Facility") from a syndicate of nine banks to repay the
Thermo Subordinated Note ("the Subordinated Note") and certain existing higher
interest credit facilities, pay fees and expenses related to this new credit
facility, and for ongoing working capital and general corporate needs. Due to
the full repayment of the Subordinated Note and the amount outstanding under the
original higher interest credit facility, the Company recorded a non-cash charge
for the write off of unamortized debt issuance costs and fair value of warrants
issued in connection with the Subordinated Note as interest expense of
approximately $3.6 million in the second quarter of fiscal 2003.

At October 3, 2003, Trimble had approximately $106 million of
borrowings under the Credit Facility, comprised of a $47 million four-year term
loan and $59 million of a $125 million three-year revolver. The Company has
access to an additional $66 million of cash under the terms of the revolving
credit facility. The Company has commitment fees on the unused portion of 0.5%
if the Leverage Ratio (which is defined as total indebtedness to Earnings before
Interest, Taxes, Depreciation and Amortization (EBITDA), as defined in the
related agreement) is 2.0 or greater and 0.375% if the Leverage Ratio is less
than 2.0.

Pricing of interest for any borrowings under the Credit Facility is
fixed for the first six months at LIBOR plus 175 basis points (2.90 % at October
3, 2003) and is thereafter tied to a formula, based on the Leverage Ratio.

The Credit Facility is secured by all of the Company's material assets,
except for assets that are subject to foreign tax considerations. Financial
covenants of the Credit Facility include leverage, fixed charge, and minimum net
worth tests. At October 3, 2003, Trimble was in compliance with all financial

debt covenants. The amount due under the revolver loan is paid as the loan
matures on June 25, 2006, and the loan commitment fees are paid on a quarterly
basis.

Under the terms of the Credit Facility, the Company is currently
restricted from paying dividends and is limited as to the amount of its common
stock that it can repurchase. The Company is allowed to either pay dividends or
repurchase shares of its common stock up to 25% of net income in the previous
fiscal year, or a combination of both.

Promissory Note

The promissory note consists of a $1.7 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 3.99% variable
interest rate as of October 3, 2003.

Weighted Average Cost of Debt

The weighted average cost of debt was approximately 2.99% for the
fiscal quarter ended October 3, 2003.

NOTE 8 -- Segment Information:

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

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

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

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

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

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

o Portfolio Technologies -- The various operations that comprise this segment
were aggregated on the basis that no single operation accounted for more
than 10% of the total revenue. During the first two fiscal quarters of
2003, this segment was comprised solely of the Military and Advanced
Systems business. The Tripod Data Systems business is now included in the
Engineering and Construction segment, while previously it was included in

this segment. Beginning with the third quarter of fiscal 2003, Applanix's
performance is reported in this business segment.

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 Company and each of its segments employ the same
accounting policies.

The following table presents revenues, operating income (loss), and
identifiable assets for the five segments. All financial information for fiscal
2002 has been re-stated in order to reflect the realignment of the reportable
segments. Operating income (loss) is net revenue less operating expenses,
excluding unallocated general corporate expenses, goodwill amortization,
restructuring charges, non-operating income (expense), and income taxes. The
identifiable assets that Trimble's Chief Operating Decision Maker (Trimble's
Chief Executive Officer) views by segment are accounts receivable and inventory.

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

(1) As presented, the accounts receivable number excludes cash received in
advance, deferred revenue and allowances, which are not allocated between
segments.

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

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(In thousands)
Assets:
Accounts receivable total for reportable divisions $ 119,984 $ 100,274
Unallocated (1) (16,919) (20,629)
-- ------- -------
Total $ 103,065 $ 79,645
========= =========
- ----------------------------
(1) Includes cash in advance, deferred revenue, allowances, and other
receivables that are not allocated by segment.

NOTE 9 -- Shareholders' Equity:

Comprehensive Income (Loss)

The components of comprehensive income, net of related tax, include:

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

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

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(In thousands)
Cumulative foreign currency translation adjustments $ 18,892 $ (1,032)
Net gain on hedging transactions - 7
Net unrealized gain (loss) on investments 65 (1)
-- --
Accumulated other comprehensive income (loss) $ 18,957 $ (1,026)
========= =========

Equity Financing:

On April 14, 2003, Trimble sold 2,100,000 shares of its common stock,
no par value per share, to a certain investor at a price of $18.25 per share in
an offering pursuant to its shelf registration statement. The offering resulted
in net proceeds to Trimble of approximately $36.6 million, approximately $31
million of which was used to pay down the principal balance and $5.6 million was
used to pay down the accrued interest due on the Subordinated Note. This
Subordinated Note was paid off on June 25, 2003.

NOTE 10 -- Earnings Per Share:

The following data show the amounts used in computing earnings per
share and the effect on the weighted-average number of shares of dilutive
potential common stock.

NOTE 11 -- Related-Party Transactions:

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 Condensed Statements of Operations include expenses from this
operating lease of $86,351 for each of fiscal quarters ended October 3, 2003 and
September 27, 2002, and $259,054 for each of nine-month periods ended October 3,
2003 and September 27, 2002.

Notes Receivable

Trimble has notes receivable from officers and employees of
approximately $1.0 million as of October 3, 2003 and $1.2 million as of January
3, 2003. The notes bear interest from 4.49% to 6.62% and have an average
remaining life of 1.7 years as of October 3, 2003.

Joint Ventures

See Note 3 of the Notes to Consolidated Condensed Financial Statements.

NOTE 12 -- Product Warranties:

While Trimble engages in extensive product quality programs and
processes including actively monitoring and evaluating the quality of component
suppliers, the Company's 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 accrued warranty expense during the nine months ended October 3,
2003 are as follows:

(in thousands)
--------------
Balance at January 3, 2003 $ 6,394
Warranties accrued 3,802
Warranty claims (3,708)
------
Balance at October 3, 2003 $ 6,488
==========

NOTE 13 -- Litigation:

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

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
subject to the "safe harbor" created by those sections. Actual results could
differ materially from those indicated in the forward-looking statements due to
a number of factors including, but not limited to, the risk factors discussed in
"Risks and Uncertainties" below and elsewhere in this report as well as in the
Company's Annual Report on Form 10-K for fiscal year 2002 and other reports and
documents that the Company files from time to time with the Securities and
Exchange Commission. The Company has attempted to identify forward-looking
statements in this report by placing an asterisk (*) before paragraphs.
Discussions containing such forward-looking statements may be found in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" below. 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 are made as of the date of this Quarterly Report on Form 10-Q, and
the Company disclaims any obligation to update these statements or to explain
the reasons why actual results may differ.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Trimble's discussion and analysis of its financial condition and
results of operations are based upon our consolidated condensed financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to product returns, doubtful accounts,
inventories, investments, intangible assets, income taxes, warranty obligations,
restructuring costs, and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the amount and timing of revenue and expenses and the
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. See the discussion of our critical accounting
policies under the heading Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Form 10K for fiscal 2002.

Recent Business Developments

Nikon-Trimble Joint Venture

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

Under the terms of the Nikon-Trimble agreement, Nikon contributed (Y)1.2
billion (approximately US$10 million on June 30, 2003) in cash, while we
contributed (Y)500 million (approximately US$4.1 million on June 30, 2003) in
cash and (Y)700 million of our common stock (232,834 shares valued at
approximately US$5.9 million on June 30, 2003). Nikon-Trimble purchased certain
tangible and intangible assets from Nikon Geotecs Co., Ltd., and Trimble Japan
KK.

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

We have adopted the equity method of accounting for our investment in
Nikon-Trimble, therefore 50% share of profit or loss from this joint venture
will be reported by Trimble in the Non-operating section of the Consolidated
Condensed Statement of Operations under the heading of "Expenses for affiliated
operations, net." During the third quarter of fiscal 2003, and the first quarter
of its operations, Nikon-Trimble reported a loss of $428,000 of which Trimble's
share is $214,000. At October 3, 2003, the outstanding balance from

Nikon-Trimble due to Trimble was approximately $1.4 million related to the
transfer of certain tangible and intangible assets from Trimble Japan KK.

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

Applanix Corporation

* On July 7, 2003, Trimble acquired privately held Applanix Corporation
("Applanix") of Ontario, Canada for approximately $18.7 million. Applanix
develops systems that integrate inertial navigation system and Global
Positioning System (GPS) technologies. Trimble expects the Applanix acquisition
to extend its technology portfolio and enable increased robustness and
capabilities in its future positioning products. Applanix's performance is
reported under the Company's Portfolio Technologies business segment.

Acquisition of MENSI S.A.

On September 17, 2003, we signed a definitive agreement with EDF
Environnement et Developpement S.A. of France to acquire its subsidiary, MENSI
S.A., a developer of terrestrial 3D laser scanning technology. Closing of the
transaction is subject to approval by French authorities and is expected to
occur in the fourth quarter of fiscal 2003.

Results of Operations

Our revenues from operations for the three and nine month periods ended
October 3, 2003, were $139.6 million and $405.0 million, as compared to $114.7
million and $342.0 million in the corresponding periods in fiscal 2002. The net
income for the three and nine month periods ended October 3, 2003 was $9.9
million, or $0.29 diluted income per share and $23.4 million, or $0.72 diluted
income per share, compared to a net income for the corresponding periods in
fiscal 2002, of $2.7 million, or $0.09 diluted income per share and $6.3 million
or $0.22 diluted income per share. The impact of the weaker U.S. dollar added
approximately $2.7 million and $11.5 million to our revenues while decreasing
our operating income by $1.0 million and $3.8 million for the three and nine
month periods ended October 3, 2003 as compared to corresponding periods in the
prior fiscal year.

The following table shows revenue and operating income by segment for
the periods indicated and should be read in conjunction with the narrative
descriptions below. Operating income by segment excludes unallocated corporate
expenses, which are comprised primarily of general and administrative costs,
amortization of purchased intangibles as well as other items not controlled by
the business segment.

At the beginning of fiscal 2003, 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 Tripod Data Systems business
is now included in the Engineering and Construction segment, while previously it
was included in the Portfolio segment.

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

Engineering and Construction

Engineering and Construction revenues increased by $11.6 million (or
14%) and $37.1 million (or 16%) while segment operating income increased $0.4
million (or 3%) and 4.0 million (or 9%) for the three and nine months ended
October 3, 2003 as compared to the same corresponding periods in fiscal 2002. We
continued to experience stronger demand for survey equipment primarily due to
the strength of our new products, our marketing actions, and geographic
expansion, especially in Asia and Russia. The weakening of the US dollar versus

several major currencies during the year contributed approximately $2.0 million
and $9.7 million of the revenue increases for the three and nine months ended
October 3, 2003 as compared to the same corresponding periods in fiscal 2002.

* Segment operating income was impacted year over year due to increased
operating expenses outside of the United States (largely driven by the weaker US
dollar), and increased research and development spending on certain programs as
we continue to invest in developing next generation technology.

Field Solutions

Field Solutions revenues increased by approximately $6.9 million (or 52%)
and $11.3 million (or 23%), while segment operating income increased by $3.4
million (or 482%) and by $3.3 million (or 42%) for the three and nine months
ended October 3, 2003 as compared to the same corresponding periods in fiscal
2002. Revenues were up year over year due to continued stronger sales of the
GeoExplorer(R) CE series handhelds and robust market acceptance of automatic
guidance products. In addition, stronger U.S. governmental and manual guidance
agricultural sales in Brazil bolstered revenues substantially. Delayed shipments
of our GeoExplorer products in the third quarter of fiscal 2002 resulted in $2.4
million of sales deferred into the fourth quarter of fiscal 2002, which also
contributed to increased operating income compared to prior fiscal year.

Segment operating income increased from the corresponding first nine
months of 2002 primarily due to higher revenues and a mix shift to higher margin
product sales.

Mobile Solutions

Mobile Solutions revenues increased by $0.4 million (or 19%) and $3.1
million (or 47%), while segment operating loss decreased by $1.02 million (or
33%) and $4.8 million (or 50%) for the three and nine months ended October 3,
2003 as compared to the same corresponding periods in fiscal 2002. The increased
revenues were primarily attributable to the ready-mix vertical market and the -
dealer distribution network, resulting in increased sales of products and
services related to the Televisant(R) system platform. These increases were
offset by certain field failures resulting from purchased components, which have
been largely resolved at this time. During the past year, we also saw a shift in
the composition of revenues in this segment, with a growing portion attributed
to this newer service-based product offering while the legacy hardware-only
business is declining in importance. The reduction of the segment operating loss
by $0.4 million was due to the increased service billings. and improved margins
over prior year due to a shift in demand to higher margin products. This was led
by the introduction of new General Packet Radio System ("GPRS") products and
service revenues from the Televisant service offering.

Component Technologies

Component Technologies revenues increased by $1.6 million (or 11%) and
$9.1 million (or 23%), while segment operating income increased by $2.1 million
(or 83%) and $7.3 million (or 127%) for the three and nine months ended October
3, 2003 as compared to the same corresponding periods in fiscal 2002. The
increase in revenues during fiscal 2003 was primarily due to increased demand
from our wireless infrastructure customers. The increased revenues and higher
margins aided by favorable product mix, as well as lower costs due to the
transfer of the manufacturing of our products to China, resulted in higher
segment operating income.

Portfolio Technologies

Portfolio Technologies revenues increased by $4.3 million (or 165%) and
$2.4 million (or 29%), while operating loss increased by $0.1 million (or 56%)
and $1.0 million (or 238%) for the three and nine months ended October 3, 2003
as compared to the same corresponding periods in fiscal 2002. The increases in
revenues were primarily driven by the inclusion of revenue from Applanix, while
offset by lower revenue of military-related products.

Segment operating income decreased from the corresponding first nine
months of fiscal 2002 primarily due to a mix shift to lower margin product
sales, weaker operating results from military products, and the amortization of
inventory cost associated with the mark up adjustment of Applanix inventory to
fair market value as a result of purchase price acquisition accounting.

International Revenues

* Sales to our unaffiliated customers in locations outside the U.S. were
approximately 49% of total revenues for both the nine months ended October 3,
2003 and September 27, 2002, respectively. North and South America represented
56% of total revenue, Europe, the Middle East and Africa 31%, and Asia 13% in
the first nine months of fiscal 2003. 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, and tariffs or other barriers. Our results of operations
could be adversely affected if we were unable to continue to generate
significant sales in locations outside the United States

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 approximately 50% and 50% for
the three and nine months ended October 3, 2003, and approximately 50% and 51%
for the corresponding periods in fiscal 2002. Gross margin was stable due to
continued stronger sales by Tripod Data Systems, GIS, wireless infrastructure,
survey products, and stronger focus on product cost reductions. These factors
were offset by inclusion of revenue from Nikon-Trimble products which have a
lower gross margin compared to our other products and the impact of the weaker
US dollar on the cost of our manufacturing and distribution locations outside of
the United States.

* 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 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:

Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
2003 2002 2003 2002
---- ---- ---- ----
(In thousands)
Research and development $ 17,346 $ 15,235 $ 50,463 $ 45,259
Sales and marketing 25,015 21,338 73,572 65,362
General and administrative 10,306 10,812 28,837 31,484
Restructuring charges 627 154 1,733 646
Amortization of purchased intangibles 1,870 1,832 5,390 6,134
----- ----- ----- -----
Total $ 55,164 $ 49,371 $159,995 $148,885
======== ======== ======== ========

Research and Development

Research and development spending increased by $2.1 million and $5.2
million during the three and nine month periods ended October 3, 2003, and
represented 12.4% and 12.5% of revenue, compared with 13.3% and 13.2% in the
same corresponding periods in fiscal 2002. The increase in absolute dollars
during the three and nine months of fiscal 2003 compared to similar periods in
prior year was due to continued investment in next generation technology
primarily in the Engineering and Construction segment, the weakness of the US
dollar versus major European and New Zealand currencies and also the inclusion
of the research and development expenses from Applanix after the acquisition in
July 2003.

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

Sales and Marketing

Sales and marketing expense increased by $3.7 million and $8.2 million
during the three and nine month periods ended October 3, 2003 and represents
17.9% and 18.2% of revenue, compared with 18.6% and 19.1% in the corresponding
periods in fiscal 2002. The increases in absolute dollars in fiscal 2003 were
primarily driven by increased sales efforts, the impact of the weakness of the
US dollar in Europe, and the inclusion of Applanix sales and marketing expenses
versus prior fiscal year.

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

General and Administrative

General and administrative expenses decreased by $0.5 million
(representing 7% of revenue) during the third fiscal quarter of 2003 as compared
to the corresponding period during fiscal 2002 (representing 9% of revenue).
General and administrative expense decreased by $2.6 million (representing 7% of
revenue) during the nine month period ended October 3, 2003 as compared to the
corresponding period during fiscal 2002 (representing 9% of revenue). The impact
of troubled South American economies as well as a significant customer
receivable write off drove provisions and write off of receivables higher in the
corresponding fiscal 2002 compared to the fiscal 2003.This decrease was
partially offset by the inclusion of the expenses from Applanix after the
acquisition in July 2003.

Restructuring Charges

Restructuring charges of $0.6 million and $1.7 million were recorded
during the three and nine months periods ended October 3, 2003, respectively,
which related to severance costs and Trimble's Japanese office relocation due to
the Nikon-Trimble joint venture formation. As a result of these actions, our
headcount decreased during the nine months period ended October 3, 2003 by 50
individuals and in the corresponding period of fiscal 2002 by 40 individuals. As
of October 3, 2003, the outstanding unpaid balance related to restructuring
activities was approximately $0.4 million.

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:

Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
2003 2002 2003 2002
---- ---- ---- ----
(in thousands)

Interest income $ 129 $ 116 $ 316 $ 336
Interest expense (1,188) (3,654) (10,764) (11,232)
Foreign currency transaction gain (loss) 166 (354) 649 (1,123)
Expenses for affiliated operations, net (1,984) (1,516) (5,100) (2,726)
Other expense 265 156 126 334
--- --- --- ---
Total $(2,612) $(5,252) $(14,773) $(14,411)
======== ======== ========= =========

Non-operating expense, net decreased by $2.6 million during the third
quarter of fiscal 2003 as compared with the corresponding period in fiscal 2002,
while it increased by $0.4 million during the nine-months period ended October
3, 2003 as compared with the corresponding period in fiscal 2002 primarily due
to expenses for affiliated operations. The increase of expenses for affiliated
operations for the three-month period is primarily due to the inclusion of the
Nikon-Trimble joint venture share of losses. The increase of expenses for
affiliated operations during the nine-month period is due to the fact that CTCT
commenced operations in April of 2002, resulting in no such expenses during the
first fiscal quarter of 2002. In the second quarter of fiscal 2003, we wrote off
$2.3 million of debt issuance costs as a result of our debt refinancing in June
2003 and $1.3 million related to the remaining unamortized portion of the
warrants issued upon full repayment of the principal balance of the Subordinated
Note. This reduction in debt and lower interest rate resulted in a decrease in
interest expense during the third quarter of fiscal 2003.

Income Tax Provision

We recorded provisions for income taxes of $1.4 million for the three
months ended October 3, 2003 and $3.8 million for the nine months ended October
3, 2003. The provisions for income taxes for the comparable periods in 2002 were
$0.25 million and $3.25 million, respectively. These amounts reflect foreign
taxes on profits in foreign jurisdictions and the benefit from utilizing net
operating loss carryforwards.

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.

Liquidity and Capital Resources

October 3, January 3,
As of 2003 2003
- ----- ---- ----
(dollars in thousands)

Cash and cash equivalents $ 43,409 $ 28,679
As a percentage of total assets 8.3% 6.5%
Accounts receivable days sales outstanding (DSO) 59 58
Inventory turns per year 3.9 4.1

October 3, September 27,
Nine Months Ended 2003 2002
- ----------------- ---- ----
(in thousands)

Cash provided (used) by operating activities $ 15,740 $ 25,064
Cash used in investing activities $(14,996) $ (3,805)
Cash provided (used) by financing activities $ 13,986 $(21,985)
Net change in cash and cash equivalents $ 14,730 $ (726)

At October 3, 2003, we had cash and cash equivalents of $43.4 million,
total debt amounting to $108.0 million and $66 million available for borrowing
under our new Credit Facility subject to compliance with certain financial
ratios.

In the first nine months of 2003, cash provided by operating activities
was $15.7 million, as compared to $25.1 million provided by operating activities
during the corresponding period in fiscal 2002. The decrease was primarily due
to increase in accounts receivable, inventories and decrease in accounts
payable. Also, the prior year was positively impacted by a special one-time
distribution of $11.0 million by the CTCT joint venture to us. Our ability to
continue to generate cash from operations will depend in large part on revenues,
the rate of collections of accounts receivable, and profitability.

Cash flows used in investing activities were $15.0 million in the first
nine months of fiscal 2003, as compared to $3.8 million in the corresponding
fiscal period in 2002. The increase was primarily due to a $4.2 million cash
outlay related to the company's cash contribution to the Nikon-Trimble joint
venture in June 2003, $2.6 million cash outlay related to the company's
acquisition of Applanix and increased expenditure on capital equipment and
intangibles.

Cash provided by financing activities was $14.0 million in the first
nine months of 2003, as compared to $22.0 million used in financing activities
in the corresponding period in fiscal 2002. In the first nine months ended
October 3, 2003, we received net proceeds of approximately $36.6 million from
the sale of 2.1 million shares of our common stock in April 2003, $10.4 million
of cash from the issuance of common stock to our employees under the stock
option and stock purchase plans. These receipts were partially offset by $33.5
million of debt repayments. In the corresponding period in fiscal 2002, we made
$40.7 million of debt repayments and this was partially offset by $17.4 million

of net proceeds received from a private equity placement and $1.9 million
related to the issuance of common stock under the employee stock option and
stock purchase plans.

On April 14, 2003, the Company sold 2,100,000 shares of its common
stock, no par value per share, to a certain investor at a price of $18.25 per
share in an offering pursuant to the Company's shelf registration statement. The
offering resulted in net proceeds to the Company of approximately $36.6 million,
approximately $31 million of which was used to pay down the principal balance
and $5.6 million was used to pay down the accrued interest due on the
Subordinated Note.

On June 25, 2003, we obtained a new Credit Facility which enabled us to
pay off our indebtedness under our previous credit facility and the Subordinated
Note in the amount of $109 million. At October 3, 2003 we had $106 million
outstanding under the new Credit Facility.

The new Credit Facility is secured by all material assets of our
Company, except for assets that are subject to foreign tax considerations.
Financial covenants of the Credit Facility include leverage, fixed charge, and
minimum net worth tests. At October 3, 2003 and as of the date of this report,
we are in compliance with all debt covenants. The amounts due under the revolver
loan are paid as the loans mature, and the loan commitment fees are paid on a
quarterly basis. Under the four-year term loan portion of the Credit Facility,
we are due to make payments (excluding interest) of approximately $3.1 million
in fiscal 2003, $12.5 million in each of the next three fiscal years (2004,
2005, and 2006) and $6.3 million in fiscal 2007.

Under the terms of the Credit Facility, we are 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 believe that our cash and cash equivalents, together with our Credit
Facility, will be sufficient to meet our anticipated operating cash needs for at
least the next twelve months.

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

* 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.

New Accounting Standards

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

In January of 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities." FIN No. 46 requires a variable interest entity
("VIE") to be consolidated by a company if that company is considered to be the
primary beneficiary in a VIE. Primary beneficiary is the party 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
requirements of FIN No. 46 apply immediately to VIE's created after January 31,

2003. The consolidation requirements apply to older entities in the first fiscal
year or interim period ending after December 15, 2003. We are currently
evaluating the provisions of FIN No. 46.

In May of 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments With Characteristics of both Liabilities and Equity" which
requires freestanding financial instruments such as mandatory redeemable shares,
forward purchase contracts and written put options to be reported as liabilities
by their issuers as well as related new disclosure requirements. The provisions
of SFAS No. 150 are effective for instruments entered into or modified after May
31, 2003 and pre-existing instruments as of the beginning of the first interim
period that commences after June 15, 2003. The effect of adopting SFAS No. 150
did not have a material impact on our financial condition or results of
operations.

Risks and Uncertainties

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

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

We have not been able in the past to consistently predict when our
customers will place orders and request shipments, so that we cannot always
accurately plan our manufacturing requirements. As a result, if orders and
shipments differ from what we predict, we may incur additional expenses and
build excess inventory, which may require additional inventory write-downs. 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 continues in effect until either
party gives the other ninety days written notice.

Since January 2003, Solectron has been assembling most of our Component
Technology products in China. Although this initiative in China has brought cost
savings over assembling in California, we may experience quality control issues,
shipping delays or other problems associated with manufacturing in China.

In addition, we rely on sole suppliers for a number of our critical
components. We have experienced shortages of components in the past. Our current
reliance on sole or a limited group of suppliers involves several risks,
including a potential inability to obtain an adequate supply of required
components and reduced control over pricing. Any inability to obtain adequate
deliveries or any other circumstance that would require us to seek alternative
sources of supply or to manufacture such components internally could
significantly delay our ability to ship our products, which could damage
relationships with current and prospective customers and could harm our
reputation and brand, 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 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.

On June 25, 2003, Trimble executed a Credit Agreement with Scotia
Capital and certain other banks, which provides for financial commitments
totaling up to $175 million. This credit facility contains financial covenants
regarding minimum fixed charge coverage and maximum leverage ratio, which are
extremely sensitive to changes in earnings before interest, taxes, depreciation
and amortization ("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.

We Are Dependent on Key Customers.

We generate a portion of our revenue from large original equipment
manufacturers such as Siemens VDO Automotive AG and Nortel. A reduction or loss
of business with these customers could have a material adverse effect on our
financial condition and results of operations. There can be no assurance that we
will be able to continue to realize value from these relationships in the
future.

We Are Dependent on New Products.

Our future revenue stream depends to a large degree on our ability to
bring new products to market on a timely basis. We must continue to make
significant investments in research and development in order to continue to
develop new products, enhance existing products and achieve market acceptance of
such products. We may incur problems in the future in innovating and introducing
new products. Our development stage products may not be successfully completed
or, if developed, may not achieve significant customer acceptance. If we were
unable to successfully define, develop and introduce competitive new products,
and enhance existing products, our future results of operations would be
adversely affected. Development and manufacturing schedules for technology
products are difficult to predict, and we might not achieve timely initial
customer shipments of new products. The timely availability of these products in
volume and their acceptance by customers are important to our future success. A
delay in new product introductions could have a significant impact on our
results of operations.

We 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, such as Caterpillar, McNeilus, and CNH Global. 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 kinematic precision. The continuing availability
of these non-GPS radio frequencies is essential to provide enhanced GPS products
to our precision survey markets. Any regulatory changes in spectrum allocation
or in allowable operating conditions may materially and adversely affect the
utility and reliability of our products, which would, in turn, cause a material
adverse effect on our operating results.

In addition, unwanted emissions from mobile satellite services and
other equipment operating in adjacent frequency bands or in-band from licensed
and unlicensed devices may materially and adversely affect the utility and
reliability of our products, which could result in a material adverse effect on
our operating results. The FCC continually receives proposals for novel
technologies and services, such as ultra-wideband technologies, which may seek
to operate in, or across, the radio frequency bands currently used by the GPS
SPS and other public safety services. Adverse decisions by the FCC that result
in harmful interference to the delivery of the GPS SPS and other radio frequency
spectrum also used in our products may materially and adversely affect the
utility and reliability of our products, which could result in a material
adverse effect on our business and financial condition.

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

We have certain products, such as GPS RTK systems and Robotic Total
Stations, that use integrated radio communication technology requiring access to
available radio frequencies allocated by the FCC for which the end-user is
required to obtain a license in order to operate. In addition, access to these
frequencies by state agencies is under management by state radio communications
coordinators. Some bands are experiencing congestion that excludes their
availability for access by state agencies in some states, including the State of
California. To reduce congestion, the FCC is requiring migration of radio
technology from wideband to narrowband operations in these bands. As of January
2004, the Commission will only issue new licenses for narrowband radios. An
inability to obtain access to these radio frequencies by the end-user and for
new products to comply with FCC requirements could have an adverse effect on our
operating results.

Many of Our Products Rely on the GPS Satellite System.

The GPS satellites and their ground support systems are complex
electronic systems subject to electronic and mechanical failures and possible
sabotage. The satellites were originally designed to have lives of 7.5 years and
are subject to damage by the hostile space environment in which they operate.
However, of the current deployment of 28 satellites in place, some have already
been in operation for 13 years. To repair damaged or malfunctioning satellites
is currently not economically feasible. If a significant number of satellites
were to become inoperable, there could be a substantial delay before they are
replaced with new satellites. A reduction in the number of operating satellites
may impair the current utility of the GPS system and the growth of current and
additional market opportunities.

In addition, there can be no assurance that the 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.
For example, we recently acquired Applanix Corporation. Acquisitions of, and
investments in, companies, divisions of companies, or products entail numerous
risks, including:

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

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

We Face Competition in Our Markets.

Our markets are highly competitive and we expect that both direct and
indirect competition will increase in the future. Our overall competitive
position depends on a number of factors including the price, quality and
performance of our products, the level of customer service, the development of
new technology and our ability to participate in emerging markets. Within each
of our markets, we encounter direct competition from other GPS, optical and
laser suppliers and competition may intensify from various larger 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 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 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 or as other intellectual property claims are made, 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 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 outside the United States comprised approximately 49% of our revenues
in both the first nine months of fiscal 2003 and the first nine months of fiscal
2002. 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.

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 the first nine months of 2002, in the first nine months
of 2003, the U.S. currency has weakened against other currencies, especially
against the Euro and Swedish Krona.

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.

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,
some of 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 kinematic
products because of interference with certain other users of similar radio
frequencies. An inability or delay in obtaining such certifications or changes
to the rules by the FCC could adversely affect our ability to bring our products
to market, which could harm our customer relationships and have a material
adverse effect on our business.

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

The market price of our common stock has been, and may continue to be,
highly volatile. During the first nine months of 2003, our stock price ranged
from a high of $28.49 to a low of $13.19. We believe that a variety of factors
could cause the price of our common stock to fluctuate, perhaps substantially,
including:

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

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

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

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

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

Market Interest Rate Risk

We are exposed to market risk due to the possibility of changing
interest rates under our secured credit Facility. Our Credit Facility is
comprised of a three-year U.S. dollar-only revolver that expires on June 25,
2006, and a four-year term loan that expires on June 25, 2007. Borrowings under
the Credit Facility have interest payments based on a floating rate of LIBOR
plus a number of basis points tied to a formula based on our Leverage Ratio.

The revolver matures on June 25, 2006 and has an outstanding principal
balance of $59 million, while the term loan matures on June 25, 2007 and has an
outstanding principal balance of $47 million, as of October 3, 2003 (all in U.S.
currency only). The three-month LIBOR effective rate at October 3, 2003 was
1.15%. A hypothetical 10% increase in three-month LIBOR rates could result in
approximately $121,756 annual increase in interest expense on the existing
principal balances.

In addition, we have a $1.7 million promissory note, of which
approximately $0.1 million was classified as a current liability at October 3,
2003. The note is payable in monthly installments, bearing a 3.99% variable
interest rate as of October 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 quarter ended October 3, 2003, we have no outstanding
contracts related to firm backlog hedges. 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 six 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 October 3, 2003:

Foreign Currency Contract Value Fair Value in
Amount USD USD
Currency Buy/Sell (in thousands) (in thousands) (in thousands)
- -------- -------- -------------- -------------- --------------
AUD Buy 1,950 $ (1,263) $ (1,314)
CAD Buy 6,871 (4,932) (5,099)
MXN Buy 2,400 (227) (213)
NZD Buy 4,050 (2,352) (2,393)
SEK Buy 139,667 (17,153) (17,958)
CAD Sell (1,000) 712 742
EUR Sell (31,574) 35,993 36,476
JPY Sell (70,746) 608 638
MXN Sell (5,000) 460 442
SEK Sell (13,375) 1,634 1,732
----- -----
$ 13,480 $ 13,052

ITEM 4. CONTROLS AND PROCEDURES

(a) Controls and Procedures.

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

(b) Internal Control Over Financial Reporting.

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

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3.1 Restated Articles of Incorporation of Trimble Navigation Limited, filed
June 25, 1986. (1)

3.2 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed October 6, 1988. (1)

3.3 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed July 18, 1990. (1)

3.4 Certificate of Determination of Trimble Navigation Limited, filed February
19, 1999. (1)

3.5 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed May 29, 2003. (2)

3.6 Amended and Restated Bylaws of Trimble Navigation Limited. (3)

10.3+ 1993 Stock Option Plan, as amended October 24, 2003.

31.1 Certification of Chief Executive Officer pursuant to Securities Exchange
Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2003.

31.2 Certification of Chief Financial Officer pursuant to Securities Exchange
Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2003.

32.1 Certification of Chief Executive Officer pursuant to section 18 U.S.C.
section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 dated November 12, 2003.

32.2 Certification of Chief Financial Officer pursuant to section 18 U.S.C.
section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 dated November 12, 2003.

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

(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a), "Exhibits" of the registrant's Annual Report on
Form 10-K for the fiscal year ended January 1, 1999, as filed with the SEC
on March 29, 1999.

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

(3) 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.

(b) Reports on Form 8-K

On July 18, 2003, the Company filed a report on Form 8-K reporting that
Nickolas W. Vande Steeg, a senior vice president and operating officer for
Parker Hannifin Corporation, joined its board of directors.

On July 30, 2003, the Company filed a report on Form 8-K reporting the
financial results for the fiscal quarter ended July 4, 2003.

On September 17, 2003, the Company filed a report on Form 8-K reporting
that it had signed an agreement with Environnement et Developpement S.A. of
France to acquire its subsidiary, MENSI S.A.

SIGNATURES

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

TRIMBLE NAVIGATION LIMITED
(Registrant)

By: /s/ Mary Ellen Genovese
-----------------------
Mary Ellen Genovese
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)

DATE: November 11, 2003

EXHIBIT INDEX

Exhibit No. Description

3.1 Restated Articles of Incorporation of Trimble Navigation Limited, filed
June 25, 1986. (1)

3.2 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed October 6, 1988. (1)

3.3 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed July 18, 1990. (1)

3.4 Certificate of Determination of Trimble Navigation Limited, filed February
19, 1999. (1)

3.5 Certificate of Amendment of Articles of Incorporation of Trimble Navigation
Limited, filed May 29, 2003. (2)

3.6 Amended and Restated Bylaws of Trimble Navigation Limited. (3)

10.3+ 1993 Stock Option Plan, as amended October 24, 2003.

31.1 Certification of Chief Executive Officer pursuant to Securities Exchange
Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2003.

31.2 Certification of Chief Financial Officer pursuant to Securities Exchange
Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2003.

32.1 Certification of Chief Executive Officer pursuant to section 18 U.S.C.
section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 dated November 12, 2003.

32.2 Certification of Chief Financial Officer pursuant to section 18 U.S.C.
section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 dated November 12, 2003.

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

(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a), "Exhibits" of the registrant's Annual Report on
Form 10-K for the fiscal year ended January 1, 1999, as filed with the SEC
on March 29, 1999.

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

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