LXE INC. 
                         POST OFFICE BOX 7700
                       NORCROSS, GA  30091-7700 




                                      May 14, 1996 



Securities and Exchange Commission 
Washington, D. C.  20549 

Gentlemen: 

Pursuant to the requirements of the Securities Exchange Act of 
1934, we are transmitting herewith the following Form 10-Q for 
the quarter ended March 31, 1996. 

Sincerely, 

LXE INC. 



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

                             FORMForm 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 March 31,September 30, 1996
                                        [   ]  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 0-19051 


                            LXE Inc.INC.
                 ------------------------------
     (Exact name of registrant as specified in its charter) 


               Georgia                           58-1829757
   ------------------------------          ----------------------
  (State or other jurisdiction of         (IRS Employer IdentificationID Number)
   incorporation orof organization)       Number)


          303 Research Drive 
          Norcross, Georgia                         30092-299330092 
 --------------------------------------           ----------
(Address of principal executive offices)          (Zip Code)


Registrant's Telephone Number, Including Area Code-Code: (770) 447-4224



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 
                            -----          -----

The number of shares outstanding of each of the issuer's classes of
common stock, as of the close of business on May 1,November 13, 1996: 

               Class                        Number of Shares 
    Common Stock, $.01 Parpar Value                5,574,518          
                                                                  
                                                                  
Page  1 of 10.





                                                            FORM 10-Q 
                            -2-

PART ILXE INC. 
AND SUBSIDIARIES 

                          INDEX 
                                                               Page No.
Part I.   Financial Information 

     Item 1.   Financial Statements 

               Consolidated Statements of Operations - 
               Three Months and Nine Months Ended 
               September 30, 1996 and 1995                       3 

               Consolidated Balance Sheets - September 30, 
               1996 and December 31, 1995                       4-5

               Consolidated Statements of Cash Flows - 
               Nine Months Ended September 30, 1996 
               and 1995                                          6

               Notes to Interim Consolidated Financial 
               Statements                                        7 

     Item 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations     8 


Part II   Other Information 

     Item 4.   Submission of Matters to a Vote of Security 
               Holders                                           9

     Item 6.   Exhibits and Reports on Form 8-K                  9 




                                                            FORM 10-Q
                             -3- 

LXE Inc.INC. 


                           PART I 
                    FINANCIAL INFORMATION 

ITEM 1.   Financial Statements 

Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data) 


                                  Three Months Ended   
                                                  March 31months ended   Nine months ended
                                    September 30         September 30
                                 -------------------   -----------------
                                  1996          1995    1996        1995
                                 ------       ------   ------     ------
Net sales                       $14,163       17,306$18,243       11,348   48,935     45,188
Cost of sales                    7,622        9,17410,756        7,197   27,711     25,718 
                                 ------       ------   ------     ------
     Gross profit                 6,541        8,1327,487        4,151   21,224     19,470

Selling, general and 
  administrative expenses         5,256        5,0314,717        5,395   15,276     15,170
Product development and 
  engineering expenses            2,020        1,6721,703        1,993    5,118      5,100
                                 ------       ------   ------     ------

     Operating income (loss)      (735)       1,4291,067       (3,237)     830       (800)

Interest and other income, 244          108net 
  of foreign exchange gains 
  and losses                        (50)          55       31        473
Interest expense                   (145)         (52)(204)        (132)    (536)      (247)
                                 ------       ------   ------     ------

     Earnings (loss) before 
      income taxes                  (636)       1,485813       (3,314)     325       (574)

Income tax expense (benefit)                  (242)         578taxes                        309       (1,291)     125       (275)
                                 ------       ------   ------     ------
     Net earnings (loss)        $   (394)         907504       (2,023)     200       (299)
                                 ======       ======   ======     ======
Net earnings (loss) per 
  common and common equivalentequiva-
  lent share                    $   (.07)         .16.09         (.36)     .04       (.05)
                                 ======       ======   ======     ======

Weighted average number 
 of common and common 
 equivalent shares                5,734        5,555    5,7905,659      5,525 
       

See accompanying notes to interim consolidated financial statements. 




                                                            FORM 10-Q
                             -3--4- 

LXE Inc.INC. 


Consolidated Balance Sheets (Unaudited) 
(In thousands) 


                                         March 31September 30      December 31
                                             1996             1995 
                                         Assets------------      -----------
ASSETS 

Current assets: 
  Cash and interest bearing deposits       $  1,5722,547            1,881
  Trade accounts receivable, net             15,13718,969           16,237
  Inventories: 
    Work in process                           3,4192,859            3,623
    Parts and materials                      9,31210,094            8,906
                                            -------           ------
        Total inventories                    12,73112,953           12,529

  Prepaid income taxes                        1,3321,291            1,027
                                                 
  Deferred income tax benefit                   869              869
                                            -------           ------
        Total current assets                 31,64136,629           32,543

Property, plant and equipment:
  Land                                          250              250
  Building and leasehold improvements         5,3945,462            5,371
  Machinery and equipment                    18,03519,721           17,213
  Furniture and fixtures                      1,2341,248            1,238
                                            -------          ------- 
        Total property, plant               
          and equipment                      24,91326,681           24,072

  Less accumulated depreciation and 
    amortization                             12,57913,996           11,949
                                            -------          -------
        Net property, plant and 
         equipment                           12,33412,685           12,123

Other assets (note 4)                         5,0145,074            4,815
                                            $48,989-------          -------

                                           $ 54,388           49,481
                                            =======          =======
                                                              

See accompanying notes to interim consolidated financial statements. 






                                                            FORM 10-Q
                             -4--5- 

LXE Inc.INC. 


Consolidated Balance Sheets (Unaudited), Continuedcontinued 
(In thousands, except share data) 


                                         March 31September 30      December 31
                                             1996             1995 
                                         Liabilities and Stockholders' Equity------------      -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: 
  Current installments of long-term debt    $   280143              275
  Current installments of long-term debt 
    to Parent                                   275              275
  Accounts payable                            5,0177,224            4,431
  Accrued compensation costs                  1,1911,061              994
  Deferred revenue                            1,7841,463            1,296
  Other current liabilities                     367495              220
  Due to Parent                                 362290              240
                                             ------           ------
       Total current liabilities             9,27610,951            7,731

Long-term debt, excluding current 
  installments                                5,3518,500            6,925

Long-term debt to Parent, excluding 
  current installments                        1,3281,191            1,397

Deferred income taxes                           817              817
                                             ------           ------
       Total liabilities                     16,77221,459           16,870
                                             ------           ------

Stockholders' equity: 
  Preferred stock of $1.00 par value 
   per share.  -              - 
   Authorized 5,000,000
   shares; none issued                          -                -   
  Common stock of $.01 par value per 
   share.  Authorized 20,000,000 shares; 
   issued and outstanding 5,554,6445,574,518 in 
   1996 and 5,436,275 in 1995                    56               56
  Additional paid-in capital                 18,94919,067           18,949
  Retained earnings                          13,21213,806           13,606
                                             ------           ------
        Total stockholders' equity           32,21732,929           32,611
                                             $48,989------           ------

                                            $54,388           49,481 
                                             See accompanying notes to interim consolidated financial statements.






                                                                FORM 10-Q
                                  -5-
LXE Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)                                                              
                                                Three Months Ended March 31 
                                                      1996          1995   
Cash flows from operating activities:                                   
  Net earnings (loss)                              $  (394)          907
  Adjustments to reconcile net earnings (loss) 
   to net cash provided by (used in) operating 
   activities: 
    Depreciation and amortization                      630           645 
    Changes in operating assets and liabilities: 
      Trade accounts receivable                      1,100          (925) 
      Inventories                                     (202)       (1,719)
      Accounts payable                                 586            (7) 
      Income taxes                                    (305)         (357)
      Accrued compensation costs                       197            (4) 
      Deferred revenue                                 488           258 
      Due to Parent and other                          224          (388)

        Net cash provided by (used in) 
        operating activities                         2,324        (1,590) 

Cash flows from investing activities: 
  Purchase of property, plant and equipment           (841)       (1,213) 
  Capitalized product software                        (154)          - 
  
        Net cash used in investing activities         (995)       (1,213)

Cash flows from financing activities: 
  Payments on long-term debt                        (1,569)          (61) 
  Payments on long-term debt to Parent                 (69)          (69) 
  Proceeds from exercise of stock options              -             165

        Net cash provided by (used in) 
        financing activities                        (1,638)           35 

        Net change in cash and interest 
        bearing deposits                              (309)       (2,768)

Cash and interest bearing deposits at January 1      1,881         7,937

Cash and interest bearing deposits at March 31     $ 1,572         5,169 

Supplemental disclosure of cash flow information: 
  Cash paid for interest                           $   132            51 

  Cash paid for income taxes                       $    63           939======           ======
                                                             

See accompanying notes to interim consolidated financial statements. 

                                                            FORM 10-Q
                             -6- 
LXE Inc.INC. 

Consolidated Statements of Cash Flows (Unaudited) 
(In thousands) 
                                           Nine Months Ended September 30
                                              1996                1995
                                            --------            --------
Cash flow from operating activities: 
 Net earnings (loss)                        $   200               (299)
 Adjustments to reconcile net earnings to  
   net cash used in operating activities: 
     Depreciation and amortization            2,047              2,038
     Changes in operating assets and 
       liabilities: 
         Trade accounts receivable           (2,732)             3,283
         Inventories                           (424)            (5,043)
         Accounts payable                     2,793               (222)
         Income taxes                          (264)            (1,760)
         Accrued compensation costs              67               (275)
         Deferred revenue                       167               (192)
         Due to Parent and other                389               (791)
                                              -----              -----
           Net cash provided by (used in) 
            operating activities              2,243             (3,261)
                                              -----              -----
Cash flows from investing activities: 
 Purchase of property, plant and equipment   (2,609)            (3,643)
 Capitalized product software costs and 
   other market-related investments            (323)            (3,143)
                                              -----              -----
           Net cash used in investing  
            activities                       (2,932)            (6,786)
                                              -----              -----
Cash flows from financing activities: 
  Repayment of long-term debt                  (207)              (183)
  Repayment of long-term debt to Parent        (206)              (206)
  Borrowing under line of credit              1,650              4,650
  Proceeds from exercise of stock options       118               (136)
                                              -----              -----
           Net cash provided by financing 
            activities                        1,355              4,125
                                              -----              -----
           Net change in cash and cash 
             equivalents                        666             (5,922)

Cash and cash equivalents at January 1        1,881              7,937
                                              -----              -----
Cash and cash equivalents at September 30    $2,547              2,015
                                              =====              =====
Supplemental disclosure of cash flow 
  information: 
    Cash paid for interest                   $  204                247
    Cash paid for income taxes               $   70              1,378
                                              

See accompanying notes to interim consolidated financial statements. 





                                                            FORM 10-Q
                                -7- 
LXE INC. 

Notes to Interim Consolidated Financial Statements (Unaudited) 

(1) Basis of Presentation 

In the opinion of management, these interim consolidated financial
statements reflect all normal and recurring adjustments necessary for a
fair presentation of results for such periods.  The results of operations
for any interim period are not necessarily indicative of results for the
full year.  These financial statements should be read in conjunction with
the financial statements and related notes contained in the Company's
Annual Reportreport on Form 10-K for the year ended December 31, 1995. 

(2) Earnings (Loss) perPer Share 

     Earnings (loss) Earnings(loss)per common and common equivalent share for the interim
periods were based on the weighted average number of shares of common
stock outstanding and equivalentequivalents shares derived from dilutive stock
options, except dilutive stock options are excluded for loss periods. 
Fully diluted earnings per share are not significantly different from the
primary earnings per share presented. 

(3)  Accounting for Stock-Based Compensation 

     In October 1995, the Financial Accounting Standards Board adopted
Statement of Financialfinancial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock-Based Compensation," effective for fiscal years
beginning after December 15, 1995.  The Company intends to comply with
the provisions of SFAS 123 in fiscal 1996 by continuing to recognize
compensation cost from stock options under the "intrinsic value" method,
with additional footnote disclosures to be provided, including the pro
forma effects of applying the "fair value" method of SFAS 123.  Based
upon this accounting policy, the Company does not expect to recognize any
compensation cost associated with stock options granted in 1996.  

(4)  Other Assets 

     Following is a summary of other assets as of March 31,September 30, 1996 and
December 31, 1995 (in thousands):
                                         March 31,September 30,    December 31, 
                                             1996             1995
                                         ------------     -----------
Investment in non-public U.S. Company      $2,500$ 2,500            2,500
Capitalized software costs                   1,3211,392            1,167 
Other                                          1,193898            1,148 
                                             -----            -----
Total other assets                         5,014$ 4,790            4,815
                                             =====            =====

The Company's investment in a non-public U.S. company comprises a
minority ownership interest and a loan repayable in three years.  This
investment is valued at cost. 

The Company also capitalized certain costs to develop software which will
be licensed to customers.  Capitalized software costs will be amortized
using the greater of the ratio of current gross revenues for the product
to the total of current and anticipated future gross revenues or the
straight-
linestraight-line method over three years.   





                                                       FORM 10-Q
                                -7--8- 

LXE Inc. 

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

Results of Operations
First- ---------------------

Consolidated sales for the third quarter revenuesand first nine months of
1996 were higher$18.2 million and $48.9 million, respectively, compared
with $11.3 million and $45.2 million for the same respective
periods in 1995.  Sales for materials handling applications
increased in both North American and international markets. 
Sales also increased due to the Company's international markets
but lower inentry into the North American market
resulting in a net decrease in
consolidated revenues from the first quarter of 1996 compared with the same
period in 1995.  The Company is addressing its lower North American
revenues by continuing to expand its product line to support more 
industry-standard technology platforms and systems, and by seeking to form 
strategic partnerships in new markets such as health carefor healthcare information management. 

Cost of sales for the third quarter, as a percentage of net
sales, was 54%59% in the first quarter
of 1996 compared with 53%63% in 1995, mainly
reflecting competitive pricing
pressures.a higher sales base in 1996 to absorb fixed expenses. 
For the first nine months, the cost of sales percentage did not
vary significantly in 1996 from 1995, although the mix of export
and North American sales has changed.

Selling, general and administrative expenses were higher in 1996 compared
with 1995 were lower for the third quarter and comparable for the
first nine months, due mainly to continued growthreorganization of the EuropeanCompany's
sales subsidiaries.efforts.  Product development and engineering expenses increaseddid
not vary significantly in 1996 compared with 1995, as the Company
continued efforts to expand its product line.

Interest and other income was reported net of a foreign exchange
loss in the third quarter of 1996 and lower gains for the first
quarternine months of 1996 compared with 1995, due to efforts to expandresulting from currency
fluctuations that affected the product line.

Other income for the first quarteraccounting translation of 1996 was higher than in 1995 because
of currency translation gains associated with the Company's European
operations.subsidiaries' financial statements into U.S. dollars.  Interest
expense has increased within 1996 as a result of increased borrowing
under the Company's higher level
of  borrowing under its revolving credit agreement.

The effective income tax rate for the first quarternine months of 1996
was 38%, which wasis comparable with the rate
for the preceding fiscal year.


Liquidity and Capital Resources
Net cash- -------------------------------

Cash provided by operations, lessnet of cash used in investing
activities (mainly purchases of property, plant and equipment),
and borrowings under a revolving credit agreement resulted in $1.3a
net increase in cash and cash equivalents to $2.5 million net positive cash flow before debt payments.  The Company made
total debt paymentsas of
$1.6September 30, 1996, compared with $1.9 million including $1.5 million to reduceat the levelbeginning
of borrowing under the revolving credit loan.year.  Management does not expect to generate significant
positive cash flow in the secondfourth quarter of 1996, but1996; however,
management believes that the Company's present liquidity,
together with cash from operations and sources of external
financing, will support its current business activities and
capital investment plans. 

  




                                                  FORM 10-Q
                                -8--9- 

LXE Inc.INC. 


                                PART II 
                           Other InformationOTHER INFORMATION 

Item 6.  Exhibits and Reports on Form 8-K 

(a) Exhibits - The following exhibitexhibits are filed as part of this
Report:report: 

    27.1  Financial Data Schedule 

(b) Reports on Form 8-K - No reports on Form 8-K were filed by
the Registrant during the period covered by this report on Form
10-Q. 




                                                       FORM 10-Q
                                -9--10- 

                             SIGNATURES 


Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrantRegistrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized. 

LXE Inc.INC. 


By:          /s/                                       Date:  5/11/14/96
    ---------------------------------------                  -----------
    Thomas E. Sharon, Chairman of the Board 
     and Chief Executive Officer 



By:         /s/                                        Date:  5/11/14/96
    ---------------------------------------                  -----------
    Don T. Scartz 
    Treasurer  
       (ChiefChief Financial Officer)  






                                                                FORM 10-Q
                                 -10-

LXE Inc.



                             Exhibit Index


                                                          Page No.    


Exhibit 27.1        Financial Data Schedule                  11Officer