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

FORM 10  Q

|      |  |                                                                                                                                | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------ | 
|[X]   |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002 | 
|      |  |                                                                                                                                | 
|      |  | or                                                                                                                             | 
|      |  |                                                                                                                                | 
|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________      | 

Commission file number 0-28180

SPECTRALINK CORPORATION
(Exact name of registrant as specified in charter)

|                                                                               |  |                                                
|------------------------------------------------------------------------------ |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of incorporation or organization)        |  | 84-1141188
(IRS Employer
Identification Number)
|                                                                               |  |                                                
|5755 Central Avenue, Boulder, Colorado
(Address of principal executive office) |  | 80301-2848
(Zip code)                          

303-440-5330
(Issuers telephone number)

(Former name, former address and former fiscal year, if changed from last report)

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, and (2) has been subject to such filing
requirements for the past 90 days. YesX No__

Applicable only to corporate issuers:
As of June 30, 2002, there were 19,040,673 shares of SpectraLink Corporations
Common Stock  par value $.01.





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TABLE OF CONTENTS



|                             |                                                                                              |                                                      |  |  |  |  |  | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I Financial Information
|                             | Item 1 Condensed Consolidated Financial Statements                                          
|                             |                                                                                              | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF INCOME         
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                             |                                                                                              | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                             | ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | Item 3. Quantitative and Qualitative Disclosures about Market Risk.                         
|Part II Other Information   
|                             | Item 1 Legal Proceedings                                                                    
|                             | Item 4 Submission of Matters to a Vote of Security Holders                                  
|                             | Item 6 Exhibits and Reports on Form 8-K                                                     
|                             |                                                                                              | (a) Exhibits                                        
|                             |                                                                                              | (b) Form 8-K                                        



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SPECTRALINK CORPORATION AND SUBSIDIARY
INDEX

|                             |                                                                                              |                                                                                                                          |  |    |    | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ |  | -- | -- | 
|                             |                                                                                              | Page                                                                                                                    
|Part I Financial Information |                                                                                              |                                                                                                                          |  |   
|                             | Item 1 Condensed Consolidated Financial Statements                                           |                                                                                                                          |  |    |   
|                             |                                                                                              | Condensed Consolidated Balance Sheets at
June 30, 2002 and December 31, 2001(Unaudited)                                  |  |    | 3  | 
|                             |                                                                                              | Condensed Consolidated Statements of Income for the
Three Months and Six Months Ended June 30, 2002 and 2001 (Unaudited) |  |    | 4  | 
|                             |                                                                                              | Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2002 and 2001 (Unaudited)              |  |    | 5  | 
|                             |                                                                                              | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                         |  |    | 6  | 
|                             | Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations |                                                                                                                          |  | 9  |   
|                             | Item 3 Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                          |  | 14 |   
|Part II Other Information    |                                                                                              |                                                                                                                          |  |   
|                             | Item 1 Legal Proceedings                                                                     |                                                                                                                          |  | 20 |   
|                             | Item 4 Submission of Matters to a Vote of Security Holders                                   |                                                                                                                          |  | 21 |   
|                             | Item 6 Exhibits and Reports on Form 8-K                                                      |                                                                                                                          |  |    |   
|                             |                                                                                              | (a)  Exhibits                                                                                                            |  |    |    | 
|                             |                                                                                              | None                                                                                                                     |  |    | 21 | 
|                             |                                                                                              | (b)  Form 8-K                                                                                                            |  |    |    | 
|                             |                                                                                              | None                                                                                                                     |  |    | 21 | 

2



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SPECTRALINK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |              |        |  |  | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ------- | ------ | -------- | ----- | ------------ | ------ |  |  | 
|                                     |                                                                                                                                                                |                                            |       |         |        | June 30, |       | December 31,
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                |                                            |       |         |        | 2002     |       | 2001        
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|ASSETS                              
|CURRENT ASSETS:                      |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     | Cash and cash equivalents                                                                                                                                      |                                            | $     | 39,840  |        |          | $     | 37,242       |       
|                                     | Short-term investments in marketable securities                                                                                                                |                                            |       |        |        |          |       | 1,004        |       
|                                     | Trade accounts receivable, net of allowance of $344 and $364, respectively                                                                                     |                                            |       | 11,916  |        |          |       | 12,820       |       
|                                     | Income taxes receivable                                                                                                                                        |                                            |       | 1,428   |        |          |       | 2,579        |       
|                                     | Inventory, net of allowance of $567 and $410, respectively                                                                                                     |                                            |       | 7,797   |        |          |       | 8,073        |       
|                                     | Deferred income taxes-current portion                                                                                                                          |                                            |       | 1,548   |        |          |       | 1,548        |       
|                                     | Other                                                                                                                                                          |                                            |       | 732     |        |          |       | 520          |       
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | Total current assets                       |       |         | 63,261 |          |       |              | 63,786 | 
|PROPERTY AND EQUIPMENT, at cost:     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     | Furniture and fixtures                                                                                                                                         |                                            |       | 1,577   |        |          |       | 1,575        |       
|                                     | Equipment                                                                                                                                                      |                                            |       | 6,485   |        |          |       | 6,290        |       
|                                     | Leasehold improvements                                                                                                                                         |                                            |       | 864     |        |          |       | 856          |       
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                |                                            | 8,926 |         |        |          | 8,721 |             
|                                     | Less  accumulated depreciation                                                                                                                                |                                            |       | (7,059  | )      |          |       | (6,503       | )     
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | Net property and equipment                 |       |         | 1,867  |          |       |              | 2,218  | 
|DEFERRED INCOME TAXES  NON CURRENT  |                                                                                                                                                                |                                            | 201   |         |        |          | 201   |             
|OTHER                                |                                                                                                                                                                |                                            | 252   |         |        |          | 233   |             
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | TOTAL ASSETS                               |       | $       | 65,581 |          |       | $            | 66,438 | 
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|LIABILITIES AND STOCKHOLDERS EQUITY
|CURRENT LIABILITIES:                 |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     | Accounts payable                                                                                                                                               |                                            | $     | 660     |        |          | $     | 1,009        |       
|                                     | Accrued payroll, commissions and employee benefits                                                                                                             |                                            |       | 1,764   |        |          |       | 2,371        |       
|                                     | Accrued sales, use and property taxes                                                                                                                          |                                            |       | 491     |        |          |       | 345          |       
|                                     | Accrued warranty expenses                                                                                                                                      |                                            |       | 289     |        |          |       | 278          |       
|                                     | Other accrued expenses                                                                                                                                         |                                            |       | 1,180   |        |          |       | 618          |       
|                                     | Deferred revenue                                                                                                                                               |                                            |       | 4,291   |        |          |       | 3,868        |       
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | Total current liabilities                  |       |         | 8,675  |          |       |              | 8,489  | 
|LONG-TERM LIABILITIES                |                                                                                                                                                                |                                            | 212   |         |        |          | 231   |             
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | TOTAL LIABILITIES                          |       |         | 8,887  |          |       |              | 8,720  | 
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|STOCKHOLDERS EQUITY:                |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     | Preferred stock, 5,000 shares authorized, none issued and outstanding                                                                                          |                                            |       |        |        |          |       |             |       
|                                     | Common stock, $0.01 par value, 50,000 shares authorized, 22,027 and 21,754 shares
issued, respectively, and 19,041 and 19,228 shares outstanding, respectively |                                            |       | 220     |        |          |       | 218          |       
|                                     | Additional paid-in capital                                                                                                                                     |                                            |       | 63,387  |        |          |       | 62,120       |       
|                                     | Retained earnings                                                                                                                                              |                                            |       | 15,201  |        |          |       | 12,997       |       
|                                     | Treasury stock, 2,987 shares and 2,526 shares, respectively, at cost                                                                                           |                                            |       | (22,114 | )      |          |       | (17,617      | )     
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | TOTAL STOCKHOLDERS EQUITY                 |       |         | 56,694 |          |       |              | 57,718 | 
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             
|                                     |                                                                                                                                                                | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |       | $       | 65,581 |          |       | $            | 66,438 | 
|                                     |                                                                                                                                                                |                                            |       |         |        |          |       |             

The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.

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SPECTRALINK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)

|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |        |        |        | 
|------------------------------------------- | -------------------------- | ------------------------ | ------------ | ------ | ------------------ | ----- | ---------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | 
|                                            |                            |                          |              |        | Three Months Ended |       | Six Months Ended
|                                            |                            |                          |              |        |                    |       |                 
|                                            |                            |                          |              |        | June 30,           |       | June 30,        
|                                            |                            |                          |              |        |                    |       |                 
|                                            |                            |                          |              |        | 2002               |       | 2001             |        | 2002   |        | 2001  
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |       
|SALES:                                      |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            | Product Sales, net         |                          | $            | 12,128 |                    |       | $                | 14,083 |        |        | $      | 23,391 |        |        | $      | 25,777 |       
|                                            | Service Sales              |                          |              | 3,109  |                    |       |                  | 2,479  |        |        |        | 5,707  |        |        |        | 4,848  |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            |                            | Net Sales                |              |        | 15,237             |       |                  |        | 16,562 |        |        |        | 29,098 |        |        |        | 30,625 |       
|COST OF SALES:                              |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            | Cost of Product Sales      |                          |              | 3,821  |                    |       |                  | 4,213  |        |        |        | 7,345  |        |        |        | 7,398  |       
|                                            | Cost of Service Sales      |                          |              | 1,607  |                    |       |                  | 1,373  |        |        |        | 2,905  |        |        |        | 2,683  |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            |                            | Total Cost of Sales      |              |        | 5,428              |       |                  |        | 5,586  |        |        |        | 10,250 |        |        |        | 10,081 |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            |                            |                          | Gross Profit |        |                    | 9,809 |                  |        |        | 10,976 |        |        |        | 18,848 |        |        |        | 20,544 | 
|OPERATING EXPENSES:                         |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            | Research and Development   |                          |              | 1,620  |                    |       |                  | 1,327  |        |        |        | 3,142  |        |        |        | 2,602  |       
|                                            | Marketing and Selling      |                          |              | 5,237  |                    |       |                  | 5,730  |        |        |        | 10,488 |        |        |        | 10,881 |       
|                                            | General and Administrative |                          |              | 1,025  |                    |       |                  | 895    |        |        |        | 1,958  |        |        |        | 1,700  |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|                                            |                            | Total Operating Expenses |              |        | 7,882              |       |                  |        | 7,952  |        |        |        | 15,588 |        |        |        | 15,183 |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|INCOME FROM OPERATIONS                      |                            |                          | 1,927        |        |                    |       | 3,024            |        |        |        | 3,260  |        |        |        | 5,361  |       
|INVESTMENT INCOME AND OTHER, net            |                            |                          | 152          |        |                    |       | 359              |        |        |        | 295    |        |        |        | 800    |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|INCOME BEFORE INCOME TAXES                  |                            |                          | 2,079        |        |                    |       | 3,383            |        |        |        | 3,555  |        |        |        | 6,161  |       
|INCOME TAX EXPENSE                          |                            |                          | 790          |        |                    |       | 1,269            |        |        |        | 1,351  |        |        |        | 2,310  |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|NET INCOME                                  |                            | $                        | 1,289        |        |                    | $     | 2,114            |        |        | $      | 2,204  |        |        | $      | 3,851  |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|BASIC EARNINGS PER SHARE (Note 3)           |                            | $                        | 0.07         |        |                    | $     | 0.11             |        |        | $      | 0.12   |        |        | $      | 0.20   |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|BASIC WEIGHTED AVERAGE SHARES OUTSTANDING   |                            |                          | 19,060       |        |                    |       | 18,890           |        |        |        | 19,130 |        |        |        | 18,980 |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|DILUTED EARNINGS PER SHARE (Note 3)         |                            | $                        | 0.07         |        |                    | $     | 0.11             |        |        | $      | 0.11   |        |        | $      | 0.19   |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       
|DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING |                            |                          | 19,460       |        |                    |       | 19,680           |        |        |        | 19,530 |        |        |        | 19,870 |       
|                                            |                            |                          |              |        |                    |       |                  |        |        |        |        |        |        |        |        |       

The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.

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SPECTRALINK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |        |        |        |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------- | ------ | ---------------- | ------ | ------ | ------ | ------ | ------ | -
|                                                  |                                                                                   |                                                                                       |                                           |        | Six Months Ended
|                                                  |                                                                                   |                                                                                       |                                           |        |                 
|                                                  |                                                                                   |                                                                                       |                                           |        | June 30,        
|                                                  |                                                                                   |                                                                                       |                                           |        |                 
|                                                  |                                                                                   |                                                                                       |                                           |        | 2002             |        | 2001  
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |       
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  | Net income                                                                        |                                                                                       | $                                         | 2,204  |                  |        | $      | 3,851  |       
|                                                  | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                                                       |                                           |        |                  |        |        |        |       
|                                                  |                                                                                   | Depreciation and amortization                                                         |                                           |        | 556              |        |        |        | 527    |       
|                                                  |                                                                                   | Income tax benefit from the exercise of stock options                                 |                                           |        | 160              |        |        |        | 374    |       
|                                                  |                                                                                   | Provision for bad debts                                                               |                                           |        | 110              |        |        |        | 56     |       
|                                                  |                                                                                   | Write-down for excess and obsolete inventory                                          |                                           |        | 157              |        |        |        | 154    |       
|                                                  |                                                                                   | Amortization of premium (discount) on investments in marketable securities            |                                           |        | 4                |        |        |        | (40    | )     
|                                                  | Changes in assets and liabilities -                                               |                                                                                       |                                           |        |                  |        |        |        |       
|                                                  |                                                                                   | Decrease (increase) in trade accounts receivable                                      |                                           |        | 794              |        |        |        | (2,541 | )     
|                                                  |                                                                                   | Decrease in inventory                                                                 |                                           |        | 119              |        |        |        | 805    |       
|                                                  |                                                                                   | Decrease in other assets and income tax receivable                                    |                                           |        | 920              |        |        |        | 58     |       
|                                                  |                                                                                   | Decrease in accounts payable                                                          |                                           |        | (349             | )      |        |        | (682   | )     
|                                                  |                                                                                   | Increase (decrease) in accrued liabilities, income taxes payable and
deferred
revenue |                                           |        | 516              |        |        |        | (278   | )     
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  |                                                                                   |                                                                                       | Net cash provided by operating activities |        |                  | 5,191  |        |        |        | 2,284  |  
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  | Purchases of property and equipment                                               |                                                                                       |                                           | (205   | )                |        |        | (695   | )     
|                                                  | Purchases of investments in marketable securities                                 |                                                                                       |                                           |       |                  |        |        | (3,484 | )     
|                                                  | Maturity of investments in marketable securities                                  |                                                                                       |                                           | 1,000  |                  |        |        | 9,500  |       
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  |                                                                                   |                                                                                       | Net cash provided by investing activities |        |                  | 795    |        |        |        | 5,321  |  
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  | Proceeds from exercises of common stock options                                   |                                                                                       |                                           | 798    |                  |        |        | 548    |       
|                                                  | Proceeds from issuances of common stock                                           |                                                                                       |                                           | 311    |                  |        |        | 295    |       
|                                                  | Purchases of treasury stock                                                       |                                                                                       |                                           | (4,497 | )                |        |        | (3,555 | )     
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  |                                                                                   |                                                                                       | Net cash used in financing activities     |        |                  | (3,388 | )      |        |        | (2,712 | )
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|INCREASE IN CASH AND CASH EQUIVALENTS             |                                                                                   |                                                                                       | 2,598                                     |        |                  |        | 4,893  |       
|CASH AND CASH EQUIVALENTS, beginning of period    |                                                                                   |                                                                                       | 37,242                                    |        |                  |        | 20,793 |       
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|CASH AND CASH EQUIVALENTS, end of period          |                                                                                   | $                                                                                     | 39,840                                    |        |                  | $      | 25,686 |       
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                                   |                                                                                       |                                           |        |                  |        |        |       
|                                                  | Cash paid for income taxes                                                        |                                                                                       | $                                         | 74     |                  |        | $      | 1,933  |       
|                                                  |                                                                                   |                                                                                       |                                           |        |                  |        |        |       

The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.

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SPECTRALINK CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)

1. Basis of Presentation

The accompanying condensed consolidated financial statements as of June
30, 2002 and December 31, 2001, and for the three months and six months ended
June 30, 2002 and 2001, have been prepared from the books and records of
SpectraLink Corporation and SpectraLink International Corporation (together
SpectraLink) and are unaudited. In managements opinion, these financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present SpectraLinks financial position,
results of operations and cash flows for the periods presented. The results of
operations for the period ended June 30, 2002, are not necessarily indicative
of the results to be expected for any subsequent quarter or for the entire
fiscal year ending December 31, 2002.

The financial statements should be read in conjunction with the audited
financial statements and notes thereto as of and for the year ended December
31, 2001, which are included in SpectraLinks Annual Report on Form 10-K. The
accounting policies utilized in the preparation of the financial statements
herein presented are the same as set forth in SpectraLinks annual financial
statements.

2. Inventory

Inventory includes the cost of raw materials, direct labor and
manufacturing overhead, and is stated at the lower of cost (first-in,
first-out) or market. Inventory as of June 30, 2002 and December 31, 2001,
consisted of the following:

|                 |  |                |       |              |  |   |       | 
|---------------- |  | -------------- | ----- | ------------ |  | - | ----- | 
|                 |  | June 30,       |       | December 31,
|                 |  |                |       |             
|                 |  | 2002           |       | 2001        
|                 |  |                |       |             
|                 |  | (In Thousands)
|Raw materials    |  | $              | 2,624 |              |  | $ | 3,621 | 
|Work in progress |  |                |      |              |  |   | 16    | 
|Finished goods   |  |                | 5,173 |              |  |   | 4,436 | 
|                 |  |                |       |              |  |   |       | 
|                 |  | $              | 7,797 |              |  | $ | 8,073 | 
|                 |  |                |       |              |  |   |       | 

The reserve for inventory was $567,000 and $410,000 as of June 30, 2002 and
December 31, 2001, respectively.

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##### Table of Contents



3. Earnings Per Share

Basic earnings per share is computed by dividing the net income by the
weighted average number of shares of common stock outstanding for the period.
Diluted earnings per share is determined by dividing the net income by the sum
of the weighted average number of common shares outstanding and if not
anti-dilutive, the effect of outstanding stock options and/or other common
stock equivalents determined utilizing the treasury stock method. Potentially
dilutive common stock options excluded from the calculation of dilutive income
per share because they were anti-dilutive, totaled 423,984 and 781,237 for the
three months ended June 30, 2002 and 2001, respectively, and 419,779 and
299,230 for the six months ended June 30, 2002 and 2001, respectively. A
reconciliation of the numerators and denominators used in computing earnings
per share is as follows:

Three Months Ended June 30,
(In thousands, except per share amounts)

|                               |                           |   |        |   |        |  |           |     |        |   |        |   |           |   |       |   |  |  |        |     |  |   |      |   |  |  |  |  | 
|------------------------------ | ------------------------- | - | ------ | - | ------ |  | --------- | --- | ------ | - | ------ | - | --------- | - | ----- | - |  |  | ------ | --- |  | - | ---- | - |  |  |  |  | 
|                               |                           |   | 2002   |   | 2001   |  |           |     |       
|                               |                           |   |        |   |        |  |           |     |       
|                               |                           |   | Income |   | Shares |  | Per Share |     | Income |   | Shares |   | Per Share |   |       |   | 
|                               |                           |   |        |   |        |  |           |     |        |   |        |   |           |   |       |   | 
|Basic EPS                     |                           | $ | 1,289  |   |        |  | 19,060    |     |        | $ | 0.07   |   |           | $ | 2,114 |   |  |  | 18,890 |     |  | $ | 0.11 |  
|Effect of dilutive securities: |                           |   |        |   |        |  |           |     |        |   |        |   |           |   |       |   |  |  |        |     |  |   |      |  
|                               | Stock purchase plan       |   |        |  |        |  |           | 27  |        |   |        |  |           |   |       |  |  |  |        | 25  |  |   |      |  | 
|                               | Stock options outstanding |   |        |  |        |  |           | 373 |        |   |        |  |           |   |       |  |  |  |        | 765 |  |   |      |  | 
|                               |                           |   |        |   |        |  |           |     |        |   |        |   |           |   |       |   |  |  |        |     |  |   |      |  
|Diluted EPS                   |                           | $ | 1,289  |   |        |  | 19,460    |     |        | $ | 0.07   |   |           | $ | 2,114 |   |  |  | 19,680 |     |  | $ | 0.11 |  

Six Months Ended June 30,
(In thousands, except per share amounts)

|                               |                           |   |        |   |        |  |           |     |        |   |        |       |           |   |       |   |  |  |        |     |  |   |      |       |   |  |  |  | 
|------------------------------ | ------------------------- | - | ------ | - | ------ |  | --------- | --- | ------ | - | ------ | ----- | --------- | - | ----- | - |  |  | ------ | --- |  | - | ---- | ----- | - |  |  |  | 
|                               |                           |   | 2002   |   | 2001   |  |           |     |       
|                               |                           |   |        |   |        |  |           |     |       
|                               |                           |   | Income |   | Shares |  | Per Share |     | Income |   | Shares |       | Per Share |   |       |   | 
|                               |                           |   |        |   |        |  |           |     |        |   |        |       |           |   |       |   | 
|Basic EPS                     |                           | $ | 2,204  |   |        |  | 19,130    |     |        | $ | 0.12   |       |           | $ | 3,851 |   |  |  | 18,980 |     |  | $ | 0.20 |      
|Effect of dilutive securities: |                           |   |        |   |        |  |           |     |        |   |        |       |           |   |       |   |  |  |        |     |  |   |      |      
|                               | Stock purchase plan       |   |        |  |        |  |           | 18  |        |   |        |      |           |   |       |  |  |  |        | 18  |  |   |      |      |  
|                               | Stock options outstanding |   |        |  |        |  |           | 382 |        |   |        | (0.01 | )         |   |       |  |  |  |        | 872 |  |   |      | (0.01 | )
|                               |                           |   |        |   |        |  |           |     |        |   |        |       |           |   |       |   |  |  |        |     |  |   |      |      
|Diluted EPS                   |                           | $ | 2,204  |   |        |  | 19,530    |     |        | $ | 0.11   |       |           | $ | 3,851 |   |  |  | 19,870 |     |  | $ | 0.19 |      

4. Stockholders Equity

In the second quarter of 2002, SpectraLink repurchased 100,000 shares of
outstanding common stock (now classified as treasury stock) at a cost of
$1,036,000, and during the second quarter of 2001, 202,500 shares were
repurchased at a cost of $1,806,000. For the six months ended June 30, 2002,
SpectraLink repurchased 461,000 shares of outstanding common stock (now
classified as treasury stock) at a cost of $4,497,000 and during the six months
ended June 30, 2001, 390,000 shares were repurchased at a cost of $3,555,000.

5. Legal Proceedings

SpectraLink and certain of its officers and directors have been named as
defendants in four lawsuits filed between February 7, 2002 and February 21,
2002, three of which have been filed in the United States District Court for
the District of Colorado and one of which has been filed in the Colorado
District Court for the City and County of Denver. The cases are designated as
follows: Wilmer Kerns, Individually And On Behalf of All Others Similarly
Situated, Plaintiff, vs. SpectraLink Corporation, Bruce Holland and Nancy K.
Hamilton, Defendants (United States District Court Civil Action Number
02-D-0263) (the Kerns Action); Danilo Martin Molieri, Individually and On
Behalf of All Others Similarly Situated, Plaintiff, v. SpectraLink Corporation,
Bruce Holland and Nancy K. Hamilton, Defendants (United States District Court
Civil Action Number 02-D-0315) (the Molieri Action); Evie Elennis,
derivatively on behalf of SpectraLink Corporation, Plaintiff(s), v. Bruce M.
Holland, Anthony V. Carollo, Jr., Gary L. Bliss, Michael P. Cronin, Nancy K.
Hamilton and John H. Elms, Defendant(s), and SpectraLink Corporation, Nominal
Defendant (United States District Court Civil Action Number 02-D-0345) (the
Federal Derivative Action); and Roger Humphreys, Derivatively on Behalf of
Nominal Defendant SpectraLink Corporation,

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Plaintiff, v. Carl D. Carman, Anthony V. Carollo, Jr., Bruce M. Holland, Burton
J. McMurtry, Gary L. Bliss, Michael P. Cronin, John H. Elms, and Nancy K.
Hamilton, Defendants (Colorado District Court Case No. 02CV1687) (the State
Derivative Action). In the Kerns and Molieri Actions, plaintiffs, who purport
to be purchasers or holders of SpectraLink common stock, seek to assert claims
on behalf of a class of persons who purchased securities in SpectraLink between
July 19, 2001 and January 11, 2002. The plaintiffs in the Federal and State
Derivative Actions purport to bring their claims derivatively on behalf of
SpectraLink.

These cases arise out of a press release issued by SpectraLink on January
14, 2002, announcing preliminary financial results for the fourth quarter of
2001 and revising downward its estimates for year 2002 results of operations.
The Kerns and Molieri Actions contain essentially identical claims alleging
that SpectraLink and certain of its officers and directors violated the United
States securities laws, specifically Sections 10(b) and 20(a) and Rule 10b-5
under the Securities Exchange Act of 1934, as a result of alleged public
misstatements and omissions, and cite to certain insider sales of SpectraLink
stock prior to the January 14, 2002 press release. In the cases brought as
derivative actions, the plaintiffs allege that the officers and directors of
SpectraLink violated fiduciary duties owed to SpectraLink and its stockholders
under state laws by allowing and/or facilitating the issuance of these same
alleged public misstatements and omissions, misappropriating nonpublic
information for their own benefit, making insider stock sales, wasting
corporate assets, abusing their positions of control, and mismanaging the
corporation. The plaintiffs in these derivative cases allege that SpectraLink
has and will continue to suffer injury as a result of these alleged violations
of duty for which the officers and directors should be held liable.

At the request of the plaintiffs in the Kerns and Molieri cases, the Court
consolidated those two actions, and appointed Landon Hendricks and Derek P. Poh
as lead plaintiffs. The plaintiffs in the consolidated action will file a
consolidated amended complaint by August 13, 2002.

The defendants in the Federal and State Derivative Actions filed motions
to dismiss. In the Federal Action, the plaintiff stipulated to and the Court
then ordered a stay of discovery and a stay of motion practice pending
resolution of the anticipated motion to dismiss the consolidated amended
complaint in the consolidated action described above. In the State Derivative
Action, the plaintiff also agreed to a stay of discovery and a stay of motion
practice pending resolution of the anticipated motion to dismiss, and the
stipulation has been submitted to the state court for approval.

It is possible that additional lawsuits may be filed alleging similar
claims, and that any such additional lawsuits arising out of the same operative
facts and circumstances would also be consolidated. Unless circumstances
warrant, SpectraLink does not intend to report the filing of additional
lawsuits based on the same operative facts and circumstances.

SpectraLink believes that the lawsuits are without merit and it intends to
vigorously defend both itself and its officers and directors, with whom
SpectraLink shares common interests and defenses. However, no assurance can be
given that SpectraLink will be successful in defending the claims being
asserted in these suits. If SpectraLink is not successful in its defense of
these suits, it could be required to make significant payments to its
stockholders and/or their lawyers, which could have a material adverse effect
on SpectraLinks business, financial condition and results of operations. In
addition, the litigation could result in substantial costs and divert
managements attention and resources. In the particular case of the Federal
and State Derivative Actions, a finding of liability on the part of all or some
of the defendant officers and directors could ultimately result in the
interests of SpectraLink becoming adverse to those officers and directors. In
either case, SpectraLinks business could be adversely affected, even if the
plaintiffs are ultimately not successful in the prosecution of their claims
against SpectraLink and/or its officers and directors.

SpectraLink is not presently a party to any other material pending legal
proceedings of which it is aware.

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PART I   ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECTRALINK CORPORATION AND SUBSIDIARY

This Form 10-Q contains forward-looking statements within the context of
section 21E of the Securities Exchange Act of 1934, as amended. Each and every
forward-looking statement involves a number of risks and uncertainties which
are described in this report. The actual results that SpectraLink achieves may
differ materially from those described in any forward-looking statement due to
such risks and uncertainties. SpectraLink has identified by * bold face*
various sentences within this Form 10-Q which are believed to contain
forward-looking statements. Additionally, words such as believes,
anticipates, expects, intends, could, might, and similar expressions
are intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. SpectraLink undertakes no obligation to
revise any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this report.

Business Description

SpectraLink commenced operations in April 1990 to design, manufacture and
sell workplace wireless telephone systems which complement existing telephone
systems by providing mobile communications in a building or campus environment.
SpectraLink Wireless Telephone Systems increase the efficiency of employees by
enabling them to remain in telephone contact while moving throughout the
workplace. SpectraLinks primary sales efforts are currently focused on home
improvement, grocery stores and other retail store chains, hospitals, nursing
homes, distribution centers, manufacturing and service facilities, corporate
offices and education facilities. SpectraLink sells its systems in the United
States, Canada, Europe and Asia/Pacific through its direct sales force,
telecommunications equipment distributors, and certain specialty dealers.
Effective December 23, 1999, SpectraLink incorporated SpectraLink International
Corporation in Delaware, as a wholly owned subsidiary of SpectraLink.

Since inception, SpectraLink has expended considerable effort and
resources developing its wireless telephone systems, building its direct and
indirect channels of distribution, and managing the effects of rapid growth.
This rapid growth has required SpectraLink to significantly increase the scale
of its operations, including the hiring of additional personnel in all
functional areas, and has resulted in significantly higher operating expenses.
SpectraLink anticipates that its operating expenses will continue to increase.
Expansion of SpectraLinks operations may cause a significant strain on
SpectraLinks management, financial and other resources. The inability of
SpectraLink to manage additional growth, should it occur, could have a material
adverse effect on SpectraLinks business, financial condition and results of
operations.

Critical Accounting Policies and Estimates

SpectraLink has identified the most critical accounting principles upon
which its financial status depends in response to the SECs Release No.
33-8040, Cautionary Advice Regarding Disclosure About Critical Accounting
Policies. SpectraLink determined the critical accounting principles by
considering accounting policies that involve the most complex or subjective
decisions or assessments. Below is a summary of SpectraLinks most critical
accounting policies. This discussion and analysis should be read in
conjunction with SpectraLinks consolidated financial statements and related
notes included in SpectraLinks Annual Report on Form 10-K for the fiscal year
ended December 31, 2001, which was filed with the U.S. Securities and Exchange
Commission on March 25, 2002 (2001 Form 10-K ).

SpectraLinks discussion and analysis of its financial condition and
results of operations are based upon SpectraLinks consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires SpectraLink to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. SpectraLink evaluates its
estimates, on an on-going basis, including those related to product returns,
bad debts, inventories, income taxes, warranty obligations, contingencies and
litigation. SpectraLink bases estimates on historical experience and on
various other assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

SpectraLink believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements:
9Table of Contents



| |  |  | SpectraLinks revenue recognition policy is significant because
SpectraLinks revenue is a key component of its results of operations.
SpectraLink follows very specific and detailed guidelines in
measuring revenue and determining the periods that the related revenue
should be recorded; however, certain judgments affect the application
of SpectraLinks revenue policy. Revenue results are difficult to
predict, and any shortfall in revenue or delay in recognizing revenue
could cause SpectraLinks operating results to vary significantly from
quarter to quarter and could result in operating losses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | SpectraLink maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers to make
required payments. Additional allowances may be required if the
financial condition of SpectraLinks customers were to deteriorate,
resulting in an impairment of their ability to make payments.                                                                                                                                                                                                                                                                                     
|
| |  |  | SpectraLink provides for the estimated cost of product warranties
at the time revenue is recognized. SpectraLink engages in extensive
product quality programs and processes, including actively monitoring
and evaluating the quality of its component suppliers. Product
failure rates, material usage and service delivery costs incurred in
correcting a product failure affect SpectraLinks warranty obligation.
Revisions to the estimated warranty liability would be required
should actual product failure rates, material usage or service
delivery costs differ from SpectraLinks estimates.               
|
| |  |  | SpectraLink writes down its inventory for estimated obsolescence
or unmarketable inventory equal to the difference between the cost of
inventory and the estimated market value based upon assumptions about
future demand and market conditions. Additional inventory write-downs
may be required if actual market conditions are less favorable than
those projected by management.                                                                                                                                                                                                                                   
|
| |  |  | SpectraLink may record a valuation allowance to reduce its
deferred tax assets to an amount that is estimated to be more likely
than not that such amounts will not be realized. SpectraLink
considers future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the need for a valuation allowance.                                                                                                                                                                                                                                                                                  

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Results of Operations

The following table sets forth unaudited results of operations for the
three month and six month periods ended June 30, 2002 and 2001, as a percentage
of net sales in each of these periods. This data has been derived from
unaudited consolidated financial statements.

|                                 |                            |           |      |                    |       |                  |      |      |       |      |      |      |       |   |      |      |       |  
|-------------------------------- | -------------------------- | --------- | ---- | ------------------ | ----- | ---------------- | ---- | ---- | ----- | ---- | ---- | ---- | ----- | - | ---- | ---- | ----- | -
|                                 |                            |           |      | Three Months Ended |       | Six Months Ended
|                                 |                            |           |      |                    |       |                 
|                                 |                            |           |      | June 30,           |       | June 30,        
|                                 |                            |           |      |                    |       |                 
|                                 |                            |           |      | 2002               |       | 2001             |      | 2002 |       | 2001
|                                 |                            |           |      |                    |       |                  |      |      |       |     
|Product Sales, net               |                            |           | 79.6 | %                  |       |                  | 85.0 | %    |       |      | 80.4 | %    |       |   | 84.2 | %   
|Service Sales                    |                            |           | 20.4 | %                  |       |                  | 15.0 | %    |       |      | 19.6 | %    |       |   | 15.8 | %   
|                                 |                            | Net Sales |      |                    | 100.0 | %                |      |      | 100.0 | %    |      |      | 100.0 | % |      |      | 100.0 | %
|Cost of Product Sales            |                            |           | 25.1 | %                  |       |                  | 25.4 | %    |       |      | 25.2 | %    |       |   | 24.1 | %   
|Cost of Service Sales            |                            |           | 10.5 | %                  |       |                  | 8.3  | %    |       |      | 10.0 | %    |       |   | 8.8  | %   
|                                 | Total Cost of Sales        |           |      | 35.6               | %     |                  |      | 33.7 | %     |      |      | 35.2 | %     |   |      | 32.9 | %    
|Gross Profit                     |                            |           | 64.4 | %                  |       |                  | 66.3 | %    |       |      | 64.8 | %    |       |   | 67.1 | %   
|Operating Expenses:              |                            |           |      |                    |       |                  |      |      |       |      |      |      |       |   |      |     
|                                 | Research and Development   |           |      | 10.6               | %     |                  |      | 8.0  | %     |      |      | 10.8 | %     |   |      | 8.5  | %    
|                                 | Marketing and Selling      |           |      | 34.4               | %     |                  |      | 34.6 | %     |      |      | 36.1 | %     |   |      | 35.5 | %    
|                                 | General and Administrative |           |      | 6.7                | %     |                  |      | 5.4  | %     |      |      | 6.7  | %     |   |      | 5.6  | %    
|Total Operating Expenses         |                            |           | 51.7 | %                  |       |                  | 48.0 | %    |       |      | 53.6 | %    |       |   | 49.6 | %   
|Income from Operations           |                            |           | 12.7 | %                  |       |                  | 18.3 | %    |       |      | 11.2 | %    |       |   | 17.5 | %   
|Investment Income and Other, net |                            |           | 1.0  | %                  |       |                  | 2.2  | %    |       |      | 1.0  | %    |       |   | 2.6  | %   
|Income Before Income Taxes       |                            |           | 13.7 | %                  |       |                  | 20.5 | %    |       |      | 12.2 | %    |       |   | 20.1 | %   
|Income Tax Expense               |                            |           | 5.2  | %                  |       |                  | 7.7  | %    |       |      | 4.6  | %    |       |   | 7.5  | %   
|Net Income                       |                            |           | 8.5  | %                  |       |                  | 12.8 | %    |       |      | 7.6  | %    |       |   | 12.6 | %   

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SPECTRALINK CORPORATION AND SUBSIDIARY
Three and Six Months Ended June 30, 2002 and 2001

Product Sales, net.SpectraLink derives its product revenue principally from
the sale of wireless, on-premises telephone systems. Product sales for the
three months ended June 30, 2002, decreased by 13.9% to $12,128,000 from
$14,083,000 for the same period last year. Product sales for the six months
ended June 30, 2002, decreased by 9.3% to $23,391,000 from $25,777,000 for the
same period last year. The decrease in sales was mainly due to SpectraLinks
decreasing orders from customers as a result of the weak economy and a decline
in indirect sales.

Service Sales. SpectraLink derives its service revenue principally from the
installation and service of wireless, on-premises telephone systems. Service
sales for the three months ended June 30, 2002, increased by 25.4% to
$3,109,000 from $2,479,000 for the same period last year. Service sales for
the six months ended June 30, 2002, increased by 17.7% to $5,707,000 from
$4,848,000 for the same period last year. The increase in service sales was
mainly due to increased revenue from maintenance contracts because as product
sales increase, future service revenue may increase as there is a larger
install base. Service sales also increased due to additional installations.

The customer mix shows a relatively equal increase in the percentage of direct
sales compared to the decrease in the percentage of indirect sales for the
three months and six months ended June 30, 2002 and 2001. The following table
details the sales to different customer types as a percentage of total net
sales:

Customer Mix Table
(As a Percentage of Net Sales)

|                |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  
|--------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                |  | Three Months Ended |       | Six Months Ended
|                |  |                    |       |                 
|                |  | June 30,           |       | June 30,        
|                |  |                    |       |                 
|                |  | 2002               |       | 2001             |  | 2002 |       | 2001
|                |  |                    |       |                  |  |      |       |     
|Customer Type:  |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  
|Indirect Sales  |  |                    | 38.4  | %                |  |      | 61.7  | %    |  |  | 46.5  | % |  |  | 58.8  | %
|Direct Sales    |  |                    | 41.2  | %                |  |      | 23.3  | %    |  |  | 33.9  | % |  |  | 25.4  | %
|Service Sales   |  |                    | 20.4  | %                |  |      | 15.0  | %    |  |  | 19.6  | % |  |  | 15.8  | %
|                |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  
|Total Net Sales |  |                    | 100.0 | %                |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|                |  |                    |       |                  |  |      |       |      |  |  |       |   |  |  |       |  

The following table summarizes sales to major customers:

Sales to Major Customers
(As a Percentage of Net Sales)

|               |  |                    |     |                  |  |      |      |      |  |  |      |   |  |  |      |  
|-------------- |  | ------------------ | --- | ---------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|               |  | Three Months Ended |     | Six Months Ended
|               |  |                    |     |                 
|               |  | June 30,           |     | June 30,        
|               |  |                    |     |                 
|               |  | 2002               |     | 2001             |  | 2002 |      | 2001
|               |  |                    |     |                  |  |      |      |     
|Customer Name: |  |                    |     |                  |  |      |      |      |  |  |      |   |  |  |      |  
|Customer A:    |  |                    | 9.1 | %                |  |      | 17.1 | %    |  |  | 10.0 | % |  |  | 13.8 | %
|Customer B:    |  |                    | 4.3 | %                |  |      | 11.0 | %    |  |  | 4.6  | % |  |  | 10.7 | %
|Customer C:    |  |                    | 3.9 | %                |  |      | 4.0  | %    |  |  | 10.8 | % |  |  | 2.7  | %

Gross Profit.SpectraLinks cost of sales consists primarily of direct
material, direct labor, service expenses, and manufacturing overhead. Gross
profit decreased by 10.6% to $9,809,000 for the three months ended June 30,
2002, from $10,976,000 for the same period last year. Gross profit decreased
by 8.3% to $18,848,000 for the six months ended June 30, 2002, from $20,544,000
for the same period last year. For the three months and six months ended

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June 30, 2002, gross profit margin (gross profit as a percentage of net sales)
decreased to 64.4% from 66.3% and to 64.8% from 67.1%, respectively. The
decrease in gross profit margin as a percentage of net sales was mainly due to
an increase in service sales as a percentage of total sales, a change in
SpectraLinks product mix and a decrease in product sales due to the weak
economy.

Research and Development.Research and development expenses consist primarily
of employee costs, professional services and supplies necessary to develop,
enhance and reduce the cost of SpectraLinks systems. Research and development
expenses increased by 22.1% to $1,620,000 for the three months ended June 30,
2002, from $1,327,000 for the same period last year, representing 10.6% and
8.0%, respectively, of net sales. Research and development expenses increased
by 20.8% to $3,142,000 for the six months ended June 30, 2002, from $2,602,000
for the same period last year, representing 10.8% and 8.5%, respectively, of
net sales. SPECTRALINK EXPECTS THAT RESEARCH AND DEVELOPMENT EXPENSES WILL BE
APPROXIMATELY 10.5% OF REVENUE FOR FISCAL 2002.In both periods, SpectraLink
incurred research and development costs for new product development,
improvements to existing products, and manufacturing process improvements. The
increase in research and development, in dollars spent and as a percentage of
net sales, was due to an increase in headcount, which resulted from hiring
additional research and development personnel, as well as costs associated with
developing new products and performance enhancements to existing products.

Marketing and Selling.Marketing and selling expenses consist primarily of
salaries and other expenses for personnel, commissions, travel, advertising,
trade shows, sales meetings and market research. Sales and marketing expenses
decreased by 8.6% to $5,237,000 for the three months ended June 30, 2002, from
$5,730,000 for the same period last year, representing 34.4% and 34.6%,
respectively, of net sales. Sales and marketing expenses decreased by 3.6% to
$10,488,000 for the six months ended June 30, 2002, from $10,881,000 for the
same period last year, representing 36.1% and 35.5%, respectively, of net
sales. The decrease in dollars spent was primarily due to a decrease in
expenses relating to commissions, public relations and sales meetings due to a
decline in net sales. Marketing and selling costs as a percentage of net sales
remained relatively consistent for the three months and six months ended June
30, 2002 to the same period last year.

General and Administrative. General and administrative expenses consist
primarily of salaries and other expenses for management, finance, accounting,
contract administration, order processing, investor relations, and human
resources, as well as legal and other professional services. General and
administrative expenses increased by 14.5% to $1,025,000 for the three months
ended June 30, 2002, from $895,000 for the same period last year, representing
6.7% and 5.4%, respectively, of net sales. General and administrative expenses
increased by 15.2% to $1,958,000 for the six months ended June 30, 2002, from
$1,700,000 for the same period last year, representing 6.7% and 5.6%,
respectively, of net sales. The increase in dollars spent was primarily a
result of increasing SpectraLinks infrastructure to support future growth for
domestic and international business matters as well as increased legal,
insurance and other corporate costs. The increase in general and
administrative costs as a percentage of net sales was primarily a result of a decline in
net sales.

Investment Income and Other (Net).Investment income is the result of
SpectraLinks investments in money market, investment-grade debt securities,
government securities, and corporate bonds. Investment income and other
decreased by 57.7% to $152,000 for the three months ended June 30, 2002, from
$359,000 for the same period last year, representing 1.0% and 2.2%,
respectively, of net sales. Investment income and other decreased by 63.1% to
$295,000 for the six months ended June 30, 2002, from $800,000 for the same
period last year, representing 1.0% and 2.6%, respectively, of net sales. The
decrease in investment income and other was primarily due to a decrease in
interest rates in 2002.

Income Tax.SpectraLinks income tax expense was $790,000 for the three months
ended June 30, 2002, compared to $1,269,000 for the same period last year, and
$1,351,000 for the six months ended June 30, 2002 compared to $2,310,000 for
the same period last year. The decrease was primarily related to decreased
sales and income from the operations of SpectraLink.

SpectraLinks operating expenses are based in part on its expectations of
future sales, and SpectraLinks expense levels are generally determined in
advance of sales. SPECTRALINK CURRENTLY PLANS TO CONTINUE TO EXPAND CERTAIN
AREAS OF ITS BUSINESS AND INCREASE ITS OPERATING EXPENSES IN AN EFFORT TO
GENERATE AND SUPPORT ADDITIONAL FUTURE REVENUE.If sales do not materialize in
a quarter as expected, SpectraLinks results of operations for that quarter
would be adversely affected. Net income may be disproportionately affected by
a reduction of revenues because only a small portion of SpectraLinks expenses
varies with its revenue.

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Liquidity and Capital Resources

Since its inception, SpectraLink has funded its operations with cash
provided by operations, supplemented by equity financing and leases on capital
equipment. As of June 30, 2002, SpectraLink had $39,840,000 of cash and cash
equivalents.

For the six months ended June 30, 2002, SpectraLink generated cash from
operations of $5,191,000, which was a direct result of net income of
$2,204,000, and decreases in income taxes receivable and accounts receivable. Investing
activities generated cash of $795,000 from the maturity of investments in
marketable securities. SpectraLink used $3,388,000 of cash in financing
activities during the six months ended June 30, 2002, which was a direct result
of purchases of 461,000 shares of its outstanding common stock (now classified
as treasury stock) at a cost of $4,497,000. The use of cash to repurchase
common stock was offset by proceeds of $1,109,000 received from stock option
exercises.

As of June 30, 2002, SpectraLink had working capital of $54,586,000
compared to $55,297,000 at December 31, 2001. The decrease in working capital
occurred primarily due to a decrease in income taxes receivable and accounts
receivable. As of June 30, 2002, SpectraLinks current ratio (ratio of current
assets to current liabilities) was 7.3:1, compared with a current ratio of
7.5:1 as of December 31, 2001.

SPECTRALINK BELIEVES THAT ITS CURRENT CASH, CASH EQUIVALENTS, AND CASH
GENERATED FROM OPERATIONS WILL BE SUFFICIENT, BASED ON SPECTRALINKS PRESENTLY
ANTICIPATED NEEDS TO FUND NECESSARY CAPITAL EXPENDITURES, TO PROVIDE ADEQUATE
WORKING CAPITAL, AND TO FINANCE SPECTRALINKS EXPANSION FOR THE FORESEEABLE
FUTURE. THERE CAN BE NO ASSURANCE THAT ANY ADDITIONAL FINANCING WILL BE
AVAILABLE TO SPECTRALINK ON ACCEPTABLE TERMS, OR AT ALL, WHEN REQUIRED BY
SPECTRALINK. IF EQUITY SECURITIES ARE ISSUED TO RAISE ADDITIONAL FUNDS,
FURTHER DILUTION TO THE EXISTING STOCKHOLDERS WILL RESULT.




Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of SpectraLink due to adverse
changes in financial and commodity market prices and rates. SpectraLink is
exposed to market risk in the areas of changes in United States interest rates.
These exposures are directly related to its normal operating and funding
activities. As of June 30, 2002, SpectraLink has not used derivative
instruments or engaged in hedging activities.

FORWARD-LOOKING STATEMENT FACTORS

Certain statements in this Form 10-Q, as well as statements made by
SpectraLink in periodic press releases, oral statements made by SpectraLinks
officials to analysts and stockholders in the course of presentations about
SpectraLink and conference calls following earnings releases, constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the Reform Act). Caution should be taken not
to place undue reliance on any such forward-looking statements since such
statements speak only as of the date of the making of such statements and
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of SpectraLink to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include, among other
things,



| |  |  | Many of the orders for SpectraLinks products are realized at the
end of the quarter, which makes it difficult to estimate or adjust
SpectraLinks operating activities quickly in response to an
unexpected increase or decrease in customer demand.Due to the timing
of orders from customers, SpectraLink has often recognized a
substantial portion of its revenue in the last month of a quarter. As
a result, minor fluctuations in the timing of orders and the shipment
of products may, in the future, cause operating results to vary
significantly from quarter to quarter. The demand for SpectraLinks
products depends upon many factors and is difficult to forecast.
Significant unanticipated fluctuations in demand could cause problems
in SpectraLinks operations. The lead-time required to assemble
SpectraLinks systems is often longer than the lead-time SpectraLinks
customers provide to SpectraLink for delivery of their product
requirements. Therefore, SpectraLink often must place orders in
advance of expected purchase orders from SpectraLinks customers. As
a result, SpectraLink has only a limited ability to react
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |   |  | to fluctuations in demand for its products, which could cause it to have
either too much or too little inventory of a particular product.
Further, the business relationship which SpectraLink has with Offshore
Group to use a Mexico facility to assemble SpectraLinks products may
not be able to provide product in a timely manner. Additionally, once
SpectraLink receives an order, it requires sufficient time to complete
the configuration of its product to the phone systems of the customer.
SpectraLinks inability to satisfy customer demand in a timely manner
would lead to lost sales and impede SpectraLinks ability to increase
its revenue. Conversely, a large portion of SpectraLinks expenses,
including rent, salaries and capital leases, is fixed and difficult to
reduce. SpectraLinks expenses are based in part on expectations for
its revenue. If SpectraLinks revenue does not meet its expectations,
the adverse effect of the revenue shortfall upon SpectraLinks operating
results may be acute in light of the fixed nature of its expenses. It
is possible that due to fluctuations in revenue, SpectraLinks operating
results could be below the expectations of securities analysts and
investors. For instance, SpectraLinks stock price declined
substantially after its preliminary announcement of its fourth quarter
2001 financial results reported in January 2002. In such an event, or
in the event that adverse market conditions prevail or are perceived to
prevail either generally or with respect to SpectraLinks business, the
price of SpectraLinks common stock would likely decline further.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The continuing economic slowdown, particularly in information
technology spending, will adversely impact SpectraLinks business.
SpectraLinks business has been adversely impacted by the general
economic slowdown in the United States and worldwide, particularly the
decline in information technology spending. Consumers of information
technology continue to defer, and in some cases cancel, their purchase
decisions. SpectraLinks operating results have been adversely
affected as a result. SpectraLink expects the economic slowdown to
continue to adversely impact its business and operating results for at
least the next few quarters and perhaps significantly longer. The
adverse impacts from the slowdown include longer sales cycles, lower
average selling prices and reduced revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | The ability of SpectraLink and its distributors and resellers to
develop and execute effective marketing and sales strategies.
SpectraLink offers its products directly and indirectly through a
variety of third-party business partners, including distributors and
resellers. Changes in the financial or business condition of these
distributors and resellers, in addition to the ability to develop and
execute effective marketing and sales strategies, could subject
SpectraLink to losses and affect its ability to bring its products to
market. For instance, SpectraLink experienced a decrease in sales by
distributors during the three months ended June 30, 2002, when those
distributors downsized their businesses in reaction to the economic
slowdown and, as a result, had fewer sales representatives marketing
SpectraLink products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | The market for on-premises wireless telephone systems may fail to
grow or to grow as quickly as SpectraLink anticipates. SpectraLinks
future growth depends in part on the widespread deployment of
integrated voice and data products for combined voice and data
services. If this growth does not occur as planned, SpectraLinks
future results of operations would be materially and adversely
affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | The risk of business interruption arising from SpectraLinks
dependence on its manufacturing facility located in Boulder, Colorado
and the business relationship SpectraLink has with Offshore Group to
use a facility in Guaymas/Empalme, Sonora, Mexico which provides
assembly services.SpectraLink is highly dependent on its Boulder,
Colorado manufacturing facility, which is home to the majority of
SpectraLinks manufacturing operations. SpectraLink is also highly
dependent upon its business relationship with Offshore Group to
provide a facility located in Guaymas/Empalme, Sonora, Mexico which
assembles SpectraLinks products. Any event that may disrupt or
indefinitely discontinue either of the facilitys capacity to
manufacture, assemble and repair SpectraLinks products could greatly
impair SpectraLinks ability to generate revenues, fulfill orders and
attain financial goals. For instance, SpectraLink may experience
delays in the receipt of assembled product from the facility in Mexico
should the border between the U.S. and Mexico close.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | SpectraLink faces increasing competition in the on-premises
wireless telephone system market.The on-premises wireless telephone
system industry is competitive and influenced by the introduction of
new products and new entrants into the industry. The competitive
factors affecting the market for SpectraLinks systems include product
functionality and features, frequency band of operation, ease-of-use,
quality of support, product quality and performance, price,
distribution channels, and the effectiveness of marketing and sales
efforts. Most of SpectraLinks competitors have significantly greater
financial, technical, research and development, and marketing
resources than SpectraLink. As a result, SpectraLinks competitors may
respond more quickly to new or emerging technologies and changes in
customer requirements, or may devote greater resources to the
development, promotion, sale and support                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |   |  | of their products than SpectraLink. In addition, some purchasers may
prefer to buy their wireless telephone systems from a single source
provider of telephone systems, such as Alcatel, Avaya, or NEC America,
all of which manufacture and sell PBX or key/hybrid systems. Other
purchasers may prefer to buy their 802.11 wireless telephone systems
from a single source provider of wireless local area networks, or LANs,
such as Symbol Technologies, which provides 802.11 wireless
infrastructure and application devices, such as bar code scanners, as
well as wireless telephones. Because SpectraLink focuses on wireless
on-premises telephone communications, it cannot serve as the sole source
for a complete telephone or data communications system. There is no
assurance that SpectraLink will be able to compete successfully in the
future. Further, if a potential customer is already using a competing
product or system, that potential customer may not be willing or able to
make the investment necessary to replace such a system with a
SpectraLink Wireless Telephone System. In addition, there may be
potential customers who choose another technology because of cost or
their belief that their needs do not require the full functionality
provided by a SpectraLink Wireless Telephone System.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | SpectraLinks ability to respond to rapid technological changes
within the on-premises wireless telephone industry. The wireless
communications industry is characterized by rapid technological
change, short product life cycles and evolving industry standards. To
remain competitive, SpectraLink must develop or gain access to new
technologies in order to increase product performance and
functionality, reduce product size and maintain cost-effectiveness.
SpectraLinks success is also dependent on its ability to develop new
products for existing and emerging wireless communications markets and
to introduce such products in a timely manner. Due to the competitive
nature of SpectraLinks business, any delay in the commercial
availability of new products could materially and adversely affect
SpectraLinks business, reputation and operating results. In
addition, if SpectraLink is unable to develop or obtain access to
advanced wireless networking technologies as they become available, or
is unable to design, develop and introduce competitive new products on
a timely basis, SpectraLinks future operating results would be
materially and adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | The ability of SpectraLink to develop and introduce new products
and transition existing products.SpectraLinks development efforts
may not lead to the successful introduction of new or improved
products. SpectraLink may encounter delays in deploying new or
improved products. For instance, SpectraLinks new products may not
properly function with its customers existing telephone systems or
SpectraLinks new products may contain defects or bugs. These
incompatibilities, defects or bugs may not be detected until
SpectraLinks customers begin to install the products. SpectraLink
may need to modify the design of its new or improved products if they
have incompatibilities, defects or bugs, which could result in
significant expenditures by SpectraLink as it seeks to remedy the
problems, delays in the purchase of the products or cancelled orders.
SpectraLink may also encounter delays in the manufacturing and
production of the new products. Additionally, the new products may
not be commercially successful. Demand for our existing products may
decrease upon the announcement of new or improved products. Further,
since products under development are often announced before
introduction, these announcements may cause customers to delay
purchases of any products until the new or improved versions of those
products are available. If customer orders decrease or are delayed
during the product transition, SpectraLink may experience a decline in
revenue and have excess inventory on hand which could decrease gross
profit margins. Delays or deficiencies in the development,
manufacturing, and delivery of or demand for new or improved products
could have a negative effect on SpectraLinks business, operating
results or financial condition.
|
| |  |  | SpectraLinks reliance on sole or limited sources of supply for
many components and equipment used in its manufacturing process.
SpectraLink relies on sole or limited sources of supply for many
components and equipment used in its manufacturing process. The
delay, inability, or refusal of any of these suppliers to ship these
components or equipment could interrupt SpectraLinks manufacturing
process and ability to manufacture products in a timely manner to meet
customer demand. The limited number of sources for many of these
components may also prevent SpectraLink from decreasing its reliance
on certain suppliers and finding other sources at competitive prices.
Unforeseen price increases by any of the sole or limited source
suppliers could negatively impact product margins and the financial
performance of SpectraLink.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | SpectraLinks ability to manage potential expansion of operations
in the U.S. and internationally.SpectraLink intends to expand its
existing domestic and international operations and to enter new
markets. This expansion will require significant management attention
and financial resources. SpectraLink currently has limited experience
in marketing and distributing its products internationally and in
developing versions of products that comply with local standards.
SpectraLink may also not be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |   |  | able to maintain or increase international market demand for its
products. International operations are subject to other inherent risks,
including foreign government regulation of technology or unexpected
changes in regulatory and customs requirements, difficulty and delays in
accounts receivable collection, difficulties and costs of staffing and
managing foreign operations, reduced protection for intellectual
property rights, foreign currency exchange rate fluctuations, and
taxation consequences.                                                                                                                                                                                                                                                                                                                                                                             
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | SpectraLinks ability to attract and retain personnel, including
key technical and management personnel.Much of the future success of
SpectraLink depends on the continued service and availability of
skilled personnel, including technical, marketing and staff positions.
Experienced personnel in the information technology industry are in
high demand and competition for their talents is intense. There can
be no assurance that SpectraLink will be able to successfully retain
and attract the key personnel it needs. Many of SpectraLinks key
personnel receive a total compensation package that includes stock
options and other equity awards. New regulations, volatility in the
stock market and other factors could diminish the value of
SpectraLinks equity awards, putting SpectraLink at a competitive
disadvantage or forcing SpectraLink to use more cash compensation.
|
| |  |  | The historic volatility of SpectraLinks stock price, which may
make it more difficult to resell shares at prices attractive to
sellers. The market price of SpectraLinks common stock has been
volatile and is likely to remain subject to wide fluctuations in the
future. For example, during the 12 month period ended June 30, 2002,
the trading close price of SpectraLinks common stock has ranged from
a high of $19.99 per share to a low of $8.45 per share. Many factors
could cause the market price of SpectraLinks common stock to
fluctuate, including:                                                                                                                                                                                                                                                                                                                          



| |  |  | variations in SpectraLinks actual or anticipated
quarterly or annual results;                                       
| | - |  | ---------------------------------------------------------------------------------------------------------------------
|
| |  |  | market conditions in SpectraLinks industry, the
industries of SpectraLinks customers and the economy as a whole;   
|
| |  |  | announcements of technological innovations by
SpectraLink or by its competitors;                                     
|
| |  |  | introduction of new products or product enhancements or
new pricing policies by SpectraLink or by its competitors;   
|
| |  |  | acquisitions or strategic alliances by SpectraLink or by its competitors;                                            
|
| |  |  | recruitment or departure of key personnel;                                                                           
|
| |  |  | the gain or loss of significant orders;                                                                              
|
| |  |  | changes in the market valuations of other telecommunications companies;                                              
|
| |  |  | the amount of liquid financial resources available to us;                                                            
|
| |  |  | the gain or loss of significant customers; and                                                                       
|
| |  |  | changes in the estimates of SpectraLinks operating
performance or changes in recommendations by securities analysts.



| |   |  | In addition, the stock market in general and the market for
technology-related stocks in particular has experienced a decline since
2000, and could decline further, which could cause the market price of
SpectraLinks common stock to fall for reasons not necessarily related
to SpectraLinks business, results of operations or financial condition.
The market price of SpectraLinks stock also might decline in reaction
to events that affect other companies in SpectraLinks industry even if
these events do not directly affect SpectraLink. Accordingly, you may
not be able to resell your shares of common stock at or above the price
you paid. Securities class action litigation is often brought against a
company following a period of volatility in the market price of its
securities, and SpectraLink has recently been sued in several purported
securities class action lawsuits. Further, certain of SpectraLinks
management and directors have also been sued in purported shareholder
derivative actions. Although SpectraLink believes that the lawsuits
lack merit, due to inherent uncertainties in litigation, SpectraLink
cannot accurately predict the outcome of this litigation. An adverse
determination could have a significant effect upon SpectraLinks
business and materially affect the price of its stock. Moreover,
regardless of the ultimate result, it is likely that the lawsuits will
require SpectraLink to incur expenses and divert managements attention
and resources from other matters, which could also adversely affect
SpectraLinks business and the price of its stock.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | SpectraLinks reliance on a limited number of significant
customers. A portion of SpectraLinks revenue has been derived from a
limited number of customers. Sales to two customers represented
approximately 10.0% and 10.8%, respectively, of SpectraLinks revenue
during the six months ended June 30, 2002. Sales to two customers
represented approximately 13.8% and 10.7% of revenue during the six
months ended June 30, 2001. Further, sales to one customer represented
approximately 12% of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |   |  | SpectraLinks revenue during each of 2001 and 2000. SpectraLink also
has experienced quarter to quarter variability in sales to each of its
major customers and expects this pattern to continue in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Changes in rules and regulations of the FCC. The wireless
communications industry, regulated by the Federal Communications
Commission (FCC), is subject to changing political, economic and
regulatory influences. Regulatory changes, including changes in the
allocation of available frequency spectrum, could significantly impact
SpectraLinks operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | SpectraLinks ability to protect its intellectual property
rights. SpectraLinks future success depends, in part, upon its
proprietary technology. SpectraLink relies on a combination of
patent, copyright, trade secret and trademark laws, confidentiality
procedures and nondisclosure and other contractual provisions to
protect its proprietary rights. These legal protections provide only
limited protection and may be time consuming and expensive to obtain
and enforce. There can be no assurance that SpectraLinks pending
patent applications will be allowed or that the issued or pending
patents will not be challenged or circumvented by competitors or
provide meaningful protection against competition. If challenged,
SpectraLinks patents might not be upheld or their claims could be
narrowed. If SpectraLink fails to protect its proprietary rights
adequately, SpectraLinks competitors might gain access to
SpectraLinks technology. As a result, SpectraLinks competitors might
offer similar products and SpectraLink might not be able to compete
successfully in its market. Moreover, despite SpectraLinks efforts to
protect its proprietary rights, unauthorized parties may copy aspects
of SpectraLinks products and obtain and use information that
SpectraLink regards as proprietary. Also, SpectraLinks competitors
may independently develop similar, but not infringing, technology,
duplicate SpectraLinks products, or design around SpectraLinks
patents or its other intellectual property. In addition, other parties
may breach confidentiality agreements or other protective contracts
with SpectraLink, and SpectraLink may not be able to enforce its
rights in the event of these breaches. Furthermore, SpectraLink
expects that it will increase its international operations in the
future, and the laws of many foreign countries do not protect
SpectraLinks intellectual property rights to the same extent as the
laws of the United States. SpectraLink may be required to spend
significant resources to monitor and protect its intellectual property
rights. Any litigation surrounding SpectraLinks rights could force
SpectraLink to divert important financial and other resources from its
business operations.
|
| |  |  | The assertion of intellectual property infringement claims
against SpectraLink.SpectraLinks industry is characterized by the
existence of a large number of patents and frequent claims and related
litigation regarding patent and other intellectual property rights.
SpectraLink cannot be certain that its products do not and will not
infringe upon issued patents, patents to be issued in the future or other
intellectual property rights of others. SpectraLink may in the future
be notified that it is infringing upon certain patent and/or other
intellectual property rights of others. Although there are no such
pending lawsuits against SpectraLink or unresolved notices that
SpectraLink is infringing upon intellectual property rights of others,
there can be no assurance that infringement claims will not occur in
the future. From time to time, third parties may assert exclusive
patent, copyright, trademark and other intellectual property rights to
technologies and related methods that are important to SpectraLink.
Litigation may be necessary in the future to defend against claims of
infringement or invalidity, to determine the validity and scope of the
proprietary rights of others, to enforce SpectraLinks intellectual
property rights, or to protect SpectraLinks trade secrets.
SpectraLink may also be subject to claims from customers for
indemnification. Any resulting litigation, regardless of its
resolution, could result in substantial costs and diversion of
resources. If it were determined that SpectraLinks products infringe
upon the intellectual property rights of others, SpectraLink would
need to obtain licenses from these parties or reengineer its products
in order to avoid infringement. SpectraLink might not be able to
obtain the necessary licenses on acceptable terms or at all, or to
reengineer its products successfully. Moreover, if SpectraLink is
sued for infringement and loses the suit, it could be required to pay
substantial damages or be enjoined from licensing or using the
infringing products or technology. Any of the foregoing could cause
SpectraLink to incur significant costs and prevent it from selling its
products.                                                    
|
| |  |  | A lower than anticipated rate of development of domestic and
international markets using the 802.11 standard.SpectraLinks
NetLink Wireless Telephones are compatible with the IEEE 802.11
standard for use on 802.11 compliant wireless LANs. Consequently,
demand for NetLink Wireless Telephones depends upon the development of
markets utilizing 802.11 compliant networks. This depends in part
upon the initial adoption of the 802.11 standard in international
markets, as well as enhancements to that standard in the U.S. and
foreign markets where the standard has already been                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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| |   |  | adopted. Additionally, markets utilizing 802.11 compliant networks may
develop more slowly, if at all, if competing wireless networks are
established and utilized. If markets utilizing 802.11 compliant
networks do not grow as SpectraLink anticipates, SpectraLinks growth
would be impeded and it would not be able to factor the related revenues
into its growth in the future.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | SpectraLinks reliance on its 802.11 technology partners to
continue to provide the wireless local area network for SpectraLinks
NetLink product, and to provide access points which support
SpectraLink Voice Priority.                                                                                                                                                              
|
| |  |  | The certification and approval process for SpectraLinks NetLink
product for use in countries that support the 802.11 standard.                                                                                                                                                                                                                                                        
|
| |  |  | Potential fluctuations in SpectraLinks future operating results.
SpectraLink has experienced, and may in the future continue to
experience, significant quarterly fluctuations in revenue, gross
margins and operating results due to numerous factors, some of which
are outside SpectraLinks control. These factors include:                                                       



| |  |  | fluctuating market demand for, and declines in the
average selling prices of, SpectraLinks products,
| | - |  | -----------------------------------------------------------------------------------------------------
|
| |  |  | the timing of and delay of
significant orders from customers, and                                    
|
| |  |  | seasonality in demand within SpectraLinks various sectors.                                          



| |  |  | Historically, SpectraLink has not operated with a significant order
backlog and a substantial portion of SpectraLinks revenue in any
quarter has been derived from orders booked and shipped in that quarter.
Accordingly, SpectraLinks revenue expectations are based almost
entirely on its internal estimates of future demand and not on firm
customer orders. Planned expense levels are relatively fixed in the
short term and are based in large part on these estimates, and if orders
and revenue do not meet expectations, SpectraLinks operating results
could be materially adversely affected.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Part II     Other Information

Item 1 Legal Proceedings

SpectraLink and certain of its officers and directors have been named as
defendants in four lawsuits filed between February 7, 2002 and February 21,
2002, three of which have been filed in the United States District Court for
the District of Colorado and one of which has been filed in the Colorado
District Court for the City and County of Denver. The cases are designated as
follows: Wilmer Kerns, Individually And On Behalf of All Others Similarly
Situated, Plaintiff, vs. SpectraLink Corporation, Bruce Holland and Nancy K.
Hamilton, Defendants (United States District Court Civil Action Number
02-D-0263) (the Kerns Action); Danilo Martin Molieri, Individually and On
Behalf of All Others Similarly Situated, Plaintiff, v. SpectraLink Corporation,
Bruce Holland and Nancy K. Hamilton, Defendants (United States District Court
Civil Action Number 02-D-0315) (the Molieri Action); Evie Elennis,
derivatively on behalf of SpectraLink Corporation, Plaintiff(s), v. Bruce M.
Holland, Anthony V. Carollo, Jr., Gary L. Bliss, Michael P. Cronin, Nancy K.
Hamilton and John H. Elms, Defendant(s), and SpectraLink Corporation, Nominal
Defendant (United States District Court Civil Action Number 02-D-0345) (the
Federal Derivative Action); and Roger Humphreys, Derivatively on Behalf of
Nominal Defendant SpectraLink Corporation, Plaintiff, v. Carl D. Carman,
Anthony V. Carollo, Jr., Bruce M. Holland, Burton J. McMurtry, Gary L. Bliss,
Michael P. Cronin, John H. Elms, and Nancy K. Hamilton, Defendants (Colorado
District Court Case No. 02CV1687) (the State Derivative Action). In the
Kerns and Molieri Actions, plaintiffs, who purport to be purchasers or holders
of SpectraLink common stock, seek to assert claims on behalf of a class of
persons who purchased securities in SpectraLink between July 19, 2001 and
January 11, 2002. The plaintiffs in the Federal and State Derivative Actions
purport to bring their claims derivatively on behalf of SpectraLink.

These cases arise out of a press release issued by SpectraLink on January
14, 2002, announcing preliminary financial results for the fourth quarter of
2001 and revising downward its estimates for year 2002 results of operations.
The Kerns and Molieri Actions contain essentially identical claims alleging
that SpectraLink and certain of its officers and directors violated the United
States securities laws, specifically Sections 10(b) and 20(a) and Rule 10b-5
under the Securities Exchange Act of 1934, as a result of alleged public
misstatements and omissions, and cite to certain insider sales of SpectraLink
stock prior to the January 14, 2002 press release. In the cases brought as
derivative actions, the plaintiffs allege that the officers and directors of
SpectraLink violated fiduciary duties owed to SpectraLink and its stockholders
under state laws by allowing and/or facilitating the issuance of these same
alleged public misstatements and omissions, misappropriating nonpublic
information for their own benefit, making insider stock sales, wasting
corporate assets, abusing their positions of control, and mismanaging the
corporation. The plaintiffs in these derivative cases allege that SpectraLink
has and will continue to suffer injury as a result of these alleged violations
of duty for which the officers and directors should be held liable.

At the request of the plaintiffs in the Kerns and Molieri cases, the Court
consolidated those two actions, and appointed Landon Hendricks and Derek P. Poh
as lead plaintiffs. The plaintiffs in the consolidated action will file a
consolidated amended complaint by August 13, 2002.

The defendants in the Federal and State Derivative Actions filed motions
to dismiss. In the Federal Action, the plaintiff stipulated to and the Court
then ordered a stay of discovery and a stay of motion practice pending
resolution of the anticipated motion to dismiss the consolidated amended
complaint in the consolidated action described above. In the State Derivative
Action, the plaintiff also agreed to a stay of discovery and a stay of motion
practice pending resolution of the anticipated motion to dismiss, and the
stipulation has been submitted to the state court for approval.

It is possible that additional lawsuits may be filed alleging similar
claims, and that any such additional lawsuits arising out of the same operative
facts and circumstances would also be consolidated. Unless circumstances
warrant, SpectraLink does not intend to report the filing of additional
lawsuits based on the same operative facts and circumstances.

SpectraLink believes that the lawsuits are without merit and it intends to
vigorously defend both itself and its officers and directors, with whom
SpectraLink shares common interests and defenses. However, no assurance can be
given that SpectraLink will be successful in defending the claims being
asserted in these suits. If SpectraLink is not successful in its defense of
these suits, it could be required to make significant payments to its
stockholders and/or their lawyers, which could have a material adverse effect
on SpectraLinks business, financial condition and results of operations. In
addition, the litigation could result in substantial costs and divert
managements attention and resources. In the particular case of the Federal
and State Derivative Actions, a finding of liability on the part of all or some
of the defendant officers and directors could ultimately result in the
interests of SpectraLink becoming adverse to those officers and directors. In
either case, SpectraLinks business could be adversely affected, even if the

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plaintiffs are ultimately not successful in the prosecution of their claims
against SpectraLink and/or its officers and directors.

SpectraLink is not presently a party to any other material pending legal
proceedings of which it is aware.




Item 4 Submission of Matters to a Vote of Security Holders



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | At SpectraLinks Annual Meeting of Stockholders held May 22, 2002, the
following proposal was adopted by the margins indicated.



| | 1. |  | To elect a board of Directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                  |            |          |  |  |           | 
|----------------------- |  | ---------------- | ---------- | -------- |  |  | --------- | 
|                        |  | Number of Shares
|                        |  |                 
|                        |  | Voted For        |            | Withheld
|                        |  |                  |            |         
|Bruce M. Holland        |  |                  | 14,274,099 |          |  |  | 2,517,823 | 
|Carl D. Carman          |  |                  | 16,766,474 |          |  |  | 25,448    | 
|Anthony V. Carollo, Jr. |  |                  | 16,766,274 |          |  |  | 25,648    | 
|Burton J. McMurtry      |  |                  | 16,766,274 |          |  |  | 25,648    | 




Item 6 Exhibits and Reports on Form 8-K







|    |  |                                                                                                                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits                                                                                                                                                                                                                                                 
|    |  | No exhibits are filed with this Report. Exhibits filed with SpectraLinks 2001 Form
10-K constitute those exhibits currently required to be on file. The reader should refer to
the 2001 Form 10-K under Part III, Item 14, for a list of those exhibits.
|    |  |                                                                                                                                                                                                                                                          
|(b) |  | Reports on Form 8-K                                                                                                                                                                                                                                      
|    |  | No reports were filed during the fiscal quarter ended June 30, 2002.                                                                                                                                                                                     

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SPECTRALINK CORPORATION
SIGNATURES

In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

|                      |  |                                           
|--------------------- |  | ------------------------------------------
|                      |  | SPECTRALINK CORPORATION                   
|                      |  |                                           
|Date: August 13, 2002 |  | By:                                       
|                      |  | Nancy K. Hamilton,                        
|                      |  | Principal Financial and Accounting Officer
|                      |  | and on behalf of the Registrant           

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