<PAGE> 1


                                     1996
                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

                                 FORM 10-K

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

                  For the fiscal year ended December 31, 1996

                        Commission File Number 0-8664
                            The Harper Group, Inc.
              (Exact name of registrant as specified in its charter)
            Delaware                                            94-1740320
(State of other jurisdiction of                             (I.R.S. Employer
  incorporationor organization)                         Identification Number)

       260 Townsend Street
    San Francisco, California                                   94107-0933
(Address of principal executive offices)                        (Zip Code)

     Registrant's telephone number, including area code:  (415) 978-0600

        Securities registered pursuant to Section 12(b) of the Act:
                                                      Name of each exchange
  Title of each class                                  on which registered
  -------------------                                  -------------------
         None                                                  None

           Securities registered pursuant to Section 12(g) of the Act:
                              Title of each class
                              -------------------
                          Common Stock, $1.00 par value
        Rights to Purchase Series A Junior Participating Preferred Stock

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

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

     At March 14, 1997, the aggregate market value of the registrant's
Common Stock held by non-affiliates of the registrant was approximately
$278,219,000.

     At March 14, 1997, the number of shares outstanding of registrant's
Common Stock was 15,957,898 (net of 500,000 treasury shares).


                  DOCUMENTS INCORPORATED BY REFERENCE

     Proxy Statement dated April 1, 1997 - Part III of this Form 10-K;
Annual Report to Stockholders for year ended December 31, 1996 - Part II
of this Form 10-K.

     The Exhibit Index is located on pages 18 through 20 hereof.

<PAGE> 2
                                  PART I
ITEM 1 - BUSINESS


General
-------

     The Harper Group, Inc. ("the Company") is a leader in providing
transportation and integrated logistics services for the international
movement of goods and the furnishing of value-added information,
distribution, and inventory management services to customers worldwide.
The Company is principally engaged in international air and ocean
freight forwarding, customs brokerage and integrated logistics. The
Company provides value-added services in addition to those customarily
provided by traditional air freight forwarders, ocean freight forwarders
and customs brokers. These services are designed to provide global
logistics solutions for customers in order to streamline their supply
chain, reduce their inventories, improve their logistics information,
enhance their profitability and provide them with more efficient and
effective international transportation strategies.

     The Company's global array of services benefits customers by
reducing overall international logistics costs and increasing the speed
and reliability of the delivery of goods worldwide. These services
include: air and ocean export and import freight transportation;
worldwide customs brokerage, duty drawback, Free Trade Zone management
and associated services; global freight tracking; other information
management services such as electronic data interchange ("EDI"),
electronic invoicing and purchase order management; logistics
management; warehousing and distribution services; inventory and
materials management; protective cargo packing; bonded warehousing;
project cargo management; global purchasing and trade finance services;
and marine insurance (ocean and air coverage).

     The Company's global services are supplied through its network of
over 350 offices, agents and distribution centers located in over 90
countries on six continents. These facilities are linked by the
Company's real-time, on-line communications network that speeds the two-
way flow of shipment data and related logistics information between
origins and destinations around the world. In addition to its own
operations, the Company utilizes a network of overseas agents for
comprehensive, global coverage of major trade centers.

     The Company commenced operations in 1898, was incorporated in
California in 1970, and reincorporated in Delaware in 1987. Until
December 31, 1993, its operating subsidiaries in the United States
included Circle Airfreight Corporation, Inc., its principal
international air freight subsidiary, Harper Robinson & Co., Inc., its
principal international ocean freight forwarding and customs brokerage
subsidiary; Max Gruenhut International, Inc., a full service air and
ocean freight forwarding firm; and Darrell J. Sekin and Co. ("Sekin"), a
full service firm engaged in air and ocean freight forwarding and
customs brokerage.

     Effective January 1, 1994, Circle Airfreight Corporation, Inc. and
Max Gruenhut International, Inc. were merged into Harper Robinson & Co.,
Inc., which was renamed Circle International, Inc. These domestic
operating subsidiaries were unified in order to achieve economic and
service efficiencies, to provide a common set of standards and
procedures, and to improve the sales and marketing of the Company's
integrated services. Internationally, the Company continues to operate a
number of subsidiaries under the names "Circle Freight International"
and "Max Gruenhut", in addition to the name "Circle International".
Unless the context otherwise requires, references to the Company or
Harper include The Harper Group, Inc. and its subsidiaries.

     Certain information regarding the Company's operations by
geographic regions for the three years in the period ended December 31,
1996, is incorporated by reference to Note 12 of the Notes to
Consolidated Financial Statements in the 1996 Annual Report to
Stockholders.


<PAGE> 3

     The following tables show the approximate amounts of revenue and
net revenue, expressed in dollars and as a percentage, attributable to
the Company's principal services during each of the three years in the
period ended December 31, 1996. Revenue from air and ocean freight
forwarding, where the Company acts in the capacity of a consolidator of
shipments, includes all transportation charges to the customer.  Revenue
from air and ocean freight forwarding, where the Company acts in the
capacity of a cargo agent, includes only the commissions charged to
carriers and forwarding and related fees charged to customers.  Revenue
earned by the Company as a customs broker includes commissions and fees
charged to customers for those services as well as services relating to
distribution, warehousing, materials management, and other related
services.  Net revenue for air and ocean freight forwarding, which is
the equivalent of gross profit in other industries, is determined by
deducting any freight consolidation costs from freight forwarding
revenue.  In the opinion of management, net revenue provides a more
accurate measure than revenue of the relative importance of the
Company's principal services.


                               Year Ended December 31
                          1996           1995             1994
                              (Dollars in thousands)
Revenue:
Air freight
 forwarding             $375,507  63%    $346,624  64%   $313,012  67%
Customs brokerage
 and other               116,831  20%     102,377  19%     77,694  16%
Ocean freight
 forwarding              103,095  17%      93,327  17%     78,842  17%
                        --------  ---    --------  ---   --------  ---

        Total           $595,433 100%    $542,328 100%   $469,548 100%
                        ======== ====    ======== ====   ======== ====

Net Revenue:
Air freight
 forwarding             $ 93,686  38%    $ 87,747  40%   $ 87,467  45%
Customs brokerage
 and other               116,831  48%     102,377  46%     77,694  40%
Ocean freight
 forwarding               35,101  14%      31,687  14%     28,978  15%
                        --------  ---    --------  ---   --------  ---

        Total           $245,618 100%    $221,811 100%   $194,139 100%
                        ======== ====    ======== ====   ======== ====

Recent Developments

     Organization:

     The unification of the three domestic operating subsidiaries
referred to above resulted in a consolidated, focused market identity
for the Company's operating units and its products. The consolidation of
previously separate branch offices, accounting systems and job
responsibilities continued during 1996 as well.  Management believes
that integration of the Company's operating systems has enhanced the
Company's ability to pursue its sales strategy of providing door-to-door
integrated logistics solutions to its customers.  As a further step
towards strengthening the Company's market identity, the Company is
proposing to its shareholders at its Annual Meeting of Shareholders
scheduled for May 13, 1997 that the name of the Company be changed to
Circle International Group, Inc.

<PAGE> 4

     Acquisitions:

     Effective January 1996, the Company acquired 80% of Imex, a
Brazilian customs brokerage company specializing in the biotech, high
technology, and telecommunication industries.  This acquisition enhanced
the Company's operations in Brazil and created synergies necessary to
offer a complete menu of integrated door-to-door logistics services in
the region.

     In February 1996, the Company acquired the customer list of
Celadon/Jacky Maeder Ltd., a New York partnership, consisting primarily
of the accounts handled by most of that firm's offices in the United
States. The consideration for the purchase is based on the net revenue
generated from purchased accounts within twelve months of the
acquisition. The acquisition is intended to increase the Company's
market share in the United States. In connection with this transaction,
the Company sold its operations in Switzerland to Jacky Maeder A.G.,
which is one of the largest freight forwarders in Switzerland, and will
act as the Company's exclusive agent in Switzerland. The Company in turn
serves as the exclusive agent in the United States for Jacky Maeder A.G.
and two of its global alliance partners, which are also large European
freight forwarders.

     In April 1996, the Company acquired the assets of Gilmex
International Cargo Services N.V., a Belgium company, to strengthen its
network in Belgium, an important distribution center.  Immediately after
the purchase of Gilmex, the Company sold a 49% interest in the combined
Belgium operations back to the original owner of Gilmex.  The combined
operations are conducted under the name of Circle Gilmex and offer a
full menu of logistics services including air, ocean, and inland
forwarding, customs clearance, warehousing and materials management.
The Company entered into a put and a call option with the seller to
acquire the 49% interest back any time between April 1999 and March
2006.

     In August 1996, the Company acquired a 40% equity interest in TDS
Logistics, Inc. (TDS).  TDS is a North American provider of material
handling, packaging and consolidation services for overseas shipping of
completely knocked-down new vehicles, which is a means of shipping a
controlled inventory of parts for a specific number of vehicles to be
produced in overseas assembly plants.  TDS also has operations in Brazil
and Belgium.  The Company's strategy is to strengthen its market
position in the automotive industry by its alliance with TDS.  For a
further description of this and certain other acquisitions, see Note 2
to the Company's Financial Statements which is incorporated by
reference.

     In November 1996, the Company acquired all the outstanding shares
of Trans International Groupe (TIG), a Minneapolis-based ocean freight
forwarder.  Total number of shares to be paid is contingent upon
achieving a special net revenue level and other factors.

     Additionally, in 1996 the Company opened operations in Guam, and
added two new offices in the United States.

     Effective February 1997, the Company combined its owned operations
in Thailand with Worldbridge International to form a new joint venture
company called Circle Worldbridge International (Thailand), owned 55% by
the Company.  The purpose of this transaction was to increase market
share in Thailand and improve the level of services offered to customers
in that market.

<PAGE> 5

     Information Systems:

     The Company continuously enhances its information systems
capabilities in order to meet its customers' changing needs and to
provide first-class information transmission, processing, and management
services. The Company has been a leader in providing its customers with
global shipment tracking and tracing capabilities and with providing
data and reports to better manage the global logistics process. In 1994,
the Company implemented its new computer architecture, "Circle Logistics
Advanced Systems Solutions", known as CLASS.  This provides significant
improvements for the management of ocean shipments, allows for the
automated preparation of over 15 shipping documents and provides a user-
friendly menu-driven system.  Additionally, this system integrated the
Company's customs brokerage system into the CLASS system. This allows
for improved on-line tracking of shipments by customers and provides an
improved data base system for the analysis and reporting of customs
information. The Company has also developed a customer oriented purchase
order management system to support supply chain management and the
logistics needs of its customers.

     The Company has invested considerable effort on its EDI
capabilities to allow electronic transmission of a variety of shipment
documentation according to the requirements of its customers. In
September 1996, the Company implemented an information tool that allows
customers to track air freight shipments via the internet, including
flight information, estimated and confirmed arrival and departure times,
and a description of the shipment.  The Company continues to link future
development of its information systems to the specific requirements of
its customers and seeks to connect its customers to its information
systems and internet tools whenever possible.

     Quality Initiatives:

     In key global regions the Company maintains personnel focused on
implementing quality initiatives to better serve customers' needs and
improve internal efficiencies.  The Company achieved ISO 9001 or 9002
certifications in many locations throughout Europe, South Africa and in
the Asia-Pacific region.  In 1996 the Company achieved ISO 9002
certification at 17 major locations within the USA, covering
approximately 46% of our USA employee population.  ISO certification
efforts will continue throughout 1997, encompassing all office locations
in the USA, as well as several in the Far East and Latin America.  The
Company's quality initiatives include an on-going effort to standardize
procedures incorporating best practices, and to involve all employees in
identifying ways to continually improve services to customers.

     Facilities:

     The Company has a program designated to modernize and expand its
facilities to meet the increased need for distribution, material
management and warehouse services.  In 1996, the Company sold three of
its facilities for a total of approximately $6.9 million, and replaced
them with leased, new larger facilities which were built according to
the Company's specifications.  Additionally, other build-to-suit leases
were entered into for new facilities in the United States, and
additional new facilities are anticipated in 1997 in continuation of the
Company's facilities program.

     The Company also purchased a facility in Northampton, England which
it operates as a logistics and distribution center in the center of
England.  This facility is intended to be the prototype for other
similar operations in Europe in the future.

<PAGE> 6

International Air Freight Forwarding
------------------------------------

     The Company believes that it is one of the largest forwarders of
international air freight in the United States. The Company's air
freight forwarding and related logistics services include the following:
inland transportation of freight from point of origin to distribution
center or the carrier's cargo terminal; warehousing; cargo assembly;
export packing and vendor shipment consolidation; global freight
forwarding; charter arrangement and handling; electronic transmittal of
logistics documentation; electronic purchase order/shipment tracking;
expedited document delivery to overseas destinations for customs
clearance; and priority notification to shipper and consignee of cargo
arrival. In addition, the Company continues to expand the scope of its
services, including such services as logistics services for commercial
and governmental projects, inventory management, EDI and cargo
insurance. The Company does not own or operate aircraft, which enables
the Company to tailor its services to customer requirements.

     As a global air freight forwarder, the Company is both a
consolidator of air freight shipments (an indirect air carrier) and an
airline cargo agent. The following table provides certain information
concerning the Company's air freight forwarding business during each of
the three years ended December 31, 1996.

                                           Year Ended December 31,
                                        1996         1995       1994
                                 (In thousands, except per shipment data)
As indirect carrier:
Revenue (1)                           $359,532     $328,597   $296,464
Revenue net of air freight
  consolidation costs (1)             $ 77,710     $ 69,720   $ 70,919
Number of shipments                        383          375        353
Net revenue per shipment              $ 202.90     $ 185.92   $ 200.90
Weight in kilos                        137,937      133,389    106,587
Kilos per shipment                      360.15       355.70     301.95

As airline agent:
Revenue (1)                           $ 15,976     $ 18,027   $ 16,548
Number of shipments                        106          117        137
Net revenue per shipment              $ 150.72     $ 154.08   $ 120.79
Weight in kilos                         32,119       35,887     38,897
Kilos per shipment                      303.01       306.73     283.92

----------------------------------------
        (1)  Management believes that revenue net of air freight
        consolidation costs is a better measure than revenue of the
        relative importance of the two types of air freight forwarding
        service offered by the Company because net revenue, like revenue
        earned by the Company as an airline agent, does not include the
        carrier's charge to the Company for carrying the shipment.

     During 1996, the Company's principal air freight forwarding
customers were shippers of computer, electronic and high technology
equipment, automotive products, machinery and machine parts, consumer
goods, clothing, pharmaceuticals, chemicals, and aerospace equipment.

     The air freight forwarding business of the Company is not dependent
on any one customer or industry. The Company provides services to global
or multinational customers, as well as regional customers. During 1996,
the Company had in excess of 30,000 air freight forwarding customers,
and no customer accounted for more than 5% of the Company's net air
freight forwarding revenue.

<PAGE> 7

     Indirect Air Carrier: As an indirect air carrier, the Company
procures shipments from its customers, consolidates shipments bound for
a particular destination, determines the routing, selects the direct
carrier (an airline) with which the consolidated lot is to move and
tenders each consolidated lot as a single shipment to the direct carrier
for transportation to a destination. At the destination the Company or
its agent receives the consolidated lot, breaks it into its component
shipments and distributes the individual shipments. During 1996, the
Company derived approximately 83% of its net air freight forwarding
revenue from its services as an indirect air carrier.

     The Company's rates are based on a per kilo charge that generally
decreases within a certain range as the weight of the shipment
increases. The Company ordinarily charges the shipper a rate less than
the rate which the shipper would be charged by an airline. The rates
that airlines charge to forwarders and others also generally decrease as
the weight of the shipment increases. As a result of the consolidation
of its customers' shipments, the Company generally obtains lower rates
per kilo from airlines than the rates it charges its customers for
individual shipments. This rate differential is the primary source of
the Company's net air freight forwarding revenue. The Company's practice
is to make prompt adjustments in its rates to match changes in airline
rates.

     As part of its services, the Company prepares documentation
relating to the international movement of goods; provides handling,
packing, and containerizing services; arranges for the routing and
tracing of shipments when necessary; provides physical breakbulk,
delivery and inland transportation services; and arranges for freight
insurance. Another source of the Company's net air freight forwarding
revenue is the fees which the Company charges for services related to
the movement of goods, which include computer-prepared shipment
documentation; expedited delivery of air waybills, packing lists,
commercial invoices, and other documents; and electronic shipment
tracking and tracing. The Company offers its customers access to its
global on-line computer information system, which acts as a
comprehensive source of vital information for its customers.

     During 1996, approximately 47% of the Company's net air freight
forwarding revenue as an indirect carrier was attributable to shipments
originating in the United States and terminating abroad. As measured by
net air freight forwarding revenue earned as an indirect carrier, the
Company's principal regions of destination in 1996 were Europe, Asia,
South America, and Australia/New Zealand.

     By accepting goods for air shipment, the Company assumes the role
of a carrier and becomes responsible to the shipper for the safe
delivery of the shipment, subject to a legal limitation on liability of
$20.00 per kilo. Because the Company's relationship to the airline is
also that of a shipper to a carrier, the airline generally assumes the
same responsibility to the Company as the airline assumes to its other
customers. The Company obtains, for the benefit of its customers, cargo
insurance covering such cargo for $20.00 per kilo or such higher amount
as the customer may designate.

     Airline Agent: As an authorized cargo sales agent of most airlines
worldwide, the Company arranges for the transportation of individual
shipments and receives from the airline a commission for arranging the
shipment. In addition, the Company provides the shipper with ancillary
services such as export documentation for which it receives a separate
fee. When acting in this capacity, the Company does not consolidate
shipments or have responsibility for shipments once they have been
tendered to the airline. The Company conducts its agency air freight
forwarding operations from the same facilities as its indirect carrier
operations, and services the same regions of the world. During 1996, the
Company derived approximately 17% of its air freight forwarding net
revenue from its services as an airline agent.

<PAGE> 8

Customs Brokerage
-----------------

     The Company functions as a customs broker with respect to entries
of freight into approximately 50 major destinations in the United States
and in about 300 overseas destinations through its network of offices
and agents.

     In its capacity as a customs broker, the Company prepares and files
all formal documentation required for clearance through customs
agencies, obtains customs bonds, in many cases facilitates the payment
of import duties on behalf of the importer, arranges for payment of
collect freight charges, and assists the importer in obtaining the best
commodity classifications and in qualifying for duty drawback refunds.
The Company's customs brokers and support staff have substantial
knowledge of the complex tariff laws and customs regulations governing
the payment of duty, as well as valuation and import restrictions in
their respective countries.  Within the U.S. the Company employs a
significant number of personnel holding individual Customs broker
licenses.

     The Company believes that it is a leader in the use of computer
technology for customs brokerage activities on behalf of its clients.
The Company has been a leader in the use of the Automated Brokerage
Interface information system, providing an on-line link with the United
States customs agencies. In several global trading centers in addition
to the United States, the Company's offices are connected electronically
to customs agencies for expedited pre-clearance of goods and centralized
import management. Such on-line interface with customs agencies speeds
freight release and provides nationwide control of clearances at
multiple ports and airports of entry.

     The Company works with importers to design cost-effective import
programs which utilize the Company's distribution and logistics services
and computer technology. Such services include electronic document
preparation, routing cargo from overseas origins to ports and airports
of entry, bonded warehousing, distribution of the cleared cargo to
inland locations and duty drawback. For consolidated shipments,
containers are devanned, cargo is segregated according to final
destination, and goods are forwarded to final destinations. In many U.S.
and overseas locations, the Company's bonded warehouses enable importers
to defer payment of customs duties and coordinate release of cargo with
their production or distribution schedules. Goods are stored under
Customs Service supervision until the importer is ready to withdraw or
re-export them. The Company receives storage charges for these in-
transit goods and fees for related ancillary services. The Company also
offers Free Trade Zone management and duty drawback services to provide
customers with additional tools to maintain cost-effective import
programs.

     Management estimates that in 1996 the Company handled over 350,000
customs entries in the United States. The Company does not have a fixed
fee schedule for customs brokerage services. Instead, its fees are based
on the volume of business transacted for a particular customer, and the
type, number and complexity of services provided. In addition to its
fees, the Company bills the importer for amounts which the Company has
paid on the importer's behalf, including duties, collect freight
charges, and similar payments.

     As a customs broker operating in the United States, the Company is
licensed by the Treasury Department and regulated by the United States
Customs Service. The Company's fees for acting as a customs broker in
the United States are not regulated.

<PAGE> 9

International Ocean Freight Forwarding
--------------------------------------

     As a global ocean freight forwarder, the Company arranges for the
shipment of freight by ocean carriers and acts as the agent of the
shipper or the importer. The Company's ocean freight forwarding and
related logistics services include inland transportation from point of
origin to distribution facility or port of export; cargo assembly,
packing and consolidation; warehousing; electronic transmittal of
documentation and shipment tracking; expedited document delivery; pre-
alert consignee notification; and cargo insurance.

     A number of the Company's facilities provide protective cargo
packing, crating and specialized handling services for retail goods,
government-specification cargo, consumer goods, hazardous cargo, heavy
machinery and assemblies, and perishable cargo. Other facilities are
equipped to handle tons of equipment and material from multiple origins
to overseas "turn-key" projects, such as manufacturing facilities or
government installations. The Company does not own or operate ships or
assume carrier responsibility, preferring to retain the flexibility to
tailor logistics services and options to the customer's requirements.

     The Company's compensation for its ocean freight forwarding
services is derived principally from commissions paid by shipping lines
and from forwarding and documentation fees paid by its customers, who
are either shippers or consignees. In 1996, approximately 58% of the
Company's net ocean freight forwarding revenue was attributable to
commissions, forwarding fees, and associated ancillary services.

     During 1996, more than 15,000 customers utilized the Company's
ocean freight forwarding services worldwide. Although the Company
services a wide variety of shippers, its principal customers are
shippers of industrial and agricultural machinery and equipment, motor
vehicles, computer equipment, clothing, agricultural products and
energy-related equipment.

     A majority of the ocean freight shipments forwarded by the Company
originate in the United States, Asia and Europe and terminate in a
foreign port.

     Ocean Freight Consolidation:

     The Company's global operations as an indirect ocean carrier or
NVOCC (non-vessel operating common carrier) are similar in some respects
to its air freight consolidation operations. The Company procures
customer freight, consolidates shipments bound for a particular
destination, determines the routing, selects the ocean carrier or
charters a ship, and tenders each consolidated lot as a single shipment
to the direct carrier for transportation to a distribution point. As a
NVOCC, the Company generally derives its revenue from the spread between
the rate specified in a tariff which it has on file with the Federal
Maritime Commission and the ocean carrier's charge to the Company for
carrying the shipment, in addition to charging for other ancillary
services related to the movement of the freight. Because of the volume
of freight controlled and consolidated by the Company, it is generally
able to obtain lower rates from ocean carriers than the rate which the
shipper would be able to procure. In 1996, this service, and associated
ancillary services, contributed approximately 42% of the Company's net
ocean freight forwarding revenue.

<PAGE>10

Distribution and Materials Management Services
----------------------------------------------

     The Company offers a full range of customized distribution and
materials management services in connection with the transportation of
cargo. These services are provided in a number of the Company's owned
logistics facilities in many locations throughout the world, as well as
in premises leased from others. In 1996, the Company continued its
program of building state-of-the-art warehouse and distribution
facilities. Additional new facilities projects are contemplated for
1997. The Company's distribution and materials management services
include inventory control, order processing, import/export freight
staging, protective and specialized packing and crating, pick and pack
operations containerization, consolidation and deconsolidation, and
special handling for perishables, hazardous materials, and heavy-lift
equipment. For import shipments, the Company provides bonded warehouse
services and in certain locations Free Trade Zone services. These
warehouse and distribution services complement the other transportation
services, including information systems tools, provided by the Company
and form part of the integrated logistics solutions the Company offers
to its customers.

Insurance
---------

     Another transportation service offered to customers is the
arranging of international marine/air cargo insurance in connection with
the Company's air freight and ocean freight forwarding operations.
Insurance coverage frequently is tailored to a customer's shipping
program and is procured for the customer as a component of the Company's
integrated logistics. The Company also arranges for surety bonds for
importers as part of its customs brokerage activities.

Global Projects
---------------

     The Company has global project divisions in North America and the
United Kingdom to meet the special requirements of global project
management and heavy lift movements. In addition to logistics advice,
and traditional ocean and air transportation services, the project
divisions provide on-site assistance, vessel chartering services and
consulting regarding large-scale project movements.

Trade Facilitation Services
---------------------------

     In 1994, the Company established Circle Trade Services, Ltd.,
("CTSL") which offers purchasing, procurement and trade finance services
to companies engaged in global trade. CTSL's mission is to provide
customers requiring the international transportation of cargo with
creative global trade solutions which enable them to successfully
complete international transactions. Included among its various trade
services, CTSL has developed programs for customers which result in
lower costs by finding new sourcing opportunities, coordinating the
activities of multiple suppliers, and creating trade finance solutions.
CTSL offers international procurement and financing expertise not
offered by traditional logistics companies and works with a global
network to develop this specialized business.

Competition and Business Conditions
-----------------------------------

     The Company's principal businesses are directly related to the
volume of international trade, particularly trade between the United
States and other nations. In general, global trading is expanding as
businesses increasingly seek new sourcing opportunities and penetrate
international markets. The extent of such trade is influenced by many
factors, including economic and political conditions in the United
States and abroad, changes in supply or manufacturing practices, labor
conditions, wars and other armed conflicts, currency fluctuations, and
United States and foreign laws relating to tariffs, trade restrictions,
foreign investments and taxation.

<PAGE> 11

     Management believes that the Company is one of the world's largest
international freight forwarders and integrated logistics providers. In
addition to competition from other freight forwarders and cargo sales
agents, the Company encounters competition from direct carriers which
actively solicit freight from shippers and from integrated
transportation companies that operate their own aircraft and also act as
carriers. Other transportation-related businesses, such as trucking and
distribution companies, have also entered the logistics and freight
forwarding market. In recent years, there has been a trend towards
consolidation in the forwarding industry which, together with pressure
to reduce transportation costs, has led to intensified competition and
lower operating margins. Significant competition comes from large
domestic and foreign firms with substantial capital resources which have
offices in multiple global locations, offer a broad array of services
and provide information systems.

     As a customs broker and ocean freight forwarder, the Company
encounters strong competition in every port in which it does business.
The Company has customs brokerage and ocean freight forwarding offices
in most major United States ports, and it competes with large domestic
and foreign firms, as well as local and regional firms.

     For several years the Company has offered customers multiple
transportation services, in addition to traditional air and ocean
freight forwarding, in order to meet all of the logistics requirements
of its customers. An extension of its array of multiple services is the
Company's integrated transportation logistics program under which the
Company offers a comprehensive program designed to meet the customer's
total door-to-door transportation requirements.  This assists the
customer in creating more efficient global sourcing, financing,
inventory distribution, and warehousing strategies. The value-added
logistics capabilities which support this strategy use the full-spectrum
of services offered by the Company, including information management,
materials management, protective packing, vendor coordination and
purchase order processing, ocean or air transportation, customs
brokerage, warehouse and distribution and global trade services. The
Company's transportation logistics program often relies on the
integration of its customers' information systems with the Company's
information systems, frequently using electronic data interfaces and
requiring employees assigned and dedicated exclusively to the customer's
shipment management requirements. In recent years, the Company has
committed significant resources to information technology and facilities
to develop and implement its integrated transportation logistics
services.

     Integrated logistics and related value-added services are, in part,
a response to the growing trend toward the outsourcing of key
distribution functions by businesses requiring international logistics
services and are a response to competitive pressures which have reduced
traditional freight forwarding transportation margins.

Marketing
---------

     The Company's worldwide services are marketed primarily by its
senior executives, by approximately 200 salespersons and by over 400
country, regional, branch and district managers who divide their time
between marketing, administration and operations. Such persons generally
deal directly with executives in the transportation, finance, logistics,
shipping or purchasing departments of the Company's existing and
potential customers. Their sales efforts are supplemented by the
Company's agents in certain foreign commercial centers in which the
Company does not have an office or terminal. The Company has taken a
number of initiatives to improve the effectiveness of its sales
programs, including the formation of a global sales team targeting
multinational customers, the establishment of regional sales teams, the
overseas assignments of foreign employees responsible for targeting
specific trade lanes, and the consolidation of the United States sales
force under a common sales program. The Company also has Marketing, and
Global Sales departments designed to support the Company's sales and
marketing activities.

     In conjunction with these sales and marketing efforts, the Company
continues to invest significant resources in enhancing its information
systems to make these systems more responsive to customers and other
users in managing their international transportation needs. The use of
EDI applications and dial up visibility to a customer's shipments via
the internet also serve as important sales tools.

<PAGE> 12

Employees
---------

     As of December 31, 1996, the Company employed  over 3,500 persons,
of whom approximately 725 were engaged in managerial and sales
activities, and the balance were engaged in operations or were general
office employees.

Executive Officers
------------------

     The Company's executive officers are as follows:

      Name          Age                      Position

Peter Gibert        54        Chairman of the Board, President and Chief
                                 Executive Officer
Steven D. Leonard   46        Senior Vice President (and President and
                                 Chief Operating Officer of
                                  Circle International, Inc.)
Robert J. Diaz      54        Senior Vice President, Chief Financial
                                 Officer and Treasurer
Kim E. Wertheimer   43        Vice President (and Executive Vice President
                                 of Circle International, Inc. )
Robert H. Kennis    44        Vice President, Secretary and General Counsel

     Mr. Gibert assumed the position of Chief Operating Officer in May
1991, following the Company's acquisition of Darrell J. Sekin & Co.
("Sekin"). Mr. Gibert originally joined the Company in 1965 and served
in numerous positions within the Company until January 1984, when he
joined Sekin as its President. In May 1992, he became Chief Executive
Officer of the Company, and in May 1993 he was elected Chairman of the
Board of Directors. Mr. Gibert was first elected to the Board of
Directors at the 1992 Annual Meeting of Shareholders and serves as a
Class I director.

     Mr. Leonard joined the Company in April 1996 as Senior Vice
President of the Company, and serves as President and Chief Operating
Officer for Circle International, Inc.  He served as Vice President of
Sales and Sales Service with America West Airlines from 1995 to March
1996.  Prior to joining America West, Mr. Leonard completed 19 years in
various management assignments with American Airlines, most recently as
Vice President of Worldwide Cargo Sales and Marketing.

     Mr. Diaz originally joined the Company in April 1992. He served as
its Vice President and Chief Financial Officer until October 1992, when
he joined Coors Brewing Company as its Vice President, Corporate
Controller, and later served as its Principal Financial Officer. Mr.
Diaz returned to the Company in December 1994 as its Senior Vice
President and Chief Financial Officer.  From mid-1991 to April 1992, Mr.
Diaz served as President of Com-Pro International, a company engaged in
the distribution of computer products to Latin America. From 1982 to
August 1990 Mr. Diaz worked for the Clorox Company, serving as Corporate
Vice President-International from 1988 to August 1990.

     Mr. Wertheimer joined the Company in May 1991, following the
Company's acquisition of Sekin Transport International. In May 1995, he
was elected Vice President of the Company and also serves as Executive
Vice President for Circle International, Inc.  He presently has
management responsibilities for the Company's North American integrated
logistics and information services operations. Before becoming Vice
President, Mr. Wertheimer managed the Company's Southwest region and was
responsible for managing its operation and leading the Company's
integrated logistics activities. From 1988 to 1991, Mr. Wertheimer was
Vice President of Planning and Development at Sekin Transport
International. Prior to 1988, Mr. Wertheimer was a consultant with
McKinsey & Company, an international management consulting firm.

     Mr. Kennis joined the Company in 1989. He serves as Vice President
and Secretary, and is the Company's Chief Legal Officer. Prior to
joining the Company, he was Vice President and Legal Counsel for The
Consolidated Capital Companies for four years. From 1978 to 1984, he was
with the law firm of Bronson, Bronson & McKinnon as an associate and
first-level partner.

<PAGE> 13

ITEM 2 - PROPERTIES

     The properties used in the Company's domestic and foreign
operations consist principally of air and ocean freight forwarding
offices, customs brokerage offices, and warehouse and distribution
facilities. In the United States, almost all freight forwarding
operations and customs brokerage offices are conducted from the same
facility. The Company's foreign offices are principally engaged in
customs brokerage and ocean and air freight forwarding; additionally,
other transportation management services such as warehousing,
distribution, packing, containerization, and inland transportation are
offered at many offices.

      The following table sets forth certain information as of December
31, 1996 concerning the Company's domestic and foreign facilities and
freight handling terminals.

                                        Number of Facilities
                                     Owned       Leased      Total

Domestic                               13          58          71
Foreign                                51         104         155
                                      ---         ---         ---
Total                                  64         162         226
                                      ===         ===         ===

     The Company owns its headquarters building in San Francisco.

     Under many of its leases, the Company, in addition to rental
payments, is responsible for payment of property taxes, maintenance and
insurance. In 1996, the aggregate rental expense for all of the
Company's leased facilities was approximately $9.9 million.

     For further information concerning the Company's lease commitments,
see Note 6 of the Notes to Consolidated Financial Statements in the 1996
Annual Report to Stockholders.


ITEM 3 - LEGAL PROCEEDINGS

     The Company is party to routine litigation incidental to its
business, primarily claims for goods lost or damaged in transit or
improperly shipped. Many of the lawsuits to which the Company is a party
are covered by insurance and are being defended by the Company's
insurance carriers. The Company has established reserves and it is
management's opinion that the resolution of such litigation will not
have a material adverse effect on the Company's consolidated financial
statements taken as a whole.

     The United States Internal Revenue Service issued a notice of
deficiency with respect to the Company's income tax liabilities for the
years 1986 and 1987 asserting an aggregate liability for tax of
approximately $7.9 million. The Company subsequently filed a petition in
the U.S. Tax Court contesting all of the asserted deficiency, and made a
partial payment of tax.  Settlement negotiations with the Internal
Revenue Service have now been concluded with respect to this matter.
Under the terms of the proposed settlement, the Company would be
entitled to receive a net refund of tax of approximately $300,000.
However, there has been no final settlement because the matter has been
held in abeyance pending resolution of the Company's refund proposals
arising out of its 1992 write-offs and prior period adjustments.

     The Company  is engaged in discussions with the IRS with respect
to federal income tax refunds arising out of the 1992 write-offs and
prior period adjustments involving approximately $9 million of tax. A
tentative agreement has been made on specific issues which would produce
a tax refund of $5.3 million. It is not possible to predict at this time
the extent to which the IRS will ultimately agree with the Company's
remaining proposed income tax refunds, or the effect upon the settlement
of the issues in the Company's tax years 1986 and 1987.

<PAGE> 14

     The IRS has issued a notice of proposed deficiency with respect to
tax years 1988 and 1989 proposing to assert deficiencies in tax and
penalties in the aggregate amount of approximately $9.9 million. The
Company has agreed to adjustments that will result in a deficiency in
tax in the amount of approximately $500,000 for 1988 and has filed a
protest with respect to the remaining non-agreed proposed deficiency.
The matter is still pending before the IRS Appeals Office.  Although
certain major issues have been tentatively resolved, absent a final
settlement it is not possible to predict the ultimate outcome.

     Management believes that the ultimate resolution of these matters
will not have a material adverse effect on the Company's consolidated
financial statements taken as a whole.

ITEM 4 - Submission of Matters to a Vote of Security Holders

     Inapplicable.

                                PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
         HOLDER MATTERS

     The information required by this item is incorporated by reference
from page 28 of the Company's Annual Report to Stockholders for the year
ended December 31, 1996.

ITEM 6 - SELECTED FINANCIAL DATA

     The information required by this item is incorporated by reference
from page 1 of the Company's Annual Report to Stockholders for the year
ended December 31, 1996.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

     The information required by this item is incorporated by reference
from pages 13 through 15 of the Company's Annual Report to Stockholders
for the year ended December 31, 1996.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is incorporated by reference
from pages 16 through 27 of the Company's Annual Report to Stockholders
for the year ended December 31, 1996. Also see Item 14 below.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

     Inapplicable.

                                PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item is incorporated by reference
from pages 1, 2, and 11 of the Company's Proxy Statement dated April 1,
1997 under the captions "Election of Directors" and "Section 16(a)
Information". Also see "Executive Officers" under Item 1 above.

<PAGE> 15

ITEM 11 - EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference
from pages 4 through 6 of the Company's Proxy Statement dated April 1,
1997 under the captions "Compensation of Executive Officers", "Options
Granted to Executive Officers", and "Employment Agreements".

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

     The information required by this item is incorporated by reference
from pages 10 and 11 of the Company's Proxy Statement dated April 1,
1997 under the caption "Ownership of Management and Principal
Stockholders".

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference
from pages 6 and 7 of the Company's Proxy Statement dated April 1, 1997
under the caption "Transactions with the Company" and from page 3 of
such Proxy Statement under the caption "Compensation Committee
Interlocks and Insider Participation".


                                PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
          8-K

(a)    The following are filed as part of this report:

       (1)(2) Financial Statements: See the attached Index to
              Financial Statements on page 17.

       (3)    Exhibits: See the attached Exhibit Index on pages 18 through
              20.

(b)    The following Form 8-K was filed during the last quarter of the
       period covered by this report:

       (1)    Item 5.  Other events.  Business segment information and
              revenue by service for the nine months ended September 30, 1996,
              filed on November 5, 1996

<PAGE> 16

                              Signatures

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

Date:

THE HARPER GROUP, INC.


By: /S/ Peter Gibert
   -------------------------------
    Peter Gibert
    Chairman of the Board, President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated on March 14,
1997.

               Signature                           Title

      /s/      Peter Gibert                 Chairman of the Board,
----------------------------------           President and
       (Peter Gibert)                        Chief Executive Officer
                                             (Principal Executive
                                             Officer)

      /s/      Robert J. Diaz               Senior Vice President and
----------------------------------           Chief Financial Officer
       (Robert J. Diaz)                     (Principal Financial Officer
                                             and Principal Accounting Officer)

      /s/      Wesley J. Fastiff            Director
----------------------------------
       (Wesley J. Fastiff)

      /s/      Edwin J. Holman              Director
----------------------------------
       (Edwin J. Holman)

      /s/      John M. Kaiser               Director
----------------------------------
       (John M. Kaiser)

      /s/      John M. Lillie               Director
----------------------------------
       (John M. Lillie)

      /s/      Ray C. Robinson, Jr.         Director
----------------------------------
       (Ray C. Robinson, Jr.)

      /s/      Frank J. Wezniak             Director
----------------------------------
       (Frank J. Wezniak)


<PAGE>17

                          THE HARPER GROUP, INC.

                      INDEX TO FINANCIAL STATEMENTS


                                                             PAGE
Financial Statements:

The Harper Group, Inc. and Subsidiaries:

     Consolidated Financial Statements and
     Independent Auditors' Report, included
     in the Company's 1996 Annual Report to
     Stockholders (pages 16 through 27) are
     hereby incorporated by reference
     in this report:

     Consolidated Income Statements for the
     years ended December 31, 1996, 1995 and 1994             16 *

     Consolidated Balance Sheets, December 31, 1996
     and 1995                                                 17 *

     Consolidated Statements of Stockholders' Equity
     for the years ended December 31, 1996, 1995,
     and 1994                                                 18 *

     Consolidated Statements of Cash Flows for the
     years ended December 31, 1996, 1995, and 1994            19 *

     Notes to Consolidated Financial Statements               20 - 26 *

     Independent Auditors' Report                             27 *


Financial schedules are omitted either because they are not required,
not applicable, or the required information is included in the financial
statements or notes thereto.

*  Refers to pages in the Company's 1996 Annual Report to Stockholders.

<PAGE> 18


                                 EXHIBIT INDEX
Exhibit Number       EXHIBIT                                  PAGE
--------------       -------                                  ----

3.1                  Certificate of Incorporation of
                     the Harper Group, Inc., a Delaware
                     corporation. (Incorporated by
                     reference to Exhibit 4.2 to
                     Registration Statement No. 33-40826
                     filed on May 24, 1991.)



3.2                  Registrant's by-laws, as heretofore
                     amended.  (Incorporated by reference
                     to Exhibit 3.2.1 to Annual Report on
                     Form 10-K for the fiscal year ended
                     December 31, 1986, filed on or about
                     March 31, 1987.)



3.2.1                Amendments to Article IV, Sections
                     2,3,4,5 and 6 of Registrant's by-laws,
                     effective as of May 23, 1991.
                     (Incorporated by reference to Exhibit
                     3.2.1 to Annual Report on Form 10-K
                     for the fiscal year ended December 31,
                     1991, filed on or about March 31,
                     1992.)



3.2.2                Sections 2 and 3 of Registrant's by-
                     laws effective as of May 31, 1992.
                     (Incorporated by reference to Exhibit
                     3.2.2 to Annual Report on Form 10-K for
                     the fiscal year ended December 31, 1992
                     filed on or about March 31, 1993.)



4.1                  Specimen certificate of Registrant's
                     Common Stock.  (Incorporated by
                     reference to Exhibit 4.1 to Registration
                     Statement No. 2-59017, filed on May 16,
                     1977.)



4.2                  Rights Agreement, dated as of October 24,
                     1994, between The Harper Group, Inc. and
                     Chemical Trust Company of California,
                     which includes as Exhibit A thereto the
                     Certificate of Designation, Preferences .
                     and Rights of Series A Junior Participating
                     Preferred Stock, as Exhibit B thereto the
                     Form of Rights Certificate and as Exhibit C
                     thereto a Summary of Rights to Purchase
                     Common Stock. (Incorporated by reference
                     to the Form 8-A Registration Statement
                     filed on or about October 24, 1994.)



10.1                 Agreement of Merger between Registrant and
                     the Harper Group, a California corporation,
                     providing for the reincorporation of
                     Registrant in Delaware.  (Incorporated by
                     reference to Exhibit A to Registrant's Proxy
                     Statement dated April 1, 1987, filed on or
                     about April 10, 1987.)



10.2                 Master Agreement dated February 8, 1989
                     between Registrant and Bowater Industries
                     PLC. (Schedules Excluded) (Incorporated by
                     reference to Exhibit 10.2 to Annual Report on
                     Form 10-K for the fiscal year ended December
                     31, 1988, filed on or about March 31, 1989.)



10.3                 Form of indemnity agreement between
                     Registrant and each of its directors
                     (Incorporated by reference to Exhibit 10.3
                     to Annual Report on Form 10-K for the fiscal
                     year ended December 31, 1988,  filed on or
                     about March 31, 1989.)



10.4                 Agreement and Plan of Reorganization dated as
                     of April 23, 1992, with exhibits attached,
                     including Registration Rights Agreement,
                     Employment Agreement between Registrant and
                     Peter Gibert and Indemnification Agreement.
                     (Incorporated by reference to Exhibit 2.1. to
                     Current Report on Form 8-K, dated May 21,
                     1991, filed on or about May 23, 1991.)



10.4.1               Amendments to May 1991 Employment Agreement
                     of Peter Gibert  (Incorporated by reference
                     to Exhibit 10.4.1 to Annual Report on Form
                     10-K for the fiscal year ended December 31,
                     1995.)*


<PAGE> 19

10.5                 1990 Stock Option Plan.  (Incorporated by
                     reference to Exhibit 10.5 to Annual Report on
                     Form 10-K for the fiscal year ended December
                     31, 1992, filed on or about  March 31, 1993.)*



10.6                 Stock Option Plan for Non-Employee Directors.
                     (Incorporated by reference to Exhibit 10.6 to
                     Annual Report on Form 10-K for the fiscal
                     year ended December 31, 1992, filed on or
                     about March 31, 1993.)*



10.8                 Credit Agreement dated October 15, 1993
                     between Registrant and Bank of America
                     National Trust and Savings Association.
                     (Incorporated by reference to Pages 14-103
                     to Form 10-Q for the nine months ended
                     September 30, 1993, filed on or about
                     November 10, 1993.)



10.9                 1994 Omnibus Equity Incentive Plan
                     (Incorporated by reference to the Form S-8
                     Registration Statement filed on or about May
                     9, 1994)*



10.9.1               Amendment No. 1 to 1994 Omnibus Equity
                     Incentive Plan (Incorporated by reference to
                     Exhibit 10.11.1 to Annual Report on Form 10-K
                     for fiscal year ended December 31, 1995.)



10.10                1995 Stock Option Plan For Non-Employee
                     Directors (Incorporated by reference to
                     Exhibit 10.12 to Annual Report on Form 10-K
                     for the fiscal year ended December 31, 1995.)*



10.11                Employment Agreement with Kim Wertheimer
                     (Incorporated by reference to Exhibit 10.13
                     to Annual Report on Form 10-K for the fiscal
                     year ended December 31, 1995.)*



13.1                 Sections of the Annual Report to
                     Stockholders referenced under Part II,
                     Items 5,6,7 and 8 hereof.  (Pages 1 and
                     13 through 28 of the Annual Report to
                     Stockholders.)



21.1                 List of Subsidiaries                        42

23.1                 Consent of Deloitte & Touche LLP            43

27                   Financial Data Schedule                     44

____________________________

*  Indicates, as required by Item 14(a)(3), a management contract or
compensatory plan required to be filed as an exhibit to this Form 10-K.

<PAGE> 20
<TABLE>
<CAPTION>

                          SELECTED FINANCIAL DATA
                   the Harper Group, Inc. and Subsidiaries
         (dollars in thousands except per share and employee amounts)

                                  Year ended December 31

                1996           1995           1994          1993         1992
                ----           ----           ----          ----         ----
<S>         <C>       <C>  <C>       <C>  <C>       <C>  <C>       <C>  <C>       <C>
Revenue
Air freight
forwarding  $375,507  63%  $346,624  64%  $313,012  67%  $282,031  66%  $272,159  63%
Customs
brokerage
and other    116,831  20    102,377  19     77,694  16     62,066  14     66,692  15
Ocean
freight
forwarding   103,095  17     93,327  17     78,842  17     85,841  20     92,817  22
            -------- ----  -------- ----  -------- ----  -------- ----  -------- ----
Total       $595,433 100%  $542,328 100%  $469,548 100%  $429,938 100%  $431,668 100%
            ======== ====  ======== ====  ======== ====  ======== ====  ======== ====

Net revenue
Air freight
forwarding  $ 93,686  38%  $ 87,747  40%  $ 87,467  45%  $ 86,322  47%  $ 89,919  46%
Customs
brokerage
and other    116,831  48    102,377  46     77,694  40     62,066  34     66,692  34
Ocean
freight
forwarding    35,101  14     31,687  14     28,978  15     34,065  19     38,089  20
            -------- ----  -------- ----  -------- ----  -------- ----  -------- ----
Total       $245,618 100%  $221,811 100%  $194,139 100%  $182,453 100%  $194,700 100%
            ======== ====  ======== ====  ======== ====  ======== ====  ======== ====
Income from
operations
   (B)      $ 29,538       $ 27,229       $ 23,739       $ 15,166       $  8,691
Net income
  (A)(B)      21,615         18,872         16,706         19,094          4,969
Net income
per share       1.36           1.18           1.02           1.15            .30
Dividends
declared
per share        .24            .22            .21            .20            .20

At December 31:
Working
capital      $71,666       $ 73,007       $ 42,674       $ 32,241       $ 22,502
Marketable
securities     7,799         36,544         41,660         47,869         35,823
Total
assets       393,330        336,743        324,464        302,920        297,240
Long-term
obligations   28,963         30,053         31,867         22,561         26,079
Stockholders'
equity       181,744        165,456        151,349        145,175        130,702
Number of
employees      3,607          3,214          3,150          3,025          3,175


</TABLE>

[FN]
(A) 1993 includes an after-tax gain on the sale of Intercargo stock of
$2,874,000 ($.17 per share) and an after tax gain on the sale of real
property in Hong Kong of $1,812,000 ($.11 per share).
(B) 1992 includes special charges of $14.7 million resulting in an
after-tax loss of $12.6 million ($.75 per share).

<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

the Harper Group, Inc. and Subsidiaries

Results of Operations:
1996 versus 1995

     Revenue in 1996 increased by $53.1 million or 10% over 1995:

     Air freight revenue increased by $28.9 million or 8% over 1995 as a
result of revenue increases from North America, Europe, and South
Pacific. The increase resulted primarily from an increase in the number
of shipments in these regions, but was offset by declines in the
business where the Company acts as airline agent for customers and
declines in the average revenue per kilo, due to shifting more share of
the business to consolidations and higher kilo global accounts.
Management believes this strategy will result in the ability to expand
the range of services sold in the future.

     Customs brokerage and other revenue, which includes warehousing,
distribution and other fee based services, increased $14.5 million or
14% over 1995.  The improvement was a result of an increase in import
related services, warehousing and distribution services, as well as an
increase in the number of customs entries processed.  These increases
included the impact of the acquisition of the customer list of
Celadon/Jacky Maeder, Ltd., a U.S. based international freight forwarder
and customs brokerage company.

     Ocean freight revenue increased $9.8 million or 10% over 1995 as a
result of an increase in the number of shipments in North America, Asia
and Latin America.

Net revenue in 1996 increased by $23.8 million or 11% over 1995:

     Air freight net revenue increased $5.9 million or 7% over the prior
year due to an increase in revenue per shipment and improvements in air
freight yield in the Middle East, South Pacific and parts of Asia.
However, the Company continues to experience yield pressures in other
regions, as the available lift capacity is not as fruitful in all the
trade lanes where kilos are growing.

     Ocean freight net revenue increased $3.4 million or 11% over the
prior year as a result of yield increases in Latin America, Middle East
and Asia.  The increase is offset by a slight reduction in yields in
other regions.

     Salaries and related costs increased $13.3 million or 11% over
the prior year as a result of an increase in the number of employees
hired to serve new customers, and due to increased business from
acquisitions. Salaries as a percentage of net revenue are consistent
with prior year levels.

     Operating, selling and administrative costs increased $8.2 million
or 11% as a result of processing higher transaction volumes and
additional occupancy costs of new facilities and facilities sold and
leased back. The new facilities have been added to support the increases
in warehousing and distribution revenue.

     Other income - net increased $1.9 million or 59% from prior year
primarily as a result of higher equity earnings from unconsolidated
affiliates, lower interest expense due to lower average debt during the
year, and foreign currency losses on the Japanese Yen in 1995 that did
not recur in 1996.  In order to minimize this type of risk, in the
latter part of 1995 the Company implemented a hedging program for
certain foreign currency payables.  The proceeds from sales of
marketable securities were used for the acquisition of TDS Logistics,
Inc. and other corporate purposes.

     The effective income tax rates for 1996 and 1995 were 37.9% and
38.2%, respectively. The Company's effective tax rate fluctuates due
to changes in foreign tax rates and regulations and the level of
pre-tax profit in foreign countries.

<PAGE> 22

1995 versus 1994
----------------

     Revenue in 1995 increased by $72.8 million or 16% over 1994:

     Air freight revenue increased by $33.6 million or 11% over 1994 as
a result of revenue increases from North America, Europe, and the Far
East. The increase resulted primarily from an increase in weight shipped
in these regions offset by lower revenue per kilo. Pricing on air
freight shipments continued to be highly competitive which caused lower
revenue per kilo and a decline in yields.

     Customs brokerage and other revenue increased $24.7 million or 32%
over 1994. Customs brokerage revenue increased as a result of an
increase in the number of customs brokerage entries, primarily in North
America and Europe. Warehousing and distribution revenues increased in
North America and Europe, and to a lesser extent in all other regions,
as a direct result of the Company's efforts to provide customers with a
broader range of logistics services.

     Ocean freight revenue increased $14.5 million or 18% over 1994 as a
result of an increase in the number of shipments and an increase in the
average revenue per shipment. Revenue increases were derived from North
America and Europe. The increase in average revenue per shipment is due
to the Company's focus on providing a broader range of ocean freight
forwarding services.

     Net revenue in 1995 increased by $27.7 million or 14% over 1994:

     Air freight net revenue levels were consistent with the prior year.
As a result of competitive pricing pressures and rising cargo space
costs from carriers the Company continues to experience air freight
yield erosion. Over the past few years a higher demand for carrier space
created upward pressure on air freight consolidation costs, which have
not been passed on to customers in all cases.

     Ocean freight net revenue increased $2.7 million or 9% over the
prior year as a result of revenue increases from Europe and North
America. The Company experienced some yield erosion in 1995 compared to
1994 due to increases in ocean carrier costs.

     Salaries and related costs increased $15.8 million or 15% over
the prior year as a result of an increase in the number of employees
primarily in Europe where salary costs tend to be higher. Salaries
as a percentage of net revenue are consistent with prior year levels.

     Operating, selling and administrative costs increased $8.4 million
or 13% as a result of processing more transactions and additional
occupancy costs of new facilities. The new facilities have been added
to support the increases in warehousing and distribution revenue.

     Other income - net is less than the prior year primarily as a
result of lower net foreign exchange gains which was slightly offset
by an increase in investment income. Foreign exchange gains and losses
are generally not material and are a normal and recurring part of the
Company's operations. The Company manages foreign currency risks through
spot rates and forward contracts. In 1995, foreign currency losses were
concentrated in Japan and Mexico. Investment income, primarily interest
income, was slightly higher than the prior year due to higher invested
balances.

     The effective income tax rates for 1995 and 1994 were 38.2% and 39.8%,
respectively. The Company's effective tax rate fluctuates due to changes
in foreign tax rates and regulations and the level of pre-tax profit in
those countries.

<PAGE> 23

Liquidity and Capital Resources, 1996 and 1995:

     Commercial paper issued and outstanding at the end of 1996 was $25
million which is supported by a $40 million back-up facility line of
credit. In addition, the Company had short term and long term notes
payable totaling $11.7 million and $8.0 million at the end of 1996 and
1995, respectively.  At December 31, 1996 the Company had authorized,
uncommitted borrowing capacity of $25 million, which management believes
is adequate to supplement cash flows from operations, fund its capital
expenditures and pay dividends.

     Capital expenditures for 1996 and 1995 were $21 million and $13
million, respectively, representing investments in information
technology and investments in new facilities, primarily in Europe.  The
Company expects to incur capital expenditures in 1997 at levels
comparable to 1996, depending on lease vs. buy opportunities.

     In December, 1995, the Company sold and leased back six of its
North American facilities. Proceeds from the sale were approximately $15
million. No gain or loss was recognized on the transaction. The Company
believes the sale and leaseback transaction improves the utilization of
the Company's assets and makes its balance sheet more comparable with
companies in its peer group.

     The Company's Board of Directors approved stock repurchase program
for a total of 1,000,000 shares of its common stock on the open market.
The Company repurchased 213,000, 287,000 and 500,000 shares in 1996,
1995 and 1994, respectively, which completed the repurchase program.  In
February 1997, the Board of Directors approved the stock repurchase of
an additional 100,000 shares.

     Net cash provided by operating activities increased to $30.8
million in 1996 from $22.2 million in 1995. During 1995, the Company
implemented reporting, training and measurement systems which were
designed to improve the Company's trade working capital position and
cash flow from operations in relation to its increase in billings to
customers. The Company believes these efforts continue to improve the
Company's ability to generate cash.

     The Company makes significant disbursements on behalf of its
customers for transportation costs and customs duties. The billings to
customers for these disbursements, which are several times the amount of
revenue and fees derived from these transactions, are not recorded as
revenue and expense on the Company's income statement.

     This discussion contains certain forward-looking statements
reflecting the Company's current expectations that  are dependent on
certain risks and uncertainties including but not limited to such
factors as market demand, pricing, risks associated with operations
outside of the U.S., changing economic conditions, the effect of the
Company's accounting policies and other risk factors detailed herein.
There can be no assurances that the Company's actual future performance
will meet such expectations.


<PAGE> 24
<TABLE>
<CAPTION>
                     CONSOLIDATED INCOME STATEMENTS
                the Harper Group, Inc. and Subsidiaries
                (in thousands except per share amounts)

                                  Year ended December 31
                               1996        1995        1994
                               ----        ----        ----
<S>                         <C>         <C>        <C>
Revenue                     $ 595,433   $ 542,328   $ 469,548
Freight consolidation
costs                         349,815     320,517     275,409
                            ---------   ---------   ---------

Net revenue                   245,618     221,811     194,139

Other costs and expenses:
   Salaries and related       133,228     119,967     104,146
   Operating, selling and
   administrative              82,852      74,615      66,254
                            ---------   ---------   ---------
Total other costs and
expenses                      216,080     194,582     170,400
                            ---------   ---------   ---------

Income from operations         29,538      27,229      23,739

Other income-net                5,252       3,307       4,033
                            ---------   ---------   ---------

Income before taxes            34,790      30,536      27,772

Taxes on income                13,175      11,664      11,066
                            ---------   ---------   ---------

Net income                  $  21,615   $  18,872   $  16,706
                            =========   =========   =========

Net income per share         $   1.36    $   1.18    $   1.02
                            ---------   ---------   ---------
Weighted average common
shares outstanding             15,900      16,021      16,428
                            =========   =========   =========

</TABLE>
[FN]
See Notes to Consolidated Financial Statements

<PAGE> 25
<TABLE>
<CAPTION>
                            CONSOLIDATED BALANCE SHEETS
                     the Harper Group, Inc. and Subsidiaries
               (in thousands except share and per share amounts)

                                                 December 31
                                              1996         1995
                                              ----         ----
<S>                                     <C>          <C>
Assets
Current assets:
   Cash and equivalents                  $   31,522   $   22,439
   Short-term investments                     6,469       11,299
   Trade receivables, less allowance
     for doubtful accounts of:
     1996, $4,970;  1995, $4,739            196,070      162,629
   Other receivables                          5,616        4,256
   Other current assets                       8,993        6,741
                                         ----------   ----------

Total current assets                        248,670      207,364

Property:
   Land                                      14,564       16,876
   Buildings and improvements                56,812       56,297
   Equipment and furniture                   68,137       56,835
                                         ----------   ----------
   Total                                    139,513      130,008
   Less accumulated depreciation            (62,171)     (56,413)
                                         ----------   ----------
 Property - net                              77,342       73,595

Marketable securities available
for sale                                      7,799       36,544
Investments in unconsolidated
affiliates                                   34,489        2,971
Goodwill                                     20,028       10,702
Other assets                                  5,002        5,567
                                         ----------   ----------

Total assets                              $ 393,330    $ 336,743
                                         ==========   ==========

Liabilities and Stockholders' Equity
Current liabilities:
   Notes payable to banks                 $   7,731    $   2,898
   Trade payables                           134,272      101,313
   Accrued salaries and related costs        11,485        9,144
   Dividends payable                          1,912        1,756
   Income taxes payable                       6,082        4,330
   Other liabilities                         15,522       14,916
                                         ----------   ----------

Total current liabilities                   177,004      134,357

Deferred income taxes                         5,619        6,877
Long-term notes payable                      28,963       30,053
Commitments and contingencies                   -            -

Stockholders' equity:
   Preferred stock, $1 par:
    shares authorized,1,000,000                 -            -
   Common stock, $1 par:
    shares authorized, 40,000,000;
    shares issued and outstanding
    (including treasury shares)
    1996,  16,392,848;
    1995,  16,250,669                        22,627       19,956
   Treasury stock, at cost:
    1996,  500,000 shares;
    1995,  287,000 shares                    (8,947)      (4,890)
   Retained earnings                        173,224      155,427
   Unrealized loss in value of
    marketable securities, net                 (407)        (806)
   Cumulative translation adjustments        (4,753)      (4,231)
                                         ----------   ----------

Total stockholders' equity                  181,744      165,456
                                         ----------   ----------
Total liabilities and stockholders'
equity                                    $ 393,330   $  336,743
                                         ==========   ==========

</TABLE>

[FN]

See Notes to Consolidated Financial Statements

<PAGE> 26
<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    the Harper Group, Inc. and Subsidiaries

                 (in thousands except share and per share amounts)
                For the years ended December 31, 1996, 1995 and 1994

                                                                            Unrealized
                                                                                Change in    Total
                         Common Stock    Treasury Stock             Cumulative   value of    Stock-
                         ------------    --------------   Retained  Translation Marketable   holder's
                        Shares  Amount   Shares   Amount  Earnings  Adjustments Securities   Equity
----------------------------------------------------------------------------------------------------
<S>                    <C>      <C>        <C>      <C>   <C>         <C>         <C>       <C>
Balance
  January 1, 1994   16,625,803 $25,686       --       --  $126,770     $(7,281)         --  $145,175
  Net income                --      --       --       --    16,706          --          --    16,706
  Cash dividends
   ($.21 per share)         --      --       --       --    (3,413)         --          --    (3,413)
  Exercise of
    stock options,
    including tax
    benefit              6,875      86       --       --        --          --          --        86
  Repurchase and
    retirement of
    common stock      (500,000) (7,172)      --       --        --          --          --    (7,172)
  Change in the
    value of
    marketable
    securities, net         --      --       --       --        --          --     $(2,657)   (2,657)
  Foreign currency
    translation             --      --       --       --        --       2,624          --     2,624
----------------------------------------------------------------------------------------------------
Balance
  December 31, 1994 16,132,678  18,600       --       --   140,063      (4,657)     (2,657)  151,349
  Net income                --      --       --       --    18,872          --          --    18,872
  Cash dividends
    ($.22 per share)        --      --       --       --    (3,508)         --          --    (3,508)
  Exercise of stock
    options, including
    tax benefit        117,991   1,356       --       --        --          --          --     1,356
  Purchase of treasury
    stock                   --      -- (287,000) $(4,890)       --          --          --    (4,890)
  Change in the value
    of marketable
    securities, net         --      --       --       --        --          --       1,851     1,851
  Foreign currency
    translation             --      --       --       --        --         426          --       426
----------------------------------------------------------------------------------------------------
Balance
  December 31, 1995 16,250,669  19,956 (287,000)  (4,890)  155,427      (4,231)       (806) $165,456
  Net income                --      --       --       --    21,615          --          --    21,615
  Cash dividends
    ($.24 per share)        --      --       --       --    (3,818)         --          --    (3,818)
  Issuance of stock
    for acquisition     20,469     496       --       --        --          --          --       496
  Exercise of stock
    options, including
    tax benefit        121,710   2,175       --       --        --          --          --     2,175
  Purchase of treasury
    stock                   --      -- (213,000)  (4,057)       --          --          --    (4,057)
  Change in the value
    of marketable
    securities, net         --      --       --       --        --          --         399       399
  Foreign currency
    translation             --      --       --       --        --        (522)         --      (522)
----------------------------------------------------------------------------------------------------
Balance
  December 31, 1996 16,392,848 $22,627 (500,000) $(8,947) $173,224     $(4,753)    $  (407) $181,744
=====================================================================================================
</TABLE>

[FN]
See Notes to Consolidated Financial Statements

<PAGE> 27

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    the Harper Group, Inc. and Subsidiaries
                             (in thousands)
<TABLE>
<CAPTION>

                                                     Year ended December 31
                                                   1996      1995      1994
                                                   ----      ----      ----
<S>                                                  <C>       <C>       <C>
Operating activities:
   Net income                                  $ 21,615  $ 18,872  $ 16,706
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization               11,730    10,700    10,005
     Provision for doubtful accounts              2,767     3,130     2,239
     Deferred income taxes                       (1,527)      653      (150)
     Gains on sales of real property, investments
        and equipment                            (1,153)     (911)   (1,261)
     Equity in earnings of affiliates              (606)     (679)   (1,157)
     Other                                          456       461       609
     Net effect of changes in:
        Trade receivables                       (31,759)  (18,862)  (18,315)
        Other receivables                        (1,168)      670       698
        Other current assets                     (1,935)   (1,967)    1,882
        Trade payables                           28,301     8,225     2,149
        Other liabilities                         4,124     1,949     3,312
                                               --------  --------  --------
Net cash provided by operating activities        30,845    22,241    16,717

Investing activities:
     Proceeds from sales of property              9,231    19,720     2,923
     Proceeds from sales of equity investments        -         -     1,007
     Proceeds from sales of marketable
       securities                                29,225     7,108    25,301
     Purchases of marketable securities            (655)        -   (23,085)
     Short-term investments-net                   5,327    (8,482)     (100)
     Capital expenditures                       (21,019)  (12,690)  (16,817)
     Acquisitions of businesses                 (41,276)   (2,772)   (1,458)
     Other                                         (207)       11      (263)
Net cash provided by (used in)                 --------  --------  --------
  investing activities                          (19,374)    2,895   (12,492)

Financing activities:
     Issuance (repayment) of long-term
       notes payable - net                       (1,090)   (1,814)    9,306
     Increase (decrease) in notes payable         4,833   (11,487)    2,752
     Payments of dividends                       (3,729)   (3,551)   (3,301)
     Proceeds from exercise of stock options      1,679     1,206        86
     Common stock repurchase                     (4,057)   (4,890)   (7,172)
Net cash provided by (used in)                 --------  --------  --------
  financing activities                           (2,364)  (20,536)    1,671

Effect of exchange rate changes on cash             (24)     (296)      937
                                               --------  --------  --------
Increase in cash and equivalents                  9,083     4,304     6,833
Cash and equivalents at beginning of year        22,439    18,135    11,302
                                               --------  --------  --------
Cash and equivalents at end of year            $ 31,522  $ 22,439  $ 18,135
                                               ========  ========  ========
Cash paid for interest expense                 $  2,649  $  3,448  $  3,206
                                               ========  ========  ========
Cash paid for income taxes                     $ 12,748  $ 10,246  $  7,645
                                               ========  ========  ========
</TABLE>

[FN]
See Notes to Consolidated Financial Statements

<PAGE> 28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the Harper Group, Inc. and Subsidiaries

Note 1 - Significant Accounting Policies

Nature of Operations - The Harper Group, Inc. (the Company), is an
international transportation and logistics service provider. The
Company's services are provided through its network of approximately 350
offices, distribution centers, and agents located in approximately 96
countries on six continents. The Company's principal lines of business
are air freight forwarding, ocean freight forwarding, customs brokerage
and value added services in the materials management area, such as
warehousing, distributions and insurance. The principal markets for all
lines of business are North America, Europe and the Far East with
significant operations in the Middle East, Latin America and the South
Pacific (see Note 12).

Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Risk Factors  -  The Company's operations are influenced by many
factors, including economic and political conditions around the world,
international laws, and currency exchange rates.  The impact of these
risk factors is minimized by having customers in a wide range of
industries located throughout the world.  There are no significant
concentrations of risks as of December 31, 1996 and 1995.

Principles of Consolidation - The accompanying consolidated financial
statements include the Harper Group, Inc. and its majority-owned
subsidiaries. Investments in 50% or less owned affiliates are accounted
for by the equity method. All significant intercompany balances and
transactions have been eliminated.

Cash and Equivalents include demand deposits and investments with
original maturities of three months or less.

Short-term Investments include deposits of cash in interest bearing
securities which have original maturities of greater than 90 days and
less than one year.

Trade Receivables include disbursements made by the Company on behalf of
its customers for transportation costs and custom duties.  The billings
to customers for these disbursements, which are several times the amount
of revenue and fees derived from these transactions, are not recorded as
revenue and expense on the Company's income statement.  Management
establishes reserves based on the expected ultimate recovery of these
receivables.

Property and equipment are stated at cost. Depreciation is computed
principally by the straight-line method at rates based on the estimated
useful lives of the various classes of property as follows: building,
20-50 years; leasehold improvements, life of the lease or estimated
useful life if shorter; equipment and furniture, 3-10 years.

Goodwill, representing the excess of purchase price over the fair value
of net assets acquired, is being amortized on a straight-line basis over
the period of expected benefit not exceeding 40 years.  The carrying
value of goodwill is reviewed periodically based on the projected
undiscounted cash flows of the related business unit over the remaining
amortization period.  If the cash flow indicates that the goodwill is
not recoverable, the carrying value will be reduced by the estimated
shortfall of the cash flows.  No reduction in goodwill was necessary for
1996 and 1995.

<PAGE> 29

Impairment of Long Lived Assets - In 1996 the Company adopted Statement
of Financial Accounting Standards ("SFAS") No.121, "Accounting for the
Impairment of Long Lived Assets," which requires that long-lived assets,
and certain identifiable intangibles related to those assets be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.  Management
believes that there is no impairment of long-lived assets as of December
31, 1996.

Revenue Recognition - Revenue and freight consolidation costs are
recognized at the time the freight departs the terminal of origin.
Customs brokerage and other revenue are recognized upon completing the
documents necessary for customs clearance.

Revenue realized as an indirect air carrier or an ocean freight
consolidator includes the direct carrier's charges to the Company for
carrying the shipment. Revenue realized in other capacities includes
only the commissions and fees received.

Net income per share is based on the weighted average common shares
outstanding during the period. Common stock equivalents are not
considered to be dilutive.

Taxes on Income - Under SFAS No. 109, "Accounting for Income Taxes," the
Company provides a deferred tax expense or benefit equal to the change
in the deferred tax assets and liabilities during the year. Deferred
income taxes represent tax credit carry forwards and future tax effects
resulting from temporary differences between the financial statement and
the tax basis of assets and liabilities using current or enacted tax
rates in effect for the year in which the differences are expected to
reverse.

Foreign Currency Translation - Most foreign assets and liabilities are
translated using month-end exchange rates. The impact of exchange rate
changes is shown as "Cumulative translation adjustments" in
stockholders' equity. Gains and losses from foreign exchange
transactions are included in net income.

Fair Value of Financial Instruments - The fair values presented
throughout these financial statements have been estimated using
appropriate valuation methodologies and market information available at
December 31, 1996 and 1995. However, considerable judgment is required
in interpreting market data to develop estimates of fair value and the
estimates presented are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. The use of
different market assumptions or estimation methodologies could have a
material effect on the estimated fair values. Additionally, the fair
values presented throughout these financial statements have not been
estimated since December 31, 1996. Current estimates of fair value may
differ significantly from the amounts presented.

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value:

Cash and equivalents, receivables and payables, short-term
investments and notes payable to banks - The carrying amount of these
items approximates fair value.

Marketable securities - The fair value is based on quoted market
prices. As discussed in Note 3, these securities are recorded at fair
value.

Long-term notes payable - The fair value of the Company's long-term
debt is estimated based on quoted market prices for the same or
similar issues or on the current rates offered to the Company for
debt of the same remaining maturities. The carrying amount of these
items approximates their fair value.

<PAGE> 30

Foreign Currency Forward Contracts - The Company uses foreign currency
forward contracts to hedge foreign currency exposure on trade payable
transactions in certain currencies. These contracts do not subject the
Company to risk due to exchange rate movements because gains and losses
on these contracts offset gains and losses on the payable being hedged.
At December 31, 1996, 20 foreign currency forward contracts were
outstanding with a maximum duration of 90 days, with a notional value of
approximately $1.9 million.  The market value of such contracts
approximated the cost. Realized gains and losses on the contracts for
1996 and 1995 were insignificant.

Stock Based Compensation - The Company accounts for stock based awards
to employees using the intrinsic value method in accordance with APB No.
25, "Accounting for Stock Issued to Employees."

Reclassification  -  Certain 1995 and 1994 amounts have been
reclassified to conform with the 1996 presentation.


Note 2 - Acquisitions

During 1996, the Company acquired the assets of various freight
forwarders and custom brokers for an aggregate purchase price of $11.0
million, including $0.5 million in the Company's common stock.  These
acquisitions were accounted for as purchases.  In connection with these
acquisitions, the Company recorded $10.4 million of goodwill, which is
being amortized over estimated useful lives of up to twenty years.

In August 1996, the Company acquired a 40% interest in TDS Logistics,
Inc. (TDS) for $30.0 million.  TDS provides specialty packaging and
services for automotive exports.  The investment in TDS is recorded in
investments in unconsolidated affiliates and includes $28.1 million of
excess purchase price over net assets, which is being amortized over 37
years.  The Company has an option to purchase the other 60% interest in
TDS at a price to be determined when the option is exercised.  The
option is exercisable between October 1, 1999 and December 31, 1999.  If
the Company elects not to exercise its option, other TDS shareholders
have the right to sell its shares and can require the Company to sell
its shares in the same manner.

Had all the 1996 acquisitions occurred on January 1, 1996, the effect on
revenues and net income would have been immaterial.

During 1995, the Company acquired two companies engaged in freight
forwarding and customs brokerage services for a purchase price of $2.8
million.   Both acquisitions were accounted for under the purchase
method.  The excess of cost over the sum of identifiable net assets
acquired have been allocated to intangible assets, to be amortized over
estimated lives of 20 years.


Note 3 - Long-term Marketable Securities

SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities" requires that debt and equity securities be classified into
one of three categories: held to maturity, available for sale or
trading. Management has designated marketable debt and equity securities
as available for sale. Changes in the fair value of available for sale
securities, net of deferred taxes, are presented in the stockholders'
equity section of the balance sheet under the caption "Unrealized change
in value of marketable securities".  In 1995, the Company sold debt and
equity securities and realized a loss on the sale.  Total unrealized
loss on marketable securities before deferred taxes was $1,322,000 as of
December 31, 1995. In 1996, the Company sold the majority of the debt
securities which resulted in a realized loss.  Consequently, the total
unrealized loss on marketable securities before deferred taxes decreased
by $655,000 as of December 31, 1996.

<PAGE> 31

At December 31, 1996, 1995 and 1994, the aggregate fair value, gross
unrealized (gains) losses, and amortized cost of marketable securities
were as follows (in thousands):


                                    1996        1995        1994
                                    ----        ----        ----
 Debt Securities
 Fair value                     $    403    $ 29,692    $ 34,434
 Amortized cost                      402      29,901      37,104
                                --------    --------    --------
 Unrealized (gain) loss         $     (1)   $    209    $  2,670
                                ========    ========    ========
Equity Securities
 Fair value                     $  7,799    $  6,852    $  7,226
 Cost                              8,467       7,965       8,709
                                --------    --------    --------
 Unrealized loss                $    668    $  1,113    $  1,483
                                ========    ========    ========

As of December 31, 1996 unrealized gains are not material.

Contractual maturities of the fair value of debt securities as of
December 31, 1996

Within five years        $ 402,000
In the sixth year        $       -


Note 4 - Borrowing Capacity

At December 31, 1996, the Company had unused borrowing capacity from its
commercial paper program and lines of credit totaling $25 million.

At December 31, 1996, the weighted average borrowing rate for the
commercial paper was 5.5% and for committed lines of credit was  6.2%.


Note 5 - Long-term Notes Payable

Long-term notes payable included commercial paper of $25 million at
December 31, 1996 and 1995. The commercial paper is supported by a
backup facility line of credit of $40 million and $25 million as of
December 31, 1996 and 1995, respectively. Although the commercial paper
is issued on a short-term basis, it is classified as long-term because
the Company intends to, and has the ability to reissue such paper as it
matures. At December 31, 1996 and 1995, the weighted average interest
rate of outstanding commercial paper was 5.5% and 5.9%, respectively.

At December 31, 1996 and 1995, the Company had long-term notes payable
of approximately $4.0 and $5.0 million, respectively (excluding current
portion), with a weighted average interest rate of  7.6% and 7.2%,
respectively. These notes are secured by real property.

Principal payments on long-term notes that mature in 1997 ($7.7 million)
are classified as notes payable to banks. Principal payments for 1998
through 2001 are approximately $1.5 million, $0.5 million, $1.2 million,
and $0.4 million, respectively. Principal repayments thereafter are
approximately $0.4 million.

<PAGE> 32

Note 6 - Lease Commitments

At December 31, 1996, commitments on long-term operating lease
agreements for facilities require the following minimum annual rentals:

                                     (in thousands)

                     1997                 $ 10,813
                     1998                   10,718
                     1999                    6,770
                     2000                    6,050
                     2001                    5,684
                     2002 and subsequent    50,459
                                          --------
                     Total                $ 90,494
                                          ========

Rental expense under such leases was $9,860,000 in 1996, $7,803,000 in
1995, and $7,311,000 in 1994, net of rents from subleases of $830,000,
$1,260,000, and $755,000, respectively. Total rental expense (including
leases on equipment) was $11,624,000 in 1996, $9,375,000 in 1995, and
$9,123,000 in 1994.

In December 1995, the Company sold and leased back six properties which
generated net proceeds of approximately $15.3 million. The operating
lease term is for 15 years and requires minimum annual rentals of
$1,534,000 in 1997, $1,717,000 in 1998, $1,717,000 in 1999, $1,717,000
in 2000, $1,785,000 in 2001, and $16,532,000 thereafter.


Note 7 - Contingencies

The Company is party to routine litigation incidental to its business,
which primarily involve claims for goods lost or damaged in transit or
improperly shipped. Many of the lawsuits to which the Company is a party
are covered by insurance and are being defended by the Company's
insurance carriers. The Company has established reserves and it is
management's opinion that the resolution of such litigation will not
have a material adverse effect on the Company's consolidated financial
statements taken as a whole.

There are also certain contingencies related to tax issues with the
Internal Revenue Service.  Refer to Note 9 for additional discussion.


Note 8 - Common Stock

Stock Repurchase Program
Stock repurchase programs totaling one million shares have been approved
by the Board of Directors. The Company acquired and retired 500,000
shares of its common stock in 1994.  In addition, 213,000 and 287,000
shares were acquired in 1996 and 1995, respectively, at an average
purchase price of $19.05 and $17.04 per share, respectively.  These
500,000 shares are being held as treasury stock.  In February 1997, the
Board of Directors approved the repurchase of an additional 100,000
shares.

Stock Options Plan
The 1982 Stock Option Plan and the 1990 Stock Option Plan provide for
the granting of non-qualified or incentive stock options to officers and
key employees for a maximum of 956,250 common shares at not less than
fair market value on the date of grant. The Human Resources,
Compensation and Nominating Committee of the Board of Directors
determines the exercise period for the options. Under these plans, Stock
Options are generally issued with the restriction that no option may be
exercised before three years from date of grant nor later than eight
years from date of grant.

<PAGE> 33

The 1994 Omnibus Equity Incentive Plan provides for the granting of
stock options, stock appreciation rights, restricted stock awards,
performance unit awards and performance share awards to key employees
and consultants of the Company and its subsidiaries for a maximum of
2,000,000 common shares. Stock options under this plan are generally
issued at an option price at not less than fair market value on the date
of grant (To date, no stock options have been granted below fair market
value). Stock options under this plan are generally issued with the
restriction that no option may be exercised before one year from the
date of grant nor later than eight years from the date of grant.

A summary of stock option transactions for the three years ended
December 31, 1996 follows:

                                       Shares       Weighted Average
                                    under option     Exercise Price

Outstanding at December 31, 1993         451,315          $ 14.10
   Granted                               458,750            13.50
   Exercised                              (6,875)           11.02
   Canceled                             (138,871)           13.85
                                       ---------
Outstanding at December 31, 199          764,319            13.82
   Granted                               380,634            17.19
   Exercised                            (117,991)           11.76
   Canceled                              (38,249)           13.85
                                       ---------
Outstanding at December 31, 1995         988,713            14.89
   Granted                               570,589            19.67
   Exercised                            (121,710)           13.76
   Canceled                              (35,750)           14.85
                                       ---------
Outstanding at December 31, 1996       1,401,842          $ 16.60
                                       =========


                                             December 31,
                                        1996      1995      1994
                                     --------- --------- ---------
Options available for grant        1,123,570   203,687   546,072
Options exercisable                  354,683   228,552   130,620
Weighted average fair
  value of options granted
  during the year                    $ 19.67   $ 17.37   $ 13.59


During 1994, 37,500 options were repriced from $19.00 per share to
$16.00 per share. No shares were repriced during 1995 or 1996.

Shareholder Rights Plan
In October 1994, the Company adopted a Shareholder Rights Plan and
declared a dividend distribution of one preferred share purchase Right
for each outstanding share of the Company's common stock. Each Right
will entitle stockholders to buy one one-hundredth of a share of a new
series of junior participating preferred stock at an exercise price of
$53.00.

The Rights will become exercisable if, without approval of the Board of
Directors, a person or group acquires 20% or more of the Company's
common stock (or a lesser percentage set by the Board in the case of a
person determined to present certain specific risks to the Company and
its stockholders, as defined in the plan) or announces a tender offer
the consummation of which would result in ownership of 20% or more of
the common stock. If a person or group does acquire 20% or more of the
Company's stock (or such lesser percentage as has been set with respect
to a specific person) each Right unless redeemed will entitle its holder
to purchase, at the Right's then current exercise price, a number of the
common shares of the Company having a market value at that time of twice
the Right's exercise price.

<PAGE> 34

The Company will be entitled to redeem the Rights at .01 cents per Right
at any time before a 20% position (or such lesser percentage as has been
set with respect to a specific person) has been acquired. Until the
Rights become exercisable, rights certificates will not be sent to
stockholders and the Rights will automatically trade with the common
stock.

SFAS No. 123 Pro Forma Disclosures
The Company applies APB No. 25 and related Interpretations in accounting
for its Stock Options Plan described above.  Accordingly, no
compensation cost has been recognized for its options granted that are
not exercised.  Had compensation cost for the Company's stock option
plans been determined based on the fair value at the grant dates of the
stock options, consistent with the method suggested in SFAS No. 123, the
Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below:

                                              Year Ended
                                          1996          1995
                                          ----          ----
Net Income - As reported              $ 21,615      $ 18,872
             Pro forma                  20,878        18,356

Net income per share - As reported    $   1.36      $   1.18
                       Pro forma          1.31          1.15


The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option-pricing model which requires
subjective assumptions such as future stock price volatility and
expected time to exercise.  These assumptions greatly affect the
calculated values.

The Company's calculations are based on a multiple option valuation
approach and cancellations are estimated based on a historical pattern.
However, in accordance with SFAS No. 123, the impact of outstanding
unvested stock options granted prior to 1995 has been excluded from the
pro forma calculation; accordingly, the 1995 and 1996 pro forma
adjustments are not indicative of future period pro forma adjustments.
The following weighted-average assumptions were used:

                                              Year Ended
                                          1996          1995
                                          ----          ----
Expected dividend yield                   1.00 %        1.00 %
Expected volatility                         36 %          36 %
Risk-free interest rate                   5.67 %        5.31 %
Expected lives (years from vesting)       0.50          0.50


The following table summarizes information about stock options
outstanding at December 31, 1996:

                  -----  OPTIONS OUTSTANDING  -----  -- OPTIONS EXERCISABLE --
                                 Weighted  Weighted                 Weighted
Range of                          Average   Average                  Average
Exercisable        Number       Remaining  Exercise      Number     Exercise
Prices          of shares Life  (in years)   Price     of shares      Price
----------------------------------------------------------------------------
$10.54 - $13.75   352,303            5.31    $13.17      143,186      $13.01
$14.00 - $17.00   433,639            4.95    $15.79      176,022      $15.58
$17.25 - $19.38   397,950            6.32    $17.83       35,375      $17.42
$20.75 - $22.75   217,950            7.73    $21.53          100      $22.00
                ---------                                -------
$10.54 - $22.75 1,401,842            5.86    $16.60      354,683      $14.73
                =========                                =======

<PAGE> 35

Note 9 - Taxes on Income

Taxes on income include the following:              1996      1995     1994
(in thousands)                                      ----      ----     ----

Federal:
   Current                                      $  6,448  $  5,728 $  7,476
   Deferred                                       (1,237)     (667)  (1,892)

State:
   Current                                         1,167       978      979

Foreign:
   Current                                         7,073     4,305    2,761
   Deferred                                         (276)    1,320    1,742
                                                --------  -------- --------
Total                                           $ 13,175  $ 11,664 $ 11,066
                                                ========  ======== ========


Significant components of the Company's net deferred tax liability are
as follows:



December 31 (in thousands)

                                                    1996      1995
                                                    ----      ----
Deferred tax liabilities:
Undistributed earnings of subsidiaries          $  7,893  $  9,689
Accelerated depreciation                           4,270     4,176
Gain on sale of property                           2,502     2,778
Incentive compensation                                55       338
Investment in subsidiary                             232       232
                                                --------  --------
                                                $ 14,952  $ 17,213
                                                ========  ========

Deferred tax assets:
Intercompany billings                          $   5,885  $  6,462
Bad debts                                          1,206       953
Vacation pay                                         751       649
Self insurance reserves                              671     1,053
Valuation of marketable securities                   261       516
Other                                                559       703
                                               ---------  --------
                                               $   9,333  $ 10,336
                                               =========  ========

Net deferred tax liability                     $   5,619  $  6,877
                                               =========  ========

Taxes on income were different than the amount computed by applying the
United States federal statutory income tax rate. Such differences are
summarized as follows:


(in thousands)                               1996      1995      1994
                                             ----      ----      ----
Tax computed at 35%                      $ 12,177  $ 10,688  $  9,720
Increases (decreases) resulted from:
  Foreign taxes lower than federal rate      (861)     (411)     (756)
  State taxes on income,
    net of federal income tax effect          758       636       636
    Non-deductible items                      775       711       244
    Foreign net operating losses               72       453     1,512
  Other                                       254      (413)     (290)
                                         --------  --------  --------
Total                                    $ 13,175  $ 11,664  $ 11,066
                                         ========  ========  ========

<PAGE> 36

Taxes on income include deferred income taxes on undistributed earnings
(not considered permanently invested) of consolidated subsidiaries net
of applicable foreign tax credits. At December 31, 1996, cumulative
earnings of consolidated foreign subsidiaries designated as permanently
invested were approximately $ 50 million. Deferred income taxes are not
provided on permanently invested earnings.

Sources of pretax income are summarized as follows:


(in thousands)                               1996      1995      1994
                                             ----      ----      ----
Domestic                                 $ 16,205  $ 14,513  $ 13,101
Foreign                                    18,585    16,023    14,671
                                         --------  --------  --------
Total                                    $ 34,790  $ 30,536  $ 27,772
                                         ========  ========  ========

Federal Tax Litigation:
The United States Internal Revenue Service issued a notice of deficiency
with respect to the Company's income tax liabilities for the years 1986
and 1987 asserting an aggregate liability for tax of approximately $7.9
million. The Company subsequently filed a petition in the U.S. Tax Court
contesting all of the asserted deficiency, and made a partial payment of
tax.  Settlement negotiations with the Internal Revenue Service have now
been concluded with respect to this matter. Under the terms of the
proposed settlement, the Company would be entitled to receive a net
refund of tax of approximately $300,000. However, there has been no
final settlement because the matter has been held in abeyance pending
resolution of the Company's refund proposals arising out of its 1992
write-offs and prior period adjustments.

The Company  is engaged in discussions with the IRS with respect to
federal income tax refunds arising out of the 1992 write-offs and prior
period adjustments involving approximately $9 million of tax. A
tentative agreement has been made on specific issues which would produce
a tax refund of $5.3 million. It is not possible to predict at this time
the extent to which the IRS will ultimately agree with the Company's
remaining proposed income tax refunds, or the effect upon the settlement
of the issues in the Company's tax years 1986 and 1987.

The IRS has issued a notice of proposed deficiency with respect to tax
years 1988 and 1989 proposing to assert deficiencies in tax and
penalties in the aggregate amount of approximately $9.9 million. The
Company has agreed to adjustments that will result in a deficiency in
tax in the amount of approximately $500,000 for 1988 and has filed a
protest with respect to the remaining non-agreed proposed deficiency.
The matter is still pending before the IRS Appeals Office.  Although
certain major issues have been tentatively resolved, absent a final
settlement it is not possible to predict the ultimate outcome.


Note 10 - Other Income-Net

Other income-net includes the following:


(in thousands)                               1996      1995      1994
                                             ----      ----      ----
Investment income                        $  4,485  $  4,877  $  4,233
Interest expense                           (2,658)   (3,346)   (3,254)
Gain on sales of assets                     1,060     1,057     1,168
Equity in earnings of affiliates            1,107       679     1,157
Net foreign exchange gains                  1,258        40       729
                                         --------  --------  --------
Total                                    $  5,252  $  3,307  $  4,033
                                         ========  ========  ========

<PAGE> 37

Note 11 - Employee Benefit Plans

The Company has a 401(k) Savings Plan under which an employee with six
months of service at the beginning of a calendar quarter may contribute
up to 15% of base salary to the plan.  For every dollar contributed to
the plan, the Company will match 50 cents, up to a maximum of 6% of the
employee's salary.  The Company's contributions for the years ended
December 31, 1996, 1995 and 1994 were $833,000, $725,000 and $797,000,
respectively.  The Company's contributions are vested over a four year
period.

In addition, the Company offers to its employees who have completed six
months of service, the option to purchase Harper Group's common stock
through payroll deductions.  All brokerage fees associated with the
purchase are paid by the Company.


Note 12 - Business Segment Information

The Company operates in the international freight forwarding industry,
which encompasses air freight forwarding, customs brokerage, ocean
freight forwarding and other services. No customer accounted for ten
percent or more of consolidated revenue.

Certain information regarding the Company's operations by regions is
summarized below.

<TABLE>
<CAPTION>
                                         Europe &     Asia &
                                          Middle      South                Elimi-    Consoli-
                              Americas     East      Pacific  Corporate    nations     dated
                              --------  ---------    -------  ---------    -------   --------
<S>                          <C>       <C>         <C>       <C>        <C>          <C>
Year ended December 31, 1996:
Total revenue                $ 353,103  $ 142,405  $ 114,332  $       -  $ (14,407) $ 595,433
Transfers between regions       (6,091)    (3,396)    (4,920)         -     14,407          -
                             ---------  ---------  ---------  ---------  ---------  ---------
Revenues from customers      $ 347,012  $ 139,009  $ 109,412  $       -  $       -  $ 595,433
                             =========  =========  =========  =========  =========  =========
Net revenue                  $ 134,070  $  70,465  $  41,083  $       -  $       -  $ 245,618
                             =========  =========  =========  =========  =========  =========
Income (loss) from
  operations                 $  24,012  $  11,653  $   8,016  $ (14,143) $       -  $  29,538
                             =========  =========  =========  =========  =========  =========
Identifiable assets          $ 163,392  $ 118,287  $  96,041  $ 123,835  $(108,225) $ 393,330
                             =========  =========  =========  =========  =========  =========

Year ended December 31, 1995:
Total revenue                $ 309,778  $ 124,809  $ 120,791  $       -  $ (13,050) $ 542,328
Transfers between regions       (4,801)    (3,402)    (4,847)         -     13,050          -
                             ---------  ---------  ---------  ---------  ---------  ---------
Revenues from customers      $ 304,977  $ 121,407  $ 115,944  $       -  $       -  $ 542,328
                             =========  =========  =========  =========  =========  =========
Net revenue                  $ 115,731  $  67,570  $  38,510  $       -  $       -  $ 221,811
                             =========  =========  =========  =========  =========  =========
Income (loss) from
  operations                 $  22,034  $  10,326  $   6,415  $ (11,546) $       -  $  27,229
                             =========  =========  =========  =========  =========  =========
Identifiable assets          $ 140,703  $ 105,267  $  94,334  $  90,294  $ (93,855) $ 336,743
                             =========  =========  =========  =========  =========  =========

Year ended December 31, 1994:
Total revenue                $ 275,241  $  96,447  $ 108,196  $       -  $ (10,336) $ 469,548
Transfers between regions       (4,858)    (1,864)    (3,614)         -     10,336          -
                             ---------  ---------  ---------  ---------  ---------  ---------
Revenue from customers       $ 270,383  $  94,583  $ 104,582  $       -  $       -  $ 469,548
                             =========  =========  =========  =========  =========  =========
Net revenue                  $ 105,719  $  54,613  $  33,807  $       -  $       -  $ 194,139
                             =========  =========  =========  =========  =========  =========
Income (loss) from
  operations                 $  20,854  $  10,756  $   5,373  $ (13,244) $       -  $  23,739
                             =========  =========  =========  =========  =========  =========
Identifiable assets          $ 158,641  $  91,581  $  94,272  $  84,354  $(104,384) $ 324,464
                             =========  =========  =========  =========  =========  =========
</TABLE>
<PAGE> 38

Revenue from transfers between regions represents approximate amounts
that would be charged if the services were provided by an unaffiliated
company. Total regional revenue is reconciled with total consolidated
revenue by eliminating inter-regional revenue.


Note 13 - Quarterly Data (unaudited)

(in thousands except per share amounts)


                              Net         Net    Net income   Dividends
                 Revenue   revenue     income    per share    per share
1996 Quarters:
  4th Quarter  $ 161,313  $ 66,327    $ 6,567      $ .41        $ .12
  3rd Quarter    155,498    64,063      5,928        .37            -
  2nd Quarter    146,176    60,336      5,362        .34          .12
  1st Quarter    132,446    54,892      3,758        .24            -

1995 Quarters:
  4th Quarter  $ 144,110  $ 58,253    $ 5,665      $ .36        $ .11
  3rd Quarter    138,279    57,512      5,066        .32            -
  2nd Quarter    133,996    54,937      4,601        .29          .11
  1st Quarter    125,943    51,109      3,540        .22            -


<PAGE> 39

Independent Auditors' Report

The Board of Directors and Stockholders of the Harper Group, Inc.:

We have audited the accompanying consolidated balance sheets of the
Harper Group, Inc. and subsidiaries (the "Company") as of December 31,
1996 and 1995, and the related consolidated income statements and
consolidated statements of stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Harper Group,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.






/S/ DELOITTE & TOUCHE LLP
San Francisco, California
March 13, 1997


<PAGE> 40

MARKET PRICE OF COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS:

The Company's common stock is traded over the counter under the symbol
HARG. The following table sets forth the closing prices in the NASDAQ
national market system for the Company's common stock for the calendar
periods indicated, as reported by NASDAQ.

                        High         Low
                        ----        ----
1996
Fourth Quarter      $ 25-3/4    $ 20-1/2
Third Quarter         21-7/8      18-1/2
Second Quarter        23          17
First Quarter         19-1/4      16-1/2


1995
Fourth Quarter      $ 19-1/2    $ 16-1/2
Third Quarter         20          16-1/4
Second Quarter        20          15
First Quarter         18          15-1/8


As of March 1, 1996, the approximate number of stockholders of record of
the Company's common stock, excluding stockholders whose stock is held
as nominee or in street name by brokers, was 415.

Dividends Declared
Dividends declared per common share during 1996 and 1995 were:

1996                                   1995
----                                   ----
June 24        $ .12     June 26      $ .11
December 20      .12     December 18    .11

The Board of Directors considers payment of cash dividends on a semi-
annual basis subject to the availability of earnings, the financial
condition of the Company and other relevant factors.

Annual Meeting
The Annual Meeting of Stockholders will be held at 10:30 a.m. on
Tuesday, May 13, 1997 at Harper Plaza, 260 Townsend Street, San
Francisco, California 94107.

<PAGE> 41

APPENDIX TO ELECTRONIC FORMAT (EDGAR) DOCUMENT - purpose is to provide a
fair and accurate description of all graphic and image information
included in the printed Annual Report to Stockholders accompanying
"Management's Discussion and Analysis," but excluded from this filing.

Graph #1
Presents net revenue by product in a bar graph for the fiscal years
ended December 31, 1996, 1995 and 1994. Each of the three periods has
the three products stacked into one bar. This information is also
presented numerically in the Selected Financial Data section on page 1
of the Annual Report to Stockholders in this filing.

Graph #2
Presents 1996 net revenue by region in a pie chart. The regions in the
graph conform to operating regions included in Note 12 - Business
Segment Information in Notes to Consolidated Financial Statements in the
Annual Report to Stockholders presented in this filing. The percentages
used in the graph are derived from amounts in the footnote designated as
net revenue.

Graph #3
Presents income from operations in a bar graph for the years ended
December 31, 1996, 1995 and 1994. This information is also presented in
the Selected Financial Data and Consolidated Income Statements of the
Annual Report to Stockholders in this filing.

Graph #4
Presents operating margin percentages in a bar graph for the years ended
December 31, 1996, 1995 and 1994. Operating margin for these periods is
calculable from the Consolidated Income Statements presented in this
filing (page 16 of the Annual Report to Stockholders) by dividing income
from operations by net revenue.