United StatesLXE 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

                                  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   September 30, 1995
                             ORMarch 31, 1996                   
                                                                  
       
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE   
       SECURITIES EXCHANGE ACT OF 1934.1934

       For the transition period from Toto                          
              

                Commission File Number    0-19051   

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

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

      303 Research Drive 
      Norcross, GAGeorgia                              30092-2993   
Address(Address of principal executive offices              Zip Codeoffices)            (Zip Code)

Registrant's Telephone Number, Including Area Code-(404)(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 NovemberMay 1, 1995:1996: 

             Class                          Number of Shares      
  Common Stock, $.01 Par Value                 5,554,644


  2

                              Index5,574,518          
                                                                  
                                                                  
Page  No.


Part I.1 of 10.  







                                                               FORM 10-Q

                             -2-

                            PART I
                    Financial Information

Item 1.  Financial Statements

Consolidated Statements of Operations - 
            Three Months Ended and Nine Months 
            Ended September 30, 1995 and 1994             3 

          Consolidated Balance sheets - September 30,
            1995 and December 31, 1994                   4-5

          Consolidated Statements of Cash Flows - 
            Nine Months Ended September 30, 1995 
            and 1994                                      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                               9 


  3

                                 Part I
                          Financial Information

Item 1.  Financial StatementsLXE Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
                                                                  
                                             Three Months Ended   
                                                  Nine Months Ended
                                    September 30           September 30March 31       
                                             1996         1995          1994     1995         1994        

Net sales                                  11,348        17,031    45,188      45,431$14,163       17,306 
 
Cost of sales                                7,197         8,687    25,718      22,4437,622        9,174

     Gross profit                            4,151         8,344    19,470      22,9886,541        8,132

Selling, general and administrative 
  expenses                                   5,395         4,824    15,170      13,9365,256        5,031

Product development and engineering 
  expenses                                   1,993         1,652     5,100       4,4722,020        1,672

     Operating income (loss)                  (3,237)        1,868      (800)      4,580(735)       1,429

Interest and other income                      55            31       473          90244          108

Interest expense                              (132)          (50)     (247)       (147)(145)         (52) 

     Earnings (loss) before income taxes      (3,314)        1,849      (574)      4,523(636)       1,485

Income tax expense (benefit)                  (1,291)          740      (275)      1,729(242)         578

     Net earnings (loss)                   (2,023)        1,109      (299)      2,794

Earnings$  (394)         907

Net earnings (loss) per common and 
  common equivalent share                  (.36)          .19      (.05)        .48$  (.07)         .16

Weighted average number of common 
  and common equivalent shares               5,555        5,765     5,525       5,7645,790


See accompanying notes to interim consolidated financial
statements.





                                                          4FORM 10-Q
                            -3-

LXE Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
                                               September 30March 31    December 31
                                                1996          1995                1994     

Assets

Current assets:

  Cash and interest bearing deposits           1,708              1,537  
  Marketable securities (reverse re-
    purchase agreements in 1994)               307              6,400    

       Total cash and cash equivalents       2,015              7,937$ 1,572         1,881
  Trade accounts receivable, net                12,939             16,22215,137        16,237
  
  Inventories: 
    Work in process                              5,470              3,3343,419         3,623 
    Parts and materials                          9,052              6,1459,312         8,906 

        Total inventories                       14,522              9,47912,731        12,529 

  Prepaid income taxes                           1,332         1,027 

  Deferred income tax benefit                      778                778869           869 

        Total current assets                    30,254             34,41631,641        32,543

Property, plant and equipment: 
  Land                                             250           250 
  Building and leasehold improvements            4,917              4,8725,394         5,371
  Machinery and equipment                       17,125             13,91918,035        17,213
  Furniture and fixtures                         1,219              1,051
                                            23,511             20,0921,234         1,238 

        Total property, plant and equipment     24,913        24,072

  Less accumulated depreciation and 
    amortization                                11,261              9,37612,579        11,949

        Net property, plant and equipment       12,250             10,71612,334        12,123

Other assets 5,791                609 
                                
     Total assets                           48,295             45,741(note 4)                            5,014         4,815 

                                               $48,989        49,481

See accompanying notes to interim consolidated financial statements.






                                                                 5FORM 10-Q

                                  -4-
LXE Inc.
Consolidated Balance Sheets (Unaudited), Continued
(In thousands, except share data)


                                                  September 30March 31    December 31
                                                   1996           1995                1994
Liabilities and Stockholders' Equity 

Current liabilities: 
  Current installments of long-term debt        267                 244$   280            275
  Current installments of long-term debt
    to Parent                                       275            275 
  Short term borrowings                     4,650                 -
  Accounts payable                                5,330               5,552    
  Income taxes payable                        -                 1,1865,017          4,431 
  Accrued compensation costs                      1,177               1,4521,191            994
  Deferred revenue                                955               1,1471,784          1,296
  Other current liabilities                         564                 593367            220
  Due to Parent                                     372                 355362            240 

        Total current liabilities                 13,590              10,8049,276          7,731

Long-term debt, excluding current installments    144                 3505,351          6,925 

Long-term debt to Parent, excluding current 
  installments                                    1,466               1,6721,328          1,397 

Deferred income taxes                               617                 617817            817 

        Total liabilities                        15,817              13,43316,772         16,870

Stockholders' equity: 
  Preferred stock of $1.00 par value per share.     -              - 
   Authorized 5,000,000 shares; none issued or outstanding        -                   -   

  Common stock of $.01 par value per share.  
   Authorized 20,000,000 shares; 5,555,000 issued and 
   outstanding 5,554,644 in 1996 and 5,436,275
   in 1995                                           and 5,436,000 in 1994                 56             5456
  Additional paid-in capital                     18,950              18,47318,949         18,949
  Retained earnings                              13,472              13,77113,212         13,606 

        Total stockholders' equity               32,478              32,298      

     Total liabilities and stockholders'
       equity                              48,295              45,74132,217         32,611 

                                                $48,989         49,481

See accompanying notes to interim consolidated financial statements.






                                                                  6FORM 10-Q
                                  -5-
LXE Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)                                                              
                                                NineThree Months Ended September 30March 31 
                                                      1996          1995                  1994   
Cash flows from operating activities:                                   
  Net earnings (loss)                              $  (299)                2,794(394)          907
  Adjustments to reconcile net earnings (loss)to net cash flows fromprovided by (used in) operating 
   activities: 
    Depreciation and amortization                      2,038                 1,712630           645 
    Changes in operating assets and liabilities: 
      Trade accounts receivable                      3,283                (2,105)1,100          (925) 
      Inventories                                     (5,043)                  970(202)       (1,719)
      Accounts payable                                 (222)                1,069586            (7) 
      Income taxes                                    (1,760)                  388(305)         (357)
      Accrued compensation (275)                  515costs                       197            (4) 
      Deferred revenue                                 (192)                   52488           258 
      Due to Parent and other                          (791)                  205224          (388)

        Net cash provided by (used in) 
        operating activities                         (3,261)                5,6002,324        (1,590) 

Cash flows from investing activities: 
  Purchase of property, plant and equipment           (3,643)               (1,858)(841)       (1,213) 
  Capitalized product software                        costs and
    other market-related investments        (3,143)(154)          -
  Proceeds from maturity of marketable 
    securities                                 -                     800 
  
        Net cash used in investing activities         (6,786)               (1,058)(995)       (1,213)

Cash flows from financing activities: 
  Payments on long-term debt                        (183)                 (163)(1,569)          (61) 
  Payments on long-term debt to Parent                 (206)                 (206) 
  Short term borrowings                      4,650                   -(69)          (69) 
  Proceeds from exercise of stock options              net of withholding taxes paid             (136)                   69-             165

        Net cash provided by (used in) 
        financing activities                        4,125                  (300)(1,638)           35 

        Net change in cash and cash 
          equivalents                       (5,922)                4,242interest 
        bearing deposits                              (309)       (2,768)

Cash and cash equivalentsinterest bearing deposits at January 1      1,881         7,937                 2,697

Cash and cash equivalentsinterest bearing deposits at September 30    2,015                 6,939March 31     $ 1,572         5,169 

Supplemental disclosure of cash flow information: 
  Cash paid for interest                           247                   127$   132            51 

  Cash paid for income taxes                       1,378                 1,212$    63           939 


See accompanying notes to interim consolidated financial statements.






                                                              7FORM 10-Q
                                -6-

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 Report on Form 10-K for the year ended December 31, 1994.1995. 

(2)  Earnings Per(Loss) per Share 

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 equivalent shares derived from dilutive stock options,
(exceptexcept dilutive stock options are excluded for loss periods).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 Financial 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 

In the second quarterFollowing is a summary of other assets as of March 31, 1996 and December
31, 1995 the(in thousands):

                                         March 31,    December 31,
                                           1996          1995 

Investment in non-public U.S. Company     acquired$2,500         2,500
Capitalized software costs                 1,321         1,167
Other                                      1,193         1,148

Total other assets                         5,014         4,815


The Company's investment in a non-public U.S. company comprises a minority
ownership interest and a loan repayable in a non-public U.S. company.three years.  This investment is
valued at cost
and is included in other assets on the accompanying balance sheet. 

(4) New Accounting Standardcost. 

The Company has adopted SFAS 121, "Accounting for the Impairment of Long-Lived 
Assets and for Long-Lived Assets to Be Disposed Of," which was issued
by the Financial Accounting Standards Board in March 1995.  No adjustments
to the carrying value of recorded assets were required as a result of
adopting SFAS 121. 

(5) Capitalization of Software Costs 

In 1995, the company hasalso capitalized $643,000 of certain costs incurred to develop software which will
be licensed to customers.  Capitalized software costs which are included in other assets, 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. 






                                                                            
                                                              8FORM 10-Q
                                 -7-

LXE Inc. 

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

Results of Operations 

Net sales and the underlying level of orders activity decreasedFirst quarter revenues were higher in the thirdCompany's international markets
but lower in the North American market, resulting in a net decrease in
consolidated revenues from the first quarter of 19951996 compared with the third quarter for 1994.  Management
believes that these decreases relatedsame
period in 1995.  The Company is addressing its lower North American
revenues by continuing to short-term effects of the
Company's transition to an expandedexpand its product line that willto support DOS,
Windowsmore 
industry-standard technology platforms and client/server networks.  The Company has undertaken efforts
during this product line expansionsystems, and by seeking to stimulate orders for its current
products, including an initiative to encourage customers to upgrade their
systems from the earlier generations of LXE equipment.  As a result of this
initiative and other specific orders expected to be received, the Company's
order and sales activity should increaseform 
strategic partnerships in the fourth quarter compared
with the third quarter; however, the Company's 1995 fourth quarter results
are likely to be significantly less profitable than prior profitable
quarters in 1995 or the fourth quarter of 1994.new markets such as health care information 
management.

Cost of sales, as a percentage of net sales, was 63% in the third quarter
of 1995 and 57%54% in the first nine monthsquarter
of 1995,1996 compared with 51% and
49%, respectively,53% in the same periods in 1994.  The increases in the 1995, cost of sales percentage reflect increased distribution of the Company's
products through indirect channels that generally have a lower profit
margin than direct sales; the change in the cost of sales percentage also
reflectsreflecting competitive pricing
pressures and, for the three months, a lower 
sales base to absorb fixed overhead expenses.pressures.  Selling, general and administrative expenses increasedwere higher in
1996 due to expansioncontinued growth of the European sales subsidiaries and expansion of the Company's internal sales support efforts.subsidiaries.  Product
development and engineering expenses increased in the first quarter of 1996
compared with 1995 also increaseddue to develop new products with DOS, Windows and client/server capabilities.efforts to expand the product line.

Other income for the interim periods has beenfirst quarter of 1996 was higher than in 1995 compared with
1994 due tobecause
of currency translation gains associated with the Company's European
operations.  Interest expense has increased with the Company's higher level
of  borrowing under its revolving credit agreement.  The consolidatedeffective tax benefit recognizedrate
for the first nine monthsquarter of 1995
is based upon a weighted average effective tax rate (comparable1996 was 38%, which was comparable with the 38% 
as reported inrate
for the previouspreceding fiscal year) as well as other tax benefits, 
including those related to certain export activities.year.

Liquidity and Capital Resources

CashNet cash provided by operations, less cash used in investing activities
(mainly purchases of property, plant and equipment), resulted in $1.3
million net positive cash equivalents decreased as a resultflow before debt payments.  The Company made
total debt payments of several factors, mainly$1.6 million, including $1.5 million to reduce the
transition tolevel of borrowing under the expanded product line and associated increase in
inventories.  In addition, the Company has had total capital expenditures
of $6.8 million for market related investments, development of product
software and the purchase of equipment and internal software.  As a result
of the use of cash in the first nine months of the year, the Company
borrowed $4.7 million on an unsecuredrevolving credit agreement with a commercial
bank, with interest at the bank's prime rate.loan.  Management does not
expect to generate significant positive cash flow in the fourthsecond quarter of
1995, however,1996, but believes that the Company's present liquidity, together with cash
from operations and sources of cash andexternal financing, are believed to be sufficient to fundwill support its current
business activities.



  9activities and capital investment plans.  






                                                                 FORM 10-Q
                                -8-


LXE Inc. 


                              PART II
                         Other Information 



Item 6.  Exhibits and Reports on Form 8-K 

(a) Exhibits - No exhibits areThe following exhibit filed as part of this Report on Form 8-K.Report:

           27.1  Financial Data Schedule

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





                                                                   10 


                                 SIGNATURESFORM 10-Q
                                 -9-



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. 


LXE INC.Inc. 

By:              /s/                             Date:  11/5/14/9596      
    Thomas E. Sharon, Chairman of the Board                 
    and Chief Executive Officer 


By:             /s/                              Date:  11/5/14/9596        
       Don T. Scartz, ChiefTreasurer  
       (Chief Financial Officer and TreasurerOfficer)  






                                                                FORM 10-Q
                                 -10-

LXE Inc.



                             Exhibit Index


                                                          Page No.    


Exhibit 27.1        Financial Data Schedule                  11