<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 2000


                                                      REGISTRATION NO. 333-38518
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------


                                 PRE-EFFECTIVE
                                AMENDMENT NO. 4
                                       TO


                                    FORM S-1

                          REGISTRATION STATEMENT UNDER

                           THE SECURITIES ACT OF 1933
                            ------------------------

                            WJ COMMUNICATIONS, INC.

             (Exact name of Registrant as specified in its charter)


<TABLE>
<S>                            <C>                            <C>
          DELAWARE                         3663                        94-1402710
(State or other jurisdiction   (Primary Standard Industrial         (I.R.S. Employer
             of                 Classification Code Number)      Identification Number)
      incorporation or
        organization)
</TABLE>


                              3333 HILLVIEW AVENUE
                          PALO ALTO, CALIFORNIA 94304
                                 (650) 493-4141

         (Address, including zip code, and telephone number, including
            area code, of Registrant's principal executive offices)
                            ------------------------

                              MALCOLM J. CARABALLO
                            WJ COMMUNICATIONS, INC.
                              3333 HILLVIEW AVENUE
                          PALO ALTO, CALIFORNIA 94304
                                 (650) 493-4141

 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                            ------------------------

                                   COPIES TO:

<TABLE>
<S>                             <C>                             <C>
 MITCHELL S. PRESSER, ESQ.         ANTHONY T. ILER, ESQ.            DANIEL CLIVNER, ESQ.
 WACHTELL, LIPTON, ROSEN &          IRELL & MANELLA LLP           RICHARD CAPELOUTO, ESQ.
            KATZ                 333 S. HOPE STREET, SUITE       SIMPSON THACHER & BARTLETT
    51 WEST 52ND STREET                     3300                    3373 HILLVIEW AVENUE
  NEW YORK, NY 10019-6150        LOS ANGELES, CA 90071-3043         PALO ALTO, CA 94304
      (212) 403-1000                  (213) 620-1555                  (650) 251-5000
</TABLE>

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

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
                            ------------------------

    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /  ______________

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /  ______________

    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /  ______________

    If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, check the following box. / /
                            ------------------------

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                  SUBJECT TO COMPLETION, DATED AUGUST  , 2000.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE
REGISTATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS

                                5,400,000 SHARES

                             [WJ COMMUNICATIONS LOGO]

                                  COMMON STOCK

    This is an initial public offering of common stock by WJ
Communications, Inc. WJ Communications is selling 5,400,000 shares of common
stock. The estimated initial public offering price is between $14.00 and $16.00
per share.

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

    No public market currently exists for our common stock. Our common stock has
been approved for quotation on the Nasdaq National Market under the symbol WJCI.

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

<TABLE>
<CAPTION>
                                                              PER SHARE            TOTAL
                                                              ---------            -----
<S>                                                           <C>               <C>
Initial public offering price...............................   $                $
Underwriting discounts and commissions......................   $                $
Proceeds to WJ Communications, before expenses..............   $                $
</TABLE>

    WJ Communications has granted the underwriters an option for a period of
30 days to purchase up to 810,000 additional shares of common stock.

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

           INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

CHASE H&Q
              CIBC WORLD MARKETS
                             THOMAS WEISEL PARTNERS LLC

           , 2000.
<PAGE>
                              [INSIDE FRONT COVER]

    At the top of the inside front cover page of the prospectus appear the WJ
Communications name and the text, "We design, develop and manufacture innovative
products for the markets pictured below enabling data transport in current and
next generation fiber optic, broadband cable and wireless communications
networks."

    At the center of the diagram are 2 interlinking multi-colored circles
representing a ring-based fiber optic network. The larger, central ring contains
the words "Metro Core Fiber Optic Ring;" the smaller ring contains the words
"Metro Access Fiber Optic Ring." Each ring connects by a band to a schematic
located in the upper-right and lower-left quadrants. From the larger ring to the
upper-right quadrant extends a multi-colored band ending in an arrow which loops
around a diagram of the globe. The globe shows the North American continent and
portions of the South American continent. Beneath the multi-colored connecting
band are the words "Long Haul Fiber Optic Backbone." The smaller ring connects,
by a black band to a diagram of buildings located in the lower-left quadrant.

    The center "core" ring also links with schematics located in the upper-left
and lower-right quadrants. The upper-left quadrant shows the access technology,
"Broadband Cable Networks", typically employed by our home/small office
end-users. "Broadband Cable Networks" is connected to the core ring by a small
black circle. The circle contains the word "Fiber". "Broadband Cable Networks"
is represented by a black line from the "Fiber" ring to 6 homes.

    The lower-right quadrant shows the access technologies, "Mobile
Infrastructure Networks" and "Broadband Wireless Networks", primarily utilized
by corporate end-users. "Mobile Infrastructure Networks" is attached by a black
line to the core ring and is represented by a base station connected, with
yellow signal lines, to a personal device assistant and a cellular phone.
"Broadband Wireless Networks", also connected to the core ring by a black line,
is represented by a large building with a transmitter/receiver module on top
connected, by yellow signal lines, to 3 office structures.

                              [INSIDE BACK COVER]

    At the top of the inside back cover page appears the text, "We design,
develop and manufacture innovative products enabling data transport in current
and next generation fiber optic, broadband cable and wireless communications
networks." The remainder of the page is divided into 2 sections which correspond
to WJ Communications' major product areas. In each section is a series of
photographs which display the specific products.

    The top section is labeled "Fiber Optic and Wireless Communications
Products." That section is further divided into 2 sections. On the left side of
the top section appear the heading "Fiber Optic Products" and 3 photographs with
corresponding names, one of each of the following fiber optic products: a
wideband amplifier, a neighborhood node and a fiber optic oscillator. On the
right side of the top section appear the heading "Wireless Products" and 3
photographs with corresponding names, one of each of the following broadband
fixed wireless products: a microwave transceiver, a frequency converter and a
microwave multipoint distribution system unit. The text, which is centered at
the top of the top section, states:

    - Enabling reliable, high speed, high capacity data transmission

    - Providing highly integrated solutions to complex high frequency challenges

    - Based on stable, precise and highly linear frequency converter technology.

    The lower section is labeled "Semiconductor Products." It contains 3
photographs with corresponding names of the following products: a gallium
arsenide wafer, gallium arsenide packaged devices and a thin-film substrate
square. Below the photographs of the gallium arsenide wafer and the gallium
arsenide packaged devices, the text states:

    Providing components for fiber optic, broadband cable and wireless systems

    - Highly linear amplifiers and mixers

    - Stable oscillators.

    Below the photograph of the thin-film substrate square, the text states
"Advanced technology for improved high frequency electrical performance."

    At the bottom right corner of the back cover appears the WJ Communications
logo.
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Prospectus Summary..........................................      1
Risk Factors................................................      6
Forward-Looking Statements..................................     14
Use of Proceeds.............................................     15
Dividend Policy.............................................     15
Capitalization..............................................     16
Dilution....................................................     17
Selected Consolidated Financial Data........................     18
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     20
Business....................................................     34
Management..................................................     50
Principal Stockholders......................................     62
Certain Transactions........................................     64
Description of Capital Stock................................     66
Shares Eligible for Future Sale.............................     69
U.S. Federal Tax Considerations for Non-U.S. Holders........     70
Underwriting................................................     73
Legal Matters...............................................     76
Experts.....................................................     76
Where You Can Find More Information.........................     76
Index to Consolidated Financial Statements..................    F-1
</TABLE>

        "WJ Communications" is an unregistered trademark of WJ Communications.
This prospectus also includes references to registered service marks and
trademarks of other entities.
<PAGE>
                               PROSPECTUS SUMMARY

    THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING "RISK FACTORS" BEGINNING ON PAGE 6, AND OUR
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THOSE CONSOLIDATED FINANCIAL
STATEMENTS BEGINNING ON PAGE F-1 BEFORE MAKING AN INVESTMENT DECISION. SOME
TECHNICAL TERMS NOT EXPLAINED IN THIS SUMMARY ARE DESCRIBED IN MORE DETAIL IN
"BUSINESS."

                               WJ COMMUNICATIONS

    We design, develop and manufacture innovative broadband communications
products for current and next generation fiber optic, broadband cable and
wireless communications networks. We leverage our 40 years of experience in
developing high quality radio frequency, or RF, products to enable the rapid
transmission of large amounts of voice, video and data traffic over these
advanced communications networks. Our core technology expertise, coupled with
our strong design and manufacturing capabilities, allows us to provide our
customers with complete solutions to the RF challenges they face. Our products
are used by communications equipment manufacturers and service providers to
enhance the capacity and speed of their network equipment. We sell our products
to over 50 customers, including industry leaders such as Lucent Technologies and
Nortel Networks.

    Growing demand for voice, video and data services, as well as high speed
Internet access, has increased the need for communications networks capable of
handling large volumes of traffic. Simultaneously, increased competition among
network service providers has created a demand for greater bandwidth to support
new, enhanced service offerings. As the inadequacies of the traditional
communications infrastructure have limited the ability of communications service
providers to meet the growing demand for broadband access, these service
providers are upgrading the existing fiber infrastructure and are deploying
advanced communications networks which are comprised of fiber optic, broadband
cable and wireless systems. While the transport medium is very different for
these three types of networks, the core technology of RF electronics is common
to all three. With the increasing data transport rates of these networks,
greater demands are being placed on equipment manufacturers to provide high
performance RF products with the characteristics necessary to enable increased
bandwidth.

    We provide the technology, design expertise and products that address the RF
and related integration challenges inherent in advanced communications networks.
Our solution is characterized by:

    - ADVANCED DEVICE TECHNOLOGY. Our expertise in high performance gallium
      arsenide semiconductor technology and other advanced communications
      devices provide the technological foundation from which our products are
      derived. Our advanced device technology results in products that enhance
      performance at high frequencies, amplify and transform signals with
      minimal distortion and provide the precision, stability and reliability
      required by high-speed broadband networks.

    - RF DESIGN EXPERTISE. Our team of highly qualified engineers applies our
      company's 40 years of RF knowledge and expertise to both fiber optic and
      wireless products. Our engineers are adept in component design and possess
      an extensive level of integration expertise, resulting in optimum designs
      from the component to the subsystem level.

    - MANUFACTURABILITY. We use our ability to rapidly convert conceptual ideas
      and new technologies into products, and to quickly move from design to
      high volume, automated manufacturing to provide high quality, high
      performance products at competitive prices.
<PAGE>
    Our objective is to be the leading supplier of innovative, proprietary RF
solutions to fiber optic, broadband cable and wireless communications equipment
companies and service providers enabling them to implement and deploy advanced
broadband networks. To meet this goal, we intend to continue to:

    - leverage our technology leadership and design and integration expertise to
      grow within these dynamic markets;

    - maintain and develop strong collaborative customer relationships with
      industry leaders;

    - expand our manufacturing capabilities; and

    - acquire and develop new technologies.

    We were founded in 1957 to develop and manufacture microwave devices for
defense electronics and space communications systems. With the decline of the
aerospace and defense industries in the 1990s, we began applying our technology,
design and manufacturing expertise to develop commercial communications
products. In several transactions from 1997 through January 2000, we divested
all of our divisions other than our current business, along with several
non-operating real estate assets. On January 31, 2000, we completed a
recapitalization merger transaction with an affiliate of Fox Paine & Company.
Prior to the recapitalization merger we were a publicly traded company. In
connection with the recapitalization merger, we replaced our senior management
and board of directors. We are now focused exclusively on providing RF product
solutions for the commercial fiber optic, broadband cable, and wireless
communications applications. To reflect our focus on these commercial broadband
communications markets, we recently changed our name from Watkins-Johnson
Company to WJ Communications, Inc.

    Our executive offices are located at 3333 Hillview Avenue, Palo Alto,
California 94304-1223. Our telephone number is (650) 493-4141.

                              RECENT DEVELOPMENTS

    On July 25, 2000, we completed the sale of $7.5 million and $5.0 million of
Series A Preferred Stock in private placements to Cisco Systems, Inc. and an
additional investor, respectively. These sales resulted in net proceeds to us of
$11.5 million and the recognition of a $10.0 million preferred stock dividend
resulting from a beneficial conversion feature. The $10.0 million preferred
stock dividend is based upon an assumed initial public offering price of $15.00
per share, which is the midpoint of the price range set forth on the cover of
this prospectus. The beneficial conversion feature is a one time preferred stock
dividend in the period in which the initial public offering becomes effective.
These shares of Series A Preferred Stock will automatically convert into
1,498,800 shares of common stock upon the closing of this offering. The
Series A Preferred investors were granted the right to include their shares in
future registered offerings that we may make. Cisco Systems has also expressed a
current interest in purchasing up to 500,000 shares of common stock in the
offering, based on an assumed initial public offering price of $15.00 per share,
which is the midpoint of the price range set forth on the cover of this
prospectus; however, we cannot assure you that Cisco Systems will in fact
purchase shares in the offering.

                                       2
<PAGE>
                                  THE OFFERING

<TABLE>
<S>                                         <C>
Common stock offered by WJ
  Communications..........................  5,400,000 shares

Common stock to be outstanding after this
  offering................................  54,444,996 shares

                                            We estimate that we will receive net proceeds from the
                                            offering of approximately $72.8 million. We intend to
                                            use up to $40.0 million of the net proceeds to repay
                                            borrowings under our senior secured credit facility. We
                                            intend to use the balance of the net proceeds for
                                            capital expenditures, strategic investments and
                                            acquisitions and general corporate purposes.
Use of Proceeds...........................

Proposed Nasdaq National Market Symbol....  WJCI
</TABLE>

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

    This information excludes:

    - 15,278,163 shares of common stock that were subject to outstanding options
      at June 30, 2000 at a weighted average exercise price of $1.56 per share;
      and

    - 1,198,506 additional shares of common stock reserved for issuance under
      our 2000 stock incentive plan.

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

    Unless otherwise noted, the information in this prospectus assumes:

    - 47,546,196 shares of common stock outstanding on June 30, 2000;

    - the conversion of all of our outstanding shares of Series A Preferred
      Stock into 1,498,800 shares of common stock;

    - that the underwriters' over-allotment option will not be exercised;

    - our reincorporation in Delaware immediately prior to the consummation of
      the offering; and

    - a 3-for-2 stock split effected in connection with our reincorporation.

                                       3
<PAGE>
                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

    THE FOLLOWING TABLE SETS FORTH SUMMARY CONSOLIDATED FINANCIAL DATA FOR THE
PERIODS INDICATED. WE COMMENCED OUR CURRENT OPERATIONS AT THE BEGINNING OF 1996.
THE CONSOLIDATED STATEMENTS OF OPERATIONS DATA REPRESENT OUR RESULTS FROM
CONTINUING OPERATIONS. IT IS IMPORTANT THAT YOU READ THIS INFORMATION TOGETHER
WITH THE SECTION ENTITLED "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" BEGINNING ON PAGE 20 AND OUR CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES TO THOSE FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
                                                                                                         SIX MONTHS ENDED
                                                                  YEAR ENDED DECEMBER 31,              ---------------------
                                                        --------------------------------------------   JUNE 25,    JUNE 30,
                                                           1996         1997       1998       1999       1999        2000
                                                        -----------   --------   --------   --------   ---------   ---------
                                                        (UNAUDITED)                                         (UNAUDITED)
<S>                                                     <C>           <C>        <C>        <C>        <C>         <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
    Sales.............................................   $ 12,633     $ 31,174   $ 63,568   $ 82,404   $ 47,216    $ 44,678
    Cost of goods sold................................     12,238       25,591     43,400     50,534     29,825      27,541
                                                         --------     --------   --------   --------   --------    --------
    Gross profit......................................        395        5,583     20,168     31,870     17,391      17,137
    Operating expenses:
        Research and development......................      6,585       10,204     14,124     16,806      8,651       8,764
        Selling and administrative....................      3,463        2,219      4,035      5,331      2,552       5,966
        Amortization of deferred stock compensation...         --           --         --         --         --         517
        Corporate administrative......................        561        1,240      1,811      4,391      1,852         322
        Recapitalization merger and other.............         --           --         --      3,223         --      35,453
                                                         --------     --------   --------   --------   --------    --------
            Total operating expenses..................     10,609       13,663     19,970     29,751     13,055      51,022
                                                         --------     --------   --------   --------   --------    --------
    Income (loss) from operations.....................    (10,214)      (8,080)       198      2,119      4,336     (33,885)
    Interest income...................................        789        2,198      5,681      5,070      1,624       1,317
    Interest expense..................................     (1,574)        (795)      (601)      (520)      (245)     (2,275)
    Other income (expense)--net.......................       (459)        (249)     1,220        412        156        (691)
    Gain on disposition of real property..............         --        7,609     14,973     61,652         --         808
                                                         --------     --------   --------   --------   --------    --------
    Income (loss) from continuing operations before
      income taxes....................................    (11,458)         683     21,471     68,733      5,871     (34,726)
    Income tax (provision) benefit....................      4,055         (240)    (6,978)   (26,383)    (1,903)      9,374
                                                         --------     --------   --------   --------   --------    --------
    Income (loss) from continuing operations..........   $ (7,403)    $    443   $ 14,493   $ 42,350   $  3,968    $(25,352)
                                                         ========     ========   ========   ========   ========    ========
    Income (loss) from continuing operations per
      share--basic....................................   $  (0.03)    $   0.00   $   0.06   $   0.22   $   0.02    $  (0.34)
                                                         ========     ========   ========   ========   ========    ========
    Income (loss) from continuing operations per
      share--diluted..................................   $  (0.03)    $   0.00   $   0.06   $   0.21   $   0.02    $  (0.34)
                                                         ========     ========   ========   ========   ========    ========
    Shares used to calculate income (loss) from
      continuing operations per share--basic..........    247,950      247,740    232,110    192,584    196,860      73,551
    Shares used to calculated income (loss) from
      continuing operations per share--diluted........    247,950      255,270    235,710    198,341    199,830      73,551
</TABLE>

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED
                                                                JUNE 30, 2000
                                                              -----------------
                                                                 (UNAUDITED)
<S>                                                           <C>
PRO FORMA PER SHARE AMOUNTS:
  Pro forma income (loss) from continuing operations........      $(25,352)
  Beneficial conversion related to preferred stock..........        (9,982)
                                                                  --------
  Pro forma income (loss) available to common
    stockholders............................................      $(35,334)
                                                                  ========
  Pro forma income (loss) from continuing operations per
    share--basic............................................      $  (0.47)
  Pro forma income (loss) from continuing operations per
    share--diluted..........................................      $  (0.47)
  Shares used to calculate pro forma income (loss) from
    continuing operations per share--basic..................        75,050
  Shares used to calculate pro forma income (loss) from
    continuing operations per share--diluted................        75,050
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                          JUNE 30, 2000
                                                                           (UNAUDITED)
                                                              --------------------------------------
                                                                                          PRO FORMA
                                                                ACTUAL      PRO FORMA    AS ADJUSTED
                                                              -----------   ----------   -----------
<S>                                                           <C>           <C>          <C>
SUMMARY CONSOLIDATED BALANCE SHEET DATA:
    Cash and equivalents and short-term investments.........    $12,626      $24,126      $ 57,031
    Working capital.........................................     15,920       27,420        73,340
    Total assets............................................     70,656       82,156       112,398
    Total debt..............................................     39,925       39,925            --
    Capital leases, net of current portion..................      4,804        4,804         4,804
    Stockholders' equity (deficit)..........................     (1,336)      10,164        81,396
</TABLE>

    The unaudited pro forma per share amounts and unaudited pro forma summary
consolidated balance sheet data reflect the sale of Series A Preferred Stock to
investors for $11.5 million, net of expenses, the recognition of a $10.0 million
preferred stock dividend resulting from a beneficial conversion and the assumed
conversion of those shares into common stock on the date of the offering. The
$10.0 million preferred stock dividend is based upon an assumed initial public
offering price of $15.00 per share, which is the midpoint of the price range set
forth on the cover of this prospectus. The unaudited pro forma as adjusted
summary consolidated balance sheet data further reflect the sale of 5,400,000
shares of common stock in the offering at an assumed initial public offering
price of $15.00 per share, which is the midpoint of the price range set forth on
the cover of this prospectus, after deducting underwriting discounts and
commissions and estimated offering expenses and the application of the proceeds
to repay our senior secured credit facility. The summary consolidated balance
sheet data exclude approximately $3.5 million of net assets of discontinued
operations.

                                       5
<PAGE>
                                  RISK FACTORS

    YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND ALL OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION.
IF ANY OF THE FOLLOWING RISKS, OR OTHER RISKS AND UNCERTAINTIES THAT WE HAVE NOT
YET IDENTIFIED OR THAT WE CURRENTLY THINK ARE IMMATERIAL, ACTUALLY OCCUR AND ARE
MATERIAL, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE
MATERIALLY AND ADVERSELY AFFECTED. IN THAT EVENT, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.

                         RISKS RELATED TO OUR BUSINESS

IF WE ARE UNABLE TO RESPOND TO THE RAPID TECHNOLOGICAL CHANGE TAKING PLACE IN
OUR INDUSTRY, OUR EXISTING PRODUCTS COULD BECOME OBSOLETE AND WE COULD FACE
DIFFICULTIES MAKING FUTURE SALES.

    The markets in which we compete are characterized by rapidly changing
technologies, evolving industry standards and frequent improvements in products
and services. If the technologies supported by our products become obsolete or
fail to gain widespread acceptance, as a result of a change in industry
standards or otherwise, we could face difficulties making future sales. Our
future success will depend on factors including our ability to:

    - enhance the functionality of existing products in a timely and
      cost-effective manner;

    - establish close working relationships with major customers for the design
      of their new fiber optic or wireless transmission systems that incorporate
      our products;

    - identify, develop and achieve market acceptance of new products that
      address new technologies and meet customer needs in the fiber optic,
      broadband cable and wireless communications markets;

    - apply expertise and technologies to existing and emerging fiber optic,
      broadband cable or wireless communications markets; and

    - produce new products cost-efficiently.

    We must continue to make significant investments in research and development
to seek to develop product enhancements, new designs and technologies. If we are
unable to develop and introduce new products or enhancements in a timely manner
in response to changing market conditions or customer requirements, or if our
new products do not achieve market acceptance, our sales could decline.

SEVERAL CUSTOMERS ACCOUNT FOR A HIGH PERCENTAGE OF OUR SALES AND THE LOSS OF, OR
A REDUCTION IN ORDERS FROM, A SIGNIFICANT CUSTOMER COULD RESULT IN A LOSS OF
SALES.

    We depend on a small number of customers for a majority of our sales. During
the year ended December 31, 1999, we had three customers that accounted for
approximately 76% of our sales. We currently have two customers, Nortel Networks
and Lucent Technologies, which each account for more than 10% of our sales. In
the first six months of 2000, approximately 69% of our sales were attributable
to these two customers. In addition, most of our sales result from purchase
orders or from contracts that can be cancelled on short-term notice. We
anticipate that we will continue to sell a majority of our products to a
relatively small group of customers. The loss of, or a reduction in orders from,
a significant customer for any reason could cause our sales to decrease.

OUR POTENTIAL CUSTOMERS OPERATE IN AN INTENSELY COMPETITIVE ENVIRONMENT AND OUR
SUCCESS WILL DEPEND ON THE SUCCESS OF OUR CUSTOMERS.

    The companies in our target markets, communications equipment companies and
service providers, face an extremely competitive environment. If the companies
with whom we establish business relations are not successful in building their
systems, promoting their products, including new revenue-generating

                                       6
<PAGE>
services, receiving requisite approvals and accomplishing the many other
requirements for the success of their businesses, our growth will be limited.
Furthermore, our customers may have difficulty obtaining parts from other
suppliers causing these customers to cancel or delay orders for our products.
Moreover, our customers' success is affected by a number of factors, many of
which are out of our control, including:

    - product life cycles and new product introductions;

    - success of their products;

    - manufacturing strategy and changes in inventory levels;

    - regulatory approvals;

    - competitive conditions; and

    - contract awards.

    In addition, we have limited ability to foresee the competitive success of
our customers and to plan accordingly.

IF THE FIBER OPTIC, BROADBAND CABLE AND WIRELESS COMMUNICATIONS MARKETS FAIL TO
GROW OR THEY DECLINE, OUR SALES MAY NOT GROW OR MAY DECLINE.

    Our future growth depends on the success of the fiber optic, broadband cable
and wireless communications markets. The rate at which these markets will grow
is difficult to predict. These markets may fail to grow or decline for many
reasons, including:

    - the inability of fiber optic or wireless communications service providers
      to handle growing demands for faster transmission of increasing amounts of
      data for broadband applications;

    - inefficiency and poor performance of fiber optic, broadband cable or
      wireless communications services compared to other forms of broadband
      access;

    - insufficient consumer demand for fiber optic, broadband cable or wireless
      products or services; and

    - real or perceived security or health risks associated with wireless
      communications.

    If the markets for our products in fiber optic, broadband cable or wireless
communications fail to grow, or grow more slowly than we anticipate, the use of
our products may decline and our sales could suffer.

IF THE INTERNET DOES NOT CONTINUE TO EXPAND AND BROADBAND ACCESS TECHNOLOGIES
ARE NOT DEPLOYED TO SATISFY THE INCREASED BANDWIDTH REQUIREMENTS AS WE
ANTICIPATE, SALES OF OUR PRODUCTS MAY DECLINE.

    Our future success depends on the continued growth of the Internet as a
widely-used medium for commerce and communications, the continuing increase in
the amount of data transmitted over communications networks and the growth of
broadband communications networks to meet the increased demand for bandwidth. If
the Internet does not continue to expand as a widespread communications medium
and commercial marketplace, the need for significantly increased bandwidth
across networks and the market for broadband communications equipment may not
continue to develop. Future demand for our products is uncertain and will depend
to a great degree on the continued growth and deployment of new broadband
communications equipment. If this growth does not continue, sales of our
products may decline.

                                       7
<PAGE>
IF WE FAIL TO ACCURATELY FORECAST COMPONENT AND MATERIAL REQUIREMENTS FOR OUR
MANUFACTURING FACILITIES, WE COULD INCUR ADDITIONAL COSTS OR EXPERIENCE
MANUFACTURING DELAYS.

    We use rolling forecasts based on anticipated product orders to determine
our component requirements. It is very important that we accurately predict both
the demand for our products and the lead times required to obtain the necessary
components and materials. Lead times for components and materials that we order
vary significantly and depend on factors such as specific supplier requirements,
the size of the order, contract terms and current market demand for the
components. For substantial increases in production levels, some suppliers may
need six months or more lead time. If we overestimate our component and material
requirements, we may have excess inventory, which would increase our costs. If
we underestimate our component and material requirements, we may have inadequate
inventory, which could interrupt our manufacturing and delay delivery of our
products to our customers. Any of these occurrences would negatively impact our
sales.

WE DEPEND ON SINGLE OR LIMITED SOURCE SUPPLIERS FOR SOME OF THE KEY COMPONENTS
AND MATERIALS IN OUR PRODUCTS, WHICH MAKES US SUSCEPTIBLE TO SUPPLY SHORTAGES OR
PRICE FLUCTUATIONS THAT COULD ADVERSELY AFFECT OUR OPERATING RESULTS.

    We typically purchase our components and materials through purchase orders,
and we have no guaranteed supply arrangements with any of our suppliers. We
currently purchase several key components and materials used in the manufacture
of our products from single or limited source suppliers. One of our sole source
suppliers is Coors Ceramics, which supplies a substantial portion of the raw
material used to manufacture our thin-film products and there exist very limited
alternative sources for this material. Coors Ceramics is our most significant
sole source supplier. We also depend on limited or sole source suppliers for
substrates, gallium arsenide wafers, packaging, electronic components and
antennas. Recently, we faced difficulties obtaining electronic components that
are used in the manufacture of some of our products as a result of a global
shortfall of availability of these components. These difficulties resulted in
delays in the fulfillment of a number of customer orders. We may fail to obtain
required components in a timely manner in the future. We may also experience
difficulty identifying alternative sources of supply for the components used in
our products. We would experience delays if we were required to test and
evaluate products of potential alternative suppliers. Furthermore, financial or
other difficulties faced by our suppliers or significant changes in demand for
the components or materials they supply to us could limit the availability of
those components or materials to us. In addition, the majority of our
semiconductor products are packaged in The Philippines and Hong Kong. Political
and economic instability and changes in governmental regulations in these areas
could affect the ability of our overseas vendors to package our products. Any
interruption or delay in the supply of our required components, materials or
services, or our inability to obtain these components, materials or services
from alternate sources at acceptable prices and within a reasonable amount of
time, could impair our ability to meet scheduled product deliveries to our
customers and could cause customers to cancel orders.

WE FACE INTENSE COMPETITION, AND, IF WE DO NOT COMPETE EFFECTIVELY IN OUR
MARKETS, WE WILL LOSE SALES AND HAVE LOWER MARGINS.

    The market for fiber optic and wireless communications services is
relatively new, rapidly evolving and intensely competitive, and we expect
competition to intensify further in the future. Many of our current and
potential competitors have substantially greater technical, financial,
marketing, distribution and other resources than we have. Price competition is
intense and the market prices and margins of products frequently decline after
competitors begin making similar products. A number of our competitors may have
greater name recognition and market acceptance of their products and
technologies. Furthermore, our competitors, or the competitors of our customers,
may develop new technologies, enhancements of existing products or new products
that offer superior price or performance features. These new products or

                                       8
<PAGE>
technologies could render obsolete our products or the systems of our customers
into which our products are integrated.

WE RELY ON THE SIGNIFICANT EXPERIENCE AND SPECIALIZED EXPERTISE OF OUR SENIOR
MANAGEMENT IN THE RF INDUSTRY AND MUST RETAIN AND ATTRACT QUALIFIED ENGINEERS
AND OTHER HIGHLY SKILLED PERSONNEL IN A HIGHLY COMPETITIVE JOB ENVIRONMENT TO
MAINTAIN AND GROW OUR BUSINESS.

    Our performance is substantially dependent on the continued services and on
the performance of our senior management and our highly qualified team of
engineers, who have many years of experience and specialized expertise in our
business. Our performance also depends on our ability to retain and motivate our
other executive officers and key employees. The loss of the services of any of
our executive officers or of a number of our engineers could harm our ability to
maintain and build our business. We have no "key man" life insurance policies.

    Our future success also depends on our ability to identify, attract, hire,
train, retain and motivate highly skilled technical, managerial, marketing and
customer service personnel. Competition for such personnel is intense,
especially in the San Francisco Bay area, and we cannot assure you that we will
be able to successfully attract, integrate or retain sufficiently qualified
personnel. If we fail to attract, integrate and retain the necessary personnel,
our ability to maintain and build our business could suffer significantly.

WE MAY PURSUE ACQUISITIONS AND INVESTMENTS IN NEW BUSINESSES, PRODUCTS OR
TECHNOLOGIES THAT INVOLVE NUMEROUS RISKS, INCLUDING THE USE OF CASH AND
DIVERSION OF MANAGEMENT'S ATTENTION.

    In the future, we may make acquisitions of and investments in new
businesses, products and technologies or we may acquire operations that expand
our manufacturing capabilities. If we identify an acquisition candidate, we may
not be able to successfully negotiate or finance the acquisition. Even if we are
successful, we may not be able to integrate the acquired businesses, products or
technologies into our existing business and products. As a result of the rapid
pace of technological change in the communications industry, we may misgauge the
long-term potential of the acquired business or technology or the acquisition
may not be complementary to our existing business. Furthermore, potential
acquisitions and investments, whether or not consummated, may divert our
management's attention and require considerable cash outlays at the expense of
our existing operations. In addition, to complete future acquisitions, we may
issue equity securities, incur debt, assume contingent liabilities or have
amortization expenses and write-downs of acquired assets, which could affect our
profitability.

WE EXPECT TO EXPAND OUR OPERATIONS SIGNIFICANTLY AND OUR FAILURE TO MANAGE OUR
EXPANSION COULD LEAD TO CUSTOMER DISSATISFACTION, COST INEFFICIENCIES AND LOST
SALES OPPORTUNITIES.

    We are currently experiencing a period of expansion and anticipate that
further expansion will be required to address potential growth in our customer
base and market opportunities. This expansion has placed, and is expected to
continue to place, a significant strain on our management, operational and
financial resources. To manage this growth, we will be required to improve
existing and implement new transaction processing, operational and financial
systems, procedures and controls, and to expand, train and manage our growing
employee base. We also will be required to expand our finance, administrative
and operations staff. We cannot assure you that our current and planned
personnel, systems, procedures and controls will be adequate to support our
future operations. Our failure to manage our growth effectively could lead to
customer dissatisfaction, cost inefficiencies and lost sales opportunities.

OUR RELOCATION MAY DISRUPT OUR BUSINESS, INCLUDING DELAYING SHIPMENTS TO OUR
CUSTOMERS, AND MAY BE COSTLY IF IT IS NOT COMPLETED ON TIME.

    We are currently in the process of relocating our Palo Alto, California
operations to accommodate our growing operations. We are relocating to leased
office and manufacturing space in San Jose, California,

                                       9
<PAGE>
which we believe satisfies our current requirements. Our new location requires
substantial improvements and construction prior to our occupation. If these
improvements and construction are not completed as scheduled, we may have to
remain in our Palo Alto facility beyond the anticipated date, which would result
in substantial costs and expenses under our amended Palo Alto sublease. In
addition, if we are unable to relocate our operations in a timely manner, our
production schedule and product shipments may be delayed, which may, in turn,
result in cancelled orders and impaired relationships with our customers.

OUR BUSINESS IS SUBJECT TO THE RISKS OF PRODUCT RETURNS, PRODUCT LIABILITY AND
PRODUCT DEFECTS.

    Products as complex as ours frequently contain undetected errors or defects,
especially when first introduced or when new versions are released. The
occurrence of errors could result in product returns from and reduced product
shipments to our customers. In addition, any failure by our products to properly
perform could result in claims against us by our customers. Such failure also
could result in the loss of or delay in market acceptance of our products or
harm our reputation. Due to the recent introduction of some of our products, we
have limited experience with the problems that could arise with these products.

    Our purchase agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. However,
the limitation of liability provision contained in these agreements may not be
effective as a result of federal, state or local laws or ordinances or
unfavorable judicial decisions in the United States or other countries. Although
we maintain insurance to protect against claims associated with the use of our
products, our insurance coverage may not adequately cover all claims asserted
against us. In addition, even ultimately unsuccessful claims could result in
costly litigation, divert our management's time and resources and damage our
customer relationships.

WE USE A NUMBER OF SPECIALIZED TECHNOLOGIES, SOME OF WHICH ARE PATENTED, TO
DESIGN, DEVELOP AND MANUFACTURE OUR PRODUCTS. INFRINGEMENT OF OUR INTELLECTUAL
PROPERTY RIGHTS COULD HURT OUR COMPETITIVE POSITION, HARM OUR REPUTATION AND
COST US MONEY.

    We regard the protection of our copyrights, patents, service marks,
trademarks, trade dress and trade secrets as critical to our future success and
plan to rely on a combination of copyright, patent, trademark and trade secret
law, as well as on confidentiality procedures and contractual provisions, to
protect our proprietary rights. We seek patent protection for our unique
developments in circuit designs, processes and algorithms. Adequate protection
of our intellectual property rights may not be available in every country where
our products and services are made available. We intend, as a general policy, to
enter into confidentiality and invention assignment agreements with all of our
employees and contractors, as well as into nondisclosure agreements with parties
with which we conduct business, to limit access to and disclosure of our
proprietary information; however, we have not done so on a uniform basis. As a
result, we may not have adequate remedies to preserve our trade secrets or
prevent third parties from using our technology without authorization. We cannot
assure you that all future employees, contractors and business partners will
agree to these contracts, or that, even if agreed to, these contractual
arrangements or the other steps we have taken to protect our intellectual
property will prove sufficient to prevent misappropriation of our technology or
to deter independent third-party development of similar technologies. If we are
unable to execute these agreements or take other steps to prevent
misappropriation of our technology or to deter independent development of
similar technologies, our competitive position and reputation could suffer and
we could be forced to make significant expenditures.

    We regularly file patent applications with the U.S. Patent and Trademark
Office covering particular aspects of our technology and intend to prosecute
such applications to the fullest extent of the law. Based upon our assessment of
our current and future technology, we may decide to file additional patent
applications in the future, and may decide to abandon current patent
applications. We cannot assure you that any patent application we have filed or
will file will result in an issued patent, or, if patents are issued to us, that
such patents will provide us with any competitive advantages and will not be
challenged by third parties or invalidated by the U.S. Patent and Trademark
Office. Any failure to protect our existing

                                       10
<PAGE>
patents or to secure new patents may limit our ability to protect the
intellectual property rights that such patents or patent applications were
intended to cover. Furthermore, the patents of others may impair our ability to
do business. See "Business--Intellectual Property" for a more complete
description of our intellectual property and our efforts to protect it.

    We have several registered trademarks and service marks, in the United
States and abroad, and are in the process of registering others in the United
States. Nevertheless, we can not assure you that the U.S. Patent and Trademark
Office will grant us these registrations. Should we decide to apply to register
additional trademarks or service marks in foreign countries, there is no
guarantee that we will be able to secure such registrations. The inability to
register and adequately protect our trademarks and service marks could harm our
competitive position, harm our reputation and negatively impact our future
profitability. For more details, see "Business--Intellectual Property."

CLAIMS THAT WE ARE INFRINGING THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS MAY
RESULT IN COSTLY LITIGATION.

    As a provider of technologically advanced products, we are at particular
risk of becoming subject to litigation based on claims that we are infringing
the intellectual property rights of others. In the past, we have been subject to
claims that some of our products infringe the proprietary rights of third
parties. We cannot assure you that we will not be subject to any such claims in
the future. Any future similar claims, whether meritorious or not, could be
time-consuming to defend, damage our reputation, result in substantial and
unanticipated costs associated with litigation and require us to enter into
royalty or licensing agreements, which may not be available on acceptable terms
or at all.

THE VARIABILITY OF OUR MANUFACTURING YIELDS MAY AFFECT OUR GROSS MARGINS.

    The success of our business depends largely on our ability to produce our
products efficiently through a manufacturing process that results in a large
number of usable products or yields, from any particular production run. In the
past, we have experienced significant delays in our product shipments due to
lower-than-expected production yields. Due to the rigid technical requirements
for our products and manufacturing processes, our production yields may be
negatively affected by a variety of factors, some of which are beyond our
control. For instance, yields may be reduced by:

    - impurities in materials used;

    - contamination of the manufacturing environment;

    - human error, in part, due to insufficient employee training; and

    - equipment failures.

    Our manufacturing yields also vary significantly among our products due to
product complexity and the depth of our experience in manufacturing a particular
product. We cannot assure you that we will not experience problems with our
production yields in the future. Decreases in our yields can result in
substantially higher costs for our products. If we cannot maintain acceptable
production yields in the future, our gross margin may suffer.

WE ARE CURRENTLY INVOLVED IN CLASS ACTION LAWSUITS, WHICH COULD RESULT IN
SUBSTANTIAL COSTS AND DIVERT OUR MANAGEMENT'S ATTENTION AND RESOURCES.

    In 1999, four securities class action suits were brought against us
alleging, among other things, breaches of fiduciary duty of our former directors
to our former shareholders in connection with our recapitalization merger. We
believe that these lawsuits are without merit. We have entered into a
non-binding memorandum of understanding with the plaintiffs' counsel to settle
the claims of unfairness and other breaches arising out of the recapitalization
merger on a basis that will not have a material financial impact on our
business; any settlement is, however, subject to the completion of discovery and

                                       11
<PAGE>
settlement documentation on a basis acceptable to plaintiffs' counsel, as well
as to court approval after notice to the class members. Accordingly, we cannot
assure you that the settlement will occur on the basis provided for in the
memorandum or at all. If the plaintiffs elect to pursue these claims or if the
court does not approve the settlement, we could be forced to pay damages or be
subject to court-ordered relief. In addition, we may be the target of other
litigation in the future. This pending and future litigation could result in
substantial costs to us and divert our management's attention and resources. For
a more detailed description of this litigation, see "Business--Legal
Proceedings."

CHANGES IN THE REGULATORY ENVIRONMENT OF THE COMMUNICATIONS INDUSTRY MAY REDUCE
THE DEMAND FOR OUR PRODUCTS.

    The recent deregulation of the telecommunications industry has resulted in
an increased number of service providers. Such increase, coupled with the
expanding use of the Internet and data networking by businesses and consumers,
has resulted in the rapid growth of the communications industry. This has led
and will likely continue to lead to intense competition, short product life
cycles, and, to some extent, regulatory uncertainty in and outside the United
States. The course of the development of the communications industry is
difficult to predict. For example, the delays in governmental approval processes
that our customers are subject to, such as the issuance of site permits and the
auction of frequency spectrum, have in the past caused, and may in the future
cause, the cancellation, postponement or rescheduling of the installation of
communications systems by our customers. A reduction in network infrastructure
expenditures could negatively affect the sale of our products. Moreover, in the
short term, deregulation may result in a delay or a reduction in the procurement
cycle because of the general uncertainty involved with the transition period of
businesses.

OUR FUTURE PROFITABILITY COULD SUFFER FROM KNOWN OR UNKNOWN LIABILITIES THAT WE
RETAINED WHEN WE SOLD PARTS OF OUR COMPANY.

    We have recently completed the divestiture of all but our current business.
In the transactions in which we sold our other businesses, we generally retained
liability arising from events occurring prior to the sale. Some of these
liabilities were or have since become known to us, such as the environmental
condition of the production facilities we sold. We may have underestimated the
scope of these liabilities, and we may become aware of additional liabilities
associated with the following in the future:

    - ownership of the intellectual property we have sold;

    - the potential infringement by our sold businesses of the intellectual
      property of others;

    - the regulatory compliance of our sold defense business;

    - export control compliance with respect to our defense products purchased
      by the United States and foreign governments; and

    - product defect claims with respect to products manufactured by our sold
      businesses before they were sold.

    If these and any other unknown liabilities and obligations exceed our
expectations and established reserves, our future profitability could suffer and
our capital needs could increase.

IF WE FAIL TO COMPLY WITH ENVIRONMENTAL REGULATIONS WE COULD BE SUBJECT TO
SUBSTANTIAL FINES.

    Two of our current and former production facilities have significant
environmental liabilities for which we have entered into and funded fixed price
remediation agreements and obtained cost-overrun and unknown pollution insurance
coverage. We cannot assure you that this insurance will be sufficient to cover
all liabilities related to these sites. In addition, we are subject to a variety
of federal, state and local governmental regulations relating to the storage,
discharge, handling, emission, generation, manufacture and disposal of toxic or
other hazardous substances used to manufacture our products. In the past, we
have been subject to periodic environmental reviews and audits, which have
resulted in minor fines. If we fail to comply with these regulations,
substantial fines could be imposed on us, and we could be required to suspend
production, alter manufacturing processes or cease operations.

                                       12
<PAGE>
IF RF EMISSIONS POSE A HEALTH RISK, THE DEMAND FOR OUR PRODUCTS MAY DECLINE.

    Recent news reports have asserted that some radio frequency emissions from
wireless handsets may be linked to various health concerns, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. If it were determined or perceived that RF emissions from
wireless communications equipment create a health risk, the market for our
wireless customers' products and, consequently, the demand for our products
could decline significantly.

OUR MANUFACTURING FACILITIES ARE CONCENTRATED IN AN AREA SUSCEPTIBLE TO
EARTHQUAKES.

    Our headquarters and our manufacturing facilities are concentrated in an
area where there is a risk of significant earthquake activity. Substantially all
of the production equipment that currently accounts for our sales, as well as
planned additional production equipment, is or will be located in a known
earthquake zone. We cannot predict the extent of the damage that our facilities
and equipment would suffer in the event of an earthquake or how such damage
would affect our business. We do not maintain earthquake insurance.

                         RISKS RELATED TO THE OFFERING

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF YOUR
COMMON STOCK IF YOU PURCHASE COMMON STOCK IN THIS OFFERING.

    Purchasers of our common stock in this offering will experience immediate
and substantial dilution in the net tangible book value of their shares of our
common stock. At an assumed initial public offering price of $15.00 per share,
which is the midpoint of the initial public offering price range set forth on
the cover of this prospectus, the dilution will be $13.50 per share in net
tangible book value of common stock from the initial public offering price, as
more fully described under "Dilution."

YOUR INTERESTS AS HOLDERS OF OUR COMMON STOCK MAY CONFLICT WITH THOSE OF OUR
CONTROLLING STOCKHOLDER.

    As of June 30, 2000, Fox Paine beneficially owned 80.5% of our outstanding
share capital, and, after the offering and the private placements, will continue
to own approximately 70.3% of our outstanding share capital. As a result, Fox
Paine has and will continue to have control over the outcome of matters
requiring stockholder approval, including the power to:

    - elect all of our directors and the directors of our subsidiaries;

    - amend our charter or by-laws; and

    - agree to or prevent mergers, consolidations or the sale of all or
      substantially all of our assets or our subsidiaries' assets.

    Fox Paine also will be able to delay, prevent or cause a change in control
relating to us. Fox Paine's control over us and our subsidiaries, and its
ability to delay or prevent a change in control relating to us could adversely
affect the market price of our common stock.

    Fox Paine may in the future make significant investments in other
communications companies. Some of these companies may be our competitors. Fox
Paine and its affiliates are not obligated to advise us of any investment or
business opportunities of which they are aware, and they are not restricted or
prohibited from competing with us.

THE PRICE OF OUR COMMON STOCK MAY BE SUBJECT TO WIDE FLUCTUATIONS AND MAY TRADE
BELOW THE INITIAL PUBLIC OFFERING PRICE.

    The market price of our common stock after this offering may vary from the
initial public offering price. Fluctuations in the price of our common stock may
result from multiple factors, some of which are

                                       13
<PAGE>
beyond our control, including quarterly operating results that fluctuate and
vary from expectations. Factors that could cause our quarterly operating results
to fluctuate include:

    - our inability to predict the timing and magnitude of sales of our products
      due to our lengthy and variable sales cycle;

    - the timing of our orders from and shipments to major customers and
      possible cancellation of orders;

    - the tendency of customers in our industry to order large quantities of
      products on an irregular basis;

    - the concentration of customer orders at the end of a quarter which may
      result in products shipping in the following quarter;

    - the length of time our customers spend in evaluating and testing our
      products and our manufacturing process before purchasing our products; and

    - customer responses to announcements of new products.

    In addition, in recent months, the stock market has experienced extreme
price and volume fluctuations that often have been unrelated or disproportionate
to the operating performance of the underlying companies. As a result of these
fluctuations, our common stock may trade at prices below the initial public
offering price.

THE VOLATILITY OF OUR STOCK PRICE MAY INDUCE CLASS ACTION LAWSUITS, WHICH COULD
RESULT IN SUBSTANTIAL COSTS AND DIVERSION OF OUR MANAGEMENT'S ATTENTION AND
COULD CAUSE OUR STOCK PRICE TO FALL FURTHER.

    The public markets have experienced volatility that has particularly
affected the market prices of securities of many technology companies for
reasons that have often been unrelated to their operating results. In the past,
following periods of volatility in the market prices of their stock, many
companies have been the subjects of securities class action litigation.
Similarly, if our stock price is volatile we could face securities class action
litigation. Such litigation could result in substantial costs and divert
management's attention and resources, which could cause our stock price to fall
further. Furthermore, the volatility of our stock price, in addition to exposing
us to potential litigation, may adversely affect the market price of our common
stock and our company's visibility and credibility in our markets.

OUR SHARE PRICE MAY DECLINE DUE TO THE LARGE NUMBER OF SHARES OF OUR COMMON
STOCK ELIGIBLE FOR FUTURE SALE.

    Sales of substantial amounts of our common stock after the offering, or the
possibility of such sales, could adversely affect the market price of our common
stock and impede our ability to raise capital through the issuance of equity
securities. See "Shares Eligible for Future Sale."

                           FORWARD-LOOKING STATEMENTS

    This prospectus contains forward-looking statements. These forward-looking
statements are not historical facts but rather are based on current
expectations, estimates and projections about our industry, our beliefs and our
assumptions. Words such as "may," "will," "anticipates," "expects," "intends,"
"plans," "believes," "seeks" and "estimates" and variations of these words and
similar expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward-looking statements. In
addition, the forward-looking events discussed in this prospectus might not
occur. These risks and uncertainties include, among others, those described in
"Risk Factors" starting on page 6 and elsewhere in this prospectus. You are
cautioned not to place undue reliance on these forward-looking statements, which
reflect our management's view only as of the date of this prospectus. Except as
required by law, we undertake no obligation to update any forward-looking
statement, whether as a result of new information, future events or otherwise.

                                       14
<PAGE>
                                USE OF PROCEEDS

    We will receive net proceeds of approximately $72.8 million from the sale of
5,400,000 shares of common stock at an assumed initial public offering price of
$15.00 per share, which is the midpoint of the price range set forth on the
cover of this prospectus, after deducting underwriting discounts and commissions
and estimated expenses. If the underwriters exercise their over-allotment option
in full, then the net proceeds will be approximately $84.1 million.

    We intend to use up to $40.0 million of the net proceeds to repay the
aggregate principal amount outstanding under the two tranches of our senior
secured credit facility, which had estimated weighted average interest rates of
9.52% and 10.00% in the six-month period ended June 30, 2000 and mature in
December 2004 and 2005, respectively. We borrowed under our credit facility to
finance in part our recapitalization merger.

    We currently estimate that we will use the balance of the net proceeds of
this offering to fund our capital expenditures, and for strategic investments,
acquisitions and general corporate purposes. We currently expect that for 2000
and 2001, capital expenditures will total approximately $20.6 million and $12.5
million, including expenditures for capital improvements to our new
manufacturing facility and corporate headquarters as well as the purchase of new
production equipment.

    Pending any use, the net proceeds of this offering will be invested in
short-term, interest-bearing, investment grade securities.

                                DIVIDEND POLICY

    In 1997, 1998 and 1999, we paid $4.0 million, $3.7 million and $2.4 million
in dividends, respectively. Historically, we paid dividends on a quarterly
basis. We do not intend to pay cash dividends on our common stock for the
foreseeable future. Instead, we intend to retain all earnings for use in the
operation and expansion of our business. Our board of directors will make any
future determination of the payment of dividends based upon various factors then
existing, including, but not limited to, our financial condition, operating
results and current and anticipated cash needs. In addition, covenants in our
revolving credit facility limit our ability to declare and pay cash dividends on
our common stock.

                                       15
<PAGE>
                                 CAPITALIZATION

    The following table sets forth our capitalization as of June 30, 2000:

    - on an unaudited actual basis; and

    - on an unaudited pro forma basis to give effect to:

     - the sale by us of Series A Preferred Stock for $11.5 million, net of
       expenses;

     - the conversion of all our outstanding shares of Series A Preferred Stock
       into 1,498,800 shares of our common stock at a conversion price of $8.34
       per share and the recognition of a $10.0 million preferred stock dividend
       resulting from a beneficial conversion feature. The $10.0 million
       preferred stock dividend is based upon an assumed initial public offering
       price of $15.00 per share, which is the midpoint of the price range set
       forth on the cover of this prospectus; and

     - reflect the reincorporation which will occur upon the effectiveness of
       the proposed initial public offering.

    - on an unaudited pro forma as adjusted basis to give further effect to:

     - the sale by us of 5,400,000 shares of common stock at an assumed initial
       public offering price of $15.00 per share, which is the midpoint of the
       price range set forth on the cover of this prospectus, after deducting
       underwriting discounts and commissions and estimated offering expenses;

     - the use of up to $40.0 million of the estimated net proceeds to repay the
       outstanding indebtedness under our senior secured credit facility; and

     - the after-tax write-off of deferred debt issuance costs of $1.6 million.

    This table should be read in conjunction with our consolidated financial
statements and notes to those consolidated financial statements included
elsewhere in this prospectus.

    This information excludes:

    - 15,278,163 shares of common stock that were subject to outstanding options
      at June 30, 2000 at a weighted average exercise price of $1.56 per share;
      and

    - 1,198,506 additional shares of common stock reserved for issuance under
      our 2000 stock incentive plan.

<TABLE>
<CAPTION>
                                                                       JUNE 30, 2000
                                                            ------------------------------------
                                                                                     PRO FORMA
                                                             ACTUAL    PRO FORMA    AS ADJUSTED
                                                            --------   ----------   ------------
                                                                        (UNAUDITED)
                                                                       (IN THOUSANDS)
<S>                                                         <C>        <C>          <C>
Cash and equivalents......................................  $12,626     $ 24,126      $ 57,031
                                                            =======     ========      ========
Current portion of long-term debt.........................   11,950       11,950            --
Long-term debt, net of current portion....................   27,975       27,975            --
                                                            -------     --------      --------
Capital leases, net of current portion....................    4,804        4,804         4,804
                                                            -------     --------      --------
Stockholders' equity:
    Preferred Stock, $0.01 par value, 10 million
      authorized, none outstanding actual, pro forma or
      pro forma as adjusted...............................       --           --            --
    Common stock, $0.01 par value, 100 million shares
      authorized; 47,546,196 shares issued and
      outstanding, actual; 49,044,996 shares issued and
      outstanding, pro forma; and 54,444,996 shares issued
      and outstanding, pro forma as adjusted..............   69,297          490           544
    Additional paid-in capital............................       --       90,289       163,065
    Retained earnings (deficit)...........................  (66,978)     (76,960)      (78,558)
    Subscriptions receivable..............................     (252)        (252)         (252)
    Deferred stock compensation...........................   (3,403)      (3,403)       (3,403)
                                                            -------     --------      --------
        Total stockholders' equity (deficit)..............   (1,336)      10,164        81,396
                                                            -------     --------      --------
          Total capitalization............................  $43,393     $ 54,893      $ 86,200
                                                            =======     ========      ========
</TABLE>

                                       16
<PAGE>
                                    DILUTION

    As of June 30, 2000, we had an unaudited net tangible book value (deficit)
of approximately $(1.3) million, or approximately $(0.03) per share of common
stock. Net tangible book value (deficit) represents the amount of our total
tangible assets less our total liabilities divided by our shares of common stock
outstanding. Without taking into account any other changes in the net tangible
book value after June 30, 2000, other than to give effect to the receipt by us
of the net proceeds from the sale of 5,400,000 shares of common stock in this
offering at an assumed initial public offering price of $15.00 per share, which
is the midpoint of the price range set forth on the cover of this prospectus,
and including the receipt of $11.5 million of net proceeds from the sale of
Series A Preferred Stock, our unaudited pro forma as adjusted net tangible book
value as of June 30, 2000 would have been $81.4 million, or $1.50 per share.
This represents an immediate increase in net tangible book value of $0.24 per
share attributable to the private placement investors and $1.29 per share to
existing stockholders and an immediate dilution in net tangible book value of
$13.50 per share of common stock to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S>                                                           <C>
Assumed initial public offering price per share.............  $15.00
    Net tangible book value (deficit) per share as of
      June 30, 2000.........................................   (0.03)
    Increase in net tangible book value per share
      attributable to the Series A Preferred................    0.24
    Increase in net tangible book value per share
      attributable to new investors.........................    1.29
Unaudited pro forma as adjusted net tangible book value per
  share after the offering..................................    1.50
Dilution per share to new investors.........................  $13.50
</TABLE>

    The following table summarizes on an as adjusted basis, as of June 30, 2000,
the number of shares of common stock purchased from us, the total consideration
paid and the average price per share paid by existing stockholders and by new
investors who purchase shares of common stock in this offering before deducting
the underwriting discounts and commissions and estimated offering expenses:

<TABLE>
<CAPTION>
                               SHARES PURCHASED        TOTAL CONSIDERATION
                             ---------------------   -----------------------   AVERAGE PRICE
                               NUMBER     PERCENT       AMOUNT      PERCENT      PER SHARE
                             ----------   --------   ------------   --------   -------------
<S>                          <C>          <C>        <C>            <C>        <C>
Existing stockholders and
  Series A Preferred
  investors................  49,044,996      90%     $ 78,410,000      49%        $ 1.60
New investors..............   5,400,000      10%     $ 81,000,000      51%        $15.00
                             ----------     ---      ------------     ---
        Total..............  54,444,996     100%     $159,410,000     100%
</TABLE>

    The share amounts in the tables above are based on 47,546,196 shares of
common stock outstanding as of June 30, 2000 and assume the conversion of the
Series A Preferred Stock into 1,498,800 shares of common stock at a conversion
price of $8.34 per share. The tables exclude:

    - 15,278,163 shares of common stock that were subject to outstanding options
      at June 30, 2000 at a weighted average exercise price of $1.56 per share;
      and

    - 1,198,506 additional shares of common stock reserved for issuance under
      our 2000 stock incentive plan.

    If we assume that the 15,278,163 shares of common stock subject to
outstanding options were exercised at a weighted average exercise price of $1.56
per share, the dilution per share to new investors would be $13.49, the new
investors would purchase 8% of the total amount of shares outstanding based on
69,723,159 shares outstanding and pay 44% of the total consideration of
$183.2 million paid for the total amount of shares outstanding.

                                       17
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA

    You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and notes to those
consolidated financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus. WJ Communications (formerly Watkins-Johnson Company) was formed in
1957 to develop and manufacture microwave devices for defense electronics and
space communications systems. With the decline of the aerospace and defense
industries in the 1990's, we began applying our technology and our design and
manufacturing expertise to develop commercial communications products and
commenced our current operations in 1996. On January 31, 2000, we completed a
recapitalization transaction with an affiliate of Fox Paine & Co. and replaced
the majority of our senior management and our entire Board of Directors. In
several transactions leading up to the recapitalization, we divested all of our
divisions other than our current business along with several non-operating real
estate assets. All of our discontinued operations were divested as of March 31,
2000. As a result, financial information as of 1995 is not meaningful and
accordingly has not been included below. Our quarters end on the Friday closest
to the calendar month's end.

    The selected consolidated statements of operations data for the years ended
December 31, 1997, 1998 and 1999 and the selected consolidated balance sheet
data as of December 31, 1998 and 1999 are derived from our audited consolidated
financial statements included elsewhere in this prospectus. The selected
consolidated balance sheet data as of December 31, 1997 is derived from our
unaudited consolidated balance sheet which is not included in this prospectus.
The selected consolidated financial data for the year ended and as of
December 31, 1996 are derived from our unaudited consolidated financial
statements which are not included in this prospectus. The selected consolidated
financial data for the six months ended and as of June 25, 1999 and June 30,
2000 have been derived from our unaudited interim consolidated financial
statements included elsewhere in this prospectus. In the opinion of management,
our unaudited consolidated financial statements have been prepared on a basis
consistent with our audited consolidated financial statements, and include all
adjustments, which are only normally recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for the
unaudited periods. Operating results for the six months ended June 30, 2000 are
not necessarily indicative of the results for the year ending December 31, 2000
or for any future period. The selected consolidated statement of operations data
represent our results from continuing operations only and the selected
consolidated balance sheet data exclude net assets from discontinued operations.
For a discussion of our discontinued operations, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and note 10 to the audited consolidated financial statements
included elsewhere in this prospectus.

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   SIX MONTHS
                                                                                                      ENDED
                                                            YEAR ENDED DECEMBER 31,            -------------------
                                                   -----------------------------------------   JUNE 25,   JUNE 30,
                                                     1996       1997       1998       1999       1999       2000
                                                   --------   --------   --------   --------   --------   --------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
    Sales........................................  $12,633    $31,174    $63,568    $82,404    $47,216    $ 44,678
    Cost of goods sold...........................   12,238     25,591     43,400     50,534     29,825      27,541
                                                   -------    -------    -------    -------    -------    --------
    Gross profit.................................      395      5,583     20,168     31,870     17,391      17,137
    Operating expenses:
        Research and development.................    6,585     10,204     14,124     16,806      8,651       8,764
        Selling and administrative...............    3,463      2,219      4,035      5,331      2,552       5,966
        Amortization of deferred stock
          compensation...........................       --         --         --         --         --         517
        Corporate administrative.................      561      1,240      1,811      4,391      1,852         322
        Recapitalization merger and other........       --         --         --      3,223         --      35,453
                                                   -------    -------    -------    -------    -------    --------
            Total operating expenses.............   10,609     13,663     19,970     29,751     13,055      51,022
                                                   -------    -------    -------    -------    -------    --------
    Income (loss) from operations................  (10,214)    (8,080)       198      2,119      4,336     (33,885)
    Interest income..............................      789      2,198      5,681      5,070      1,624       1,317
    Interest expense.............................   (1,574)      (795)      (601)      (520)      (245)     (2,275)
    Other income (expense)--net..................     (459)      (249)     1,220        412        156        (691)
    Gain on disposition of real property.........       --      7,609     14,973     61,652         --         808
                                                   -------    -------    -------    -------    -------    --------
    Income (loss) from continuing operations
      before income taxes........................  (11,458)       683     21,471     68,733      5,871     (34,726)
    Income tax (provision) benefit...............    4,055       (240)    (6,978)   (26,383)    (1,903)      9,374
                                                   -------    -------    -------    -------    -------    --------
    Income (loss) from continuing operations.....  $(7,403)   $   443    $14,493    $42,350    $ 3,968    $(25,352)
                                                   =======    =======    =======    =======    =======    ========
    Income (loss) from continuing operations per
      share--basic...............................  $ (0.03)   $  0.00    $  0.06    $  0.22    $  0.02    $  (0.34)
                                                   =======    =======    =======    =======    =======    ========
    Income (loss) from continuing operations per
      share--diluted.............................  $ (0.03)   $  0.00    $  0.06    $  0.21    $  0.02    $  (0.34)
                                                   =======    =======    =======    =======    =======    ========
    Shares used to calculate income (loss) from
      continuing operations per share--basic.....  247,950    247,740    232,110    192,584    196,860      73,551
    Shares used to calculate income (loss) from
      continuing operations per share--diluted...  247,950    255,270    235,710    198,341    199,830      73,551
</TABLE>

    Working capital excludes net assets of discontinued operations in the amount
of $96,617, $35,563, $27,922, $20,237 and $3,451 as of December 31, 1996, 1997,
1998, 1999 and June 30, 2000, respectively. Total assets exclude net assets of
discontinued operations in the amount of $166,326, $97,317, $36,975, $20,237 and
$3,451 as of December 31, 1996, 1997, 1998, 1999 and June 30, 2000,
respectively.

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                 -----------------------------------------   JUNE 30,
                                                   1996       1997       1998       1999       2000
                                                 --------   --------   --------   --------   ---------
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>        <C>        <C>        <C>        <C>
SELECTED CONSOLIDATED BALANCE SHEET DATA:
    Cash and equivalents and short-term
      investments..............................  $ 15,702   $134,462   $ 64,624   $173,812    $12,626
    Working capital............................    30,889    131,963     90,660    179,077     15,920
    Total assets...............................    55,878    182,668    147,614    223,383     70,656
    Total debt.................................        --         --         --         --     39,925
    Capital leases, net of current portion.....     7,565      5,190      5,066      4,902      4,804
    Total stockholders' equity (deficit).......   195,005    220,987    133,679    202,137     (1,336)
    Dividends per common share.................  $   0.02   $   0.02   $   0.02   $   0.02    $    --
</TABLE>

                                       19
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THOSE CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. OUR DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS
AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS.
OUR ACTUAL RESULTS AND THE TIMING OF EVENTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS," "BUSINESS" AND ELSEWHERE IN THIS
PROSPECTUS.

OUR HISTORY

    We were founded as Watkins-Johnson Company in 1957 by Dr. Dean A. Watkins,
formerly a professor of electrical engineering at Stanford University, and
Dr. H. Richard Johnson, formerly an engineer at Hughes Laboratories. We began
developing and manufacturing microwave devices for government electronics and
space communications systems used for intelligence gathering and communications.
With the decline of the aerospace and defense industries in the 1990s, we
applied our radio frequency, or RF, expertise to the growing commercial
communications industry. In the mid-1990s, we were comprised of three primary
divisions, the semiconductor equipment group, the telecommunications group and
the microwave products group. In 1996, the microwave products group began to
develop commercial applications from its military technologies, which became our
initial products. In 1997, we sold the government electronics business within
the microwave products group to Stellex Microwave Systems, Inc. We retained the
commercial applications that we had developed and formally created a separate
business to develop these applications into products for the commercial
broadband communications market, including fiber optic and wireless networks.

    In October 1999, an affiliate of Fox Paine agreed to enter into a
recapitalization merger transaction with us. The recapitalization merger
transaction was the culmination of a strategy implemented by the predecessor
Board of Directors in February 1999 to seek to maximize shareholder value by
pursuing the sale of the company in its entirety or as separate business groups.
For a number of years prior to that time, difficult market conditions, including
decreased Federal defense spending, affected some of our business groups. The
predecessor Board determined that these conditions, as well as the difficulty
that the public capital markets had in categorizing our business and identifying
comparable companies, given our several disparate businesses, resulted in our
public stock price being undervalued. As a result, the predecessor Board decided
to divest the microwave products group in 1997, the semiconductor products group
in 1999 and the telecommunications group in early 2000, in some cases along with
associated real estate assets. We replaced the majority of our senior management
and our entire Board of Directors upon the closing of the recapitalization
merger on January 31, 2000. From January 1, 1998 until January 31, 2000, our
stock price ranged from $0.55 to $1.37 per share, adjusted for subsequent stock
splits. The price per share paid in the recapitalization merger was $1.37, which
was the price Fox Paine paid for its shares. Since our recapitalization merger,
we have been focused exclusively on providing product solutions that enable and
facilitate the development of fiber optic, broadband cable and wireless network
infrastructure. In April 2000, we changed our name from Watkins-Johnson Company
to WJ Communications, Inc. to highlight our focus on the commercial broadband
communications markets. We will reincorporate in Delaware and effect a 3 for 2
stock split in connection with this offering.

    In the recapitalization merger, FP-WJ Acquisition Corp., a newly-formed
corporation wholly-owned by Fox Paine, merged into us. All of our
pre-recapitalization shareholders except, with respect to a portion of its
shares, a family trust of which Dean A. Watkins is a co-trustee and beneficiary,
became entitled to receive cash in exchange for their shares of the
pre-recapitalization common stock. Dr. Watkins is our co-founder and was the
Chairman of our Board of Directors at the time of the recapitalization merger.
As a result of the rollover of a portion of the interest in our equity in us
held by Dr. Watkins' trust pursuant to an agreement entered into with the trust
at the time we entered into the merger agreement, we were able

                                       20
<PAGE>
to account for the merger as a recapitalization for financial accounting
purposes. In addition, the rollover provided the trust with a tax benefit, in
that the rollover shares were not retired for cash or otherwise, and the
opportunity to participate in the equity appreciation of our stock.

    Our statement of operations includes the costs of the recapitalization
merger as an expense. In addition, as a result of the continuing significant
ownership interest of the pre-recapitalization stockholders, no adjustments have
been made to the historical carrying amounts of our assets and liabilities as a
result of the recapitalization merger. Furthermore, the premium paid in cash to
stockholders in excess of that historical cost is shown as a reduction of
stockholders' equity.

OVERVIEW

    We design, develop and manufacture innovative, high quality broadband
communications products that enable voice, data and image transport over fiber
optic, broadband cable and wireless communications networks around the world.
Our products are comprised of advanced, highly functional components and
integrated assemblies which address the RF challenges of both current and next
generation broadband communications networks. These products are used in the
network infrastructure supporting and facilitating mobile communications,
broadband high speed data transmission and enhanced voice services. Our core
expertise in gallium arsenide semiconductor and thin-film technology, coupled
with our exceptional RF design and manufacturing capabilities, have enabled us
to obtain a competitive advantage in these broadband communications markets.

  SALES

    We sell our products predominantly to a few large equipment manufacturers
and service providers in the fiber optic, broadband cable and wireless network
infrastructure markets. Our major customers provide forecasted demand on at
least a monthly basis, which assists us in allocating our manufacturing
capacity. These forecasts, however, are subject to changes, including as a
result of changes in market conditions, and could fluctuate from quarter to
quarter.

    We depend on a small number of customers for a majority of our sales. During
the year ended December 31, 1999, we had three customers that each accounted for
more than 10% of our sales, Lucent Technologies, Nortel Networks and Bartley.
During that period, approximately 76% of our sales were to these three
customers. For the six months ended June 30, 2000, approximately 69% of our
sales were to Nortel and Lucent, which were our only customers that accounted
for more than 10% of our sales for that period. We have diversified our customer
base over the last few years and we have expanded our product offering from
wireless mobile infrastructure products to include fiber optic, broadband cable
and fixed wireless products and intend to further diversify our customer base
and product offering in the future. However, we anticipate that we will continue
to sell a majority of our products to a relatively small group of customers. In
addition, most of our sales result from purchase orders or contracts that can be
cancelled on short-term notice. Delays in manufacturing or supply procurement or
other factors could potentially cause cancellation, reduction or delay in orders
by or in shipments to a significant customer.

    We recognize revenues upon transfer of title of our products to customers.
Generally, title passes upon shipment of our products. Beginning in March 2000,
our contract with Lucent converted to a consignment arrangement under which
title does not pass until Lucent utilizes our products in its production
processes. As a consequence, we recognize revenue on this contract only when
Lucent notifies us of product consumption. A small portion of our sales are made
to distributors, who maintain the right of return. As such returns historically
have been nominal, we recognize revenues for these customers upon shipment.

    We provide a warranty on standard products and components and products
developed for specific customer or program applications. We estimate the
warranty cost based on our historical field return rates. To date, we have had
no significant warranty returns. We include warranty expense related to these
products in cost of goods sold.

                                       21
<PAGE>
    Generally, the selling prices of our products decrease over time as a result
of increased volumes and general competitive pressures. We expect that prices
will continue to decline as a result of volume increases and these competitive
pressures.

  COST OF GOODS SOLD

    Our cost of goods sold consists primarily of:

    - direct material costs of product components;

    - production wages, taxes and benefits;

    - costs of assembly by third party contract manufacturers;

    - labor contracted on a temporary basis;

    - supplies consumed in the manufacturing process;

    - depreciation and amortization of manufacturing plant and equipment;

    - allocated occupancy costs; and

    - scrapped material used in the production process.

    We recognize cost of goods sold upon recognition of revenue. We recognize
losses on contracts, including purchase orders, when identified.

  OPERATING EXPENSES

    Our operating expenses are classified into three general categories:
research and development, selling and administrative, and corporate
administrative. We classify all charges to the research and development, selling
and administrative, and corporate administrative categories based on the nature
of the expenditures. Although each of these three categories includes expenses
that are unique to the category type, there are commonly recurring expenditures
that are typically included in these categories, such as wages, fringe benefit
costs, depreciation and allocated overhead.

  RESEARCH AND DEVELOPMENT

    Research and development expense represents wages, supplies and allocated
overhead costs to design, develop and improve products and processes. These
costs are expensed as incurred.

  SELLING AND ADMINISTRATIVE

    Selling and administrative expense consists primarily of wages, travel and
facility costs incurred by and other expenses allocated to our selling and
administrative departments. Selling and administrative expense also includes
manufacturer representatives and distributor sales commissions, trade show and
advertising expenses and fees and expenses of legal, accounting, and other
professional consultants.

  CORPORATE ADMINISTRATIVE

    Corporate administrative expense is comprised of costs incurred at our
corporate level that were allocated to our current business operations based on
projected business volume, services and needs of operations provided. The
portion of this expense which is continuing to be incurred after the closing of
the recapitalization merger is included in selling and administrative expense
after January 31, 2000.

                                       22
<PAGE>
  RECAPITALIZATION MERGER AND OTHER

    Recapitalization merger and other expense is a non-recurring expenditure
comprised of employee retention and severance compensation, legal, professional
and other costs associated with our recapitalization merger and the sale of our
telecommunications group.

RESULTS OF OPERATIONS

    The following table sets forth selected items from our statements of
operations data as a percentage of total sales for the periods indicated:

<TABLE>
<CAPTION>
                                                        PERCENTAGE OF SALES
                                   --------------------------------------------------------------
                                      YEAR ENDED DECEMBER 31,             SIX MONTHS ENDED
                                   ------------------------------   -----------------------------
                                     1997       1998       1999     JUNE 25, 1999   JUNE 30, 2000
                                   --------   --------   --------   -------------   -------------
<S>                                <C>        <C>        <C>        <C>             <C>
Sales............................   100.0%     100.0%     100.0%        100.0%          100.0%
Cost of goods sold...............    82.1       68.3       61.3          63.2            61.6
                                    -----      -----      -----         -----          ------
Gross profit.....................    17.9       31.7       38.7          36.8            38.4
Operating expenses:
    Research and development.....    32.7       22.2       20.4          18.3            19.6
    Selling and administrative...     7.1        6.4        6.5           5.4            13.3
    Amortization of deferred
      stock compensation.........      --         --         --            --             1.2
    Corporate administrative.....     4.0        2.8        5.3           3.9             0.7
    Recapitalization merger and
      other......................      --         --        3.9            --            79.4
                                    -----      -----      -----         -----          ------
        Total operating
          expenses...............    43.8       31.4       36.1          27.6           114.2
                                    -----      -----      -----         -----          ------

Income (loss) from operations....   (25.9)       0.3        2.6           9.2           (75.8)
Interest income..................     7.1        8.9        6.2           3.4             2.9
Interest expense.................    (2.6)      (0.9)      (0.6)         (0.5)           (5.1)
Other income (expense)--net......    (0.8)       1.9        0.5           0.3            (1.5)
Gain on disposition of real
  property.......................    24.4       23.6       74.8           0.0             1.8
                                    -----      -----      -----         -----          ------

Income (loss) from continuing
  operations before income
  taxes..........................     2.2       33.8       83.4          12.4           (77.7)
Income tax (provision) benefit...    (0.8)     (11.0)     (32.0)         (4.0)           21.0
                                    -----      -----      -----         -----          ------

Income (loss) from continuing
  operations.....................     1.4%      22.8%      51.4%          8.4%          (56.7)%
                                    =====      =====      =====         =====          ======
</TABLE>

    The following table sets forth our sales by product category for the years
ended December 31, 1997, 1998 and 1999 and for the unaudited six-month periods
ended June 25, 1999 and June 30, 2000:

<TABLE>
<CAPTION>
                                      YEAR ENDED DECEMBER 31,             SIX MONTHS ENDED
                                   ------------------------------   -----------------------------
                                     1997       1998       1999     JUNE 25, 1999   JUNE 30, 2000
                                   --------   --------   --------   -------------   -------------
                                                           (IN THOUSANDS)
<S>                                <C>        <C>        <C>        <C>             <C>
Sales:
    Semiconductor................  $ 3,651    $ 9,763    $15,625       $ 7,161         $10,074
    Fiber optic..................      676      7,251     15,228         6,971          18,456
    Wireless.....................   26,847     46,554     51,551        33,084          16,148
                                   -------    -------    -------       -------         -------
        Total sales..............  $31,174    $63,568    $82,404       $47,216         $44,678
                                   =======    =======    =======       =======         =======
</TABLE>

                                       23
<PAGE>
COMPARISON OF SIX MONTHS ENDED JUNE 25, 1999 AND JUNE 30, 2000

    SALES.  Sales decreased 5% to $44.7 million in the first half of 2000 from
$47.2 million in the first half of 1999 primarily due to the completion in the
second quarter 1999 of our contract with a major customer to build fixed
wireless products for a project in an emerging country. Sales of fixed wireless
products for this project totaled $22.3 million or 47% of our sales in the first
half of 1999. The decline in sales related to the completion of our contract to
build fixed wireless products was partially offset by an increase of $11.5
million in sales of fiber optic products, which was primarily related to an
increase in assembly components shipped to one of our largest customers, and an
increase of $2.9 million in sales of semiconductor products, primarily due to
higher shipments of amplifier products.

    COST OF GOODS SOLD.  Cost of goods sold decreased 8% to $27.5 million in the
first half of 2000 from $29.8 million in the first half of 1999. The decrease is
a result of the decrease in sales and lower cost of goods sold as a percentage
of sales. Our cost of goods sold as a percentage of sales decreased to 61.6% in
the first half of 2000 from 63.2% in the first half of 1999. The decrease was
primarily due to the increase as a percentage of sales of semiconductor and
fiber optic products, which have lower variable product cost.

    RESEARCH AND DEVELOPMENT.  Research and development expense increased 1% to
$8.8 million in the first half of 2000 from $8.7 million in the first half of
1999. This increase was primarily attributable to our continued spending on the
development of wireless broadband access products and semiconductor products as
well as new spending on fiber optic product development. Research and
development expense as a percentage of sales increased to 19.6% in the first
half of 2000 from 18.3% in the first half of 1999. This increase was primarily a
result of the lower levels of sales in the first half of 2000.

    SELLING AND ADMINISTRATIVE.  Selling and administrative expense increased
134% to $6.0 million in the first half of 2000 from $2.6 million in the first
half of 1999. This increase was primarily the result of the inclusion in selling
and administrative expenses of $1.1 million of corporate administrative expenses
after January 31, 2000, the date of the recapitalization merger, $300,000 of
expenses associated with human resources and recruiting, as well as $400,000 of
expenses associated with additional sales resources in the first half of 2000.
Our selling and administrative expenses as a percentage of sales increased to
13.3% in the first half of 2000 from 5.4% in the first half of 1999 as a result
of the increase in selling and administrative cost described above combined with
the lower level of sales in the first half of 2000. Our sales expense increased
despite a decline in sales primarily because we increased the size of our sales
force from seven sales representatives in June of 1999 to 14 sales
representatives in June 2000. The increase in the number of sales
representatives is attributable to our efforts to increase our market
penetration and diversify our customer base.

    AMORTIZATION OF DEFERRED STOCK COMPENSATION.  Amortization of deferred stock
compensation expense in the first half of 2000 includes $517,000 related to the
sale of stock and the issuance of stock options at a price deemed below fair
value.

    CORPORATE ADMINISTRATIVE.  Corporate administrative expense decreased 83% to
$322,000 in the first half of 2000 from $1.9 million in the first half of 1999.
This decrease resulted from the winding-down of corporate activities at the
corporate level as a result of the recapitalization merger. It was also
attributable to the fact that in the first half of 2000 these expenses were only
included in corporate administrative expense through January 31, 2000. After
that date, the portion of these costs which continued to be incurred by us were
included in selling and administrative expense. In future periods, all of these
costs which continue to be incurred will be classified as selling and
administrative expense.

    RECAPITALIZATION MERGER AND OTHER.  We incurred the recapitalization merger
and other expense of $35.5 million in the first half of 2000 related to our
recapitalization merger. These expenses include: $16.8 million of compensation
expenses related to payments to former option holders; $9.8 million of
compensation expenses related to bonus, retention, and severance amounts for
certain employees; $4.7 million of legal, consulting and accounting fees; and
$4.2 million of financial services and other expenses related to the
recapitalization merger transaction. There was no corresponding expense in the
first half of 1999.

                                       24
<PAGE>
    INTEREST INCOME.  Interest income primarily represents interest earned on
short-term available-for-sale investments. Interest income decreased 19% to
$1.3 million in the first half of 2000 from $1.6 million in the first half of
1999. This decrease resulted from decreased average amounts of funds available
for investment during the first half of 2000 as compared to the first half of
1999.

    INTEREST EXPENSE.  Interest expense increased to $2.3 million in the first
half of 2000 from $245,000 in the first half of 1999. This increase resulted
primarily from interest expense related to the new credit facility with CIBC
World Markets Corp. that we entered into as part of the recapitalization merger.

    OTHER INCOME (EXPENSE)--NET.  Other income (expense)--net, decreased to
$691,000 of other expense in the first half of 2000 from $156,000 of other
income in the first half of 1999. This decrease is primarily related to losses
realized in the first quarter 2000 when we liquidated short-term investments to
fund in part the recapitalization merger. During the first half of 2000, we
realized a gain of $808,000 from the disposition of real property. We had no
such dispositions in the prior year period.

    INCOME TAX (PROVISION) BENEFIT.  Income tax (provision) benefit relative to
continuing operations consists of federal and state income taxes. Our effective
tax rate for the first half of 1999 was a (provision) of (32.4%). It was lower
than the provision based upon the statutory rate mostly due to benefits derived
from our foreign sales corporation and research tax credits. In the first half
of 2000, our effective tax rate resulted in a benefit of 27.0%. In this period,
we had an effective tax benefit as a result of the deductible portion of the
costs relative to the recapitalization merger with Fox Paine.

COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1999

    SALES.  Sales increased 30% to $82.4 million in 1999 from $63.6 million in
1998 primarily due to product development efforts which resulted in
significantly increased product offerings and shipments to customers. In
particular, sales increased $8.0 million for fiber optic products, $5.8 million
for semiconductor products and $5.0 million for wireless products.

    COST OF GOODS SOLD.  Cost of goods sold increased 16% to $50.5 million in
1999 from $43.4 million in 1998. This was primarily due to increased costs
resulting from our increase in sales. Cost of goods sold as a percentage of
sales decreased to 61% in 1999 from 68% in 1998, as we leveraged our fixed costs
over a higher sales volume and due to increased sales as a percentage of total
sales of semiconductor and fiber optic products which have lower variable
product costs.

    RESEARCH AND DEVELOPMENT.  Research and development expense increased 19% to
$16.8 million in 1999 from $14.1 million in 1998. This increase was primarily a
result of our increased product development efforts related to future generation
fiber optic, broadband cable and semiconductor products and wireless broadband
equipment. Research and development expense as a percentage of sales decreased
to 20% in 1999 from 22% in 1998 as a result of a greater increase in sales
during the period.

    SELLING AND ADMINISTRATIVE.  Selling and administrative expense increased
33% to $5.3 million in 1999 from $4.0 million in 1998. This increase was
primarily due to increased costs relating to an increase in sales. Selling and
administrative expense as a percentage of sales remained approximately 6% for
both years.

    CORPORATE ADMINISTRATIVE.  Corporate administrative expense increased 144%
to $4.4 million in 1999 from $1.8 million in 1998. This increase resulted
primarily from a larger amount of corporate costs being allocated to our current
business in comparison to other divisions previously operated by us, as our
current business experienced overall sales growth during the period while sales
from other divisions were declining. Following the merger recapitalization, we
expect that the portion of these costs which will continue to be incurred will
decline, with the ongoing costs included in selling and administrative expense
in the future.

                                       25
<PAGE>
    RECAPITALIZATION MERGER AND OTHER.  We incurred recapitalization merger and
other expense of $3.2 million principally during the third and fourth quarter
1999 related to our recapitalization merger and the sale of our
telecommunications group. There was no corresponding expense in 1998.

    INTEREST INCOME.  Interest income decreased 11% to $5.1 million in 1999 from
$5.7 million in 1998. This decrease resulted from the lower average amounts of
funds available for investment during 1999.

    INTEREST EXPENSE.  Interest expense decreased 13% to $520,000 in 1999 from
$601,000 in 1998. This decrease resulted from the amortization of the interest
component of our capital lease obligations in 1999.

    OTHER INCOME (EXPENSE)--NET.  Other income (expense)--net, decreased to
$412,000 in 1999 from $1.2 million in 1998. This decrease is primarily due to an
increase in the costs of administering our sublease of the Palo Alto facility
during 1999. These costs primarily related to the facility repairs.

    GAIN ON DISPOSITION OF REAL PROPERTY.  In 1999, we completed the sale of our
San Jose, California facility including a 190,000 square foot building,
resulting in net proceeds of about $16.9 million and a pre-tax gain of
$9.7 million. This property was vacated in 1998. Also in 1999, we completed the
sale of one of our long-term lease interests involving about 16 acres in Palo
Alto, California to Stanford University, resulting in net proceeds of
approximately $54.0 million and a pre-tax gain of $51.8 million.

    In 1998, we sold approximately 15 acres of undeveloped land adjacent to our
San Jose, California, facility for net proceeds of $16.0 million and a pre-tax
gain of $15.0 million. The remainder of the San Jose property was sold in 1999.

    INCOME TAX (PROVISION) BENEFIT.  Our effective tax rate increased to 38.4%
in 1999 from 32.5% in 1998. This increase was primarily related to higher taxes
paid in 1999 on the gain on real property.

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1998

    SALES.  Sales increased 104% to $63.6 million in 1998 from $31.2 million in
1997. Sales increased for both semiconductor products and fiber optic products
and to a much larger degree for wireless products. The increase in wireless
product sales included our first large order for fixed wireless products from a
major wireless carrier.

    COST OF GOODS SOLD.  Cost of goods sold increased 70% to $43.4 million in
1998 from $25.6 million in 1997. This increase is primarily due to increased
costs resulting from the increase in sales. Cost of goods sold as a percentage
of sales decreased to 68% in 1998 from 82% in 1997, primarily from leveraging
our fixed costs over higher sales volume.

    RESEARCH AND DEVELOPMENT.  Research and development expense increased 38% to
$14.1 million in 1998 from $10.2 million in 1997. This increase was primarily
attributable to increased research and development activities in 1998 related to
the launch of several products. Research and development expense as a percentage
of sales decreased to 22% in 1998 from 33% in 1997 due to greater increases in
sales in 1998 resulting from our product development efforts.

    SELLING AND ADMINISTRATIVE.  Selling and administrative expense increased
82% to $4.0 million in 1998 from $2.2 million in 1997. This increase was
primarily attributable to our increased sales efforts in 1998. Selling and
administrative expense as a percentage of sales decreased to 6% in 1998 from 7%
in 1997 primarily as a result of the increase in sales during this period.

    CORPORATE ADMINISTRATIVE.  Corporate administrative expense increased 46% to
$1.8 million in 1998 from $1.2 million in 1997. This increase primarily resulted
from a larger amount of corporate level costs being allocated to our current
business, as it achieved significant sales growth in 1998 while sales from other
business divisions were declining.

                                       26
<PAGE>
    INTEREST INCOME.  Interest income increased 159% to $5.7 million in 1998
from $2.2 million in 1997. This increase resulted from an increased average
amount of funds available for investment during the year in 1998.

    INTEREST EXPENSE.  Interest expense decreased 24% to $601,000 in 1998 from
$795,000 in 1997. This decrease resulted from the amortization of the interest
component of our capital lease obligations during 1998.

    OTHER INCOME (EXPENSE)--NET.  Other income (expense)--net, increased to
$1.2 million of other income in 1998 from $249,000 of other expense in 1997.
This increase is primarily due to a full year of net rental income of
approximately $1.2 million from subleasing part of the Palo Alto facility in
1998. In 1997, we only received two months of rental income related to this
facility, as the sublease agreement did not commence until the divestiture of
the government electronics group in October of 1997.

    GAIN ON DISPOSITION OF REAL PROPERTY.  In 1998, we sold approximately 15
acres of undeveloped land adjacent to our San Jose, California, facility for net
proceeds of $16.0 million and a pre-tax gain of $15.0 million. The remainder of
the San Jose property was sold in 1999.

    In 1997, we exchanged a portion of our subleased interest at our Palo Alto,
California, facility for consideration consisting of cash and the sublessor's
leasehold rights in the remaining parcels under the lease. The exchange resulted
in a pre-tax gain of $7.6 million.

    INCOME TAX (PROVISION) BENEFIT.  Our effective tax rate decreased to 32.5%
in 1998 from 35.1% in 1997. This decrease was primarily related to a decrease in
our effective state tax rate that resulted from an increase in tax credits
utilized for state tax purposes.

                                       27
<PAGE>
QUARTERLY RESULTS OF OPERATIONS

    The following table sets forth, for the periods presented, selected data
from our consolidated statements of operations and the data as a percentage of
sales on a quarterly basis. The consolidated statements of operations data have
been derived from our unaudited consolidated financial statements. In the
opinion of management, these statements have been prepared on substantially the
same basis as the audited consolidated financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods presented. This
information should be read in conjunction with the consolidated financial
statements and notes to those financial statements included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED
                                             ------------------------------------------------------------------
                                             MARCH 26,   JUNE 25,   SEPT. 24,   DEC. 31,   MARCH 31,   JUNE 30,
                                               1999        1999       1999        1999       2000        2000
                                             ---------   --------   ---------   --------   ---------   --------
                                                                       (IN THOUSANDS)
<S>                                          <C>         <C>        <C>         <C>        <C>         <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
    Sales..................................   $23,528    $23,688     $16,524    $18,664    $ 17,051    $27,627
    Cost of goods sold.....................    16,095     13,730       9,684     11,025      10,075     17,466
                                              -------    -------     -------    --------   --------    -------
    Gross profit...........................     7,433      9,958       6,840      7,639       6,976     10,161
    Operating expenses:
        Research and development...........     3,934      4,717       4,367      3,788       4,145      4,619
        Selling and administrative.........     1,262      1,290       1,168      1,611       2,569      3,397
        Amortization of deferred stock
          compensation.....................        --         --          --         --          --        517
        Corporate administrative...........       739      1,113       1,181      1,358         322         --
        Recapitalization merger and
          other............................        --         --       1,639      1,584      35,453         --
                                              -------    -------     -------    --------   --------    -------
            Total operating expenses.......     5,935      7,120       8,355      8,341      42,489      8,533
                                              -------    -------     -------    --------   --------    -------
    Income (loss) from operations..........     1,498      2,838      (1,515)      (702)    (35,513)     1,628
    Interest income........................       844        780       1,084      2,362       1,026        291
    Interest expense.......................      (120)      (125)       (134)      (141)       (872)    (1,403)
    Other income (expense)--net............       184        (28)        165         91        (519)      (172)
    Gain on disposition of real property...        --         --       9,686     51,966          --        808
                                              -------    -------     -------    --------   --------    -------
    Income (loss) from continuing
      operations before income taxes.......     2,406      3,465       9,286     53,576     (35,878)     1,152
    Income tax (provision) benefit.........      (782)    (1,121)     (2,964)   (21,516)      9,687       (313)
                                              -------    -------     -------    --------   --------    -------
    Income (loss) from continuing
      operations...........................   $ 1,624    $ 2,344     $ 6,322    $32,060    $(26,191)   $   839
                                              =======    =======     =======    ========   ========    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                  AS A PERCENTAGE OF SALES
                                             ------------------------------------------------------------------
                                             MARCH 26,   JUNE 25,   SEPT. 24,   DEC. 31,   MARCH 31,   JUNE 30,
                                               1999        1999       1999        1999       2000        2000
                                             ---------   --------   ---------   --------   ---------   --------
<S>                                          <C>         <C>        <C>         <C>        <C>         <C>
Sales......................................     100.0%     100.0%      100.0%     100.0%      100.0%     100.0%
Cost of goods sold.........................      68.4       58.0        58.6       59.1        59.1       63.2
                                              -------    -------     -------    --------   --------    -------
Gross profit...............................      31.6       42.0        41.4       40.9        40.9       36.8
Operating expenses:
    Research and development...............      16.7       19.9        26.4       20.3        24.3       16.7
    Selling and administrative.............       5.4        5.4         7.1        8.6        15.1       12.3
    Amortization of deferred stock
      compensation.........................       0.0        0.0         0.0        0.0         0.0        1.9
    Corporate administrative...............       3.1        4.7         7.1        7.3         1.9        0.0
    Recapitalization merger and other......       0.0        0.0         9.9        8.5       207.9        0.0
                                              -------    -------     -------    --------   --------    -------
        Total operating expenses...........      25.2       30.0        50.6       44.7       249.2       30.9
                                              -------    -------     -------    --------   --------    -------
Income (loss) before operations............       6.4       12.0        (9.2)      (3.8)     (208.3)       5.9
Interest income............................       3.6        3.3         6.6       12.7         6.0        1.1
Interest expense...........................      (0.5)      (0.5)       (0.8)      (0.8)       (5.1)      (5.1)
Other income (expense)--net................       0.8       (0.1)        1.0        0.5        (3.0)      (0.6)
Gain on disposition of real property.......       0.0        0.0        58.6      278.4         0.0        2.9
                                              -------    -------     -------    --------   --------    -------
Income (loss) from continuing operations
  before income taxes......................      10.2       14.7        56.2      287.1      (210.4)       4.2
Income tax (provision) benefit.............      (3.3)      (4.7)      (17.9)    (115.3)       56.8       (1.2)
                                              -------    -------     -------    --------   --------    -------
Income (loss) from continuing operations...       6.9%      10.0%       38.3%     171.8%     (153.6)%      3.0%
                                              =======    =======     =======    ========   ========    =======
</TABLE>

                                       28
<PAGE>
    The following discussion highlights significant events that impacted our
sales and financial results in the six quarters ended June 30, 2000. You should
not rely on our prior results in any quarter as an indication of our future
performance.

    SALES.  For the six-quarter period presented, sales were at relatively high
levels during the first and second quarter of 1999, due primarily to large
shipments of our fixed wireless products. These shipments and our customer
requirements for them were completed in the second quarter 1999. Total sales for
fiber optic and semiconductor products have grown on a quarter-by-quarter basis
from the first quarter 1999, and for wireless products have grown since the
third quarter 1999, with the exception of the first quarter 2000. In the first
quarter 2000, our sales were negatively impacted as our contract with Lucent
Technologies converted to a consignment arrangement under which title will not
pass, and we will therefore not recognize sales, until Lucent Technologies
utilizes our products in its production processes. Sales were at the highest
level during the second quarter 2000.

    COST OF GOODS SOLD.  For the six quarters presented, cost of goods sold as a
percentage of sales was at its highest level in the first quarter 1999. This was
primarily a result of costs related to the fixed wireless products and the
higher variable product costs required for manufacturing these products. Cost of
goods sold as a percentage of sales decreased in the second quarter 1999 as a
result of our product mix and higher level of manufacturing efficiency as we
completed the fixed wireless product orders. We expect cost of goods sold as a
percentage of sales to increase in the near term as new products are
transitioned from development to manufacturing and a new operating lease
commences in the third quarter 2000 in connection with the relocation of our
Palo Alto, California operations to San Jose, California.

    RESEARCH AND DEVELOPMENT.  Research and development increased significantly
in the second quarters 1999 and 2000 as compared to the first quarters 1999 and
2000, primarily because of an increase in our research and development staff and
their related cost. Research and development salaries and wages were relatively
stable during the second quarter of 1999 through the first quarter 2000. The
decline in research and development expenditures from the second quarter 1999
through the first quarter 2000 relates to lower levels of supplies being
consumed and lower levels of support cost being allocated.

    SELLING AND ADMINISTRATIVE.  Selling and administrative expense increased in
each of the six quarters presented, with the exception of a small decrease in
the third quarter 1999. The increases were primarily due to an increase in the
number of sales and marketing personnel, an increase in human resource and
recruiting expenses, and to the inclusion effective January 31, 2000 of
corporate administrative expenditures in selling and administrative expense. We
expect selling and administrative expense to increase as we continue to expand
our sales and administrative organization.

    AMORTIZATION OF DEFERRED STOCK COMPENSATION.  Amortization of deferred stock
compensation expense in the second quarter of 2000 related to the sale of stock
and the issuance of options at a price deemed below fair value.

    CORPORATE ADMINISTRATIVE.  Corporate administrative expense increased in all
four quarters 1999, and decreased in the first and second quarters of 2000. The
increases resulted primarily from corporate administrative expense incurred at
our corporate level that we allocated to our current business as it experienced
overall sales growth during these periods relative to the corporation as a
whole. Following the recapitalization merger on January 31, 2000, we expect the
portion of these costs which continue to be incurred to decline, with the
ongoing costs included in selling and administrative expense in the future.


    INTEREST INCOME.  Interest income for the six-quarter period presented
varied primarily as a result of the average amount of funds available for
investment during the period.


    INTEREST EXPENSE.  Interest expense remained at approximately the same
amount in all four quarters 1999 and increased in the first and second quarter
2000. Interest expense for the 2000 quarters was higher due to borrowings under
our new credit facility that we entered into as part of the recapitalization
merger. We expect interest expense to be lower in future quarters assuming we
raise sufficient funds in the offering to repay the amounts currently
outstanding under this facility.

                                       29
<PAGE>
    OTHER INCOME (EXPENSE)--NET.  For the four quarters in the period ended
December 31, 1999, net rental income generated from the sublease on our Palo
Alto facility decreased mostly due to higher facility repairs. Other income
(expense)--net, declined in the first quarter 2000 primarily due to losses
realized in the liquidation of short-term investments to fund in part the
recapitalization merger. Other income (expense)--net in the second quarter of
2000 declined from other income--net to other (expense)--net as compared to the
quarterly levels of 1999 primarily because of higher facility costs associated
with our Palo Alto sublease. Other income (expense)--net, is expected to
decrease in the fourth quarter 2000, as the Palo Alto, California sublease
arrangement is scheduled to expire.

LIQUIDITY AND CAPITAL RESOURCES

    Cash, cash equivalents and short-term investments decreased from
$173.8 million at December 31, 1999 to $12.6 million on June 30, 2000. The
decrease was primarily attributable to cash required to complete the
recapitalization merger on January 31, 2000. The recapitalization merger was
accomplished with our cash on hand, proceeds from the sale of the
telecommunications group of $59.5 million, proceeds from the sale of equity to
Fox Paine for $50.8 million, $4.9 million in roll-over equity by an existing
stockholder, and $40.0 million drawn from the new credit facility. As a result
of our borrowings under the credit facility, our interest expense increased by
$2.0 million in the first half of 2000 as compared to the first half of 1999.

    This credit facility is comprised of a $15.0 million five-year revolver, a
$25.0 million five-year term A loan, and a $15.0 million six-year term B loan.
The initial interest rates were LIBOR plus 3.25% for the revolver and the term A
facility and LIBOR plus 3.75% for the term B facility. Six months after the
initial pricing, interest rates are to be determined by a leveraged-based
pricing grid. The revolver has a 0.50% commitment fee payable on the undrawn
portion. The credit facility is secured by substantially all of our tangible and
intangible assets. As of June 30, 2000, $25.0 million was outstanding under the
term A facility and $14.9 million was outstanding under the term B facility. The
applicable interest rates for the six-month period ended June 30, 2000 averaged
9.52% and 10.00% for the term A and B facility, respectively. The credit
facility requires that a mandatory prepayment of an estimated $9.3 million be
made on August 4, 2000. We expect to use a portion of the net proceeds from the
offering to repay the outstanding balance of our credit facility. At the time
the credit facility is repaid we will write off the unamortized deferred
financing costs which totaled $2.7 million at June 30, 2000. As a result of this
write-off, we expect to have a net loss in the third quarter 2000.

    As of June 30, 2000, working capital, excluding net assets of discontinued
operations, was $15.9 million. Based on current plans and business conditions,
we believe that our existing cash, cash equivalents, short-term investments,
cash generated from operations, $11.5 million of net proceeds from the sales of
our Series A Preferred Stock that we completed in July 2000, and the available
credit facility will satisfy our anticipated cash and working capital
requirements for the next twelve months regardless of whether or not the
offering is completed.

    NET CASH PROVIDED (USED) BY CONTINUING OPERATING ACTIVITIES.  Net cash
provided (used) by continuing operations was $21.0 million, ($39.0) million,
$4.0 million and $570,000 in 1997, 1998 and 1999 and the six months ended
June 30, 2000, respectively. Net income (loss) in 1997, 1998, 1999 and the six
months ended June 30, 2000, was comprised of $443,000, $14.5 million,
$42.4 million and ($25.4) million, respectively, from continuing operations and
$32.5 million, ($63.7) million, $25.5 million and $30.9 million, respectively,
from discontinued operations. Significant items impacting the difference between
loss from continuing operations and cash flows from continuing operations in the
six months ended June 30, 2000 were $13.2 million used in working capital and
$35.5 million of recapitalization merger costs. The $13.2 million used in
working capital primarily relates to a $7.4 million increase in receivables, a
$7.4 million increase in inventories and a $5.5 million decline in accruals and
payables which was partially offset by a $7.6 million decline in other assets.
Significant items impacting the difference between net income from continuing
operations and cash flows from continuing operations in 1999 were $5.0 million

                                       30
<PAGE>
used in working capital, net gains on the disposition of property, plant and
equipment of $61.1 million and $21.9 million provided by the utilization of
deferred tax assets. The $61.1 million net gain on property, plant and equipment
was primarily related to a $61.7 million gain on the sale of real estate.
Significant items impacting the difference between net income from continuing
operations and cash flows from continuing operations in 1998 were $36.6 million
used in working capital and net gains on the disposition of property, plant and
equipment of $13.6 million. The $36.6 million used in working capital primarily
relates to an increase in other assets of $20.6 million, which is primarily
related to the recognition of a $13.6 million income tax refund receivable. The
$13.6 million net gain on property, plant and equipment primarily related to a
$15.0 million net gain on the sale of real estate. Significant items impacting
the difference between net income from continuing operations and cash flows from
continuing operations in 1997 were $31.8 million of cash provided by working
capital and net gains on the disposition of property, plant and equipment of
$6.8 million. The primary item providing cash from working capital in 1997 was
an increase in accruals and payables of $30.2 million, which primarily related
to income taxes payable of $23.3 million. The $6.8 million gain on property,
plant and equipment primarily related to a $7.6 million gain on the sale of real
estate.

    NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES.  Net cash provided by
investing activities was $102.4 million for the six months ended June 30, 2000.
The primary items providing cash from investing activities during the first six
months 2000 were the sale of short-term investments totaling $43.1 million and
proceeds from the sale of our discontinued operations totaling $62.3 million.
Net cash provided by investing activities increased $122.3 million to
$87.8 million in 1999 from a use of cash in 1998 of $34.5 million. The majority
of the increase was attributable to proceeds related to sales of a number of our
real property assets and asset retirements. In 1999, we completed the sale of
our San Jose, California facility resulting in net proceeds of $16.9 million and
a pre-tax gain of $9.7 million. Also during 1999, we completed the sale of one
of our Palo Alto leasehold interests involving approximately 16 acres in Palo
Alto, California, resulting in proceeds of approximately $54.0 million and a
pre-tax gain of approximately $51.8 million. In addition, in 1999, we also had
proceeds of $19.9 million from the sale of our discontinued operations.

    Net cash used in investing activities in 1998 of $34.5 million decreased
from net cash provided by investing activities in 1997 of $83.5 million,
primarily as a result of proceeds of $77.9 million from the sale of the
government electronics group in 1997 and an increase in short term investments
of $45.1 million in 1998. These short-term investments primarily consisted of
commercial paper and municipal bond funds. We also sold undeveloped land
adjacent to our San Jose, California facility resulting in net proceeds of
approximately $16.0 million in 1998.

    CAPITAL EXPENDITURES.  Capital expenditures were $3.1 million for the six
months ended June 30, 2000, $4.8 million in 1999, $5.7 million in 1998 and
$2.9 million in 1997. Capital expenditures are projected to total approximately
$20.6 million and $12.5 million in 2000 and 2001, respectively. In 2000,
approximately $6.0 million of the capital expenditures is budgeted for capital
improvements related to the relocation of the Palo Alto, California facility to
San Jose, California. The balance of capital expenditures in 2000 and 2001 is
projected for the purchase of new production equipment to meet the expected
growth in demand for our products. We expect to fund these capital expenditures
with proceeds from this offering. As of the end of 1999, there were no material
commitments for capital expenditures.

    NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES.  Net cash used in
financing activities totaled $205.4 million for the six months ended June 30,
2000 as compared to net cash used in financing activities of $2.4 million in
1999, net cash used for financing activities of $38.4 million and $9.3 million
in 1998 and 1997, respectively. Net cash used in financing activities in the six
months ended June 30, 2000 primarily related to $270.1 million to repurchase our
common stock and $35.5 million in recapitalization merger costs. The purchase of
our common stock was related to our recapitalization merger completed
January 31, 2000. These items were partially offset by net cash provided by the
issuance of long-term debt totaling

                                       31
<PAGE>
$40.0 million and $60.3 million related to the sale of common stock. The use of
cash in 1997 and 1998 primarily resulted from our stock repurchase program. In
1998, our board of directors authorized us to increase the amount of common
stock we could repurchase to 105 million shares. By December 31, 1998, we had
repurchased all 105 million shares. We repurchased 53.9 million shares in 1998
for approximately $36.2 million and 6.2 million shares in 1997 for approximately
$5.7 million.

    DISCONTINUED OPERATIONS.  We divested three businesses that are being
reported as discontinued operations. The income (loss) from each of these
discontinued operations, and the resultant gains (losses) on disposition for
1997, 1998, 1999 and for the six months ended June 30, 2000, were as follows:

<TABLE>
<CAPTION>
                                     1997                     1998                     1999                     2000
                            ----------------------   ----------------------   ----------------------   ----------------------
                             INCOME     GAIN FROM     INCOME     GAIN FROM     INCOME     GAIN FROM                GAIN FROM
                             (LOSS)    DISPOSITION    (LOSS)    DISPOSITION    (LOSS)    DISPOSITION    INCOME    DISPOSITION
                            --------   -----------   --------   -----------   --------   -----------   --------   -----------
                                                                     (IN THOUSANDS)
<S>                         <C>        <C>           <C>        <C>           <C>        <C>           <C>        <C>
Government electronics....  $ 7,210      $29,677     $     --     $   --       $   --      $ 3,323       $ --       $    --

Semiconductor equipment...   (8,998)          --      (54,288)        --        6,512       12,506         --            --

Telecommunications........    4,593           --       (9,413)        --        3,149           --        212        30,706
                            -------      -------     --------     ------       ------      -------       ----       -------

    Total.................  $ 2,805      $29,677     $(63,701)    $   --       $9,661      $15,829       $212       $30,706
                            =======      =======     ========     ======       ======      =======       ====       =======
</TABLE>

    We divested the government electronics business in October 1997, resulting
in net of tax gains of $29.7 million in 1997 and $3.3 million in 1999. We
divested the semiconductor equipment business in July 1999, resulting in a net
of tax gain of $12.5 million in 1999. We divested the telecommunications
business in January 2000, resulting in a net of tax gain of $31.4 million, net
of losses of $700,000 for other assets disposed of in the first half of 2000.

    Please refer to note 10 to the consolidated financial statements for further
information regarding our discontinued operations.

OTHER MATTERS

    ACCOUNTING PRONOUNCEMENTS.  In June 1998, the Financial Accounting Standards
Board, or FASB, issued Statement of Financial Accounting Standard 133,
"Accounting for Derivative Instruments and Hedging Activities." In June of 1999,
the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS 133." These statements
require companies to record derivatives on the balance sheet as either assets or
liabilities, measured at fair market value. Gains and losses resulting from
changes in the fair market values of those derivative instruments would be
accounted for depending on the use of the instrument and whether it qualifies
for hedge accounting. SFAS 133 will be effective for our fiscal year ending
December 31, 2001. We are currently in the process of evaluating any impact on
our financial condition or results of operations resulting from these
statements. We do not expect that the adoption of SFAS 133 will have a
significant impact on our financial statements in future periods.

    In December 1999, the SEC issued Staff Accounting Bulletin No. 101, Revenue
Recognition. SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition in financial statements. We believe that our
current accounting policies are in accordance with SAB 101.

    In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation--an interpretation of APB No. 25. Interpretation No. 44 is
effective July 1, 2000. The Interpretation clarifies the application of
Opinion 25 for various issues, specifically:

    - the definition of an employee;

                                       32
<PAGE>
    - the criteria for determining whether a plan qualifies as a
      non-compensatory plan;

    - the accounting consequence of various modifications to the terms of a
      previously fixed stock option or award; and

    - the accounting for an exchange of stock compensation awards in a business
      combination.

    We do not anticipate that the adoption of Interpretation No. 44 will have a
material impact on our financial position or the results of our operations.

    ENVIRONMENTAL MATTERS.  Of our current and former production facilities, two
have known environmental liabilities of significance, the Scotts Valley site and
the Palo Alto site. Prior to the recapitalization merger, we entered into and
funded fixed price remediation contracts, as well as cost overrun and unknown
pollution conditions liability coverage, with respect to both these sites. For a
more detailed description, see "Business--Environmental Matters."

    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  We are exposed
to market risk related to changes in interest rates and foreign currency
exchange rates. We do not use derivative financial instruments for speculative
or trading purposes.

    - INTEREST RATES.  We are exposed to changes in interest rates primarily
      from our credit facility. As a result of the recapitalization merger, the
      level of funds invested in short-term securities has decreased from
      historical levels, thus reducing our exposure to changes in interest
      rates.

    - FOREIGN EXCHANGE RATES.  In the future, we may enter into foreign exchange
      forward contracts to hedge some balance sheet exposures and specific
      transactions denominated in a foreign currency. We currently have no
      foreign exchange forward contracts outstanding. We may be exposed to
      credit-related losses in the event of nonperformance by counterparties to
      these financial instruments, but do not expect any counterparty to fail to
      meet its obligations.

    LITIGATION.  Four shareholder class action lawsuits have been filed against
us and our former directors in the California Superior Court for the County of
Santa Clara. While the allegations are not identical in the four complaints,
they all allege essentially the same grounds for relief, namely that the
individual defendants breached their fiduciary duty to our former shareholders
in connection with our recapitalization merger with Fox Paine by failing to
maximize the value of our company using an appropriate process for eliciting and
evaluating bids. The complaints also allege that the individual defendants had
conflicts of interest and committed a breach of fiduciary duty in order to
entrench themselves in office, enrich themselves financially and receive
unspecified additional perquisites. All four complaints seek a declaration that
the defendants breached their fiduciary duties, unspecified damages and various
forms of injunctive and equitable relief, including rescission of the
recapitalization merger and awards of attorneys' fees. We entered into a
memorandum of understanding in January 2000 in which plaintiffs' counsel agreed
in principle to settle the litigation, subject to, among other things, their
completion of discovery and judicial approval. For a more detailed description
of these suits, see "Business--Legal Proceedings."

    CHANGES IN INDEPENDENT AUDITORS.  In connection with our change of
ownership, we engaged the accounting firm of Arthur Andersen LLP on May 5, 2000
to replace Deloitte & Touche LLP who were terminated effective May 5, 2000 as
our independent auditors. Our board of directors approved this change in
May 2000.

    The former independent auditors' reports on our financial statements as of
and for the fiscal years ended December 31, 1997 and 1998 did not contain an
adverse opinion, a disclaimer of opinion, or any qualifications or modifications
related to any uncertainty, or any limitation of audit scope or application of
accounting principles. In 1997 and 1998, there were no disagreements with our
former independent auditors on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure with respect to
our consolidated financial statements up through May 5, 2000, the date of their
termination, that if not resolved to the former independent auditors'
satisfaction, would have caused them to make reference to the subject matter of
the disagreement in connection with their reports.

                                       33
<PAGE>
                                    BUSINESS

OVERVIEW

    We design, develop and manufacture innovative, high quality broadband
communications products that enable voice, data and image transport over fiber
optic, broadband cable and wireless communications networks around the world.
Our products are comprised of advanced, highly functional components and
integrated assemblies which address the radio frequency, or RF, challenges of
both current and next generation broadband communications networks. These
products are used in the network infrastructure supporting and facilitating
mobile communications, broadband high speed data transmission and enhanced voice
services. Our core expertise in gallium arsenide semiconductor and thin-film
technology, coupled with our exceptional RF design and manufacturing
capabilities, have enabled us to attain a competitive advantage in these
broadband communications markets.

INDUSTRY BACKGROUND

    Over the last decade, there have been significant developments in the
communications industry, as evidenced by the emergence of the Internet, wireless
communications and digital television services. Growing demand for voice, video
and data services, as well as high speed Internet access, has increased the need
for communications networks capable of handling large volumes of traffic.
Simultaneously, the deregulation of the communications industry and the
resulting competition among service providers has forced these service providers
to seek to differentiate themselves in an effort to attract and retain
subscribers. As the constraints of the traditional communications infrastructure
have limited service providers' ability to meet the growing demand for broadband
access, these service providers have been upgrading their systems, as well as
deploying next-generation broadband communications technologies including fiber
optic, broadband cable and broadband fixed wireless. These enhancements have, in
turn, fueled the demand of consumers and businesses for increased access,
mobility, functionality and bandwidth. As a result, the market for broadband
communications networks is expected to continue to grow significantly over the
next several years.

    DEMAND FOR HIGH-SPEED INTERNET ACCESS AND OTHER DATA SERVICES HAS INCREASED
THE NEED FOR BROADBAND ACCESS.  According to Ryan, Hankin & Kent, a
communications industry market research firm, Internet traffic is expected to
increase from 350,000 terabytes per month at the end of 1999 to over 15 million
terabytes per month in 2003. Consumers are using the Internet for a variety of
applications including e-mail, audio, streaming video and other multimedia
services. Businesses are also using the Internet for e-commerce, global
marketing, customer support, order fulfillment and supply management.
Furthermore, the growth in the use of corporate data networks and the rising
number of telecommuters and traveling employees have resulted in the need to
transmit large quantities of data to almost any location at high speed.

    These trends have increased the demands placed on communications networks.
As a result, communication service providers have focused on implementing system
improvements providing greater capacity and speed. The enhanced performance of
communications networks has attracted new subscribers and led to more
applications and, therefore, resulted in an even greater demand for bandwidth.
Thus, the need for additional network capacity and performance has created a
continuing cycle of network improvements and increases in bandwidth that are
being matched by advances in the applications and services generating this
demand.

    GREATER DEMAND FOR BROADBAND ACCESS HAS LED SERVICE PROVIDERS TO DEVELOP AND
DEPLOY NEXT GENERATION TRANSPORT TECHNOLOGIES.  The traditional copper wire
communications infrastructure was originally built for voice traffic. This
infrastructure has not been sufficient to meet consumer and business demand for
broadband access, which has led to the implementation and deployment of next
generation communications networks with greater transmission capacity and speed.
These networks are typically comprised of long haul segments, metro-access
segments and local access segments. The long haul

                                       34
<PAGE>
segment of the network transports voice, video and data over long distances
between metropolitan and regional concentrations of end-users. These long haul
network segments are typically connected to a metro-access loop which surrounds
concentrations of users and serves as on/off ramps to the long haul segments of
the network. In turn, the metro-access segment of a network is connected to
businesses and consumers by what is often referred to as the first and last mile
of the network. The capacity and speed of network access experienced by the
end-user is governed by the slowest segment of the network. Therefore, to
deliver broadband access to businesses and consumers, service providers must
increase the capacity of the long haul, metro-access and first and last mile
segments of the network.

    Because of its vast capacity, fiber optic transport equipment is generally
being implemented for the long haul and metro-access segments of the network. In
most cases, however, the implementation cost of fiber optic network equipment
makes it impractical to deploy fiber optic cable directly to the end-user for
all but the highest volume users. In order to provide greater bandwidth to the
small or medium size business and the residential consumer, communications
service providers are deploying lower cost broadband transport technologies
including broadband cable, wireless and digital subscriber line as illustrated
by the diagram below:

    This diagram illustrates a ring-based fiber optic network. In the center are
two interlinking rings with the larger ring containing the words "Metro Core
Fiber Optic Ring" and the smaller ring containing the words "Metro Access Fiber
Optic Ring." From the larger ring to the upper-right quadrant extends a band
ending in an arrow which loops around a diagram of the globe. Beneath the band,
the words, "Long Haul Fiber Optic Backbone" appear. The smaller ring connects by
a band to a diagram of buildings located in the lower-left quadrant.

    The larger ring also links to schematics located in the upper-left and
lower-right quadrants. The upper-left quadrant shows the access technologies,
"Digital Subscriber Line" and "Broadband Cable Networks." "Digital Subscriber
Line" is represented by a black line from the larger ring to a home. "Broadband
Cable Networks" is connected to the center ring by a small circle containing the
word "Fiber." "Broadband Cable Networks" is represented by homes.

    The lower-right quadrant shows the access technologies, "Mobile
Infrastructure Networks" and "Broadband Cable Networks." The former is attached
to the core ring by a line and is represented by a base station connected, by
signal lines, to a personal device assistant and a cellular phone. The latter is
also attached to the core ring by a line and is represented by a building with a
transmitter/receiver module on top connected, by signal lines, to 3 office
structures. The words "Point-to-Point Communication Link" and
"Point-to-Multipoint Communication Link" appear next to the 2 outer office
structures.

    FIBER OPTIC NETWORKS.  Fiber optic networks use laser-generated light to
transmit voice, video and data through ultra-thin strands of glass, which are
characterized by large capacity. These networks have been used for some time
within communications networks for long-haul data transport and are being
extended closer to the end user as bandwidth needs proliferate. One application
of fiber close to the end user is broadband cable, which combines fiber optic
cable and copper wire.

    - FIBER OPTIC SYSTEMS. The most advanced fiber optic transport technology
      commercially available is capable of carrying data at OC-192 transmission
      rates. OC-192 systems transmit data at 10 gigabits-per-second, which is
      150,000 times the capacity of a standard dial-up twisted-pair copper line.
      The majority of fiber optic systems operate at much lower data
      transmission rates. To meet the

                                       35
<PAGE>
      growing bandwidth demand, communications service providers are deploying
      additional fiber optic cable and upgrading the transmission capacity of
      their existing fiber through higher-speed transmission technologies. Ryan,
      Hankin & Kent estimates that the market for fiber optic components is
      expected to grow from $6.6 billion in 1999 to over $22.5 billion by 2003.

    - BROADBAND CABLE SYSTEMS. Broadband cable is a combination of fiber optic
      cable and copper wire, and is predominantly used within cable television
      systems. Cable television system owners have been upgrading their
      broadband cable infrastructure to enable two-way interactive, high-speed
      data, cable telephone and higher channel count video services. According
      to Paul Kagan Associates, a communications industry market research firm,
      from 1996 through 1999, the cable industry's infrastructure investments
      totaled $31 billion. Furthermore, 68% of the 68 million cable homes in the
      United States are now passed by activated two-way cable, allowing for the
      deployment of interactive, on-line and telephone services to those homes.
      They further estimate that by 2003, approximately 93% of cable homes will
      be passed by two-way cable, requiring continued spending on infrastructure
      upgrades by cable system owners.

    WIRELESS COMMUNICATIONS NETWORKS.  The global wireless communications
industry has grown considerably, driven by the demand for mobile telephone
service. According to International Data Corporation, another communications
industry market research firm, the number of cellular and personal
communications services subscribers worldwide is expected to increase from
427 million subscribers in 1999 to 1.1 billion subscribers in 2003. These mobile
subscribers are increasingly demanding data services in addition to enhanced
voice services. Next-generation mobile networks are presently being built to
provide enhanced voice and data services.

    In addition, fixed wireless communication networks are being deployed as an
alternative to wireline systems to provide high bandwidth access. Broadband
fixed wireless access offers a solution that meets the needs of many consumers
and businesses for which wireline technologies are not cost-effective or
adequate. Through the use of hubs and remote radio transmitters and receivers,
broadband data is transmitted at frequencies of 2 gigahertz or more. Broadband
fixed wireless offers another scalable means of access to fiber optic networks.

    DIGITAL SUBSCRIBER LINE TECHNOLOGY.  Digital subscriber line technology
improves the capacity and transmission speed of existing twisted-pair copper
lines. Various implementations of digital subscriber line technology are being
developed and deployed in an effort to improve network capacity while using the
existing infrastructure. According to Ryan, Hankin & Kent, at the end of 1999,
625,000 households and businesses in the United States and Canada used digital
subscriber line technology for broadband access and, by 2003, there will be
13.6 million digital subscriber line connections. The increased use of digital
subscriber line technology as an access technology that connects subscribers to
fiber optic long-haul segments of communications networks will place increased
demands on fiber optic networks to supply the desired applications and data
rates.

THE RF CHALLENGE

    While the transport medium is very different for fiber optic, broadband
cable and wireless communications networks, the core technology of RF
electronics is common to each. In these networks, signals are transported at
radio frequencies or higher. The design and performance parameters at radio
frequencies are generally more challenging and more complex than those at lower
frequencies. As a result, the demand for broadband communications networks has
led to increased demand for advanced RF products. For example, high speed fiber
optic systems place a premium on stable and reliable oscillators for precise
timing, while wireless systems generally require components that transmit
signals with minimal interference or distortion, which is commonly referred to
as high linearity. In addition, the ability to integrate RF components into
higher level, more complex assemblies and to interface these RF assemblies and
subsystems with other network elements requires a highly specialized engineering
expertise. The

                                       36
<PAGE>
knowledge and skills required to design and manufacture RF components and
integrate them into more complex assemblies and subsystems are unique and can
take many years to develop, particularly in a competitive commercial
environment. In addition, the continual pressure to innovate, bring products to
market more quickly and manufacture reliable products cost-effectively compounds
the need for advanced RF design expertise. Communications equipment
manufacturers seek companies with the technical skills and engineering resources
to design, manufacture and integrate advanced products required by current and
future generations of fiber optic and wireless infrastructure equipment.

THE WJ COMMUNICATIONS SOLUTION

    We provide the technology, design expertise and products that enable
solutions addressing the RF challenges common in fiber optic, broadband cable
and wireless communications networks. With the ability to design and manufacture
components, integrate these components into higher level RF assemblies and
interface these assemblies with other network elements, we enable advanced
communications networks that satisfy the demand for the rapid transmission of
large amounts of data, voice and video. Our core technology lies within our
advanced gallium arsenide semiconductor, thin-film substrate and oscillator
capabilities. By satisfying the critical need for precise, stable and reliable
data timing in fiber optic networks and for linearity in wireless networks, our
solutions improve both network capacity and speed.

    With our broad experience and expertise, we provide our customers with a
complete solution to their RF challenges, from technology concept to engineering
design and volume manufacturing. Our RF expertise covers a broad range of
frequencies, from a few megahertz to 30 gigahertz or more, used in advanced
communications networks today. Our solution is comprised of the following key
elements:

    ADVANCED DEVICE TECHNOLOGY.  We design products using the following core
technologies:

    - GALLIUM ARSENIDE SEMICONDUCTOR TECHNOLOGY. Gallium arsenide is a
      crystalline material that is often used as an alternative to silicon in
      the production of semiconductors used in high frequency signal
      transmission. We have substantial expertise in highly linear gallium
      arsenide semiconductor products that amplify and transform signals with
      minimal distortion and interference. We believe that our devices are more
      efficient, consume less power and produce less heat than competitive
      products, and, consequently, enable RF systems to achieve optimal
      performance.

    - THIN-FILM SUBSTRATE TECHNOLOGY. Thin-film substrates are ceramic circuit
      boards on which thin conductive and resistive films have been deposited.
      Thin-film substrates conduct signals at high frequencies with less signal
      loss than printed circuit boards. Our thin-film substrate technology
      includes several features that enhance performance at high frequencies
      while reducing the assembly cost of integrated products.

    - OSCILLATOR TECHNOLOGY. Oscillators are components that enable wireless
      systems to convert RF signals from one frequency to another. Oscillators
      are typically used to reduce transmission frequency so that signal
      processing equipment operating at lower frequencies can extract
      information from the signal. Oscillators also provide the timing function,
      or clock, for fiber optic communications networks. We have oscillator
      technology that provides the precision, stability and reliability required
      by high speed broadband networks.

    RF DESIGN EXPERTISE.  We have been designing RF and microwave products for
more than 40 years and have developed significant RF design expertise. Our team
of over 80 highly qualified and talented engineers is capable of applying this
expertise to fiber optic, broadband cable and wireless communications products.
When combined into more complex assemblies, RF components can interact with each
other and other network elements. As a result, specialized integration skills
are needed. We have developed the skills necessary to excel at integrating RF
components into higher level assemblies. This broad range of RF design expertise
allows us to create products from the component level through the more complex
assembly level that are optimized to achieve high performance with minimum cost.

                                       37
<PAGE>
    MANUFACTURABILITY.  Our ability to rapidly convert new technologies and
designs into completed products results from our flexible manufacturing
operations and our manufacturing engineering expertise. Our manufacturing
operations are comprised of a number of individual manufacturing cells. Cells
can be added or reconfigured to respond to changes in product demand. This
cell-based architecture provides us with the flexibility to use a cell to
manufacture one product in the morning and a different product in the afternoon.
Our emphasis on test and assembly automation, coupled with our judicious use of
outsourcing, has resulted in a robust, cost-effective set of manufacturing
processes. Using these processes, we can rapidly transition from prototype to
volume manufacturing with exceptional product quality and performance.

BUSINESS STRATEGY

    Our objective is to be the leading supplier of innovative, proprietary RF
solutions to communications equipment companies and service providers. To meet
this goal, we intend to:

    LEVERAGE OUR TECHNOLOGY LEADERSHIP AND OUR DESIGN AND INTEGRATION EXPERTISE
TO GROW WITH GROWING MARKETS.  We intend to participate in the rapid growth of
the global fiber optic and wireless communications markets by leveraging our
leading technology and our superior design skills and by capitalizing on the
need for higher level, more complex assemblies. We intend to apply our RF design
expertise to develop additional leading-edge products in each of the rapidly
growing areas of the communications markets. We also intend to use our
integration expertise to design cost-effective, high performance integrated
assemblies for our customers. Due to the commonality of the RF challenge in
fiber optic, broadband cable and wireless communications networks, we have the
flexibility to allocate our design and engineering resources to any or all of
these markets and intend to use this flexibility to take advantage of market
opportunities as they arise.

    MAINTAIN AND DEVELOP STRONG COLLABORATIVE CUSTOMER RELATIONSHIPS WITH
INDUSTRY LEADERS.  We believe our reputation for product quality, technical
performance, customer responsiveness, on-time delivery and cost competitiveness
will help us to continue to maintain and develop a loyal customer base. We
collaborate with many of our customers to design and develop new products for
them as they develop new products. We plan to maintain our current, and develop
new, customer relationships with industry leaders within the fiber optic,
broadband cable and wireless communications markets.

    EXPAND MANUFACTURING CAPABILITIES.  We intend to expand our manufacturing
capabilities through a combination of outsourcing and in-house manufacturing. We
also intend to continue to pursue automation in both assembly and testing for
robust processes that produce repeatable and reliable product performance.

    ACQUIRE AND DEVELOP NEW TECHNOLOGIES.  We intend to continue to augment our
existing technology base and design capabilities by acquiring complementary
technologies, design capabilities, manufacturing processes and product offerings
for broadband communications applications. In addition, we intend to continue to
focus our research and development efforts on emerging communications and RF
technologies.

PRODUCTS AND TECHNOLOGY

    We are committed to being a technology leader and product development
innovator within the growing broadband communications markets. By applying our
sophisticated integration expertise to high level assembly design, we are able
to develop cost-effective, high performance products suitable for volume
manufacturing. Many of our design engineers, because of the breadth of their
experience and expertise, are capable of working effectively at both the
semiconductor level and the integrated assembly level. As a result, we are able
to focus our expertise and resources to quickly address specific market
opportunities as they arise. Our product offerings fall into the following three
categories:

    - SEMICONDUCTOR PRODUCTS

                                       38
<PAGE>
    - FIBER OPTIC COMMUNICATIONS PRODUCTS

    - WIRELESS COMMUNICATIONS PRODUCTS

    The following diagram shows our product offering categories and portrays the
core technologies and design expertise common to all three categories. Our
products in each of these categories are derived from our core technologies
utilizing our RF design expertise:

                      TECHNOLOGY AND PRODUCT RELATIONSHIP

                                    [CHART]

SEMICONDUCTOR PRODUCTS

    Our semiconductor products include a broad array of high performance gallium
arsenide semiconductors and thin-film substrates that we manufacture for our own
use as well as for sale to others. The primary markets for our gallium arsenide
semiconductor and thin-film substrate products are the fiber optic, broadband
cable, mobile wireless infrastructure and broadband fixed wireless markets.

    GALLIUM ARSENIDE SEMICONDUCTOR PRODUCTS.  Our gallium arsenide semiconductor
products are comprised primarily of amplifiers, mixers and transistors.
Amplifiers and transistors increase the level of signals, while mixers translate
a signal from one frequency to another. The strength of our gallium arsenide
semiconductor technology lies in our ability to design and manufacture highly
linear products. High linearity is one of the most critical performance
parameters for broadband cable and wireless networks. While our gallium arsenide
semiconductor products form a solid technological foundation for our own
integrated product offerings, we sell approximately 90% of these products to
customers. We are currently developing additional highly linear amplifier and
mixer products for point-to-point and point-to-multipoint wireless access
systems, which are expected to offer significant performance and cost advantages
over other currently available products. Point-to-point wireless access systems
are two way communication links which send and receive data between two fixed
locations. Point-to-multipoint wireless access systems are two way communication
links between a single fixed central location and multiple fixed user locations.
We believe these products will provide a portion of the cost reduction necessary
to expand broadband fixed

                                       39
<PAGE>
wireless networks into more price sensitive applications and markets. The table
below illustrates the wide range of applications for which our gallium arsenide
semiconductor products are used:

<TABLE>
<CAPTION>
                                                            AMPLIFIERS    MIXERS    TRANSISTORS
                                                            ----------   --------   -----------
<S>                                                         <C>          <C>        <C>
  Fiber optic.............................................    X           N/A          X
  Broadband cable.........................................    X            X           X
  Broadband fixed wireless................................    X            X           X
  Second and third generation wireless base stations......    X            X           X
</TABLE>

    THIN-FILM SUBSTRATE PRODUCTS.  Our semiconductor products also include
thin-film substrates designed and manufactured using several advanced processes.
Our thin-film substrates incorporate technology that improves the electrical
performance of the circuits while enabling increased circuit density. In
addition, we use laser machining technology in the production of our thin-film
substrates, which allows us to cut our products into virtually any shape.
Accordingly, these custom-shaped thin-film substrates allow RF and microwave
modules to be manufactured with consistency at low cost. We use our thin-film
products in the design and production of our fiber optic and wireless
communications products and sell them to customers. We are currently developing
thin-film processes for six-inch substrates, which will further increase the
productivity and lower the manufacturing cost of broadband fixed wireless
networks.

FIBER OPTIC COMMUNICATIONS PRODUCTS

    Our fiber optic communications products include both high data-rate fiber
optic and broadband cable network products. Our fiber optic products are used in
the long haul, metro-access and first and last mile access segments of networks.
Our broadband cable products are used to provide high bandwidth first and last
mile access to consumers and small businesses.

    FIBER OPTIC PRODUCTS.  Fiber optic systems are being upgraded by
communications service providers to provide higher data transmission rates as a
means of increasing network capacity. The highest transmission rate systems that
are currently commercially available are the OC-192 systems, which operate at a
10 gigabit-per-second rate. At these high rates, the time between consecutive
pieces of data is extremely short, making system timing critical. Our highly
stable oscillator assemblies provide the timing function, or clock, that
delivers the precision and reliability needed to keep the overall system
synchronized. We currently produce oscillator assemblies for OC-192 systems and
are working with our customers to develop similar products for next-generation
OC-768 systems, which will operate at 40 gigabits-per-second. We are also
expanding our product base to include transmit and receive functions for

                                       40
<PAGE>
high-speed fiber optic systems as we integrate the RF electronics with other
elements of these networks. The following diagram illustrates an example of a
ring-based fiber optic network:

    The diagram will consist of 2 interlinking circles connected to 2
schematics. The larger ring contains the words "Metro Core Fiber Optic Ring;"
the smaller ring contains the words "Metro Access Fiber Optic Ring." From the
larger ring extends a band ending in an arrow which loops around a diagram of a
globe. Beneath the band are the words "Long Haul Fiber Optic Backbone." The
smaller ring connects by a band to a diagram of buildings.

    BROADBAND CABLE PRODUCTS.  New broadband cable networks are currently being
deployed to provide two-way data services, enhanced voice services, more
television channels and high definition TV. These broadband cable networks
contain both fiber optic lines and copper wire. We manufacture highly linear
amplifiers and mixers and are designing and developing more integrated equipment
for use within broadband cable systems. These integrated products integrate
optical detectors and laser transmitters with our RF electronics.

                                       41
<PAGE>
    The following diagram illustrates an example of a broadband cable network:

    The diagram will show a "Fiber" ring connected to 6 images of homes. The
connection to the homes contains the words "Broadband Cable Network."

WIRELESS COMMUNICATIONS PRODUCTS

    Our wireless communications products include broadband fixed wireless
equipment and mobile infrastructure equipment. Broadband fixed wireless systems
provide a means of delivering high-speed data, video and voice transmission to
businesses and consumers at fixed locations using high frequency radio
transmitters and receivers. Mobile wireless infrastructure equipment provides a
combination of voice and data services to mobile users. Second generation mobile
systems primarily offer voice services with very limited data capability. The
third generation systems currently in development are being designed to deliver
significantly higher data rates to mobile subscribers.

    BROADBAND FIXED WIRELESS EQUIPMENT.  Our broadband fixed wireless products
include transceivers and equipment used at the subscriber premises for broadband
fixed wireless systems, including point-to-point and point-to-multipoint systems
in a variety of frequencies. Broadband fixed wireless systems are designed to
provide the first and last mile access to high-speed data networks as a high
speed alternative to traditional copper wire. Point-to-point systems are two way
communication links which send and receive data between two fixed locations.
Point-to-multipoint systems are two way communication links between a single
fixed central location and multiple fixed user locations. Broadband fixed
wireless networks are in the early stages of deployment by communications
service providers who are focusing on small to medium size businesses that
demand access to greater bandwidth but do not have direct access to a fiber
optic network. Point-to-point and point-to-multipoint systems operate at both
licensed and unlicensed frequencies over short or long distances and provide a
variety of data rates ranging from 2 to 45 megabits-per-second. They also
provide a variety of output powers enabling extended range.

                                       42
<PAGE>
    The following diagram illustrates a typical network deploying both
point-to-point and point-to-multipoint systems:

    The diagram will consist of a large building with a transmitter/receiver
module on top connected, by signal lines, to 3 office structures. The words
"Broadband Cable Networks" appear next to the large building with the
transmitter/receiver module, and the words, "Point-to-Point Communication Link"
and "Point-to-Multipoint Communication Link" appear next to the office
structures.

    We currently manufacture point-to-point and point-to-multipoint transceivers
for several domestic and international broadband fixed wireless equipment
providers operating in the microwave multipoint distribution system 2.7
gigahertz band, the unlicensed 3.5 gigahertz band, the unlicensed national
information infrastructure 5.8 gigahertz band and the 26 gigahertz band. We
expect to develop broadband fixed wireless products for other frequency bands.

    MOBILE WIRELESS INFRASTRUCTURE EQUIPMENT.  We have an extensive array of
integrated products for the mobile wireless infrastructure market. These
products include base station RF front ends, diagnostic and support equipment
and repeaters. Base station RF front ends consist of filters and frequency
converters, and are used in virtually every communications system to translate
signals from one frequency to another.

                                       43
<PAGE>
    The following diagram illustrates several elements of a mobile wireless
network:

    The diagram will show a base station connected, with signals, to a repeater
containing the words "Mobile Infrastructure Networks." Both the base station and
repeater are also connected by signal lines to personal device assistants and
cellular phones.

    - BASE STATION RF FRONT ENDS AND CONVERTERS. Our base station RF front ends
      and converters incorporate our highly linear amplifiers and mixers to
      receive signals from and transmit signals to mobile subscribers. The
      resulting frequency can either be higher than the original frequency,
      which is called up-conversion, or lower, which is called down-conversion.
      These conversions are required by systems because the parts of the system
      that encode and decode the signals cannot operate at the high frequencies
      used to carry information over the air or through the network. Our base
      station RF front ends operate at the wireless personal communications
      services frequencies. Our expertise in this area derives from our diverse
      radio technology, integration skill and ability to rapidly develop and
      deploy these products. These products perform a variety of functions on
      both the receive and transmit side as well as on the support side.

    - DIAGNOSTIC AND SUPPORT EQUIPMENT. Our diagnostic and support equipment is
      used within base stations to distribute signals and to determine the
      health and status of the base station. These are custom-designed products
      and rely heavily on our RF integration expertise to prevent various
      signals from interfering with each other.

    - REPEATERS. We also design, develop and manufacture both outdoor and indoor
      repeaters for most major networks and frequencies. Repeaters are used
      primarily to extend the range of a particular cellular site to cover areas
      where the signal does not reach. They are often used along long stretches
      of highways and in tunnels or other places where the signal is obstructed.

CUSTOMERS

    We sell our semiconductor, fiber optic and wireless communications
components and subassemblies principally to equipment manufacturers that, in
turn, integrate our products into network infrastructure equipment solutions. In
some cases, we also sell products directly to network service providers. We

                                       44
<PAGE>
believe that we have strong relationships with market leaders in the fiber
optic, broadband cable, and wireless markets. Our largest revenue-producing
customers include:

<TABLE>
<S>                   <C>                            <C>
ACT Manufacturing     Jabil Circuit                  Orion Technology
Aimtronics            Kisan Telecom                  Pemstar
Bartley RF Systems    LG Information Communications  QUALCOMM
Cisco Systems         Lucent Technologies            Richardson Electronics
Elcoteq Network       Marconi                        Samsung
Ericsson              Nokia                          Sanmina
GSS/Array Technology  Nortel Networks                Sprint PCS
Harris                NU Horizons                    Stellex Microwave Systems
Hung Chang            Omnipoint Communications       Systec Research
</TABLE>

    For the first six months of 2000, 46% and 23% of our sales were derived from
Nortel Networks and Lucent Technologies, respectively. While our sales have
historically been concentrated with several key communications equipment
manufacturers, we have diversified our customer base over the last few years and
we have expanded our product offering from wireless mobile infrastructure
products to include fiber optic, broadband cable and fixed wireless products.

MARKETING AND SALES

    We sell and market our products primarily through the following three sales
channels:

    DIRECT SALES. We have a dedicated team of direct sales people who are
responsible for maintaining relationships with our key customers and generating
new business with both existing and potential customers. We cultivate strong
direct relationships with our key customers through major account teams that are
led by our sales professionals and are comprised of engineers and product
managers. These teams are designed to address the specific product needs of our
key customers.

    MANUFACTURER SALES REPRESENTATIVES. Manufacturer sales representatives are
responsible for calling on potential clients as well as maintaining
relationships with non-major accounts. We use manufacturer sales representatives
to augment our own direct sales force.

    DISTRIBUTORS. We sell our gallium arsenide semiconductor products to
component distributors that resell them through catalog, e-commerce and direct
channels.

    In 1997, 1998 and 1999, 9%, 16% and 29% of our sales, respectively, were
outside the United States. For more detailed disclosure on our foreign sales,
see note 10 to the Financial Statements.

FACILITIES AND MANUFACTURING

    We have two manufacturing facilities: a building in Milpitas, California
with over 35,000 square feet and two buildings in Palo Alto, California totaling
over 100,000 square feet. Gallium arsenide semiconductor and thin-film products
are manufactured in Milpitas, while our other products are manufactured in Palo
Alto.

    The leased Milpitas facility has two gallium arsenide semiconductor and two
thin-film manufacturing lines. The two gallium arsenide manufacturing lines
include one three-inch and one four-inch wafer processing line. Considerable
manufacturing capacity exists within these two gallium arsenide lines. Our
gallium arsenide products are packaged in The Philippines, Hong Kong and France
at vendor facilities. The thin-film manufacturing lines are capable of
processing two-inch, three-inch and four-inch substrate squares.

    The Palo Alto facility produces our fiber optic and wireless communications
products. These products are assembled in either of two ways: surface mount or
hybrid modules. Surface mount technology is

                                       45
<PAGE>
generally used for products operating at frequencies below 10 gigahertz. Hybrid
modules are necessary for products operating above 10 gigahertz. We contract
with external surface mount manufacturers for high volume manufacturing, using
both turnkey and consignment material arrangements with these surface mount
contract manufacturers depending on the characteristics of the assembly. We have
used a number of capable surface mount manufacturers. Once the surface mount
assembly operations are completed, the products are shipped to our facilities
for testing and final configuration. Hybrid modules are manufactured internally
using automated processes for both assembly and testing.

    We intend to relocate our Palo Alto operations to a new leased facility in
San Jose, California in September of 2000. The facility will consist of two
buildings of approximately 82,000 and 42,000 square feet. Both buildings are
leased for ten years from the beginning of our use. The larger building has a
base monthly rent of $158,340 and the smaller building has a base monthly rent
of $94,500. The smaller building is being constructed at the landlord's expense
and we expect to occupy it not later than the end of the second quarter of 2001.
Prior to the recapitalization merger, we sold the long-term leases for three
buildings at our Palo Alto facility, and are required to vacate these facilities
by October 31, 2000. In addition, we recently entered into an amended sublease
agreement with a third-party providing an option to purchase our long-term lease
on our fourth building in Palo Alto.

    We depend on single or limited source suppliers for the components and
materials used in many of our products, including our thin-film products,
substrates, gallium arsenide wafers, packaging, electronic components and
antennas. A significant portion of the raw material used to manufacture our
thin-film products is sole sourced from Coors Ceramics, and there exist very
limited alternative sources for this material. Although we rely on limited or
sole source suppliers for other components and materials, there are typically
alternative sources of supply available for them. If in the future we face
difficulties obtaining these components and materials from any of our limited or
sole source suppliers, we may face a delay in the shipment of products which are
manufactured using these components and materials while we identify and qualify
our alternative source of supply. As a result of these delays, we may fail to
satisfy customer orders and our sales may decline while we look for a suitable
alternative supplier.

EMPLOYEES

    One of our most important assets is our base of well-trained and experienced
employees. As of June 30, 2000, we had 355 employees, none of whom were
represented by a collective bargaining agreement. As of June 30, 2000, our
employees consisted of:

    - 32 executive and administrative employees;

    - 13 sales and marketing employees;

    - 209 manufacturing, facilities and operations employees; and

    - 101 engineering and technical employees.

    We have historically experienced relatively low turnover. Our employees have
an average of almost seven years with us. Many of our engineering and technical
staff have been with us for even longer. We believe that many of our engineers,
as a result of their tenure and their defense electronics background, are among
the most experienced high frequency engineers in the United States. We believe
that the relationship with our employees is good.

INTELLECTUAL PROPERTY

    We rely on patent, copyright, trademark and trade secret laws, as well as
confidentiality procedures and contractual provisions, to protect our
proprietary rights. We believe that one of our competitive strengths is our core
competence in engineering, manufacturing and understanding our customers and
markets, and we take aggressive steps to protect that knowledge. We have been
active in securing patents

                                       46
<PAGE>
and entering into non-disclosure and confidentiality agreements to protect our
proprietary technologies and know-how resulting from our ongoing research and
development.

    We seek patent protection for our unique developments in circuit designs,
processes and algorithms. We have 19 United States patents and three foreign
patents. We currently have seven patent applications pending in the United
States. Our existing United States patents will expire between June 2007 and
March 2017. We have chosen to pursue foreign patent protection only in selected
foreign countries. Our failure to pursue foreign protection in these countries
and the fact that patent rights may be unavailable or limited in some foreign
countries could make it easier for our competitors to utilize our intellectual
property. We cannot assure you that any patent will be issued as a result of our
pending applications or any future applications or that, if issued, these
patents will be sufficient to protect our technology. In addition, we cannot
assure you that any existing or future United States or foreign patents will not
be challenged, invalidated or circumvented, or that any patent granted will
provide us with adequate protection or any competitive advantages.

    We license various technologies from third parties that we have integrated
into our products. We have a non-exclusive, non-transferable license to use
particular thin-film technology and transferable, non-exclusive licenses to use
particular gallium arsenide technology, and technology used in the field of
commercial, or non-military, RF communications, all of which are perpetual
licenses. Our failure to maintain these licenses could harm our business.

    We generally enter into non-disclosure agreements with our vendors,
customers and licensees. Our employees are generally required to enter into
agreements providing for the maintenance of confidentiality and the assignment
of rights to inventions made by them while in our employ. We generally control
access to the distribution of documentation and other information concerning our
intellectual property. We also have entered into non-disclosure agreements to
protect our confidential information delivered to third parties, in connection
with possible strategic partnerships and for other purposes.

    We have entered into license agreements in connection with some of our
recent business dispositions with respect to some of our intellectual property
used in these sold businesses. We cannot assure you that the other parties to
these license agreements will honor the terms of the agreements or aggressively
prevent the misappropriation or infringement of our intellectual property.
Further, under these license agreements, some of our intellectual property may
be licensed to one or more of our competitors.

    The telecommunications industry is characterized by the vigorous protection
and pursuit of intellectual property rights. From time to time, we have
received, and may continue to receive in the future, notices of claims of
infringement, misappropriation or misuse of other parties' proprietary rights,
including allegations directed at our operations and our sold businesses. We
cannot assure you that we will prevail in these actions, or that other actions
alleging infringement by us of third-party intellectual property,
misappropriation or misuse by us of third-party trade secrets or the invalidity
of the patents held by us will not be asserted or prosecuted against us, or that
any assertions of infringement, misappropriation or misuse or prosecutions
seeking to establish the invalidity of our patents will not harm our competitive
position or reputation or result in significant monetary expenditures.

COMPETITION

    The markets for our products are extremely competitive and are characterized
by rapid technological change, new product development, product obsolescence and
evolving industry standards. We compete primarily on the basis of product
performance and design, reliability, delivery and price. We face competition
from other component manufacturers, as well as companies with product
integration capabilities. In addition, we compete with the captive manufacturing
operations of large communications original equipment manufactures such as Cisco
Systems, Ericsson, Lucent Technologies, Motorola and Nortel Networks. Some of
our competitors are large public companies that have significantly greater
financial, technical, marketing and other resources than us. As a result, these
competitors may be able to

                                       47
<PAGE>
devote greater resources to the development, promotion, sale and support of
their products. Furthermore, those of our competitors that have large market
capitalization or cash reserves may be better positioned than we are to acquire
other companies in order to gain new technologies or products that may displace
our product lines.


ENVIRONMENTAL MATTERS


    Our operations are subject to federal, state and local laws and regulations
governing the use, storage, disposal of and exposure to hazardous materials, the
release of pollutants into the environment and the remediation of contamination.
Our former Scotts Valley site and our current Palo Alto site have significant
environmental liabilities for which we have entered into and funded fixed price
remediation contracts and obtained cost-overrun and unknown pollution conditions
insurance coverage.

    The Scotts Valley site is a federal Superfund site. Chlorinated solvent and
other contamination was identified at the site in the early 1980s, and by the
late 1980s we had installed a groundwater extraction and treatment system. In
1991, we entered into a consent decree with the United States Environmental
Protection Agency providing for remediation of the site. In July 1999, we signed
a remediation agreement with an environmental consulting firm, ARCADIS
Geraghty & Miller. Pursuant to this remediation agreement, we paid approximately
$3.0 million in exchange for which ARCADIS agreed to perform the work necessary
to assure satisfactory completion of our obligations under the consent decree.
The agreement also contains a cost overrun guaranty from ARCADIS up to a total
project cost of $15.0 million. In addition, the agreement included procurement
of a ten-year, claims-made insurance policy to cover overruns of up to
$10.0 million from Reliance Insurance Company, along with a ten-year, claims
made $10-million policy to cover various unknown pollution conditions at the
site.

    Our Palo Alto site is a state Superfund site and is within a larger,
regional state Superfund site. As with the Scotts Valley site, contamination was
discovered in the 1980s, and groundwater extraction and treatment systems have
been operating for several years at both our site and the regional site. In
July 1999, we entered into a remediation agreement with an environmental
consulting firm, SECOR. Pursuant to this remediation agreement, we paid
approximately $2.4 million in exchange for which SECOR agreed to perform the
work necessary to assure satisfactory completion of our obligations under the
applicable remediation orders. The payment included the premium for a 30-year,
claims-made insurance policy to cover cost overruns up to $10.0 million from
AIG, along with a ten-year claims-made $10.0 million insurance policy to cover
various unknown pollution conditions at the site.

    With respect to our remaining current or former production facilities, to
date either no contamination of significance has been identified or reported to
us or the regulatory agency involved has granted closure with respect to the
identified contamination. Nevertheless, we may face environmental liabilities
related to these sites in the future.

LEGAL PROCEEDINGS

    In 1999, four shareholder class action lawsuits were filed against us and
our former directors in the California Superior Court for the County of Santa
Clara: ROSENZWEIG V. WATKINS-JOHNSON COMPANY, ET AL., CASE NO. CV885528;
SOSHTAIN V. WATKINS-JOHNSON CO., ET AL., CASE NO. CV785560; LEONG V. WATKINS-
JOHNSON CO., ET AL., CASE NO. CV785683; FONG V. WATKINS-JOHNSON CO., ET AL.,
CASE NO. CV785683. While the allegations are not identical in the four
complaints, they all allege essentially the same grounds for relief, namely that
the individual defendants breached their fiduciary duty to our former
shareholders in connection with our recapitalization merger with Fox Paine by
failing to maximize the value of our company using the appropriate process for
eliciting and evaluating bids. The plaintiffs in the actions allege that the
process engaged in by the predecessor board was defective because, allegedly,
the motivation for the recapitalization merger was the entrenchment of
then-current management in office; the appropriate evaluation of all potential
bids had not occurred; the members of the predecessor board had conflicts of

                                       48
<PAGE>
interest with respect to the transaction; the price agreed to did not reflect
what the plaintiffs considered the company's "true value;" and the announcement
of the transaction was made before the stock price had reflected the results of
the asset sales. All four complaints seek a declaration that the defendants
breached their fiduciary duties, unspecified damages and various forms of
injunctive and equitable relief, including rescission of the recapitalization
merger, and an award of attorneys' fees.

    The bid process challenged by the plaintiffs commenced on March 1, 1999,
when our predecessor board announced a plan to maximize stockholder value by
pursuing the sale of the company in its entirety or each component business
separately. Between March 1, 1999 and July 1999, 99 potential bidders, including
Fox Paine, were approached to determine their interest in buying the company or
any of its components. Potential bidders were identified by the company's senior
management in consultation with the company's financial advisor on the basis of
their current businesses, known or perceived expansion plans, reputations, track
records and financial resources. Other potential bidders were approached in
response to their own indications of interest. The company received eight formal
bids. Two bids were for the company in its entirety, three were for the
company's telecommunications group, and three were for all of the company
excluding the telecommunications group. These bids were primarily evaluated on
the basis of the value they would deliver, individually or combined, to the
company's stockholders as compared to operating one or more of the company's
component businesses on a stand-alone basis. Our predecessor board weighed these
values in consideration of the fairness opinions rendered by the company's
financial advisor. Other important factors included the likelihood of
consummating the proposed transactions on the terms proposed by the various
bidders and the reputation and experience of the various bidders in consummating
acquisitions of the type proposed.

    Pursuant to a non-binding memorandum of understanding, dated January 14,
2000, the plaintiffs' counsel in these above-referenced suits agreed in
principle to settle the litigation, subject to their completion of discovery,
judicial approval and various other contingencies. Under the terms of the
memorandum, the defendants agreed that we would engage an additional financial
advisor to opine as to the fairness of the price to be paid to our former
shareholders, and such an opinion was rendered to our board in January 2000 by
the firm of Dain Rauscher Incorporated. In addition, pursuant to the terms of
the memorandum of understanding, Fox Paine irrevocably agreed to reduce the
amount of the termination fee payable under certain circumstances, as described
in the agreement and plan of merger, from $13.25 million to $8.75 million. As of
the date of this prospectus, it is not known whether or not plaintiffs' counsel,
upon their completion of discovery, will determine to proceed with the
settlement. If plaintiffs' counsel determines to proceed with the settlement on
the basis agreed upon in the memorandum of understanding, the claims of persons
who held shares of our stock during the period from October 26, 1999 through
January 31, 2000 would, upon court approval of the terms of the settlement, be
released, and further claims against us and the individual defendants with
respect to the recapitalization merger would be barred. If plaintiffs' counsel
decides not to proceed with the settlement, these suits will presumably proceed
through the normal processes of litigation.

    We currently are involved in litigation and regulatory proceedings
incidental to the conduct of our business and expect that we will be involved in
other litigation and regulatory proceedings from time to time.

                                       49
<PAGE>
                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

    Our senior management team is comprised of experienced engineering and
wireless communications industry professionals, many of whom have over 15 years
of experience with us. Set forth below is information concerning our directors
and executive officers.

<TABLE>
<CAPTION>
NAME                                          AGE      POSITION
----                                        --------   --------
<S>                                         <C>        <C>
Malcolm J. Caraballo......................   44        President, Chief Executive Officer and
                                                       Director
William T. Freeman........................   39        Chief Financial Officer
R.E. Hoover, Jr...........................   48        Senior Vice President--Worldwide Sales and
                                                       Marketing
Thomas R. Kritzer.........................   46        Senior Vice President--Semiconductor
                                                       Products
Ronald N. Buswell.........................   52        Vice President--Integrated Products
Michael L. Gabitass.......................   39        Vice President--Integrated Product
                                                       Operations
Andrew J. Graven..........................   38        Vice President--Gallium Arsenide and Thin-
                                                       Film Products
Rainer N. Growitz.........................   44        Vice President--Finance and Secretary
W. Dexter Paine, III......................   40        Chairman of the Board
J. Thomas Bentley.........................   50        Director
Saul A. Fox...............................   47        Director
Jason B. Hurwitz..........................   27        Director
James R. Kroner...........................   38        Director
Christopher B. Paisley....................   48        Director
Charles E. Robinson.......................   66        Director
Wray T. Thorn.............................   29        Director
</TABLE>

MALCOLM J. CARABALLO was appointed the President, Chief Executive Officer and a
director of WJ Communications following the recapitalization merger on
January 31, 2000. From 1993 through January 31, 2000, Mr. Caraballo was
President of the wireless products group which, since January 2000, has been WJ
Communications' sole business. At the time of his appointment in 1993, this
business was largely a defense and space microwave products business and, since
then, has been successfully transitioned to commercial applications. Prior to
his assignment as President of the wireless products group, Mr. Caraballo served
as Vice President of the devices sales group and was responsible for sales and
marketing of modular components, tunable devices and subsystems product lines
worldwide. He also was responsible for the field sales organizations in the
United States and Europe. Previous responsibilities included engineering and
manufacturing management, program management, and design engineering.
Mr. Caraballo joined WJ Communications in 1977 as a member of the technical
staff. He received a B.S.E.E. from the University of California, Berkeley and an
M.B.A. from the University of Santa Clara.

WILLIAM T. FREEMAN was appointed Chief Financial Officer in June of 2000. Mr.
Freeman is responsible for directing our accounting, finance and information
technology organizations. From November 1997 until June 2000, Mr. Freeman served
as Chief Financial Officer of System One Services, an information technology
staffing company, which was acquired by TMP Worldwide in April of 2000. From
1988 through 1997, Mr. Freeman was employed by Danka Business Systems PLC as
Treasurer from March of 1992 through September 1996, and Chief Financial Officer
from September 1996 through November 1997. Mr. Freeman received his Masters of
Accounting from Florida State University and his B.S. in Accounting from the
University of Kentucky. Mr. Freeman is a Certified Public Accountant in the
State of Florida.

R.E. HOOVER, JR. was appointed Senior Vice President--Worldwide Sales and
Marketing following the recapitalization merger. Mr. Hoover is responsible for
all sales and marketing activities. These responsibilities include business
development, account management, and sales channel management for all

                                       50
<PAGE>
product lines. Mr. Hoover has been associated with our commercial communications
business since its inception in 1995. Mr. Hoover joined WJ Communications in
1980 and has held sales positions across various product groups and geographic
locations. From 1995 to 1997, Mr. Hoover was director of telecommunications
sales and responsible for the sales of telecommunications and microwave
products. Mr. Hoover is a veteran of the U.S. Air Force having served from 1973
to 1977. Mr. Hoover received a B.S. from California State University Long Beach.

THOMAS R. KRITZER was appointed Senior Vice President--Semiconductor Products
following the recapitalization merger. Mr. Kritzer is responsible for the
semiconductor product lines and advanced technology development. These products
include gallium arsenide semiconductor devices and thin-film substrates for
hybrid module applications. Responsibilities include strategic planning, design
engineering and profit and loss. Prior to this assignment, he was responsible
for the fiber optic and wireless communications product lines. He was one of the
first participants in our efforts to create commercial communications products
during 1995 from the original defense technology and product base which included
specialized assemblies for original equipment manufacturers and cell extender
products for service providers. At that time, he was also responsible for
strategic planning, design engineering and new product development for all
commercial communications. Since joining WJ Communications as a member of the
technical staff in 1978, Mr. Kritzer has held various technical and managerial
positions including product line experience in both the defense and
communications businesses. Mr. Kritzer earned a B.A. in Physics from the
University of North Carolina, Chapel Hill and an M.S. in Physics from Purdue
University.

RONALD R. BUSWELL was appointed Vice President--Integrated Products following
our recapitalization merger. Mr. Buswell is responsible for the fiber and
wireless communications business. These products include assemblies for fiber
optic networks, customer premise equipment for fixed wireless access networks,
assemblies for personal communications services base stations and repeaters for
both PCS and cellular networks. From 1997 through 1999, Mr. Buswell was director
of original equipment manufacturer products and was responsible for
RF integrated assemblies for wireless communications. In this position, he
focused on expanding business opportunities with several key customers and
directed design engineering and new product development activities. During 1995
and 1996, Mr. Buswell, as manager of integrated assembly marketing, was
responsible for product marketing for our initial wireless communications
business. As we developed products for the wireless market, he assumed
additional responsibility for product line management. Mr. Buswell received a
B.S.E.E. from Michigan Technological University and an M.S.E.E. from the
University of Michigan.

MICHAEL L. GABITASS was appointed Vice President--Integrated Product Operations
following our recapitalization merger. Mr. Gabitass is responsible for the
manufacturing of surface mount technology and thin-film hybrid integrated
subsystem products. He is also responsible for supply chain management. Prior to
that, Mr. Gabitass was responsible for establishing the first high volume
integrated subsystem-manufacturing line. Mr. Gabitass has been with WJ
Communications since 1988 and has also served as a technical staff member and
project manager. Mr. Gabitass received a B.S. in Electrical Engineering from the
University of California, Los Angeles.

ANDREW J. GRAVEN was appointed Vice President--GaAs and Thin-Film Operations
following our recapitalization merger. Mr. Graven is responsible for the
manufacturing of gallium arsenide and thin-film products. From 1997 to 1999, he
was responsible for gallium arsenide and thin film product line management.
Mr. Graven joined WJ Communications in 1985. From 1985 to 1997, Mr. Graven held
a variety of both technical and managerial positions for product design,
technology development, process engineering management and hybrid module
manufacturing management. Mr. Graven received his B.S. and M.S.E.E. from Santa
Clara University. He holds a patent for work related to the development of an
electro static chuck for high density plasma semiconductor manufacturing.

                                       51
<PAGE>
RAINER N. GROWITZ was appointed Vice-President--Finance and Secretary following
our recapitalization merger. Mr. Growitz is responsible for directing our
financial planning and management in order to optimize maximum revenue growth
consistent with corporate return on investment and profitability objectives.
From 1997 until January 2000, Mr. Growitz served as Director of Finance.
Mr. Growitz joined WJ Communications in 1978 and held a variety of finance,
contracts and managerial positions. Mr. Growitz received a B.S. in Accounting
from San Jose State University.

W. DEXTER PAINE, III, the Chairman of our Board of Directors and a director
since January 2000, is the co-founder of Fox Paine & Company and has been its
President since its inception in 1997. Mr. Paine also serves as a director of
Alaska Communications Systems Group Inc., the leading diversified
facilities-based telecommunications provider in Alaska. From 1994 until founding
Fox Paine, Mr. Paine served as a senior partner of Kohlberg & Company. Prior to
joining Kohlberg & Company, Mr. Paine served as a general partner at Robertson
Stephens & Company. Mr. Paine has a B.A. in economics from Williams College.

J. THOMAS BENTLEY, a director since May 2000, is a Managing Partner and a
founder of Alliant Partners, a leading firm for technology company mergers and
acquisitions. Mr. Bentley was formerly with Berkeley International Capital
Corporation where he initiated and led the leveraged buyout business. Prior to
that, Mr. Bentley worked in the leveraged buyout and investment banking business
of Citicorp and, before that, he was with the World Bank and International
Finance Corporation. Mr. Bentley received his B.A. from Vanderbilt University
and his M.S. from M.I.T.

SAUL A. FOX, a director since January 2000, is the co-founder of Fox Paine &
Company and has been its Chief Executive Officer since its inception in 1997.
Mr. Fox also serves as a director of Alaska Communications Systems Group Inc.
From 1984 until founding Fox Paine, Mr. Fox was at Kohlberg Kravis & Roberts &
Co. Prior to joining Kohlberg Kravis & Roberts, Mr. Fox was an attorney at
Latham & Watkins, a law firm headquartered in Los Angeles, California. Mr. Fox
has a B.S. in communications and computer science from Temple University and a
J.D. from the University of Pennsylvania Law School.

JASON B. HURWITZ, a director since January 2000, has been employed at Fox
Paine & Company since June 1997. Mr. Hurwitz has served as an Associate and Vice
President, and is currently a Director of Fox Paine. Before joining Fox Paine,
Mr. Hurwitz was an associate at McCown De Leeuw & Co. from August 1996 to
June 1997 and was an analyst at James D. Wolfensohn Incorporated from July 1994
to July 1996. Mr. Hurwitz has a B.S. in economics from The Wharton School at the
University of Pennsylvania.

JAMES R. KRONER, a director since January 2000, has been a Managing Director of
Fox Paine & Company since January 2000. Before joining Fox Paine, Mr. Kroner
served as a managing director and co-head of insurance investment banking at JP
Morgan & Co. Mr. Kroner also served as a managing director and head of the
insurance industry M&A practice at Salomon Smith Barney and a director in the
financial institutions M&A practice at Merrill Lynch & Co. From 1995 to 1997,
Mr. Kroner served as senior vice president and treasurer of American Re
Corporation. Mr. Kroner has a B.A. in political science from Northwestern
University and an M.B.A. from Northwestern's Kellogg School of Management.

CHRISTOPHER B. PAISLEY, a director since June 2000, served as Senior Vice
President of Finance and Chief Financial Officer of 3Com Corporation until
May 2000. Mr. Paisley joined 3Com Corporation in September 1985 as Vice
President, Finance and Chief Financial Officer. Prior to joining 3Com
Corporation, Mr. Paisley was Vice President, Finance and Chief Financial Officer
of Ridge Computers, a minicomputer manufacturer, from May 1982 to
September 1985. Previously, he was employed by Hewlett-Packard Company for five
years in a variety of accounting and finance positions. Mr. Paisley is a member
of the Board of Directors of Aspect Telecommunications Corporation and Legato
Systems, Inc. He has an M.B.A. from the University of California, Los Angeles
and a B.A. in economics from the University of California, Santa Barbara.

                                       52
<PAGE>
CHARLES E. ROBINSON, a director since January 2000, has over four decades of
experience in the telecommunications industry. Since 1997, Mr. Robinson has
served as Chairman and Chief Executive Officer of Alaska Communications Systems
Group Inc. Mr. Robinson served as President and Chief Operating Officer of
Pacific Telecom from 1981 until its sale in 1997 and was appointed Chairman and
Chief Executive Officer of Pacific Telecom in 1989. Mr. Robinson has been a
member of the National Security Telecommunications Advisory Committee for the
last 18 years, having been appointed by President Reagan. Mr. Robinson has also
served on the Board of Directors of the United States Telephone Association from
1993 to 1995.

WRAY T. THORN, a director since January 2000, has also been a Director of Fox
Paine & Company since January 2000. Mr. Thorn also serves as a director of
Alaska Communications Systems Group Inc. Prior to joining Fox Paine, Mr. Thorn
was a principal and founding member of Dubilier & Company. Prior to joining
Dubilier & Company in 1996, Mr. Thorn was an associate in the Acquisition
Finance Group of Chase Securities Inc. Mr. Thorn has an A.B. in government from
Harvard University.

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS


    Our board of directors currently consists of nine directors. All of the
officers identified above serve at the discretion of our board of directors. In
May 2000, our board of directors established an executive committee, a
compensation committee and an audit committee. The initial members of the
executive committee are Messrs. Caraballo, Paine and Thorn. The initial members
of the compensation committee are Messrs. Paine, Robinson and Thorn. The initial
members of the audit committee are Messrs. Bentley, Paine and Thorn. We expect
to replace one or more of our current audit committee members after the closing
of the offering.


    The functions of the audit committee are to:

     - recommend annually to our board of directors the appointment of our
       independent auditors;

     - discuss and review in advance the scope and the fees of our annual audit
       and review the results thereof with our independent auditors;

     - review and approve non-audit services of our independent auditors;

     - review compliance with our existing major accounting and financial
       reporting policies;

     - review the adequacy of major accounting and financial reporting policies;
       and

     - review our management's procedures and policies relating to the adequacy
       of our internal accounting controls and compliance with applicable laws
       relating to accounting practices.

    The functions of the compensation committee are to review and approve annual
salaries, bonuses, and grants of stock options under our stock incentive plans
for all executive officers and other key members of management, and to review
and approve the terms and conditions of all employee benefit plans or changes to
these plans. The compensation committee consists of directors who are not
otherwise our employees.

    The executive committee will have the authority to exercise the powers of
our board of directors, other than those reserved to the audit committee and the
compensation committee or to our full board of directors, between meetings of
our full board of directors.

                                       53
<PAGE>
EXECUTIVE COMPENSATION

    The following table sets forth information concerning compensation of the
President and Chief Executive Officer and the other most highly compensated
officers as of December 31, 1999 based on salary and bonus in 1999. As of
June 30, 2000, our Chief Executive Officer and four other most highly
compensated officers were Messrs. Caraballo, Buswell, Growitz, Hoover and
Kritzer.

<TABLE>
<CAPTION>
                                                                                      LONG-TERM
                                                                                     COMPENSATION
                                                   ANNUAL COMPENSATION             ----------------
                                          --------------------------------------      SECURITIES
                                                                  OTHER ANNUAL     UNDERLYING STOCK      ALL OTHER
NAME AND PRINCIPAL POSITION      YEAR      SALARY     BONUS     COMPENSATION (1)    OPTIONS (2)(3)    COMPENSATION (4)
---------------------------    --------   --------   --------   ----------------   ----------------   ----------------
<S>                            <C>        <C>        <C>        <C>                <C>                <C>
OUR FORMER MANAGEMENT
W. Keith Kennedy (5).........    1999     $463,646   $510,144            --                  --            $6,400
President and Chief Executive    1998      481,442         --        25,047           1,800,000             6,400
  Officer                        1997      463,726    474,854        18,347             750,000             6,400
Scott G. Buchanan (5)........    1999      218,400    140,332            --             750,000             6,400
Executive Vice President,        1998      226,760         --        12,665             360,000             6,400
  Chief Financial Officer and    1997      216,644    127,808         9,014              75,000             6,400
    Treasurer
Robert G. Hiller (6).........    1999      200,200    175,809            --             450,000             6,400
President, Telecommunications    1998      200,200         --         5,533             600,000             6,400
  Group                          1997      158,425     76,687         2,951                  --             6,400
OUR CURRENT MANAGEMENT
Malcolm J. Caraballo (7).....    1999      253,347    358,629            --             750,000             6,400
President, Wireless Products     1998      235,154    190,944        11,021             480,000             6,400
  Group                          1997      198,165    182,845         7,608              75,000             6,400
R.E. Hoover, Jr. (8).........    1999      174,901    109,677            --             600,000             6,400
Vice President, Sales--          1998      157,920    132,028            --                  --             6,379
  Wireless Products Group        1997      116,550     14,646            --             180,000             5,952
</TABLE>

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

(1) Represents the interest accrued on salary electively deferred in accordance
    with the Top Management Deferred Compensation Plan which was terminated in
    1998.

(2) Options to purchase shares of common stock. See "--Option Grants."


(3) Number of shares reflects a 20 for 1 stock split on January 31, 2000 and a
    3-for-2 stock split in            , 2000.


(4) Represents matching contributions of $4,800 to the 401(k) portion of the
    Employees' Investment Plan and contributions of $1,600 to the Employee Stock
    Ownership Plan, which was terminated prior to our recapitalization merger in
    January 2000.

(5) Messrs. Kennedy and Buchanan resigned upon completion of the
    recapitalization merger on January 31, 2000. All of their stock options were
    cancelled in exchange for a cash payment made upon their resignation.

(6) Mr. Hiller resigned upon completion of the sale of the telecommunications
    group in January 2000. All of his stock options were cancelled in exchange
    for a cash payment made upon his resignation.

(7) Mr. Caraballo was appointed our President and Chief Executive Officer on
    January 31, 2000.

(8) Mr. Hoover did not serve as an executive officer in 1999, but was among our
    five most highly compensated employees in 1999. He was appointed Senior Vice
    President, Worldwide Sales and Marketing, on January 31, 2000.

                                       54
<PAGE>
OPTION GRANTS IN 1999 AND 2000

    All of our previously issued and outstanding stock options were cancelled on
January 31, 2000 as part of our recapitalization merger. No stock options were
granted between January 1 and January 31, 2000. The following tables set forth
the stock options granted in 1999 and 2000 to the officers named above. The
stock options granted to these officers in 2000 were granted immediately after
the recapitalization merger. Our board of directors approved the grant of these
2000 stock options at an exercise price equal to the price paid for our common
stock in the recapitalization merger.

                            OPTIONS GRANTED IN 1999


<TABLE>
<CAPTION>
                                                                                               POTENTIAL REALIZABLE
                                NUMBER OF                                                        VALUE AT ASSUMED
                                SECURITIES                             MARKET                     ANNUAL RATES OF
                                UNDERLYING   % OF TOTAL                PRICE                        STOCK PRICE
                                  STOCK       OPTIONS                    ON                      APPRECIATION FOR
                                 OPTIONS     GRANTED TO   EXERCISE      DATE                       STOCK OPTIONS
                                 GRANTED     EMPLOYEES    PRICE PER      OF      EXPIRATION   -----------------------
NAME                             (SHARES)     IN 1999       SHARE      GRANT        DATE          5%          10%
----                            ----------   ----------   ---------   --------   ----------   ----------   ----------
<S>                             <C>          <C>          <C>         <C>        <C>          <C>          <C>
OUR FORMER MANAGEMENT
W. Keith Kennedy .............         --         --           --         --            --           --           --
  President and Chief
  Executive Officer

Scott G. Buchanan ............    750,000      14.6%        $0.79      $0.79     Feb. 2009     $369,476     $936,324
  Executive Vice President
  Chief Financial Officer and
  Treasurer

Robert G. Hiller .............    450,000       8.7%        $0.79      $0.79     Feb. 2009     $221,685     $561,794
  President,
  Telecommunications Group

OUR CURRENT MANAGEMENT

Malcolm J. Caraballo .........    750,000      14.6%        $0.79      $0.79     Feb. 2009     $369,476     $936,324
  President, Wireless Products
  Group

R.E. Hoover Jr. ..............    600,000      11.7%        $0.79      $0.79     Feb. 2009     $295,580     $749,059
  Vice President, Sales-
  Wireless Products Group
</TABLE>


                            OPTIONS GRANTED IN 2000

<TABLE>
<CAPTION>
                                        PERCENTAGE
                           NUMBER OF     OF TOTAL                                         POTENTIAL REALIZABLE
                           SECURITIES     STOCK                   MARKET                    VALUE AT ASSUMED
                           UNDERLYING    OPTIONS                  PRICE                   ANNUAL RATES OF STOCK
                             STOCK      GRANTED TO                  ON                     PRICE APPRECIATION
                            OPTIONS     EMPLOYEES    EXERCISE      DATE                      FOR OPTION TERM
                            GRANTED     IN FISCAL    PRICE PER      OF      EXPIRATION   -----------------------
NAME                        (SHARES)       2000        SHARE      GRANT        DATE          5%          10%
----                       ----------   ----------   ---------   --------   ----------   ----------   ----------
<S>                        <C>          <C>          <C>         <C>        <C>          <C>          <C>
Malcolm J. Caraballo.....  2,159,891         14%       $1.37      $1.37     Jan. 2010    $1,862,000   $4,719,000
R.E. Hoover, Jr..........  1,052,368          7%       $1.37      $1.37     Jan. 2010    $  907,000   $2,299,000
</TABLE>

                                       55
<PAGE>
OPTION VALUES

    The following table sets forth the number and value of all unexercised stock
options of the officers named above at December 31, 1999. All options
outstanding at January 31, 2000, were cancelled in exchange for a cash payment
equal to the difference between the fair market value of the stock at the time
of the recapitalization merger of $1.37 and the exercise price of the respective
option.

<TABLE>
<CAPTION>
                                                                       NUMBER OF
                                                                      SECURITIES
                                                                      UNDERLYING        VALUE OF UNEXERCISED
                                                                      UNEXERCISED           IN-THE-MONEY
                                                                     OPTIONS AT FY        OPTIONS AT FY END
                                                                        END (#)                  ($)
                                                                  -------------------   ---------------------
                                     SHARES ACQUIRED    VALUE        EXERCISABLE/           EXERCISABLE/
NAME                                 ON EXERCISE (#)   REALIZED      UNEXERCISABLE          UNEXERCISABLE
----                                 ---------------   --------   -------------------   ---------------------
<S>                                  <C>               <C>        <C>                   <C>
OUR FORMER MANAGEMENT

W. Keith Kennedy(1) ...............               --        --    4,407,060/2,153,400     $2,050,639/$965,889
  President and Chief Executive
  Officer

Scott G. Buchanan(1) ..............               --        --    1,528,500/1,160,010       $647,108/$594,797
  Executive Vice President
  Chief Financial Officer and
  Treasurer

Robert G. Hiller(2) ...............               --        --      630,000/1,100,040       $248,598/$540,650
  President, Telecommunications
  Group

OUR CURRENT MANAGEMENT

Malcolm J. Caraballo(3) ...........               --        --    1,878,990/1,280,010     $1,059,079/$647,297
  President, Wireless Products
  Group

R.E. Hoover Jr.(4) ................               --        --        329,970/750,030       $151,867/$395,883
  Vice President, Sales-
  Wireless Products Group
</TABLE>

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

(1)  Messrs. Kennedy and Buchanan resigned upon completion of the
    recapitalization merger on January 31, 2000. All of their stock options were
    cancelled in exchange for a cash payment made upon their resignation in an
    amount equal to the number of cancelled options multiplied by the difference
    of $1.3708 and the exercise price of the options. Mr. Kennedy received
    $3,262,545 and Mr. Buchanan received $1,342,724 in exchange for the
    cancellation of their stock options.

(2)  Mr. Hiller resigned upon completion of the sale of the telecommunications
    group in January 2000. All of his stock options were cancelled in exchange
    for a cash payment made upon his resignation.

(3)  Mr. Caraballo was appointed our President and Chief Executive Officer on
    January 31, 2000. At that time, Mr. Caraballo's options were cancelled in
    exchange for a cash payment equal to $1,824,838, which is the number of
    cancelled options multiplied by the difference between $1.3708 and the
    exercise price of the options.

(4)  Mr. Hoover was appointed our Senior Vice President--Worldwide Sales and
    Marketing on January 31, 2000. At that time, Mr. Hoover's options were
    cancelled in exchange for a cash payment equal to $588,250, which is the
    number of cancelled options multiplied by the difference between $1.3708 and
    the exercise price of the options.

                                       56
<PAGE>
    The following table sets forth the number and value of all unexercised stock
options of the officers named above at June 30, 2000:

<TABLE>
<CAPTION>
                                   NUMBER OF SECURITIES
                                  UNDERLYING UNEXERCISED
                                STOCK OPTIONS AT JUNE 30,    VALUE OF UNEXERCISED IN-THE-MONEY
                                    2000 EXERCISABLE/        STOCK OPTIONS AT JUNE 30, 2000(1)
                                      UNEXERCISABLE              EXERCISABLE/UNEXERCISABLE
                                --------------------------   ----------------------------------
<S>                             <C>                          <C>
Malcolm J. Caraballo..........      723,891/1,436,000              $7,398,166/$14,675,920
R.E. Hoover, Jr...............        73,868/978,500                $754,931/$10,000,270
</TABLE>

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

(1) Based on the estimated fair market value of our common stock as of June 30,
    2000 of $11.59 per share.

COMPENSATION OF DIRECTORS

    Our compensation committee has not yet met, but will meet in the near
future. Our compensation committee will formulate policies for compensating
non-employee directors, including meeting fees and annual retainers. We
currently do not and will not compensate our employee directors for serving as
directors. We will reimburse all directors for the reasonable and necessary
expenses they incur in performing their duties as directors.

EMPLOYMENT AGREEMENTS

    We entered into new employment agreements with some of our employees
relating to their employment with us, their ownership of our common stock and
grant of options to them to purchase shares of our common stock following the
completion of our recapitalization merger.

    EMPLOYMENT AGREEMENT WITH MALCOLM J. CARABALLO.  Under the employment
agreement between us and Malcolm J. Caraballo, effective as of January 31, 2000,
Mr. Caraballo is employed to serve as our Chief Executive Officer and President
for a three-year period with automatic one-year extensions, unless either we or
Mr. Caraballo gives no less than 90 days advance written notice of an intention
not to extend the term. Mr. Caraballo's initial annual base salary is $275,000,
which may be increased in the years following the first year of employment, but
may not be decreased. Mr. Caraballo is eligible for an annual bonus with a
target bonus equal to 60% of his annual base salary for each fiscal year if we
meet business targets determined by us in good faith. Mr. Caraballo's employment
agreement also provides for other customary benefits including the right to
participate in fringe benefit plans, life and disability insurance plans,
expense reimbursement and vacation in accordance with our top management
vacation policy.

    Under Mr. Caraballo's employment agreement, if his employment is terminated
by him for good reason or by our board of directors without cause, or if our
board of directors elects not to extend the employment period upon its
expiration, Mr. Caraballo is entitled to receive:

    - 150% of his annual base salary over the 18-month period immediately
      following such termination of employment; plus

    - for a one-year period after termination, benefits under our benefit plans,
      or a cash payment sufficient to enable him to purchase comparable benefits
      in the case of benefit plans that do not permit such continued
      participation.

    Alternatively, if his employment is terminated within three months following
a change of control, Mr. Caraballo is entitled to receive:

    - 299% of his annual base salary over the 36-month period immediately
      following such termination of employment; plus

                                       57
<PAGE>
    - for a three-year period after termination, benefits under our benefit
      plans, or a cash payment sufficient to enable him to purchase comparable
      benefits in the case of benefit plans that do not permit such continued
      participation.

    Mr. Caraballo's employment agreement also provides that during the 12-month
period following any termination of his employment, Mr. Caraballo will not
directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity:

    - hire, solicit, encourage the resignation of, or in any other manner seek
      to engage or employ any person who is then, or within the prior three
      months had been, an employee, whether or not for compensation and whether
      or not as an officer, consultant, adviser, independent sales
      representative, independent contractor or participant; or

    - contact, solicit, service or otherwise have any dealings related to the
      sale, manufacture, distribution, marketing or provision of products,
      components, equipment, hardware, other technology or services of any sort
      in the wireless communications industry or any other industry or business
      or prospective industry or business in which we participate or contemplate
      participating in as of such termination in employment, with any person or
      entity with whom we have a current or known prospective business
      relationship or who is or was at the time of his employment with us,
      including any predecessor or successor entity, a customer, vendor or
      client of ours, or a known prospective customer, vendor or client, in each
      case such activity by Mr. Caraballo does or could reasonably be expected
      to have a material adverse effect on the relationship between us and any
      such third party.

    The employment agreement with Mr. Caraballo also provides for the protection
of our confidential information and for the ownership by us or the assignment to
us of any employment-related inventions of Mr. Caraballo.

    EMPLOYMENT AGREEMENTS WITH RAINER N. GROWITZ, RALPH E. HOOVER, JR.,
WILLIAM T. FREEMAN AND THOMAS R. KRITZER.  On January 31, 2000, we entered into
employment agreements with Rainer N. Growitz, Ralph E. Hoover, Jr. and Thomas R.
Kritzer. On June 26, 2000, we entered into an employment agreement with
Mr. Freeman. These agreements employ Messrs. Growitz, Hoover, Freeman and
Kritzer to the executive offices set forth under "Management--Executive
Compensation," and are substantially similar to that of Mr. Caraballo, except as
follows:

    - Messrs. Hoover, Freeman and Kritzer will receive an initial annual base
      salary of $200,200; Mr. Growitz will receive an initial annual base salary
      of $150,020;

    - Messrs. Growitz, Hoover, Freeman and Kritzer are each eligible for an
      annual bonus with a target bonus equal to 35% of his annual base salary
      for each fiscal year if we meet specific business targets;

    - the severance benefit payable to each of Messrs. Growitz, Hoover, Freeman
      and Kritzer upon the termination of his employment by him for good reason,
      or by our board of directors without cause, or if our board of directors
      elects not to extend the employment period upon its expiration, is an
      amount equal to his annual base salary payable over the twelve-month
      period immediately following such termination; and

    - the severance benefit payable to each of Messrs. Growitz, Hoover, Freeman
      and Kritzer upon the termination of his employment within three months
      following a change of control is an amount equal to 150% of his annual
      base salary payable over the 12-month period immediately following such
      termination.

    Mr. Freeman's employment agreement includes additional benefits.
Mr. Freeman was paid a sign-on bonus of $100,000, which he must return if,
before June 26, 2001, we terminate his employment for cause or he resigns
without good reason. We have also committed to loan Mr. Freeman up to $250,000
to facilitate his move to the Silicon Valley area. The principal amount of the
loan will be forgiven under

                                       58
<PAGE>
certain circumstances in equal amounts over the five years following the date on
which the loan is made. Mr. Freeman was also loaned $250,000 to purchase shares
of our common stock. This loan bears interest at the applicable federal rate and
is due and payable on December 31, 2000.

    EMPLOYEE STOCK OWNERSHIP.  In order to give our employees a stake in our
performance and thereby align their interests with those of our stockholders,
immediately following our recapitalization merger, our executive officers
invited all of our employees to purchase shares of our common stock. All
employees were invited to participate through oral commitments made beginning
January 31, 2000 at a purchase price equal to that paid for our common stock in
the recapitalization merger. Our employees were entitled to purchase shares of
common stock with:

    - cash;

    - the proceeds paid to these employees as a result of the cancellation of
      their stock options pursuant to the recapitalization merger; and

    - the proceeds paid to these employees under our phantom stock appreciation
      rights plan for the fourth quarter of 1999 which was terminated upon the
      closing of the recapitalization merger.

    The average price per share paid by these employees was $1.37, which
reflects the 3 for 2 stock split. We received payment for these shares between
February 1 and April 7. The employees making these purchases signed subscription
agreements and became parties to our shareholders agreement on April 7. A total
of 252 employees took the opportunity to invest in our common stock, and, as of
June 30, 2000, 15.7% of our common stock before the private placements, or 15.2%
after the private placements, calculated on the same basis as provided under the
section entitled "Principal Stockholders," was held by our employees. With
respect to each employee who elected to buy we granted stock options to purchase
additional shares under our 2000 stock incentive plan.

OUR 2000 STOCK INCENTIVE PLAN

    On January 31, 2000, we adopted our 2000 stock incentive plan under which we
may grant options to purchase shares of our common stock, restricted shares of
our common stock and stock appreciation rights to participants, which include
non-employee directors, officers and employees of and consultants to us and our
affiliates. The purpose of the stock incentive plan is to give us and our
affiliates a competitive advantage in attracting, retaining and motivating
officers, employees, non-employee directors and consultants, and to provide us
and our affiliates with a stock plan providing incentives linked to the
financial results of our business and increases in shareholder value. The total
number of shares of our common stock reserved and available for grant under the
2000 stock incentive plan is 16.5 million. Our compensation committee, or our
board of directors, is authorized to make grants and various other decisions
under the stock incentive plan. Unless otherwise determined by the committee or
the board, any participant granted an award under the stock incentive plan must
agree to be bound by our shareholders' agreement.

    Stock options may include incentive stock options, nonqualified stock
options or both, in each case, with or without stock appreciation rights. The
term of each stock option is fixed by the committee or the board and stated in
the option agreement, but in no event may the term be more than ten years from
the date of grant. Stock options are not transferable other than by will or the
laws of descent and distribution. Vested stock options may be exercised in whole
or in part by payment of the exercise price by certified or bank check or other
instrument as we may accept or, if approved by the committee or the board, in
the form of unrestricted common stock already owned by the participant for at
least six months of the same class as the common stock subject to the stock
option. In addition, the committee or the board, in its discretion, may allow
the cashless exercise of stock options. After this offering, the committee or
the board, in its discretion, may allow payment of the exercise price by the
delivery to us of a properly executed exercise notice, together with a copy of
irrevocable instructions to a broker to deliver promptly to us the

                                       59
<PAGE>
amount of sale or loan proceeds to pay the purchase price, and, if requested by
us, the amount of any federal, state, local or foreign withholding taxes. When
the participant's employment with us or one of our applicable affiliates is
terminated for cause, all stock options held by the participant are immediately
terminated and cancelled. Upon a participant's death or when the participant's
employment with us or one of our applicable affiliates is terminated for any
reason other than for cause, the participant's then-unvested stock options are
forfeited and the participant or his or her legal representative may, within
90 days if such termination of employment is for any reason other than death or
disability, or within one year in the case of the participant's death or
disability, exercise any previously vested stock options.

    Stock appreciation rights may be granted in conjunction with all or part of
any stock option award and are generally exercisable only at the time or times
and to the extent the related stock options are exercisable. Upon the exercise
of a stock appreciation right, the participant is entitled to receive an amount
equal to the product of (a) the excess of the fair market value of one share of
common stock over the exercise price per share specified in the related stock
option times (b) the number of shares in respect of which the stock appreciation
right has been exercised, in cash, shares of common stock or both, with the
committee having the right to determine the form of payment. Upon termination or
exercise of the related stock option, stock appreciation rights terminate and
are no longer exercisable. Stock appreciation rights are transferable only with
the related stock options.

    Upon a change of control transaction as described in the stock incentive
plan, the committee or the board may, in its sole discretion, do one or more of
the following:

    - shorten the period during which stock options are exercisable, provided
      they remain exercisable for at least 30 days after the date notice of the
      shortening is given to the participants;

    - accelerate any vesting schedule to which a stock option or restricted
      stock award is subject;

    - arrange to have the surviving or successor entity or any parent entity
      thereof assume the restricted stock awards and the stock options or grant
      replacement options with appropriate adjustments in the exercise prices
      and adjustments in the number and kind of securities issuable upon
      exercise or adjustments so that the stock options or their replacements
      represent the right to purchase the shares of stock, securities or other
      property, including cash, as may be issuable or payable as a result of the
      change of control transaction with respect to or in exchange for the
      number of shares of common stock purchasable and receivable upon exercise
      of the stock options had such exercise occurred in full prior to the
      change of control transaction; or

    - cancel stock options or unvested stock awards upon payment to the
      participants in cash, with respect to each stock option or restricted
      stock award to the extent then exercisable or vested, including, if
      applicable, any stock options or restricted stock awards as to which the
      vesting schedule has been accelerated by decision of the committee because
      of the change of control transaction, of an amount that is the equivalent
      of the excess of the fair market value of the common stock at the
      effective time of the change of control transaction over, in the case of
      stock options, the exercise price of the stock option.

    The committee or the board may also provide for one or more of the foregoing
alternatives in any particular award agreement.

    The committee or the board may grant to any participant, on terms and
conditions determined by the committee, the right to receive cash payments to be
paid at that time if an award results in compensation income to the participant
in order to assist the participant in paying the resulting taxes.

    The stock incentive plan will terminate on January 31, 2010. However, awards
outstanding at that time will not be affected or impaired by the stock incentive
plan's termination. Our board and the committee have authority to amend, alter
or discontinue the stock incentive plan and awards granted

                                       60
<PAGE>
thereunder, but no amendment may impair the rights of any participant thereunder
without the participant's consent.

OUR 2000 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN

    In connection with the offering, we intend to adopt the WJ Communications,
Inc. 2000 Non-Employee Director Stock Compensation Plan. The purpose of this
plan is to promote a greater identity of interests between our non-employee
directors and our stockholders and to attract and retain individuals to serve as
directors. The plan will be administered by our board of directors or a
committee of our board of directors designated for this purpose. The plan will
become effective upon the completion of this offering and will provide the
following significant benefits:

    - each non-employee director who joins the board following the completion of
      this offering will receive an option to acquire 60,000 shares of common
      stock with an exercise price equal to the fair market value of the common
      stock upon the commencement of his or her directorship;

    - each non-employee director serving as of and upon the completion of this
      offering, other than Messrs. Paisley and Robinson (who have previously
      received option grants), will receive at his or her election an option to
      acquire 15,000 shares of common stock with an exercise price equal to the
      offering price or $22,000 payable in cash or shares of common stock valued
      at the offering price;

    - each non-employee director, upon his or her reelection to the board at
      each of our future annual meetings, will receive at his or her election an
      option to acquire 15,000 shares of common stock or $22,000 payable in cash
      or shares of common stock. These options will have an exercise price equal
      to, and these share grants will be valued at, the fair market value of the
      common stock at the time of reelection;

    - each non-employee director will receive an annual retainer of $10,000,
      payable at his or her election in cash or shares of common stock valued at
      its fair market value;

    - each non-employee director will receive $2,000 in shares of common stock
      valued at its fair market value or $1,000 in cash for each board or
      committee meeting attended.

All options granted under the plan will vest ratably over four years from the
date of grant.

    Our board of directors or its designated committee may adjust the awards
    under the plan if there is:

    - any change in corporate capitalization, such as a stock split;

    - a corporate transaction, such as a merger or consolidation;

    - a spin-off or other distribution of our stock or property; or

    - any reorganization or any partial or complete liquidation.

    Our board of directors may at any time terminate or amend the plan, except
that no termination or amendment may impair the rights of directors relating to
outstanding awards. No amendment will be made without the approval of our
stockholders to the extent such approval is required by law or stock exchange or
automated quotation system rule.

    Grants and awards under the plan are nontransferable other than by will or
the laws of descent and distribution, or, at the discretion of our board of
directors or the designated committee, by a written beneficiary designation.

SEVERANCE AGREEMENTS

    Prior to our recapitalization merger, we and our executive officers were
parties to severance agreements that provided that each officer was entitled to
a severance payment if he resigned within 120 days of a change in control of our
company. Mr. Kennedy, although not a party to a severance agreement, was
entitled to a similar payment under his employment agreement. The executive
officers who resigned in connection with our recapitalization merger
collectively received $5.9 million.

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<PAGE>
                             PRINCIPAL STOCKHOLDERS

    The following table sets forth information with respect to beneficial
ownership of our outstanding common stock, including the percent of the total
voting power, as of June 30, 2000, and as adjusted to reflect the completion of
the offering, by:

    - each holder of more than 5% of our common stock;

    - each of our directors;

    - each of our five most highly compensated officers named in
      "Management--Executive Compensation;" and

    - all of our directors and our named officers as a group.

    Except as otherwise indicated in the footnotes below, each beneficial owner
has the sole power to vote and to dispose of all shares held by that holder. You
should keep the following points in mind as you read the information in the
table:

    - Beneficial ownership is determined in accordance with the rules of the
      Securities and Exchange Commission. Under these rules, a person is deemed
      to be a "beneficial owner" of a security if that person has or shares
      voting power, which includes the power to vote or to direct the voting of
      the security, or investment power, which includes the power to dispose of
      or to direct the disposition of the security. A person is also deemed to
      be a beneficial owner of any securities with respect to which that person
      has a right to acquire beneficial ownership within 60 days. More than one
      person may be deemed a beneficial owner of the same security and a person
      may be deemed to be a beneficial owner of securities as to which that
      person has no economic interest.

    - The percentage of our common stock outstanding is based on the 49,044,996
      shares of our common stock outstanding as of June 30, 2000 which is
      adjusted for the issuance in July 2000 of our Series A Preferred Stock and
      the assumed conversion of the Series A Preferred Stock into 1,498,800
      shares of common stock. In computing the number of shares beneficially
      owned by a person and the percentage ownership of that person, we include
      shares of common stock subject to options held by that person that are
      currently exercisable or will become exercisable within 60 days from
      June 30, 2000, while these shares are not included for purposes of
      computing percentage ownership of any other person.

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<PAGE>

<TABLE>
<CAPTION>
                                             NUMBER OF SHARES
                                            BENEFICIALLY OWNED                 PERCENTAGE BENEFICIALLY OWNED
                                 -----------------------------------------   ----------------------------------
NAME                              PRIOR TO OFFERING      AFTER OFFERING      PRIOR TO OFFERING   AFTER OFFERING
----                             -------------------   -------------------   -----------------   --------------
<S>                              <C>                   <C>                   <C>                 <C>
Fox Paine Capital, LLC (1).....         38,297,870             38,297,870           80.5%             70.3%
Fox Paine Capital Fund (1).....         35,080,130             35,080,130           73.8%             64.4%
FPC Investors, L.P. (1)........            520,524                520,524            1.1%              1.0%
W. Dexter Paine, III (1).......         38,297,870             38,297,870           80.5%             70.3%
Saul A. Fox (1)................         38,297,870             38,297,870           80.5%             70.3%
Jason B. Hurwitz (1)...........         38,297,870             38,297,870           80.5%             70.3%
Wray T. Thorn (1)..............         38,297,870             38,297,870           80.5%             70.3%
James R. Kroner (1)............         38,297,870             38,297,870           80.5%             70.3%
Charles E. Robinson (2)........                 --                     --             --                --
J. Thomas Bentley..............                 --                     --             --                --
The Watkins Trust (3)..........          3,600,000              3,600,000            7.6%              6.6%
Dean A. Watkins (3)(4).........          3,600,000              3,600,000            7.6%              6.6%
W. Keith Kennedy, Jr...........                 --                     --             --                --
Scott G. Buchanan..............                 --                     --             --                --
Robert G. Hiller...............                 --                     --             --                --
Malcolm J. Caraballo (5).......          1,832,187              1,832,187            3.8%              3.4%
R.E. Hoover, Jr. (6)...........            146,816                146,816              *                 *
Christopher B. Paisley.........                 --                     --             --                --
All directors and executive
  officers as a group (15
  persons) (7).................         41,415,206             41,415,206
</TABLE>

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

*   The percentage of shares beneficially owned does not exceed 1%.

(1) Fox Paine Capital, LLC is General Partner or Manager of Fox Paine Capital
    Fund, FPC Investors, L.P., WJ Coinvestment Fund I, LLC, WJ Coinvestment Fund
    II, LLC, WJ Coinvestment Fund III, LLC and WJ Coinvestment Fund IV, LLC and
    possesses voting and investment power over all shares held by each of these
    entities. Fox Paine Capital is not the record owner of any shares of our
    common stock. Messrs. Fox and Paine are members of Fox Paine Capital and
    share voting power of Fox Paine Capital. Mr. Kroner is a managing director
    and Messrs. Hurwitz and Thorn are directors of Fox Paine Capital. None of
    the shares shown as beneficially owned by Messrs. Fox, Paine, Kroner,
    Hurwitz and Thorn are owned of record by these individuals. Each of Messrs.
    Fox, Paine, Kroner, Hurwitz and Thorn disclaims beneficial ownership of the
    shares owned by the entities of which Fox Paine Capital is General Partner
    or Manager, except to the extent of his pecuniary interest in those shares.
    The address of Fox Paine Capital, Fox Paine Capital Fund, FPC Investors and
    Messrs. Fox, Paine, Kroner, Hurwitz and Thorn is c/o Fox Paine & Company,
    LLC, 950 Tower Lane, Suite 1950, Foster City, CA 94404.

(2) The address of Mr. Robinson is c/o Alaska Communications Systems
    Group, Inc., 510 L. Street, Suite 500, Anchorage, Alaska 99501.

(3) The address of Mr. Watkins and the Watkins Trust is c/o WJ
    Communications, Inc., 3333 Hillview Avenue, Palo Alto, California 94304.

(4) Mr. Watkins is co-trustee of the Watkins Trust.

(5) Includes 1,108,296 shares held of record by Mr. Caraballo and 723,891 shares
    issuable under currently exercisable options.

(6) Includes 72,948 shares held of record by Mr. Hoover and 73,868 shares
    issuable under currently exercisable options.

(7) Includes shares deemed to be beneficially owned by Messrs. Fox, Paine,
    Hurwitz, Thorn and Kroner as a result of their relationships with and to Fox
    Paine Capital. Excluding such shares, all directors and executive officers
    as a group beneficially own 1,840,364 shares held of record and
    1,276,973 shares issuable under currently exercisable options.

                                       63
<PAGE>
                              CERTAIN TRANSACTIONS

MANAGEMENT AGREEMENT

    On January 31, 2000, as part of the recapitalization merger, we entered into
a management agreement with Fox Paine & Company. Under that agreement, we paid
Fox Paine an aggregate of $3.5 million for assisting us in obtaining debt
financing and advisory services. In addition, we agreed to pay Fox Paine a
management fee of $110,000 for the year ended December 31, 2000 and, for each
subsequent year, a fee in the amount of 1% of our net income before interest
expense, interest income, income taxes, depreciation and amortization and equity
in earnings (losses) of minority investments, calculated without regard to the
fee. We believe the fee represents fair value for the services rendered by Fox
Paine to us. In exchange for its management fee, Fox Paine assists us with our
strategic planning, budgets and financial projections and helps us identify
possible strategic acquisitions and recruit qualified management personnel. Fox
Paine also helps develop and enhance customer and supplier relationships on our
behalf and consults with us on various matters including tax planning and public
relations strategies, economic and industry trends and executive compensation.

    Fox Paine will continue to provide management services under this agreement
until its affiliates no longer own shares of our common stock or are no longer
represented on our board of directors. The management agreement with us is
similar to those entered into between Fox Paine and each of the other companies
acquired by Fox Paine's affiliates. In connection with this agreement, we have
agreed to indemnify Fox Paine against various liabilities that may arise as a
result of the management services it will perform for us. We have also agreed to
reimburse Fox Paine for its expenses incurred in providing these services.

SHAREHOLDERS' AGREEMENT

    On January 31, 2000, we entered into a shareholders' agreement with Fox
Paine Capital Fund, investors affiliated with Fox Paine Capital Fund and several
non-fund investors, including co-investors, the Watkins Trust and some of our
employees. Under the shareholders' agreement, following completion of the
offering and subject to limited exceptions,

    - Fox Paine Capital Fund and its affiliates, as a group, may make up to five
      demands for registration under the Securities Act of their shares of
      common stock;

    - The Watkins Trust may make one demand for registration under the
      Securities Act of its shares of common stock; and

    - In the event we register any of our equity securities under the Securities
      Act, or shares of common stock of Fox Paine Capital Fund or the Watkins
      Trust pursuant to a demand registration, each of our other stockholders
      may exercise piggyback registration rights to include all or a portion of
      its shares of common stock in the registration.

    In the event that either Fox Paine Capital Fund and its affiliates or the
Watkins Trust makes a demand for registration, we have agreed to pay all
expenses related to that registration. We have also agreed to indemnify Fox
Paine Capital Fund and the Watkins Trust against various liabilities associated
with such registration.

    The shareholders' agreement also provides that our stockholders who are a
party to the agreement will vote their shares in order to ensure that if and to
the extent Fox Paine owns shares of our common stock it will be represented on
our board of directors.

    The other material provisions of the shareholders' agreement expire upon
completion of the offering, except that rights and obligations under the
shareholders' agreement relating to indemnification in connection with
securities registrations survive indefinitely.

                                       64
<PAGE>
TRANSACTIONS RELATED TO THE RECAPITALIZATION MERGER

    In connection with our recapitalization merger, CIBC World Markets Corp.
acted as our financial advisor and rendered a fairness opinion, for which it
received customary fees, and extended us a senior secured credit facility, under
which we borrowed $40.0 million. CIBC World Markets Corp. is an underwriter in
this offering.

    In connection with our recapitalization merger, Alliant Partners, of which
J. Thomas Bentley, one of our directors, is a partner, received a $1.0 million
financial advisor fee from us.

OTHER TRANSACTIONS

    In connection with the sale of our Series A Preferred Stock in private
placements, we and Fox Paine entered into Co-Sale and Redemption Agreements with
the Series A Preferred investors which, with limited exceptions, entitle these
investors to participate pro rata and on the same terms as Fox Paine in private
sales by Fox Paine of 10% or more of the shares of our common stock. In the
event we were to redeem any shares held by Fox Paine, these investors are
entitled to participate pro rata in that redemption.

                                       65
<PAGE>
                          DESCRIPTION OF CAPITAL STOCK

    Our authorized capital stock consists of 100 million shares of common stock,
par value $0.01 per share and 10 million shares of preferred stock. As of
June 30, 2000, we had 47,546,196 shares of common stock outstanding, which were
held by 258 holders. This number does not include 1,498,800 shares of common
stock issuable upon conversion of all outstanding shares of our Series A
Preferred Stock upon completion of the offering. After the conversion of the
outstanding shares of Series A Preferred Stock into common stock and this
offering, there will be 54,444,996 shares of common stock outstanding, without
giving effect to the exercise of the underwriters' over-allotment option.

COMMON STOCK

    Subject to the rights of the holders of any preferred stock that may be
outstanding, each holder of common stock on the applicable record date is
entitled to receive dividends as may be declared by our board of directors out
of funds legally available to pay dividends, and, in the event of liquidation,
to share ratably in any distribution of our assets after payment or providing
for the payment of liabilities and the liquidation preference of any outstanding
preferred stock. Shares of common stock will vote together as a single class on
all matters presented to a vote of stockholders, including the election of
directors. Each holder of common stock is entitled to one vote for each share
held of record on the applicable record date for all of these matters. Holders
of common stock have no cumulative voting rights or preemptive rights to
purchase or subscribe for any stock or other securities, and there are no
conversion rights or redemption or sinking fund provisions with respect to
common stock. All outstanding shares of common stock are, and the shares of
common stock sold in the offerings will be when issued, fully paid and
nonassessable.

PREFERRED STOCK

    Upon the closing of the offering, each outstanding share of our Series A
Preferred Stock will automatically convert into shares of common stock. Our
charter authorizes our board of directors to issue shares of preferred stock in
one or more series and to determine, by resolution, the voting powers, and
designations, preferences and relative, participating, optional or other rights,
if any, and the qualifications, limitations or restrictions thereof, if any,
including the number of shares in each series (which our board of directors may
increase or decrease as permitted by Delaware law), liquidation preferences,
dividend rates, conversion rights and redemption provisions of the shares
constituting any series, without any further vote or action by the stockholders.
Any shares of preferred stock so issued would have priority over the common
stock with respect to dividend or liquidation rights or both. Although our board
of directors has no present plans to do so, it could issue one or more series of
preferred stock, without stockholder approval, that could, depending on the
terms of such series, impede the completion of a merger, tender offer or other
takeover attempt.

REGISTRATION RIGHTS

    On January 31, 2000, we entered into a Shareholders' Agreement with Fox
Paine Capital Fund, investors affiliated with Fox Paine Capital Fund and several
non-fund investors, including co-investors, the Watkins Trust and some of our
employees. Under this agreement, Fox Paine Capital Fund and its affiliates, as a
group, may make up to five demands for registration under the Securities Act of
their shares of common stock, and the Watkins Trust may make one demand for
registration under the Securities Act of their shares of common stock. See
"Certain Transactions--Shareholders' Agreement."

    On July 25, 2000, we entered into Investor's Rights Agreements and Co-Sale
and Redemption Rights Agreements with our Series A Preferred investors in
connection with their purchase of our Series A

                                       66
<PAGE>
Preferred Stock. Under the Investor's Rights Agreements, after 180 days
following this offering and subject to limited exceptions:

    - each of the investors may make one demand for registration under the
      Securities Act on Form S-1 of its shares of common stock; and

    - each of the investors may make up to two demands for registration under
      the Securities Act on Form S-3 of its shares of common stock.

    We have agreed to pay all expenses incurred in connection with these
registrations. We have also agreed to indemnify the Series A Preferred investors
against various liabilities associated with such registrations. These
registration rights expire two years after the completion of this offering.

    In the event that we register any of our equity securities under the
Securities Act, our Series A Preferred investors and our stockholders who are
parties to our shareholders' agreement may exercise piggyback registration
rights to include all or a portion of their shares of common stock in the
registration.

CO-SALE AND REDEMPTION RIGHTS

    We have also entered into Co-Sale and Redemption Rights Agreements with the
Series A Preferred investors. Under these agreements, with limited exceptions,
these investors are entitled to participate pro rata and on the same terms as
Fox Paine in private sales by Fox Paine of 10% or more of the shares of our
common stock. In the event we were to redeem any shares held by Fox Paine, these
investors are entitled to participate pro rata in that redemption.

ACTION BY WRITTEN CONSENT

    Under the Delaware General Corporation Law, unless the certificate of
incorporation expressly prohibits action by the written consent for
stockholders, any action required or permitted to be taken by our stockholders
at a duly called annual or special meeting of stockholders may be taken by a
consent in writing executed by stockholders possessing the requisite votes for
the action to be taken. Our certificate of incorporation does not expressly
prohibit action by the written consent of stockholders. As a result, Fox Paine,
as holder of 70.3% of our total voting power after this offering, will be able
to take any stockholder action without holding a stockholder meeting. We intend,
however, to hold annual stockholder meetings.

DELAWARE GENERAL CORPORATION LAW

    Section 203 of the Delaware General Corporation Law generally prevents
Delaware corporations from engaging under particular circumstances in a business
combination with any interested stockholder for three years following the date
that the stockholder became an interested stockholder. We have opted out of the
provisions of Section 203.

CALIFORNIA FOREIGN CORPORATION LAW

    Section 2115 of the California Corporations Code provides that under some
circumstances several provisions of the California Corporations Code may be
applied to foreign corporations qualified to do business in California,
notwithstanding the law of the jurisdiction where the corporation is
incorporated. These corporations are referred to in this prospectus as
"quasi-California" corporations. Section 2115 applies to foreign corporations
that have more than half of their voting stock held by stockholders residing in
California and more than half of their business deriving from California,
measured on or after the 135th day of the corporation's fiscal year. We believe
that following our reincorporation in Delaware we will be deemed a
quasi-California corporation and therefore, we will have to comply with
California law with

                                       67
<PAGE>
respect to, among other things, elections of directors and distributions to
stockholders. Under the California Corporations Code, a corporation is
prohibited from paying dividends unless:

    - the retained earnings of the corporation immediately prior to the
      distribution equal or exceed the amount of the proposed distribution; or

    - the assets of the corporation, exclusive of specific non-tangible assets,
      equal or exceed 1 1/4 times its liabilities, exclusive of specific
      liabilities; and

    - the current assets of the corporation at least equal its current
      liabilities. If the average pre-tax net earnings of the corporation before
      interest expense for the two years preceding the distribution were less
      than the average interest expense of the corporation for those years,
      then, the current assets of the corporation must exceed 1 1/4 times its
      current liabilities.

    Following this offering, we would be exempt from the application of
Section 2115 if more than half of our voting stock is held by stockholders with
residences outside of California or our voting stock is held by more than 800
stockholders of record.

TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the common stock will be ChaseMellon
Shareholder Services, L.L.C.

                                       68
<PAGE>
                        SHARES ELIGIBLE FOR FUTURE SALE

    Prior to the offering, there has been no public market for our common stock.
Future sales of substantial amounts of common stock in the public market, or the
perception that substantial sales may occur, could adversely affect the
prevailing market price of the common stock. After completion of the offering
and the issuance of our Series A Preferred Stock and conversion of the Series A
Preferred Stock into 1,498,800 shares of common stock, there will be 54,444,996
shares of common stock outstanding. Of these shares, the 5,400,000 shares of
common stock sold in the offering, or 6,210,000 shares if the underwriters'
option to purchase additional shares is exercised in full, will be freely
transferable without restriction under the Securities Act, except by persons who
may be deemed to be our affiliates. All the remaining shares of common stock may
not be sold unless they are registered under the Securities Act or are sold
pursuant to an exemption from registration, including an exemption contained in
Rule 144 under the Securities Act.

    In general, under Rule 144 as currently in effect, a person, or persons
whose shares are aggregated, including an affiliate, who beneficially owns
"restricted securities" may not sell those securities until they have been
beneficially owned for at least one year. Thereafter, the person would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of:

    - 1% of the then outstanding shares of common stock, or approximately
      544,450 shares after the offering; and

    - the average weekly trading volume of the common stock on the Nasdaq
      National Market during the four calendar weeks preceding the date on which
      notice of the sale is filed with the SEC.

    Sales under Rule 144 are subject to restrictions relating to manner of sale,
notice and the availability of current public information about us and may be
effected only through unsolicited brokers' transactions.

    A person who is not deemed an "affiliate" of us at any time during the
90 days preceding a sale would, except for the shareholders' agreement described
above and the "lock-up" arrangements described below, be entitled to sell his,
her or its restricted shares under Rule 144 without regard to the volume or
other limitations described above, once two years have elapsed since the
restricted shares were acquired from us or one of our affiliates.

    Our officers, directors and stockholders have agreed with the underwriters
that, during the period beginning from the date of this prospectus and
continuing to and including the date 180 days after the date of this prospectus,
they will not, directly or indirectly, offer, sell, contract to sell, transfer
the economic risk of ownership in, make any short sale, pledge or otherwise
dispose of any shares of common stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
common stock (other than, in our case, pursuant to our existing employee
compensation plans) without the prior written consent of Chase Securities Inc.,
except for the shares of common stock offered in connection with the offering.
The lock-up agreements by these persons, other than WJ Communications, will
cover an aggregate of approximately 98% of the outstanding shares of our common
stock.

    No prediction can be made as to the effect, if any, that market sales of
restricted shares or the availability of restricted shares for sale will have on
the market price of our common stock prevailing from time to time. Nevertheless,
sales of substantial amounts of common stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for our common
stock and could impair our future ability to raise capital through an offering
of our equity securities.

REGISTRATION RIGHTS

    We are a party to Investor's Rights Agreements that provide the Series A
Preferred investors and a Shareholders' Agreement that provides Fox Paine
Capital Fund, certain of its affiliates, and the Watkins Trust with the ability
to demand registration of all or a portion of the shares they own. These
stockholders and our employee stockholders who are parties to our Shareholders
Agreement have the right to include all or any portion of the shares they own on
registration statements we file, other than registration statements relating to
acquisition transactions and stock-based compensation. See "Description of
Capital Stock--Registration Rights."

                                       69
<PAGE>
              U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

    The following is a general discussion of the principal U.S. federal income
and estate tax consequences of the ownership and disposition of our common stock
by a non-U.S. holder. As used in this prospectus, the term non-U.S. holder is a
person other than:

    - a citizen or individual resident of the United States for U.S. federal
      income tax purposes,

    - a corporation or other entity taxable as a corporation created or
      organized in or under the laws of the United States or of any political
      subdivision of the United States,

    - an estate whose income is includible in gross income for U.S. federal
      income tax purposes regardless of its source, or

    - a trust, in general, if it is subject to the primary supervision of a
      court within the United States and the control of one or more U.S.
      persons.

    This discussion does not consider:

    - U.S. state and local or non-U.S. tax consequences;

    - specific facts and circumstances that may be relevant to a particular
      non-U.S. holder's tax position, including, if the non-U.S. holder is a
      partnership, that the U.S. tax consequences of holding and disposing of
      our common stock may be affected by determinations made at the partner
      level;

    - the tax consequences for the stockholders or beneficiaries of a non-U.S.
      holder;

    - special tax rules that may apply to some non-U.S. holders, including
      without limitation, banks, insurance companies, dealers in securities and
      traders in securities who elect to apply a mark-to-market method of
      accounting; or

    - special tax rules that may apply to a non-U.S. holder that holds our
      common stock as part of a "straddle," "hedge," "conversion" or
      "constructive sale" transaction.

    The following is based on provisions of the U.S. Internal Revenue Code of
1986, as amended, applicable Treasury Regulations, and administrative and
judicial interpretations, all as of the date of this prospectus, and all of
which may change, retroactively or prospectively. The following summary is for
general information. Accordingly, each non-U.S. holder should consult a tax
advisor regarding the U.S. federal, state, local and non-U.S. income and other
tax consequences of acquiring, holding and disposing of shares of our common
stock.

DIVIDENDS

    In the event that dividends are paid on shares of common stock, dividends
paid to a non-U.S. holder of common stock generally will be subject to
withholding of U.S. federal income tax at a 30% rate, or such lower rate as may
be provided by an applicable income tax treaty. Non-U.S. holders should consult
their tax advisors regarding their entitlement to benefits under a relevant
income tax treaty.

    Dividends that are effectively connected with a non-U.S. holder's conduct of
a trade or business in the United States or, if an income tax treaty applies,
attributable to a permanent establishment, or, in the case of an individual, a
"fixed base," in the United States, as provided in that treaty, which we refer
to as U.S. trade or business income, are generally subject to U.S. federal
income tax on a net income basis at regular graduated rates, but are not
generally subject to the 30% withholding tax if the non-U.S. holder files the
appropriate U.S. Internal Revenue Service form with the payor. Any U.S. trade or
business income received by a non-U.S. holder that is a corporation may also,
under particular circumstances, be subject to an additional "branch profits tax"
at a 30% rate or such lower rate as specified by an applicable income tax
treaty.

                                       70
<PAGE>
    Dividends paid prior to 2001 to an address in a foreign country are
presumed, absent actual knowledge to the contrary, to be paid to a resident of
such country for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. For dividends paid after
2000:

    - a non-U.S. holder of common stock who claims the benefit of an applicable
      income tax treaty rate generally will be required to satisfy applicable
      certification and other requirements;

    - in the case of common stock held by a foreign partnership, the
      certification requirement will generally be applied to the partners of the
      partnership and the partnership will be required to provide information,
      including a U.S. taxpayer identification number; and

    - look-through rules will apply for tiered partnerships.

    A non-U.S. holder of common stock that is eligible for a reduced rate of
U.S. withholding tax under an income tax treaty may obtain a refund or credit of
any excess amounts withheld by filing an appropriate claim for a refund with the
Internal Revenue Service.

GAIN ON DISPOSITION OF COMMON STOCK

    A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of common stock unless:

    - the gain is U.S. trade or business income, in which case, the branch
      profits tax described above may also apply to a corporate non-U.S. holder;

    - the non-U.S. holder is an individual who holds the common stock as a
      capital asset within the meaning of Section 1221 of the Internal Revenue
      Code, is present in the U.S. for more than 182 days in the taxable year of
      the disposition and meets other requirements;

    - the non-U.S. holder is subject to tax pursuant to the provisions of the
      U.S. tax law applicable to some U.S. expatriates; or

    - we are or have been a "U.S. real property holding corporation" for U.S.
      federal income tax purposes at any time during the shorter of the
      five-year period ending on the date of disposition or the period that the
      non-U.S. holder held our common stock.

    Generally, a corporation is a "U.S. real property holding corporation" if
the fair market value of its "U.S. real property interests" equals or exceeds
50% of the sum of the fair market value of its worldwide real property interests
plus its other assets used or held for use in a trade or business. We believe
that WJ Communications has not been and is not currently, and we do not
anticipate it becoming, a "U.S. real property holding corporation" for U.S.
federal income tax purposes. The tax relating to stock in a "U.S. real property
holding corporation" will not apply to a non-U.S. holder whose holdings, direct
and indirect, at all times during the applicable period, constituted 5% or less
of the common stock, provided that the common stock was regularly traded on an
established securities market.

FEDERAL ESTATE TAX

    Common stock owned or treated as owned by an individual who is a non-U.S.
holder at the time of death will be included in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax or other
treaty provides otherwise and, therefore, may be subject to U.S. federal estate
tax.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

    Under some circumstances, U.S. Treasury Regulations require information
reporting and backup withholding at a rate of 31% on specified payments on
common stock. Under currently applicable law,

                                       71
<PAGE>
non-U.S. holders of common stock generally will be exempt from these information
reporting requirements and from backup withholding on dividends paid prior to
2001 to an address outside the U.S. For dividends paid after 2000, however, a
non-U.S. holder of common stock that fails to certify its non-U.S. holder status
in accordance with applicable U.S. Treasury Regulations may be subject to backup
withholding at a rate of 31% on payments of dividends.

    The payment of the proceeds of the disposition of common stock by a holder
to or through the U.S. office of a broker or through a non-U.S. branch of a U.S.
broker generally will be subject to information reporting and backup withholding
at a rate of 31% unless the holder either certifies its status as a non-U.S.
holder under penalties of perjury or otherwise establishes an exemption. The
payment of the proceeds of the disposition by a non-U.S. holder of common stock
to or through a non-U.S. office of a non-U.S. broker will not be subject to
backup withholding or information reporting unless the non-U.S. broker is a
"U.S. related person." In the case of the payment of proceeds from the
disposition of common stock by or through a non-U.S. office of a broker that is
a U.S. person or a "U.S. related person," information reporting, but currently
not backup withholding, on the payment applies unless the broker receives a
statement from the owner, signed under penalty of perjury, certifying its
non-U.S. status or the broker has documentary evidence in its files that the
holder is a non-U.S. holder and the broker has no actual knowledge to the
contrary. For this purpose, a "U.S. related person" is:

    - a "controlled foreign corporation" for U.S. federal income tax purposes;

    - a foreign person 50% or more of whose gross income for specified periods
      is derived from the conduct of a U.S. trade or business; or

    - effective after 2000, a foreign partnership if, at any time during its
      taxable year, (a) at least 50% of the capital or profits interest in the
      partnership is owned by U.S. persons, or (b) the partnership is engaged in
      a U.S. trade or business.

    Effective after 2000, backup withholding may apply to the payment of
disposition proceeds by or through a non-U.S. office of a broker that is a U.S.
person or a U.S. related person unless certification requirements are satisfied
or an exemption is otherwise established and the broker has no actual knowledge
or reason to know that the holder is a U.S. person. Non-U.S. holders should
consult their own tax advisors regarding the application of the information
reporting and backup withholding rules to them, including changes to these rules
that will become effective after 2000.

    Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder will be refunded, or credited against the holder's U.S. federal
income tax liability, if any, PROVIDED that the required information is
furnished to the Internal Revenue Service.

                                       72
<PAGE>
                                  UNDERWRITING

    Chase Securities Inc., CIBC World Markets Corp. and Thomas Weisel Partners
LLC are the representatives of the underwriters. Subject to the terms and
conditions of the underwriting agreement, the underwriters named below, through
their representatives, have severally agreed to purchase from us the following
respective numbers of shares of common stock.

<TABLE>
<CAPTION>
                                                              NUMBER OF
NAME                                                            SHARES
----                                                          ----------
<S>                                                           <C>
Chase Securities Inc........................................
CIBC World Markets Corp.....................................
Thomas Weisel Partners LLC..................................

                                                              ----------
    Total...................................................   5,400,000
</TABLE>

    The underwriting agreement provides that the obligations of the underwriters
are subject to various conditions precedent, including the absence of any
material adverse change in our business and the receipt of various certificates,
opinions and letters from us, our counsel and the independent auditors. The
underwriters are committed to purchase all of the shares offered by us if they
purchase any shares.

    The following table shows the per share and total underwriting discounts and
commissions we will pay to the underwriters. Such amounts are shown assuming
both no exercise and full exercise of the underwriters' over-allotment option to
purchase additional shares.

                     UNDERWRITING DISCOUNTS AND COMMISSIONS

<TABLE>
<CAPTION>
                                                     WITHOUT            WITH
                                                  OVER-ALLOTMENT   OVER-ALLOTMENT
                                                     EXERCISE         EXERCISE
                                                  --------------   --------------
<S>                                               <C>              <C>
Per Share.......................................
Total...........................................
</TABLE>

    We estimate that the total expenses of this offering, excluding underwriting
discounts and commissions, will be approximately $2.5 million. The market
statistics contained in "Business--Industry Background" were obtained by the
underwriters who paid a standard fee to access that data.

    The underwriters propose to offer the shares directly to the public at the
initial public offering price set forth on the cover page of this prospectus and
to certain dealers at that price less a concession not in excess of $        per
share. The underwriters may allow and such dealers may re-allow a concession not
in excess of $        per share to various other dealers. If all of the shares
are not sold at the initial public offering price, the representatives may
change the offering price and other selling terms.

    We have granted to the underwriters an option, exercisable no later than
30 days after the date of this prospectus, to purchase up to 810,000 additional
shares of common stock at the initial public offering price, less the
underwriting discount set forth on the cover page of the prospectus. To the
extent that the underwriters exercise this option, each of the underwriters will
have a firm commitment to purchase approximately the same percentage of these
option shares which the number of shares of common stock to be purchased by it
shown in the above table bears to the total number of shares of common stock
offered by this prospectus. We will be obligated, pursuant to this option, to
sell shares to the underwriters to the extent the option is exercised. The
underwriters may exercise this option only to cover over-allotments made in
connection with the sale of shares of common stock in this offering.

                                       73
<PAGE>
    The offering of the shares is made for delivery when, as and if accepted by
the underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

    We have agreed to indemnify the underwriters against particular liabilities
specified in the underwriting agreement, including liabilities under the
Securities Act, and to contribute to payments the underwriters may be required
to make with respect to these liabilities.


    Our officers, directors and stockholders have agreed with the underwriters
that, during the period beginning from the date of this prospectus and
continuing to and including the date 180 days after the date of this prospectus,
they will not, directly or indirectly, offer, sell, contract to sell, transfer
the economic risk of ownership in, make any short sale, pledge or otherwise
dispose of any shares of common stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
common stock without the prior written consent of Chase Securities Inc., except
for shares of common stock sold in connection with certain transactions and for
shares of common stock offered in connection with the offering. We have agreed
that we will not, without the prior written consent of Chase Securities Inc.,
offer, sell or otherwise dispose of any shares of common stock, options or
warrants to acquire shares of common stock or securities exchangeable for or
convertible into shares of common stock for a period of 180 days following the
date of this prospectus, except that we may issue shares upon the exercise of
options granted prior to the date of this prospectus, may grant additional
options under our stock option plans, and may also issue shares in connection
with certain transactions. Without the prior written consent of Chase Securities
Inc., any additional options granted shall not be exercisable during this
180-day period.


    Our common stock has been approved for quotation on the Nasdaq National
Market under the symbol WJCI.

    In connection with this offering, the underwriters may effect transactions
that could have the effect of raising or maintaining, or preventing or retarding
a decline in, the market price of our shares. As a result, the price of our
shares may be higher than the price that might otherwise exist in the open
market. These transactions may be effected on the Nasdaq National Market, in the
over-the-counter market or otherwise.

    In particular, the underwriters may make short sales of our shares and may
purchase our shares on the open market to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in the offering. Covered short sales
are sales made in an amount not greater than the over-allotment option. The
underwriters may close out any covered short position by either exercising their
over-allotment option or purchasing shares in the open market. In determining
the source of shares to close out the covered short position, the underwriters
will consider, among other things, the price of shares available for purchase in
the open market as compared to the price at which they may purchase shares
through the over-allotment option. Naked short sales are sales in excess of the
over-allotment option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely
to be created if the underwriters are concerned that there may be downward
pressure on the price of the shares in the open market after pricing that could
adversely affect investors who purchase in this offering.

    In addition, an underwriter may enter a stabilizing bid in connection with
the offering, which is the placing of any bid or effecting of any purchase, for
the purposes of pegging, fixing or maintaining the price of the shares. The
underwriters may also impose penalty bids, which permit them to reclaim the
selling concession from a syndicate member when shares sold by the syndicate
member are purchased in syndicate covering transactions. Any stabilizing, if
commenced, may be discontinued at any time.

    The underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority that exceed 5% of the total number of shares of
common stock offered by them.

                                       74
<PAGE>
    Prior to this offering, there has been no public market for our shares of
common stock. The initial public offering price for the shares has been
determined by negotiations among us and the representatives. Among the factors
considered in determining the initial public offering will be prevailing market
and economic conditions, our revenue, the prospects for our future earnings,
market valuations of other companies engaged in activities similar to our
business operations and our management. The estimated initial public offering
price range set forth on the cover of this preliminary prospectus is subject to
change as a result of market conditions or other factors.

    At our request, the underwriters have reserved up to 270,000 shares of
common stock for sale at the initial public offering price to our directors,
officers, employees, business associates and related persons. The number of
shares of common stock available for sale to the general public will be reduced
if such persons purchase reserved shares. Any reserved shares which are not so
purchased may be offered by the underwriters to the general public on the same
basis as the other shares offered by this prospectus. In addition, Cisco Systems
has currently expressed an interest in purchasing up to 500,000 shares of common
stock in the offering, based on an assumed initial public offering price of
$15.00, which is the midpoint of the price range set forth on the cover of this
prospectus; however, we cannot assure you that Cisco will purchase any shares in
the offering.

    Some of the underwriters have provided from time to time, and expect to
provide in the future, financial advisory and investment banking services to us
and our affiliates, for which the underwriters have received and will receive
customary fees and commissions. In particular, CIBC World Markets Corp. acted as
our financial advisor and received fees as an agent with respect to our
$40.0 million senior secured credit facility, in connection with our
recapitalization merger with an affiliate of Fox Paine. In addition, Thomas
Weisel Partners LLC acted as our financial advisor and received fees with
respect to our private placements of Series A Preferred Stock.


    Under Rule 2710(c)(8) of the Conduct Rules of the National Association of
Securities Dealers, Inc., if more than 10% of the net proceeds of a public
offering of equity securities are to be paid to members of the NASD that are
participating in the offering, or affiliated or associated persons, the price of
the equity securities distributed to the public must be no higher than that
recommended by a qualified independent underwriter, as required by
Rule 2720(c)(3) of the Conduct Rules of the NASD. CIBC World Markets Corp. is a
member of the NASD and an underwriter in this offering. Because CIBC World
Markets Corp. will receive more than 10% of the net proceeds of this offering as
a result of the repayment of amounts outstanding under our credit facility with
CIBC World Markets Corp., we will appoint a qualified independent underwriter in
connection with this offering. Chase Securities Inc. will act as our qualified
independent underwriter and in this role it has performed due diligence
investigations and has reviewed and participated in the preparation of the
registration statement of which this prospectus is a part. The initial public
offering price will be no lower than that recommended by Chase Securities Inc.
as the qualified independent underwriter. We and the other underwriters have
agreed to indemnify Chase Securities Inc. in its capacity as qualified
independent underwriter against various liabilities, including liabilities under
the Securities Act of 1933, or to contribute to payments Chase Securities Inc.
in its capacity as qualified independent underwriter may be required to make in
respect of those liabilities.



    Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since
December 1998, Thomas Weisel Partners has been named as a lead or co-manager on
173 filed public offerings of equity securities, of which 127 have been
completed, and has acted as a syndicate member in an additional 99 public
offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the underwriting agreement entered into in connection with this
offering.


                                       75
<PAGE>
                                 LEGAL MATTERS

    The validity of the shares of common stock will be passed upon for us by
Wachtell, Lipton, Rosen & Katz, New York, New York and for the underwriters by
Simpson Thacher & Bartlett, Palo Alto, California. Wachtell, Lipton, Rosen &
Katz owns 364,742 shares of common stock. Irell & Manella LLP owns 182,370
shares of common stock.

                                    EXPERTS

    The audited consolidated financial statements, as of December 31, 1999 and
for the year then ended and the related schedule included in this prospectus and
elsewhere in the registration statement, to the extent and for the period
indicated in their reports, have been audited by Arthur Andersen LLP,
independent public accountants, and are included herein in reliance upon the
authority of said firm as expert in giving said reports.

    The consolidated financial statements included in this prospectus and the
related financial statement schedule included elsewhere in the registration
statement as of December 31, 1998 and for each of the two years in the period
then ended have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein and elsewhere in the registration
statement (which report on the consolidated financial statements expresses an
unqualified opinion and includes an explanatory paragraph referring to the
restatement of the consolidated financial statements for 1997 and 1998 to
reflect the telecommunications segment as a discontinued operation as a result
of the sale of this segment in January 2000), and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

    We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock offered in this prospectus. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedules to that registration statement. For
further information with respect to us and the common stock, we refer you to
this registration statement and its exhibits and schedules. Statements contained
in this prospectus as to the contents of any contract or other document are
summaries of material terms of those documents and, in each instance, reference
is made to the copy of that contract or document filed as an exhibit to the
registration statement, each of these statements being qualified in all respects
by that reference. The registration statement, including exhibits thereto, may
be inspected and copied at the public reference facilities maintained by the SEC
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549
and at the SEC's Regional Offices located at Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of these materials may be obtained from the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
web site (HTTP://WWW.SEC.GOV) that contains reports, proxy and information
statements and other information regarding registrants such as us which file
electronically with the SEC. The registration statement, including all exhibits
thereto and amendments thereof, is available on that web site.

    Once we become a public registrant we intend to furnish to our stockholders
our annual reports containing consolidated financial statements audited by our
independent auditors and quarterly reports containing unaudited consolidated
financial statements for each of the first three quarters of each fiscal year.

                                       76
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Report of Arthur Andersen LLP, Independent Public
  Accountants...............................................    F-2

Report of Deloitte & Touche LLP, Independent Auditors.......    F-3

Consolidated Balance Sheets.................................    F-4

Consolidated Statements of Operations.......................    F-5

Consolidated Statements of Comprehensive Income (Loss)......    F-6

Consolidated Statements of Stockholders' Equity.............    F-7

Consolidated Statements of Cash Flows.......................    F-8

Notes to Consolidated Financial Statements..................    F-9
</TABLE>

                                      F-1
<PAGE>
    After the reincorporation, stock split, and other matters as discussed in
Note 14 to WJ Communications, Inc.'s consolidated financial statements, we
expect to be in a position to render the following audit report:

                                          Arthur Andersen LLP

San Jose, California
May 24, 2000

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Stockholders and Board of Directors of
    WJ Communications, Inc.:

    We have audited the accompanying consolidated balance sheet of
WJ Communications, Inc. (a California corporation) and subsidiaries as of
December 31, 1999, and the related consolidated statements of operations,
comprehensive income (loss), stockholders' equity, and cash flows for the year
ended December 31, 1999. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of WJ
Communications, Inc. and subsidiaries at December 31, 1999, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.

San Jose, California
May 24, 2000 (except with respect to the matters in
Note 14, as to which the date is            , 2000)

                                      F-2
<PAGE>
             REPORT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

The Stockholders and Board of Directors
  of WJ Communications, Inc.:

    We have audited the accompanying consolidated balance sheet of WJ
Communications, Inc. (previously known as Watkins-Johnson Company) and
subsidiaries as of December 31, 1998, and the related consolidated statements of
operations, comprehensive income (loss), stockholders' equity, and cash flows
for each of the two years in the period then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of WJ Communications, Inc. and
subsidiaries at December 31, 1998, and the results of their operations and their
cash flows for each of the two years in the period then ended in conformity with
accounting principles generally accepted in the United States of America.

    As discussed in Note 10, the accompanying consolidated financial statements
for 1997 and 1998 have been restated to reflect the Telecommunications segment
as a discontinued operation as a result of the sale of this segment in
January 2000.

Deloitte & Touche LLP
San Jose, California
January 31, 2000

                                      F-3
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                        JUNE 30, 2000
                                                                                                          PRO FORMA
                                                               DECEMBER 31,                            LIABILITIES AND
                                                     ---------------------------------    JUNE 30,      STOCKHOLDERS'
                                                              1998              1999        2000       EQUITY (NOTE 14)
                                                     ----------------------   --------   -----------   ----------------
                                                     (AS RESTATED--NOTE 10)              (UNAUDITED)     (UNAUDITED)
<S>                                                  <C>                      <C>        <C>           <C>
ASSETS
CURRENT ASSETS:
    Cash and equivalents...........................         $ 19,271          $131,065    $ 12,626
    Short-term investments.........................           45,353            42,747          --
    Receivables (net of allowance for doubtful
      accounts of $500, $504 and $650 at
      December 31, 1998, 1999 and June 30, 2000,
      respectively)................................           12,803            11,362      18,727
    Inventories....................................            4,093             5,146      12,594
    Deferred income taxes..........................           23,653             2,642       2,303
    Income taxes receivable........................           13,570                --          --
    Deposits.......................................               --            11,101          --
    Net current assets of discontinued
      operations...................................           27,922            20,237       3,451
    Other..........................................            3,665             2,412       3,154
                                                            --------          --------    --------
    Total current assets...........................          150,330           226,712      52,855
                                                            --------          --------    --------
PROPERTY, PLANT AND EQUIPMENT, net.................           14,447            13,663      15,355
OTHER ASSETS:
    Net noncurrent assets of discontinued
      operations...................................            9,053                --          --
    Other..........................................           10,759             3,245       5,897
                                                            --------          --------    --------
                                                            $184,589          $243,620    $ 74,107
                                                            ========          ========    ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current portion of long-term debt..............         $     --          $     --    $ 11,950         $ 11,950
    Accounts payable...............................            8,825            11,493      10,544           10,544
    Accrued expenses...............................            5,874             2,722       2,792            2,792
    Provision for losses on contracts..............            2,962             3,500       3,049            3,049
    Payroll and profit sharing.....................            5,805             5,637       2,949            2,949
    Income taxes...................................            8,282             4,046       2,200            2,200
                                                            --------          --------    --------         --------
    Total current liabilities......................           31,748            27,398      33,484           33,484
                                                            --------          --------    --------         --------
LONG-TERM DEBT, net of current portion.............               --                --      27,975           27,975
OTHER LONG-TERM OBLIGATIONS........................           19,162            14,085      13,984           13,984
                                                            --------          --------    --------         --------
COMMITMENTS AND CONTINGENCIES (Notes 4, 5 and 8)
STOCKHOLDERS' EQUITY:
    Preferred stock, $0.01 par value-authorized and
      unissued, 10,000,000 shares; no shares
      outstanding actual and pro forma.............               --                --          --               --
    Common stock, $0.01 par value-authorized,
      100,000,000 shares at June 30, 2000;
      outstanding: 196,430,610, 200,497,470, and
      47,507,731 shares, respectively and
      49,006,531 shares outstanding pro forma;
      subscribed: 0, 0 and 38,465, respectively and
      38,465 shares subscribed pro forma...........           34,454            37,798      69,297              490
    Additional paid-in capital.....................               --                --          --           90,289
    Retained earnings (deficit)....................           99,073           164,542     (66,978)         (76,960)
    Subscriptions receivable.......................               --                --        (252)            (252)
    Deferred stock compensation....................               --                --      (3,403)          (3,403)
    Other comprehensive income (loss)..............              152              (203)         --               --
                                                            --------          --------    --------         --------
    Total stockholders' equity (deficit)...........          133,679           202,137      (1,336)          10,164
                                                            --------          --------    --------         --------
                                                            $184,589          $243,620    $ 74,107         $ 85,607
                                                            ========          ========    ========         ========
</TABLE>

                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-4
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                       YEAR ENDED                         SIX MONTHS ENDED
                                                      ---------------------------------------------   ------------------------
                                                      DECEMBER 31,    DECEMBER 31,    DECEMBER 31,     JUNE 25,      JUNE 30,
                                                          1997            1998            1999           1999          2000
                                                      -------------   -------------   -------------   -----------   ----------
                                                         (AS RESTATED--NOTE 10)                             (UNAUDITED)
<S>                                                   <C>             <C>             <C>             <C>           <C>
Sales...............................................   $    31,174     $    63,568     $    82,404    $    47,216   $   44,678
Cost of goods sold..................................        25,591          43,400          50,534         29,825       27,541
                                                       -----------     -----------     -----------    -----------   ----------
Gross profit........................................         5,583          20,168          31,870         17,391       17,137
Operating expenses:
    Research and development........................        10,204          14,124          16,806          8,651        8,764
    Selling and administrative......................         2,219           4,035           5,331          2,552        5,966
    Amortization of deferred stock
      compensation(*)...............................            --              --              --             --          517
    Corporate administrative........................         1,240           1,811           4,391          1,852          322
    Recapitalization merger and other (Note 1)......            --              --           3,223             --       35,453
                                                       -----------     -----------     -----------    -----------   ----------
      Total operating expenses......................        13,663          19,970          29,751         13,055       51,022
                                                       -----------     -----------     -----------    -----------   ----------
Income (loss) from operations.......................        (8,080)            198           2,119          4,336      (33,885)
Interest income.....................................         2,198           5,681           5,070          1,624        1,317
Interest expense....................................          (795)           (601)           (520)          (245)      (2,275)
Other income (expense)--net.........................          (249)          1,220             412            156         (691)
Gain on disposition of real property (Note 12)......         7,609          14,973          61,652             --          808
                                                       -----------     -----------     -----------    -----------   ----------
Income (loss) from continuing operations before
  income taxes......................................           683          21,471          68,733          5,871      (34,726)
Income tax (provision) benefit......................          (240)         (6,978)        (26,383)        (1,903)       9,374
                                                       -----------     -----------     -----------    -----------   ----------
Income (loss) from continuing operations............           443          14,493          42,350          3,968      (25,352)
Discontinued operations (Note 10):
    Income (loss) from discontinued operations, net
      of taxes......................................         2,805         (63,701)          9,661          5,105          212
    Gain on disposition, net of taxes...............        29,677              --          15,829          7,318       30,706
                                                       -----------     -----------     -----------    -----------   ----------
Net income (loss)...................................   $    32,925     $   (49,208)    $    67,840    $    16,391   $    5,566
                                                       ===========     ===========     ===========    ===========   ==========
Basic per share amounts:
    Income (loss) from continuing operations........   $      0.00     $      0.06     $      0.22    $      0.02   $    (0.34)
    Income (loss) from discontinued operations......          0.01           (0.27)           0.05           0.03           --
    Gain on disposition of discontinued
      operations....................................          0.12              --            0.08           0.04         0.42
                                                       -----------     -----------     -----------    -----------   ----------
Net income (loss)...................................   $      0.13     $     (0.21)    $      0.35    $      0.08   $     0.08
                                                       ===========     ===========     ===========    ===========   ==========
Basic average shares................................       247,740         232,110         192,584        196,860       73,551

Diluted per share amounts:
    Income (loss) from continuing operations........   $      0.00     $      0.06     $      0.21    $      0.02   $    (0.34)
    Income (loss) from discontinued operations......          0.01           (0.27)           0.05           0.03           --
    Gain on disposition of discontinued
      operations....................................          0.12              --            0.08           0.04         0.42
                                                       -----------     -----------     -----------    -----------   ----------
Net income (loss)...................................   $      0.13     $     (0.21)    $      0.34    $      0.08   $     0.08
                                                       ===========     ===========     ===========    ===========   ==========
Diluted average shares..............................       255,270         235,710         198,341        199,830       73,551
    Pro Forma per share amounts (Note 14)
    Basic per share amounts:
        Income (loss) from continuing operations....                                                                $    (0.47)
        Income from discontinued operations.........                                                                        --
        Gain on disposition of discontinued
          operations................................                                                                      0.41
                                                                                                                    ----------
    Net Income......................................                                                                $    (0.06)
                                                                                                                    ==========
    Basic average shares............................                                                                    75,050

    Diluted per share amounts:
        Income (loss) from continuing operations....                                                                $    (0.47)
        Income from discontinued operations.........                                                                        --
        Gain on disposition of discontinued
          operations................................                                                                      0.41
                                                                                                                    ----------
    Net income......................................                                                                $    (0.06)
                                                                                                                    ==========
    Diluted average shares..........................                                                                    75,050
(*)Amortization of deferred stock compensation
  excluded from the following expenses
    Cost of goods sold..............................                                                                $       40
    Research and development........................                                                                       156
    Selling and administrative......................                                                                       321
                                                                                                                    ----------
                                                                                                                    $      517
                                                                                                                    ==========
</TABLE>

                See notes to consolidated financial statements.

                                      F-5
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              YEAR ENDED                         SIX MONTHS ENDED
                                             ---------------------------------------------   ------------------------
                                             DECEMBER 31,    DECEMBER 31,    DECEMBER 31,      JUNE 25,     JUNE 30,
                                                 1997            1998            1999            1999         2000
                                             -------------   -------------   -------------   ------------   ---------
                                                (AS RESTATED--NOTE 10)                             (UNAUDITED)
<S>                                          <C>             <C>             <C>             <C>            <C>
Net income (loss)..........................  $     32,925    $    (49,208)   $     67,840    $     16,391   $  5,566
    Unrealized holding gains (losses) on
      securities arising during period.....            --             192            (329)           (373)        (6)
        Less: reclassification adjustment
          for gains included in net
          income...........................            --             (40)            (26)             70        209
                                             ------------    ------------    ------------    ------------   --------
    Net unrealized holding gains (losses)
      on securities--net of income tax
      benefit (provision) of $--, $(97),
      $130, $(96) and $(130),
      respectively.........................            --             152            (355)           (303)       203
                                             ------------    ------------    ------------    ------------   --------
Comprehensive income (loss)................  $     32,925    $    (49,056)   $     67,485    $     16,088   $  5,769
                                             ============    ============    ============    ============   ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-6
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                                        TOTAL
                                  COMMON STOCK         RETAINED        OTHER          DEFERRED                      STOCKHOLDERS'
                             -----------------------   EARNINGS    COMPREHENSIVE        STOCK       SUBSCRIPTIONS      EQUITY
                                SHARES      DOLLARS    (DEFICIT)   INCOME (LOSS)    COMPENSATION     RECEIVABLE       (DEFICIT)
                             ------------   --------   ---------   --------------   -------------   -------------   -------------
<S>                          <C>            <C>        <C>         <C>              <C>             <C>             <C>
Balance, December 31,
  1996.....................   249,877,440   $ 38,998   $ 156,007      $     --         $    --         $    --        $ 195,005
                             ------------   --------   ---------      --------         -------         -------        ---------
    Net income.............            --         --      32,925            --              --              --           32,925
    Dividends
      declared--$0.02 per
      share................            --         --      (3,974)           --              --              --           (3,974)
    Stock option
      transactions.........     4,079,640      2,778          --            --              --              --            2,778
    Repurchases of common
      stock................    (6,126,000)    (1,145)     (4,602)           --              --              --           (5,747)
                             ------------   --------   ---------      --------         -------         -------        ---------
Balance, December 31,
  1997.....................   247,831,080     40,631     180,356            --              --              --          220,987
    Net loss...............            --         --     (49,208)           --              --              --          (49,208)
    Dividends
      declared--$0.02 per
      share................            --         --      (3,685)           --              --              --           (3,685)
    Stock option
      transactions.........     2,473,530      1,605          --            --              --              --            1,605
    Repurchases of common
      stock................   (53,874,000)    (7,782)    (28,390)           --              --              --          (36,172)
    Unrealized holding
      gains on
      securities--net of
      taxes of $97.........            --         --          --           152              --              --              152
                             ------------   --------   ---------      --------         -------         -------        ---------
Balance, December 31,
  1998.....................   196,430,610     34,454      99,073           152              --              --          133,679
    Net income.............            --         --      67,840            --              --              --           67,840
    Dividends
      declared--$0.02 per
      share................            --         --      (2,371)           --              --              --           (2,371)
    Stock option
      transactions.........     4,066,860      3,344          --            --              --              --            3,344
    Unrealized holding
      losses on
      securities--net of
      taxes of $130........            --         --          --          (355)             --              --             (355)
                             ------------   --------   ---------      --------         -------         -------        ---------
Balance, December 31,
  1999.....................   200,497,470     37,798     164,542          (203)             --              --          202,137
    Net income
      (unaudited)..........            --         --       5,566            --              --              --            5,566
    Stock option
      transactions
      (unaudited)..........       159,856        184          --            --              --              --              184
    Common stock redemption
      related to
      recapitalization
      merger (unaudited)...  (197,034,960)   (33,017)   (237,086)           --              --              --         (270,103)
    Common stock issued
      (unaudited)..........    40,117,365     54,995          --            --              --              --           54,995
    Subscription for common
      stock (unaudited)....     3,806,465      5,417          --            --              --          (5,417)              --
    Repayments on
      subscriptions
      (unaudited)..........            --         --          --            --              --           5,165            5,165
    Deferred stock
      compensation
      (unaudited)..........            --      3,920          --            --          (3,920)             --               --
    Amortization of
      deferred stock
      compensation
      (unaudited)..........            --         --          --            --             517              --              517
    Unrealized holding
      gains (losses) on
      securities--net of
      taxes of $130
      (unaudited)..........            --         --          --           203              --              --              203
                             ------------   --------   ---------      --------         -------         -------        ---------
Balance, June 30, 2000
  (unaudited)..............    47,546,196   $ 69,297   $ (66,978)     $     --         $(3,403)        $  (252)       $  (1,336)
                             ============   ========   =========      ========         =======         =======        =========
</TABLE>

                See notes to consolidated financial statements.

                                      F-7
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       YEAR ENDED                       SIX MONTHS ENDED
                                                      ---------------------------------------------   --------------------
                                                      DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 25,   JUNE 30,
                                                          1997            1998            1999          1999       2000
                                                      -------------   -------------   -------------   --------   ---------
                                                         (AS RESTATED--NOTE 10)                           (UNAUDITED)
<S>                                                   <C>             <C>             <C>             <C>        <C>
OPERATING ACTIVITIES:
    Net income (loss)...............................    $ 32,925        $ (49,208)      $ 67,840      $16,391    $   5,566
    Adjustments to reconcile net income (loss) to
      net cash provided (used) by operating
      activities:
        Recapitalization merger costs...............          --               --          3,223           --       35,453
        Depreciation and amortization...............       1,116            1,982          2,610        1,158        1,382
        Net gain on disposal of property, plant and
          equipment.................................      (6,843)         (13,587)       (61,077)          29          (68)
        Deferred income taxes.......................      (5,556)          (5,234)        21,932       (6,230)       1,822
        Amortization of deferred stock
          compensation..............................                                                       --          517
        Results of discontinued operations and
          (gain) loss on disposal...................     (32,482)          63,701        (25,490)     (12,423)     (30,918)
        Net changes in:
            Receivables.............................      (1,045)          (4,970)         1,441          767       (7,365)
            Inventories.............................         175           (2,116)        (1,053)          73       (7,448)
            Other assets............................      (1,466)         (20,634)         4,096        3,610        7,575
            Accruals and payables...................      30,212           (9,074)       (10,014)      (2,766)      (5,495)
            Advances on contracts...................         800             (576)            --           --           --
            Provision for losses on contracts.......       3,150              748            538         (212)        (451)
                                                        --------        ---------       --------      --------   ---------
    Net cash provided (used) by continuing operating
      activities....................................      20,986          (38,968)         4,046          397          570
    Net cash provided (used) by discontinued
      operations....................................      23,607           (3,358)        22,349      (21,495)     (16,020)
                                                        --------        ---------       --------      --------   ---------
    Net cash provided (used) by operating
      activities....................................      44,593          (42,326)        26,395      (21,098)     (15,450)
                                                        --------        ---------       --------      --------   ---------
INVESTING ACTIVITIES:
    Purchases of property, plant and equipment......      (2,887)          (5,705)        (4,825)      (1,483)      (3,148)
    Purchase of short-term investments..............          --         (101,046)       (24,869)     (13,198)          --
    Proceeds from sale of short-term investments....          --           55,943         26,867       23,587       43,080
    Proceeds from sale of discontinued operations...      77,884               --         19,878       19,878       62,288
    Proceeds on real property sales and assets
      retirements...................................       8,475           16,331         70,747           --          162
                                                        --------        ---------       --------      --------   ---------
    Net cash provided (used) by investing
      activities....................................      83,472          (34,477)        87,798       28,784      102,382
                                                        --------        ---------       --------      --------   ---------
FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt........          --               --             --           --       40,000
    Payments on long-term borrowings................      (2,362)            (136)          (149)          --         (158)
    Payment of capital lease obligation.............          --               --             --          (77)          --
    Proceeds from issuance of common stock..........       2,778            1,605          3,344          363       60,343
    Repurchase of common stock......................      (5,747)         (36,172)            --           --     (270,103)
    Recapitalization merger costs...................          --               --         (3,223)          --      (35,453)
    Dividends paid..................................      (3,974)          (3,685)        (2,371)      (1,576)          --
                                                        --------        ---------       --------      --------   ---------
    Net cash provided (used) by financing
      activities....................................      (9,305)         (38,388)        (2,399)      (1,290)    (205,371)
                                                        --------        ---------       --------      --------   ---------
Net increase (decrease) in cash and equivalents.....     118,760         (115,191)       111,794        6,396     (118,439)
Cash and equivalents at beginning of year...........      15,702          134,462         19,271       19,271      131,065
                                                        --------        ---------       --------      --------   ---------
Cash and equivalents at end of year.................    $134,462        $  19,271       $131,065      $25,667    $  12,676
                                                        ========        =========       ========      ========   =========
Other cash flow information:
Income taxes paid (net of refunds)..................    $  3,143        $   9,478       $ (9,622)     $  (637)   $   5,525
Interest paid.......................................         718              501            520          245        1,617
Noncash investing and financing activities:
Reclassification of plant held for sale from
  "Property, Plant and Equipment" to "Other Assets",
  at book value which is below market(1)............          --        $   6,422             --           --           --
</TABLE>

(1) The company's San Jose, California plant was vacated in 1998 and held for
    sale. See additional information in Note 12 to the consolidated financial
    statements.

                See notes to consolidated financial statements.

                                      F-8
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS OF THE COMPANY

    WJ Communications, Inc. (formerly Watkins-Johnson Company, the "Company")
was founded in 1957 in Palo Alto, California. The Company has been incorporated
in California since its inception and is expected to reincorporate in Delaware
in 2000. For more than 30 years, the Company developed and manufactured
microwave devices for government electronics and space communications systems
used for intelligence gathering and communication. In 1996, the Company began to
develop commercial applications for its military technologies. The Company's
continuing operations design, develop and manufacture innovative, high quality
broadband communications products that enable voice, data and image transport
over fiber optic, broadband cable and wireless communications networks around
the world. The Company's products are comprised of advanced, highly functional
components and integrated assemblies which address the radio frequency
challenges faced by both current and next generation broadband communications
networks. The Company's products are used in the network infrastructure
supporting and facilitating mobile communications, broadband high speed data
transmission and enhanced voice services. The Company previously operated
through other segments and has treated the Government Electronics, Semiconductor
Equipment and Telecommunication segments as discontinued operations. All
segments treated as discontinued operations had been divested by March 31, 2000.

    Effective January 31, 2000, a recapitalization merger of the Company was
completed that included the following transactions, in accordance with the terms
of the recapitalization merger agreement among the Company and FP-WJ Acquisition
Corp. dated October 25, 1999 (the "Agreement"):

    - The Company entered into a credit facility ("Facility") with CIBC World
      Markets Corp., among others. This Facility is comprised of a
      $15.0 million five-year revolver, a $25.0 million five-year term A loan,
      and a $15.0 million six-year term B loan. The Company borrowed
      $25.0 million under the term A loan and $15.0 million under the term B
      loan as part of the recapitalization merger.

    - The Company incurred approximately $3.6 million in financing costs in
      conjunction with the Facility that were capitalized and $35.5 million of
      transaction, retention and severance compensation that was charged to
      operating expenses. A breakdown of the $35.5 million is as follows (in
      thousands):

<TABLE>
<S>                                                           <C>
Legal.......................................................   $1,200
Consulting and accounting fees..............................    3,500
Bonus and retention payments................................    3,400
Severance costs.............................................    6,400
Compensation charge for payment of stock options............   16,800
Financial services..........................................    2,600
Other.......................................................    1,600
                                                              -------
                                                              $35,500
                                                              =======
</TABLE>

    - The severance costs relate to 22 hourly and salary personnel whose
      positions were eliminated at the date of the recapitalization merger
      transaction. This entire amount was paid during the three months ended
      March 31, 2000.

    - The Watkins Trust retained an approximate 8.5% voting and economic
      interest in the Company as part of the recapitalization merger.

                                      F-9
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND OPERATIONS OF THE COMPANY (CONTINUED)
    - The Company redeemed the remainder of the outstanding common stock for a
      cash payment of approximately $270 million.

    - Fox Paine Capital Fund and affiliates (collectively "Fox Paine") invested
      $50.8 million in the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include those
of the Company and its subsidiaries after elimination of all intercompany
balances and transactions. The Company disposed of its Government Electronics
segment in October 1997, Semiconductor Equipment segment in July 1999, and
Telecommunications segment in January 2000. The consolidated financial
statements reflect such dispositions and results of operations of these
businesses as discontinued operations. For additional information on
discontinued operations, see Note 10.

INTERIM CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)--The consolidated
financial statements as of and for the six months ended June 25, 1999 and
June 30, 2000 and related footnote information are unaudited and have been
prepared on the same basis as the audited consolidated financial statements. In
the opinion of management, the interim unaudited consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of the results of these interim
periods. The results for the six months ended June 30, 2000 are not necessarily
indicative of the operating results to be expected for the entire year.

CASH EQUIVALENTS AND INVESTMENTS--Cash equivalents consist of municipal bond
funds and commercial paper acquired with remaining maturity periods of 90 days
or less and are stated at cost plus accrued interest which approximates market
value. Investments consist of high-grade debt securities (AA rating or better)
with maturity greater than 90 days from the date of acquisition and are
classified as "available-for-sale." Investments classified as available-for-sale
are reported at fair market value with unrealized gains or losses excluded from
earnings and reported as a separate component of stockholders' equity, net of
tax, until realized.

INVENTORIES--Inventories are stated at the lower of cost, using first-in,
first-out and average-cost basis, or market. Cost of inventory items is based on
purchase and production cost. Inventories at December 31, 1998 and 1999 and
June 30, 2000 consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------   JUNE 30,
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Finished goods..............................................   $  313     $  536    $ 1,590
Work in process.............................................      191        452      1,734
Raw materials and parts.....................................    3,589      4,158      9,270
                                                               ------     ------    -------
Total inventories...........................................   $4,093     $5,146    $12,594
                                                               ======     ======    =======
</TABLE>

OTHER CURRENT ASSETS--Other current assets as of June 30, 2000 include
approximately $0.4 million of deferred costs associated with the Company's
planned initial public offering, which if not completed, will be expensed.

                                      F-10
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at cost.
Provision for depreciation and amortization is primarily based on the
straight-line method. Costs incurred to maintain property, plant and equipment
that do not increase the useful life of the underlying asset are expensed as
incurred. Leases which at inception assure the lessor full recovery of the fair
market value of the property over the lease term are capitalized and amortized
over the lease term in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 13 "Accounting for Leases."

    At December 31, 1998, 1999 and June 30, 2000, property, plant and equipment
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------   JUNE 30,
                                                              1998       1999       2000
                                                            --------   --------   --------
<S>                                                         <C>        <C>        <C>
Land......................................................  $    466   $     --   $     --
Buildings and improvements................................     3,871      3,150      3,206
Plant facilities..........................................    11,183      6,982      6,982
Machinery and equipment...................................    24,282     24,382     26,277
                                                            --------   --------   --------
                                                              39,802     34,514     36,465
Accumulated depreciation and amortization.................   (25,355)   (20,851)   (21,110)
                                                            --------   --------   --------
Property, plant and equipment-net.........................  $ 14,447   $ 13,663   $ 15,355
                                                            ========   ========   ========
</TABLE>

OTHER ASSETS--At December 31, 1998, 1999 and June 30, 2000, Other Assets
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                           -------------------   JUNE 30,
                                                             1998       1999       2000
                                                           --------   --------   --------
<S>                                                        <C>        <C>        <C>
Deferred income taxes....................................  $ 3,725     $3,056     $2,880
Deferred financing costs.................................       --         --      2,663
Idle facilities..........................................    6,422         --         --
Notes receivable.........................................      412         30        275
Other....................................................      200        159         79
                                                           -------     ------     ------
                                                           $10,759     $3,245     $5,897
                                                           =======     ======     ======
</TABLE>

REVENUE RECOGNITION--Revenues from product sales are recognized when all of the
following conditions are met: the product has been shipped, the Company has the
right to invoice the customer at a fixed price, the collection of the receivable
is probable and there are no significant obligations remaining. Generally, title
passes upon shipment of the Company's products. Beginning in March 2000, our
contract with a significant customer converted to a consignment arrangement
under which title does not pass until this significant customer utilizes our
products in its production processes. As a consequence, we recognize revenue on
this contract only when this significant customer notifies us of product
consumption. Any anticipated losses on contracts are charged to earnings when
identified. The Company provides a warranty on standard products and components
and products developed for specific customers or program applications. The
Company estimates the cost of warranty based on its historical field return
rates. To date, the Company has had no significant warranty returns.

                                      F-11
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FORWARD EXCHANGE CONTRACTS--The Company previously entered into forward exchange
contracts to hedge sales transactions and firm commitments denominated in
foreign currencies. Gains and losses on the forward contracts were recognized
based on changes in exchange rates, as are offsetting foreign exchange gains and
losses on the underlying transactions. As of June 30, 2000 we have no foreign
exchange contracts outstanding.

INCOME TAXES--The consolidated statements of operations include provisions for
deferred income taxes using the liability method for transactions that are
reported in one period for financial accounting purposes and in another period
for income tax purposes.

PER SHARE INFORMATION--Basic earnings per share is computed using the weighted
average number of shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock (such as stock options) were exercised or
converted into common stock, however, such adjustments are excluded when they
are considered antidilutive.

FISCAL YEAR--The Company's fiscal year consists of 52 or 53 weeks ending on
December 31st of each year. The years ended 1997, 1998 and 1999 included 52
weeks each. The six months ended June 25, 1999 and June 30, 2000 included
26 weeks.

MARKET RISKS--The success of the Company is dependent on a number of factors.
These factors include the ability to manage and adequately finance anticipated
growth, the need to satisfy changing and increasingly complex customer
requirements especially in the fiber optics and wireless markets, dependency on
a small number of customers and a limited number of key personnel and
competition from companies with greater resources.

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

STOCK-BASED COMPENSATION--The company continues to account for stock-based
compensation granted to employees and directors under the intrinsic value method
as defined in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Proforma disclosures for net income and earnings per share
as if the fair value based method was used are included in Note 6 in accordance
with SFAS 123 "Accounting for Stock-based Compensation."

RECENT ACCOUNTING PRONOUNCEMENTS--In June 1998, the FASB issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." In June 1999,
the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS 133." These Statements
require companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains and losses resulting from changes in
the fair market values of those derivative instruments would be accounted for
depending on the use of the instrument and whether it qualifies for hedge
accounting. SFAS 133 will be effective for the Company's year ending
December 31, 2001. The Company enters into forward exchange contracts to hedge
sales transactions and firm commitments denominated in foreign currencies.
Management is in the process of evaluating any impact on the Company's financial
condition or results of operations resulting from these Statements.

                                      F-12
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements.
SAB 101 provides guidance on applying generally accepted accounting principles
to revenue recognition in financial statements. The Company has adopted SAB 101
and the adoption had no material effect on the accompanying financial
statements.

    In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation--an interpretation of APB No. 25. Interpretation No. 44 is
effective July 1, 2000. The Interpretation clarifies the application of
Opinion 25 for various issues, specifically:

    - the definition of an employee;

    - the criteria for determining whether a plan qualifies as a
      non-compensatory plan;

    - the accounting consequence of various modifications to the terms of a
      previously fixed stock option or award; and

    - the accounting for an exchange of stock compensation awards in a business
      combination.

    We do not anticipate that the adoption of Interpretation No. 44 will have a
material impact on our financial position or the results of our operations.

3. FINANCIAL INSTRUMENTS AND SHORT-TERM INVESTMENTS

    Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash and equivalents, short-term
investments, receivables, and financial instruments used in hedging
transactions. The Company invests in a variety of financial instruments such as
commercial paper and municipal bond funds, and, by policy, limits the amount of
credit exposure with any one financial institution or commercial issuer.
Concentration of credit risk with respect to trade receivables is limited due to
the variety of customers and market segments into which the Company's products
are sold, as well as their dispersion across geographic areas. The Company
maintains an allowance for doubtful accounts based upon the expected
collectibility of receivables.

    The carrying value of cash and equivalents, short-term investments,
receivables, accounts payable and short-term notes payable are a reasonable
approximation of their fair market value due to the short-term maturities of
those instruments. The carrying value of the Company's long-term debt
approximates fair value based on the interest rates currently available to the
Company for long-term debt with similar terms as the borrowings of the Company.
Considerable judgment is required in interpreting market data to develop
estimates of fair value, so these estimates are not necessarily indicative of
the amounts that could be realized or would be paid in a current market
exchange.

    The fair value and the amortized cost of available-for-sale securities at
December 31, 1998 and 1999, including unrealized holding gains, are presented in
the table which follows. Fair values are based on quoted market prices.
Available-for-sale securities are classified as current assets and have an
average maturity of less than two years. Gross proceeds from the sale of
marketable securities were $55.9 million, $26.9 million and $43.1 million during
1998, 1999 and for the six months ended June 30, 2000, respectively. Gross gains
and losses realized on such sales or maturities were not material. For the
purpose of determining gross realized gains and losses, the cost of securities
sold is based upon specific identification.

                                      F-13
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. FINANCIAL INSTRUMENTS AND SHORT-TERM INVESTMENTS (CONTINUED)
    Financial instrument and short-term investments are summarized, as follows
(in thousands):

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                      -------------------   JUNE 30,
                                                        1998       1999       2000
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Cost................................................  $45,104    $43,080     $   --
Unrealized holding gains (losses)...................      249       (333)        --
                                                      -------    -------     ------
Market value........................................  $45,353    $42,747     $   --
                                                      =======    =======     ======
</TABLE>

4. LONG-TERM DEBT

    On January 31, 2000, the Company entered into a credit facility ("Facility")
with CIBC World Markets Corp., among others. As of June 30, 2000, obligations
under the Facility are summarized as follows (in thousands):

<TABLE>
<S>                                                           <C>
Term A loan, interest at LIBOR plus 3.25% or prime plus
  2.25%, as periodically elected by the Company, maturing in
  December 2004 (two notes: 9.90% and 9.56% at June 30,
  2000).....................................................     $25,000
Term B loan, interest at LIBOR plus 3.75% or prime plus
  2.75%, as periodically elected by the Company, maturing in
  December 2005 (two notes: 10.44% and 10.06% at June 30,
  2000).....................................................      14,925
                                                                 -------
                                                                  39,925
Less: current portion.......................................      11,950
                                                                 -------
    Total long-term debt....................................     $27,975
                                                                 =======
</TABLE>

    The Facility also included a $15 million five-year revolver maturing in
2004. Interest rates for any borrowings under the five-year revolver are at
LIBOR plus 3.25% or prime plus 2.25%, as periodically elected by the Company. At
June 30, 2000, there were no borrowings outstanding under the five-year
revolver.

    The Facility is secured by substantially all of the assets of the Company.
The Facility also includes certain financial covenants, as follows: maximum
leverage of no more than 4.5 for the first quarter fiscal 2000 declining to 2.5
for fiscal 2003 and thereafter; minimum interest coverage ratio of 2.0 for
fiscal 2000 increasing to 3.0 for fiscal 2002 and thereafter; minimum fixed
charge ratio of 1.00 through fiscal 2001 increasing to 1.10 for fiscal 2004 and
thereafter; minimum EBITDA of $7.5 million for second fiscal quarter 2000
increasing periodically to $18.0 million in fiscal 2003 and thereafter. The
Facility contains various covenants and restrictions including restrictions on
the payment of dividends and limitations on incurring additional indebtedness.

                                      F-14
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM DEBT (CONTINUED)
    Principal maturities under the Facility as of June 30, 2000 are as follows
(in thousands):

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING JUNE 30,
-----------------------------
<S>                                                           <C>
2001........................................................  $11,950
2002........................................................    4,900
2003........................................................    6,150
2004........................................................    6,077
2005........................................................    5,075
2006........................................................    5,773
                                                              -------
                                                              $39,925
                                                              =======
</TABLE>

    The Company may prepay the term A and B loans at any time upon adequate
notice to the lender. The Facility requires that a mandatory prepayment of an
estimated $9.3 million be made in August 2000.

    The Company has letters of credit of $8.3 million as of June 30, 2000 with
no amount having been drawn.

5. OTHER LONG-TERM OBLIGATIONS

    Long-term obligations, excluding amounts due within one year, consist of the
following (in thousands):

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                      -------------------   JUNE 30,
                                                        1998       1999       2000
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Deferred compensation...............................  $   201    $    --    $    --
Environmental remediation...........................    3,254        193        190
Capital leases, net of current portion..............    5,066      4,902      4,804
Deferred income taxes--reserves for tax
  contingencies.....................................   10,641      8,990      8,990
                                                      -------    -------    -------
Total...............................................  $19,162    $14,085    $13,984
                                                      =======    =======    =======
</TABLE>

    The current portion of long-term obligations is included in current
liabilities. The expected maturity amounts are as follows: 2000, $5,889,500;
2001, $6,851,000; 2002, $1,396,000; 2003, $1,363,000; 2004, $247,000 thereafter,
$4,228,000.

ENVIRONMENTAL REMEDIATION--As discussed in Note 8, the Company is obligated to
remediate groundwater contamination at its Palo Alto, California, facility.

LEASES--The Company's Palo Alto, California lease is treated as a capital lease
for financial statement purposes. The capital lease has been extended to the
year 2014 with an option to extend to 2029. The Company also has noncancellable
operating leases for the Milpitas facility and equipment expiring through the
year 2006.

                                      F-15
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. OTHER LONG-TERM OBLIGATIONS (CONTINUED)

    Payment obligations under existing capital and operating leases as of
December 31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              CAPITAL    OPERATING
                                                               LEASES     LEASES
                                                              --------   ---------
<S>                                                           <C>        <C>
LEASE PAYMENTS:
    2000....................................................  $   635     $  543
    2001....................................................      635        478
    2002....................................................      635        411
    2003....................................................      635        408
    2004....................................................      635        408
    Remaining years.........................................    6,187        764
                                                              -------     ------
Total.......................................................    9,362     $3,012
                                                                          ======
Less: Imputed interest......................................   (4,310)
                                                              -------
Present value of lease payments (including current portion
  of $150)..................................................  $ 5,052
                                                              =======
</TABLE>

    The Company sub-leases a portion of its Palo Alto, California facility under
a short-term operating lease expiring October 2000. Included in Other Income
(Expense), net for 1998 and 1999 is approximately $1.2 million and $400,000,
respectively, of income after expenses from this sub-lease agreement. Rental
income under the sub-lease agreement was not significant prior to 1998.

    Rent expense included in continuing operations for property and equipment
relating to operating leases is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                1997       1998       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Real property...............................................    $ 26       $406       $408
Equipment...................................................     568        191        148
                                                                ----       ----       ----
Total.......................................................    $594       $597       $556
                                                                ====       ====       ====
</TABLE>

6. STOCKHOLDERS' EQUITY

    STOCK SPLIT--During the first quarter of fiscal 2000, the Company effected a
stock split of 20 shares of common stock for every one share of outstanding
common stock. All share and per share amounts in these financial statements have
been adjusted to give effect to this stock split.

    SUBSCRIBED SHARES (UNAUDITED)--During the first quarter of fiscal 2000, the
Company sold shares to employees as part of the recapitalization merger. The
subscription receivables are classified as a contra-equity account in the
accompanying balance sheet as of June 30, 2000.

    STOCK REPURCHASE PROGRAM--In 1998, the Company's Board of Directors
increased the Company's common stock repurchase authorization up to 105,000,000
shares. By December 31, 1998, all 105,000,000 shares were repurchased, of which
6,126,000 and 53,874,000 were repurchased in 1997 and 1998, respectively.

                                      F-16
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCKHOLDERS' EQUITY (CONTINUED)
    2000 STOCK OPTION PLAN--On January 31, 2000, the Company's "2000 Stock
Incentive Plan" (the "Plan") was adopted and approved by the board of directors.
The Plan may grant incentive awards in the form of options to purchase shares of
the Company's common stock, restricted shares, common stock and stock
appreciation rights to participants, which include non-employee directors,
officers and employees of and consultants to the Company and its affiliates. The
total number of shares of common stock reserved and available for grant under
the stock incentive plan is 16,500,000 shares. Stock options may include
incentive stock options, nonqualified stock options or both, in each case, with
or without stock appreciation rights. During the six months ended June 30, 2000,
there were the following grants of stock options:

<TABLE>
<CAPTION>
                                                                 WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                    ----------   ----------------
<S>                                                 <C>          <C>
2000 (UNAUDITED)
Granted...........................................  15,318,144        $1.56
Exercised.........................................     (23,331)       $1.37
Terminated........................................     (16,650)       $1.37
At June 30:
    Outstanding...................................  15,278,163        $1.56
    Exercisable...................................   2,195,247        $1.37
    Reserved for future grants....................   1,198,506
</TABLE>

    Absent a public market for its securities, the board of directors determined
the fair market value of its stock for purposes of issuing common stock options
based upon recent sales of its securities and other market factors.

    In conjunction with the issuance of certain stock options in 2000,
14,559,294 options were granted at an average exercise price of $1.37 per share
which was equal to the weighted average fair value of $1.37 per share at the
date of grant. This fair value was determined by using the same fair value used
in the recapitalization merger transaction which was completed in January, 2000.
Additionally, the Company granted 758,850 options where the weighted average
exercise price of $5.15 per share was less than the deemed weighted average fair
value of $9.87 per share. The Company has recorded deferred stock compensation
in the aggregate amount of $3,920,000 representing the differential between the
deemed fair value of the Company's common stock and the exercise price at the
date of grant. The Company is amortizing this amount over the vesting period of
the options. The Company recorded $517,000 of deferred stock compensation
expense for the six months ended June 30, 2000 in the accompanying financial
statements.

    The Plan provides that options granted under the Plan will have a term of no
more than 10 years. Options granted to date in 2000 have vesting provisions
which include immediate vesting and vesting periods of 3 years, 5 years, and
9 years. The provisions of the Plan provide that under certain circumstances,
such as a change in control, the achievement of certain performance objectives,
or certain liquidity events, the outstanding options may be subject to
accelerated vesting.

                                      F-17
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCKHOLDERS' EQUITY (CONTINUED)
The following table summarizes information concerning currently outstanding and
exercisable options at June 30, 2000 (unaudited):

<TABLE>
<CAPTION>
                                           OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                          -----------------------------------------------------   ------------------------------
                                          WEIGHTED AVERAGE
                            NUMBER       YEARS OF REMAINING    WEIGHTED AVERAGE     NUMBER      WEIGHTED AVERAGE
RANGE OF EXERCISE PRICES  OUTSTANDING     CONTRACTUAL LIFE      EXERCISE PRICE    EXERCISABLE    EXERCISE PRICE
------------------------  -----------   --------------------   ----------------   -----------   ----------------
<S>                       <C>           <C>                    <C>                <C>           <C>
$1.37 to $6.67..........  15,278,163             9.9                $1.57          2,195,247         $1.37
</TABLE>

ACTIVITY RELATED TO ALL STOCK OPTION PLANS PRIOR TO THE RECAPITALIZATION MERGER

    WATKINS-JOHNSON STOCK OPTION PLANS--The Watkins-Johnson Stock Option Plans
(the "Plans") provided for grants of nonqualifying and incentive stock options
to certain key employees and officers. Options were granted at the market price
on the date of grant and expire at the tenth anniversary date. One-third of the
options granted are exercisable on each of the second, third and fourth
anniversary dates following the grant. This plan was terminated at the time of
the recapitalization merger on January 31, 2000.

    The Nonemployee Directors Stock Option Plan provide for a fixed schedule of
options to be granted through the year 2005. Nonemployee directors of the
Company are automatically granted 90,000 shares of common stock each year that
they remain a director of the Company. The options are granted at the market
price on the date of grant and expire on the tenth anniversary date. The options
granted become exercisable six months after the date of grant. As included in
the tables below, options for 630,000 shares were granted at $0.89 in 1997,
options for 630,000 shares were granted at $0.89 in 1998 and options for 630,000
shares were granted at $0.83 in 1999. This plan was terminated at the time of
the recapitalization merger on January 31, 2000.

    Stock option transactions included in the Consolidated Statements of
Stockholders' Equity are shown net of retirement of outstanding shares used in
payment for options exercised and include tax benefits related to sales under
stock option plans of $719,000, $217,000 and $653,000 for 1997, 1998 and 1999,
respectively.

                                      F-18
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCKHOLDERS' EQUITY (CONTINUED)
    Activity related to all stock option plans prior to the recapitalization
merger is as follows:

<TABLE>
<CAPTION>
                                                                 WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                    ----------   ----------------
<S>                                                 <C>          <C>
1997
Granted...........................................   7,260,000        $0.88(1)
Exercised.........................................   4,079,640        $0.51
Terminated........................................   5,739,270        $1.16
At December 31:
    Outstanding...................................  43,318,200        $0.91
    Exercisable...................................  20,818,980        $0.79

1998
Granted...........................................   7,260,000        $0.86(1)
Exercised.........................................   2,473,530        $0.56
Terminated........................................   4,542,810        $0.99
At December 31:
    Outstanding...................................  43,561,860        $0.91
    Exercisable...................................  25,762,950        $0.89

1999
Granted...........................................   5,145,000        $0.79(1)
Exercised.........................................   4,066,860        $0.66
Terminated........................................   8,410,140        $1.13
At December 31:
    Outstanding...................................  36,229,860        $0.87
    Exercisable...................................  24,194,640        $0.90

2000
Exercised.........................................     137,490        $1.12
Terminated........................................  36,092,370        $0.87
At June 30:
    Outstanding...................................          --        $  --
</TABLE>

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

(1) Note that for options granted during these periods, the weighted average
    exercise price was equal to weighted average grant date fair value based
    upon the market value of the Company's publicly traded common stock at the
    date of grant.

    As part of the recapitalization merger, as discussed in Note 1, vesting of
all outstanding options was accelerated and the fully vested options were
surrendered in exchange for the right to receive $1.37 per share in cash,
therefore all of the Watkins-Johnson stock option plans discussed above were
terminated.

    As discussed in Note 2, the Company applies Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for its plans. Accordingly, no compensation
expense has been recognized for its stock-based compensation plans. Had
compensation cost for the Company's stock option plans been determined based
upon the fair value at the grant date for awards under these plans, and
amortized to expense over the vesting period of the awards

                                      F-19
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCKHOLDERS' EQUITY (CONTINUED)
consistent with the methodology prescribed under SFAS 123, "Accounting for
Stock-Based Compensation," the Company's pro forma net income (loss) for 1997,
1998 and 1999 would have been $31.7 million, $(50.4) million and $67.4 million,
respectively, or $0.13, $(0.22) and $0.35 per basic and diluted share,
respectively. In accordance with SFAS 123, the impact of outstanding non-vested
stock options granted prior to 1995 has been excluded from the pro forma
calculation; accordingly, the 1997 and 1998 pro forma adjustments are not
indicative of future period pro forma adjustments, when the calculation will
apply to all applicable stock options. The weighted average fair value of
options calculated on the date of grant using the Black-Scholes option-pricing
model along with the weighted average assumptions used are as follows:

<TABLE>
<CAPTION>
                                                           1997       1998       1999
                                                         --------   --------   --------
<S>                                                      <C>        <C>        <C>
Fair value.............................................   $ 0.40     $ 0.39     $ 0.38
Dividend yield.........................................      1.2%       2.1%       1.5%
Volatility.............................................     38.1%      41.7%      42.9%
Risk free interest rate at the time of grant...........      6.1%       5.4%       4.8%
Expected term to exercise (in months from the vest
  date)................................................      4.5        4.9        6.6
</TABLE>

    The Company's calculations are based on a multiple option valuation approach
and forfeitures are recognized as they occur. The Black-Scholes model used by
the Company to calculate option values, as well as other currently accepted
option valuation models, were developed to estimate the fair values of freely
tradable, fully transferable options without vesting restrictions, which
significantly differ from the Company's stock option awards. These models also
require highly subjective assumptions, including future stock price volatility,
and expected time until exercise, which greatly affect the calculated values.

7. INCOME TAXES

    The provision for income taxes includes deferred taxes reflecting the net
tax effects of temporary differences that are reported in one period for
financial accounting purposes and in another period for income tax purposes.
Deferred tax assets are recognized when management believes realization of
future tax benefits of temporary differences is more likely than not. In
estimating future tax consequences, generally all expected future events are
considered other than enactments of changes in the tax law or rates. The
components of income from continuing operations before federal and state taxes
was $683,000, $21,471,000 and $68,733,000 in 1997, 1998 and 1999, respectively.
Foreign income from continuing operations was insignificant.

                                      F-20
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)
    The provision for federal and state tax expense (benefit) on income from
continuing operations consists of the amounts below. Foreign tax expense was
insignificant for 1997, 1998 and 1999.

<TABLE>
<CAPTION>
                                                          1997       1998       1999
                                                        --------   --------   --------
                                                                (IN THOUSANDS)
<S>                                                     <C>        <C>        <C>
Current:
    U.S...............................................   $4,056    $10,205    $21,175
    State.............................................    3,342      1,910      3,004
                                                         ------    -------    -------
Total current.........................................    7,398     12,115     24,179
Deferred:
    U.S...............................................   (3,831)    (3,381)     2,680
    State.............................................   (3,327)    (1,756)      (476)
                                                         ------    -------    -------
Total.................................................   $  240    $ 6,978    $26,383
                                                         ======    =======    =======
</TABLE>

    The differences between the effective income tax rate and the statutory
federal income tax rate are as follows:

<TABLE>
<CAPTION>
                                                             1997       1998       1999
                                                           --------   --------   --------
<S>                                                        <C>        <C>        <C>
Statutory federal tax rate...............................    35.0%      35.0%      35.0%
Export sales benefit.....................................    (1.7)      (0.8)      (0.7)
Research credit..........................................    (2.6)      (0.7)      (0.7)
State taxes net of federal tax...........................     2.1        0.7        3.6
Other....................................................     2.3       (1.7)       1.2
                                                            -----      -----      -----
Effective tax rate.......................................    35.1%      32.5%      38.4%
                                                            =====      =====      =====
</TABLE>

    Deferred tax assets are comprised of the following at December 31
(in thousands):

<TABLE>
<CAPTION>
                                                                1998       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred compensation.......................................  $ 1,902     $   80
Loss accruals...............................................    2,313      2,279
Environmental remediation...................................    1,595        214
Vacation accrual............................................      344        355
Depreciation and amortization...............................    1,228      2,011
Net operating loss carryforwards, credits and tax attributes
  carried over from discontinued operations.................   19,359         --
Other.......................................................      637        529
                                                              -------     ------
Gross deferred tax assets...................................  $27,378     $5,468
                                                              =======     ======
Deferred tax liabilities--reserves for tax contingencies....  $10,641     $8,990
                                                              -------     ------
</TABLE>

    The Company in accordance with Statement of Financial Accounting Standards
No. 5 "Accounting for Contingencies" has established certain reserves for income
tax contingencies. These reserves relate to various tax years subject to audit
by tax authorities.

                                      F-21
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. ENVIRONMENTAL REMEDIATION AND OTHER CONTINGENCIES

    In 1991, the Company recorded a $5.2 million charge for estimated
remediation actions and cleanup costs. The Company continues to be in compliance
with the remedial action plans being monitored by various regulatory agencies at
its Palo Alto site and no additional provision has been recorded since 1991.
Expenditures charged against the provision totaled $26,000, $176,000 and
$2,628,000 for the years 1997, 1998 and 1999, respectively. Included in the 1999
expenditures was a payment of $2.4 million for required remedial services to be
performed and a related insurance policy to assure compliance for the duration
of the remedial action plans. In addition, the Company had $532,500 accrued as
of December 31, 1999 primarily related to vacating the Palo Alto site. The
Company believes any remaining unaccrued or uninsured environmental liabilities
associated with the Palo Alto site should not have a material effect on the
Company's results of operations or financial position.

    Four purported shareholder class action lawsuits have been filed against the
Company and its directors. These lawsuits allege essentially the same grounds
for relief, namely that the individual defendants breached their fiduciary duty
to the Company's shareowners in connection with the recapitalization merger,
which was completed on January 31, 2000 as discussed more fully in Note 1. On
January 14, 2000, all parties to the class action executed a memorandum of
understanding to settle the lawsuits subject to final negotiations, execution of
an acceptable settlement agreement and approval of the court. An estimated
settlement payment and related legal fees, of approximately $500,000 has been
accrued and included in the December 31, 1999 results of operations and
financial position. The Company does not expect any additional material adverse
impact due to the class action lawsuits.

    In addition to the above matters, the Company is involved in various legal
actions which arose in the ordinary course of its business activities.
Management believes the final resolution of these matters should not have a
material impact on its results of operations, cash flows, or financial position.

9. EMPLOYEE BENEFIT PLANS

    The Company has an Employees' Investment 401(k) Plan that covers
substantially all employees and provides that the Company match employees'
salary deferrals up to 3% of eligible employee compensation. The amount charged
to continuing operations was $324,000, $417,000 and $480,000 in 1997, 1998 and
1999, respectively.

    EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")--Prior to the recapitalization
merger, the Company had an ESOP to encourage employee participation and
long-term ownership of company stock. This plan was terminated at the time of
the recapitalization merger on January 31, 2000. The Company's Board of
Directors determines each year's discretionary contribution depending on the
performance and financial condition of the Company and was allocated as a
percentage of eligible employee base compensation. All U.S. employees were
eligible to participate in the ESOP and vesting was immediate. The Board
approved a contribution equal to 1% of eligible employee compensation for 1997,
1998 and 1999, which resulted in charges to continuing operations of $119,000,
$67,000 and $159,000, respectively. The ESOP held 5,448,720 and 5,231,100 shares
of common stock at December 31, 1998 and 1999, respectively, and there were no
unallocated or unearned shares held by the ESOP. Dividends paid with respect to
common stock held by the ESOP were used to purchase additional shares and were
not material for all years presented.

                                      F-22
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT REPORTING AND DISCONTINUED OPERATIONS

    In 1997, the Company adopted SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." As discussed below, three divested segments
are being reported as discontinued operations. The Government Electronics
segment was divested in October 1997, the Semiconductor Equipment segment was
divested in July 1999 and the Telecommunications segment was divested in
January 2000. As an integrated telecommunications products provider, the Company
currently has one reportable segment. The Company designs, manufactures and
services radio frequency communications products used in network infrastructure.
The Company's products enable voice, video and data transport over fiber optic,
broadband cable and wireless systems that provide the backbone for cellular and
Internet communications. While the Company's chief decision-maker monitors the
sales of various products, operations are managed and financial performance
evaluated based upon the sales and production of multiple products employing
common manufacturing and research and development resources; sales and
administrative support; and facilities. This allows the Company to leverage its
costs in an effort to maximize return. Management believes that any allocation
of such shared expenses to various products would be impractical, and currently
does not make such allocations internally. The chief decision-maker does,
however, monitor sales by products at a more detailed level than those depicted
in the Company's historical general purpose financial statements as follows (in
thousands):

<TABLE>
<CAPTION>
                                                YEAR ENDED                      SIX MONTHS ENDED
                               ---------------------------------------------   -------------------
                               DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 25,   JUNE 30,
                                   1997            1998            1999          1999       2000
                               -------------   -------------   -------------   --------   --------
<S>                            <C>             <C>             <C>             <C>        <C>
Semiconductor................     $ 3,651         $ 9,763         $15,625      $ 7,161    $10,074
Fiber optic..................         676           7,251          15,228        6,971     18,456
Wireless.....................      26,847          46,554          51,551       33,084     16,148
                                  -------         -------         -------      -------    -------
Total........................     $31,174         $63,568         $82,404      $47,216    $44,678
                                  =======         =======         =======      =======    =======
</TABLE>

    Sales to individual customers representing greater than 10% of Company
consolidated sales during at least one of the past three years are as follows
(in thousands):

<TABLE>
<CAPTION>
                                                YEAR ENDED                      SIX MONTHS ENDED
                               ---------------------------------------------   -------------------
                               DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 25,   JUNE 30,
                                   1997            1998            1999          1999       2000
                               -------------   -------------   -------------   --------   --------
<S>                            <C>             <C>             <C>             <C>        <C>
Company A....................     $20,224         $33,169         $36,107      $28,535    $10,390
Company B....................       1,209           7,848          17,876        7,915     20,413
Company C....................       5,005          10,015           8,823        2,922      1,172
</TABLE>

                                      F-23
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT REPORTING AND DISCONTINUED OPERATIONS (CONTINUED)
    Sales to unaffiliated customers by geographic area are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                YEAR ENDED                      SIX MONTHS ENDED
                               ---------------------------------------------   -------------------
                               DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 25,   JUNE 30,
                                   1997            1998            1999          1999       2000
                               -------------   -------------   -------------   --------   --------
<S>                            <C>             <C>             <C>             <C>        <C>
United States................     $28,362         $53,484         $58,110      $36,693    $20,700
Export Sales from United
  States:
    Canada...................       1,228           8,010          18,079        7,985     18,294
    Europe...................         175           1,755           3,791        1,228      4,033
    Korea....................       1,387             237           1,194          582        587
    Other....................          22              82           1,230          728      1,064
                                  -------         -------         -------      -------    -------
Total........................     $31,174         $63,568         $82,404      $47,216    $44,678
                                  =======         =======         =======      =======    =======
</TABLE>

    Foreign operations' sales and identifiable assets are less than ten percent
of consolidated totals.

    The Company's continuing operations' operating profit (loss) and year-end
long-lived assets by geographic area are substantially all located in the United
States.

    The operations of the Government Electronics segment included the
development, manufacture and sale of advanced microwave devices and tactical
electronic systems and devices for guided-missile programs and other government
applications. The operations of the Semiconductor Equipment segment involved the
development, manufacture, sale and service of chemical-vapor-deposition
equipment used in the manufacture of semiconductor products. The operations of
the Telecommunications segment involve the design, manufacture and service of
equipment and related processes with applications in government intelligence,
signal surveillance and military communications. The accompanying financial
statements for 1997 and 1998 have been restated to reflect the
Telecommunications segment as a discontinued operation as a result of the sale
of this segment in January 2000 as discussed below.

    Summarized below are the net assets of the discontinued segments. All net
assets are shown as current due to the sale of the segments, except for the net
long-term assets of the Telecommunications segment in 1998 since this sale
occurred in the year 2000 (in thousands).

<TABLE>
<CAPTION>
                                                       DECEMBER 31,    DECEMBER 31,    JUNE 30,
                                                           1998            1999          2000
                                                       -------------   -------------   --------
<S>                                                    <C>             <C>             <C>
Accounts receivable..................................    $ 19,139        $  7,933      $    --
Inventory............................................      19,277           6,057           --
Other assets.........................................      13,237          10,251        3,619
Current liabilities..................................     (38,689)         (9,180)        (168)
Fixed assets, net....................................      39,048           8,135           --
Long-term obligations................................     (24,090)         (2,959)          --
                                                         --------        --------      -------
Net assets of discontinued operations, current.......    $ 27,922        $ 20,237      $ 3,451
                                                         ========        ========      =======

Fixed assets, net....................................    $  9,144
Long-term obligations................................         (91)
                                                         --------
Net assets of discontinued operations, noncurrent....    $  9,053
                                                         ========
</TABLE>

    Other assets of discontinued operations as of June 30, 2000 are comprised
primarily of funds held in escrow related to previously sold operations. These
funds were released in July, 2000. Current liabilities as

                                      F-24
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT REPORTING AND DISCONTINUED OPERATIONS (CONTINUED)
of June 30, 2000 are recorded for liabilities related to certain
indemnifications provided to the buyers of certain assets sold. These amounts
are anticipated to be settled on or before December 31, 2000.

    Summarized below are operating results of the discontinued segments (in
thousands).

<TABLE>
<CAPTION>
                                                YEAR ENDED                      SIX MONTHS ENDED
                               ---------------------------------------------   -------------------
                               DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 25,   JUNE 30,
                                   1997            1998            1999          1999       2000
                               -------------   -------------   -------------   --------   --------
<S>                            <C>             <C>             <C>             <C>        <C>
Net sales....................    $335,843        $148,651        $120,556      $95,077    $ 1,873
Gross profit.................     110,913          26,985          44,136       34,412        861
Income (loss) before income
  taxes......................       3,855         (94,479)          8,694        6,558        303
Income taxes (benefit).......       1,050         (30,778)           (967)       1,453         91
Gain on disposition--net of
  taxes (benefit) of $20,219,
  $0, $1,458, $1,606 and
  $20,471 for the periods
  ending December 31, 1997,
  1998 and 1999, June 25,
  1999 and June 30, 2000.....      29,677              --          15,829        7,318     30,706
                                 --------        --------        --------      -------    -------
Income (loss) from
  discontinued operations....    $ 32,482        $(63,701)       $ 25,490      $12,423    $30,918
                                 ========        ========        ========      =======    =======
</TABLE>

    Included in the results of the discontinued operations were corporate
administrative expenses which totaled $11.5 million in 1997, $8.0 million in
1998, and $4.2 million in 1999. Corporate administrative expenses comprised of
costs incurred in support of the discontinued operations including;
international finance and accounting; information systems support; legal,
treasury, credit and cash management; risk management functions, including
insurance and environmental. Such charges were based on business volume,
services and needs of operations provided.

    In 1998, the Semiconductor Equipment segment discontinued its
high-density-plasma chemical-vapor-deposition product line and restructured its
operations to focus on its core atmospheric-pressure chemical-vapor-deposition
products. Inventory, demonstration equipment, and specialized fixed assets which
had no market value and no known alternative use were written down in the
restructuring. In addition, employment was reduced from 590 to 430. Terminated
employees were mostly related to the discontinued product line. Of the total
employees terminated, 120 were from domestic operations, while 40 were from
foreign operations. Employees were notified of the reduction-in-force in the
third quarter of 1998. The segment incurred charges of $21.1 million,
$13.7 million and $3.5 million related to fixed assets, inventory, severance and
other exit costs, respectively, for a total of $38.3 million. All restructuring
charges were incurred or paid out by December 31, 1999.

    Included in the 1998 asset write-down of $21.1 million was a $6.0 million
charge related to the facility in Japan. The asset was written down to fair
market value in accordance with SFAS No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Fair market
value was determined based on the intended use of the facility.

    In 1998, the Telecommunications segment discontinued its Base2-TM-
base-station product line after reassessing key customer needs and market
conditions. The reassessment concluded that the segment had

                                      F-25
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT REPORTING AND DISCONTINUED OPERATIONS (CONTINUED)
exhausted all potential sales avenues for the product, and determined that there
was no market value and alternative use for the specialized fixed assets and
equipment. In addition, employment was reduced from 320 to 290. Terminated
employees were mostly related to the Base2 product line. Employees were notified
of the reduction-in-force in the third quarter of 1998. Inventory, demonstration
equipment, and specialized fixed assets associated with the discontinued product
were written down in the third quarter and subsequently disposed of in the
fourth quarter of 1998. The segment incurred charges of $2.3 million,
$3.4 million and $0.4 million related to fixed assets, inventory, severance and
other exit costs, respectively, for a total of $6.1 million. All restructuring
charges were incurred or paid out by December 31, 1999.

    On January 14, 2000, the Company completed the sale of substantially all of
the Telecommunications segment's assets to a unit of Marconi North
America, Inc., a subsidiary of the General Electric Company p.l.c. of the United
Kingdom. Net proceeds from the sale of about $57.0 million and an estimated
pre-tax gain of more than $40.0 million are included in the Company's financial
results in the first quarter of 2000.

11. EARNINGS PER SHARE

    Basic and diluted earnings per share were computed as follows (in thousands,
except per share amounts):

<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                YEAR ENDED DECEMBER 31,            JUNE 30,
                                             ------------------------------   -------------------
                                               1997       1998       1999       1999       2000
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
Basic per share amounts:
Net income from continuing operations......  $    443   $ 14,493   $ 42,350   $  3,968   $(25,352)
                                             --------   --------   --------   --------   --------
Average shares outstanding.................   247,740    232,110    192,584    196,860     73,551
                                             --------   --------   --------   --------   --------
Basic net income per share.................  $   0.00   $   0.06   $   0.22   $   0.02   $  (0.34)
                                             ========   ========   ========   ========   ========
Diluted per share amounts:
Net income from continuing operations......  $    443   $ 14,493   $ 42,350   $  3,968   $(25,352)
                                             --------   --------   --------   --------   --------
Average shares outstanding.................   247,740    232,110    192,584    196,860     73,551
Effect of dilutive stock options...........     7,530      3,600      5,757      2,970         --
                                             --------   --------   --------   --------   --------
Dilutive shares outstanding................   255,270    235,710    198,341    199,830     73,551
                                             --------   --------   --------   --------   --------
Diluted net income per share...............  $   0.00   $   0.06   $   0.21   $   0.02   $  (0.34)
                                             ========   ========   ========   ========   ========
</TABLE>

    Weighted average options outstanding to purchase 16,920,000, 26,610,000 and
11,790,000 shares of common stock were not included in the computation of
diluted per share amounts in 1997, 1998 and 1999, respectively, because the
weighted average exercise prices were greater than the average market prices of
the common shares. Weighted average exercise prices of $1.32 in 1997, $1.12 in
1998 and $1.33 in 1999 exceeded the average market prices of $.99, $.77 and
$.99, respectively.

12. REAL ESTATE TRANSACTIONS AND DEPOSITS

    In 1997, the Company exchanged a portion of its subleasehold interest at its
Palo Alto, California facility for consideration consisting of cash and the
sublessor's leasehold rights in the remaining parcels under the lease. The
exchange resulted in a pre-tax gain of $7.6 million.

                                      F-26
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. REAL ESTATE TRANSACTIONS AND DEPOSITS (CONTINUED)
    In 1998, the Company sold approximately 15 acres of undeveloped land
adjacent to its San Jose, California, facility for net proceeds of
$16.0 million and a pre-tax gain of $15.0 million. The remainder of the San Jose
property was sold in 1999 as described below.

    In 1999, the Company completed the sale of its remaining San Jose,
California facility including a 190,000 square foot building resulting in net
proceeds of $16.9 million and a pre-tax gain of $9.7 million. This property was
vacated in 1998 and its carrying value of $6.4 million (which management
believed to be less than market value) was classified in "Other Assets"
(long-term) as of December 31, 1998.

    The Company leased approximately 16 acres of land and certain buildings
located in Palo Alto, California from Stanford University under a long-term
lease with an original expiration date of 2056. In 1999, the Company agreed to
an early termination of the lease resulting in net proceeds of about $54.0
million and a pre-tax gain of approximately $51.8 million. The escrow for this
property included a $5.0 million security deposit which was released on
January 14, 2000 after a letter of guarantee was posted by CIBC World Markets
Corp. on behalf of the Company. On December 27, 1999, the Company paid CIBC
World Markets Corp. $6.1 million in advance of receiving the funds from escrow,
which was also refunded on January 31, 2000. The $11.1 million aggregate was
recorded as a deposit as of December 31, 1999. As part of the previously
mentioned agreement, the Company may continue to occupy the property rent free
until October 2000 in order to allow operational transition. The gain on the
sale from the early termination of the lease has been reduced by approximately
$2 million to reflect the estimated fair market rent of the facility through
October 2000 .This deferred gain is being amortized over a twelve month period
through October 2000 as an offset to the estimated future rent expense in
accordance with SFAS No. 13, Accounting for Leases.

13. RELATED PARTY TRANSACTIONS

    On January 31, 2000, as part of the recapitalization merger, the Company
entered into a management agreement with Fox Paine. Fox Paine is the majority
stockholder in the Company. Under that agreement, the Company paid Fox Paine an
aggregate of $3.5 million for assistance in obtaining debt financing and
advisory services. In addition, the Company agreed to pay Fox Paine a management
fee of $110,000 for the year ended December 31, 2000 and, for each subsequent
year, a fee in the amount of 1% of net income before interest expense, interest
income, income taxes, depreciation and amortization and equity in earnings
(losses) of minority investments, calculated without regard to the fee. The
Company believes the fee represents fair value for the services rendered by Fox
Paine. In exchange for its management fee, Fox Paine assists the Company with
its strategic planning, budgets and financial projections and helps the Company
identify possible strategic acquisitions and recruit qualified management
personnel. Fox Paine also helps develop and enhance customer and supplier
relationships on behalf of the Company and consults with management on various
matters including tax planning and public relations strategies, economic and
industry trends and executive compensation. In connection with this agreement,
the Company has agreed to indemnify Fox Paine against various liabilities that
may arise as a result of the management services it will perform. The Company
has also agreed to reimburse Fox Paine for its expenses incurred in providing
these services.

                                      F-27
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUBSEQUENT EVENTS

REINCORPORATION

    On June 2, 2000, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware. This reincorporation
will occur upon the effectiveness of the proposed initial public offering. In
connection with the reincorporation, the Company will be authorized to issue
100,000,000 shares of common stock, $0.01 par value and 10,000,000 shares of
undesignated preferred stock, $0.01 par value.

STOCK SPLIT

    On       , 2000, the Company in connection with a proposed initial public
offering of its common stock and its reincorporation in Delaware effected a
3-for-2 stock split of its common shares. All share and per share amounts
presented herein have been restated to retroactively reflect this stock split.

PRIVATE PLACEMENT OF SECURITIES

    In July, 2000, the Company sold 1,498,800 shares of its Series A Preferred
Stock to one strategic investor and one financial investor. Proceeds from these
sales totaled $11.5 million, net of expenses. These Preferred Stock shares are
convertible into shares of common stock on a one for one basis in connection
with a proposed initial public offering of the Company's common shares.

PRO FORMA LIABILITIES AND STOCKHOLDERS' EQUITY

    The statement of unaudited pro forma liabilities and stockholders' equity
included in the accompanying consolidated balance sheet at June 30, 2000 gives
effect to the following pro forma adjustments:

    - the sale by the Company of Series A Preferred Stock for $11.5 million, net
      of expenses;

    - the conversion of Series A Preferred Stock into 1,498,800 shares of common
      stock at a conversion price of $8.34 per share and the recognition of a
      $10.0 million preferred stock dividend resulting from a beneficial
      conversion. The $10.0 million preferred stock dividend is based upon an
      assumed offering price of $15.00 per share which is the midpoint of the
      price range for shares in the Company's proposed initial public offering.
      Under EITF 98-5, the beneficial conversion feature will result in a one
      time preferred stock dividend that will be recorded on the sale of the
      convertible preferred shares and will be recorded in the period in which
      the initial public offering becomes effective;

    - the reincorporation which will occur upon the effectiveness of the
      proposed initial public offering.

PRO FORMA PER SHARE AMOUNTS

    The pro forma per share amounts included in the accompanying consolidated
statement of operations for the six months ended June 30, 2000 have been
computed assuming the sale and conversion of the Series A Preferred Stock
occurred at the beginning of the period presented.

                                      F-28
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUBSEQUENT EVENTS (CONTINUED)
    Pro forma basic and diluted earnings per share were computed as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED
                                                                JUNE 30, 2000
                                                              -----------------
                                                                 (UNAUDITED)
<S>                                                           <C>
Income (loss) from continuing operations....................      $(25,352)
Preferred stock dividend....................................        (9,982)
                                                                  --------
Pro forma net income (loss) available to common stockholders
  from continuing operations................................       (35,334)

Income from discontinued operations.........................           212
Gain on disposition of discontinued operations..............        30,706

Net income (loss)...........................................         5,566
Preferred stock dividend....................................        (9,982)
                                                                  --------
Pro forma net income (loss) available to common
  stockholders..............................................      $ (4,416)
                                                                  ========

Basic share amounts:
  Average basic shares outstanding..........................        73,551
  Additional shares from preferred stock conversion.........         1,499
                                                                  --------
  Pro Forma basic shares outstanding........................        75,050
                                                                  ========

Diluted share amounts:
  Average diluted shares outstanding........................        73,551
  Additional shares from preferred stock conversion.........         1,499
                                                                  --------
  Pro Forma diluted shares outstanding......................        75,050
                                                                  ========

Pro forma per share amounts

Basic per share amounts:
  Income (loss) from continuing operations..................      $  (0.47)
  Income from discontinued operations.......................            --
  Gain on disposition of discontinued operations............          0.41
                                                                  --------
  Net income (loss).........................................      $  (0.06)
                                                                  ========

Diluted per share amounts:
  Income (loss) from continuing operations..................      $  (0.47)
  Income from discontinued operations.......................            --
  Gain on disposition of discontinued operations............          0.41
                                                                  --------
  Net income (loss).........................................      $  (0.06)
                                                                  ========
</TABLE>

                                      F-29
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                5,400,000 SHARES

                             [WJ COMMUNICATIONS LOGO]

                                  COMMON STOCK

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

                                   PROSPECTUS

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

                                   CHASE H&Q

                               CIBC WORLD MARKETS

                           THOMAS WEISEL PARTNERS LLC

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

                                          , 2000

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

    YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

    NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF
THIS PROSPECTUS IN THAT JURISDICTION. PERSONS WHO COME INTO POSSESSION OF THIS
PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO INFORM
THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND THE
DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.

    UNTIL            , 2000, ALL DEALERS THAT BUY, SELL OR TRADE IN OUR SHARES
OF COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

    The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
common stock being registered, all of which will be paid by the Registrant:

<TABLE>
<CAPTION>
                                                                AMOUNT
                                                              ----------
<S>                                                           <C>
SEC registration fee........................................  $   26,400
NASD filing fee.............................................      10,500
Nasdaq National Market listing fee..........................      95,000
Printing and engraving expenses.............................     300,000
Legal fees and expenses.....................................   1,250,000
Accounting fees and expenses................................     700,000
Blue sky fees and expenses (including legal fees)...........       7,500
Transfer agent and registrar fees and expenses..............      30,000
Miscellaneous...............................................     100,000
                                                              ----------
Total.......................................................  $2,519,400
                                                              ==========
</TABLE>

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation has the power to indemnify its officers, directors, employees and
agents (or persons serving in such positions in another entity at the request of
the corporation) against expenses, including attorneys' fees, judgments, fines
or settlement amounts actually and reasonably incurred by them in connection
with the defense of any action by reason of being or having been directors or
officers, if such person shall have acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation (and, with respect to any criminal action, had no reasonable cause
to believe the person's conduct was unlawful), except that if such action shall
be by or in the right of the corporation, no such indemnification shall be
provided as to any claim, issue or matter as to which such person shall have
been judged to have been liable to the corporation unless and to the extent that
the Court of Chancery of the State of Delaware, or another court in which the
suit was brought, shall determine upon application that, in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity. The Registrant's Certificate of Incorporation provides that the
Registrant will indemnify its officers and directors to the fullest extent
permitted by Delaware law.

    As permitted by Section 102 of the DGCL, the Registrant's Certificate of
Incorporation provides that no director shall be liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty as a director
other than (i) for breaches of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for the
unlawful payment of dividends or unlawful stock purchases or redemptions under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit.

    The Underwriting Agreement is expected to provide that the Underwriters are
obligated, under certain circumstances, to indemnify directors, officers and
controlling persons of the Registrant against certain liabilities, including
liabilities under the Securities Act. Reference is made to the form of
Underwriting Agreement to be filed as Exhibit 1.1 hereto.

    The Registrant maintains directors' and officers' liability insurance for
the benefit of its directors and certain of its officers.

                                      II-1
<PAGE>
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

    The following is a summary of the transactions by the Registrant during the
past three years involving sales of the Registrant's securities that were not
registered under the Securities Act:


    (1) Pursuant to a Recapitalization Agreement, dated October 25, 1999, by and
among the Watkins Trust Dated September 19, 1988 (the "Watkins Trust"), the
Registrant and Fox Paine Capital Fund, L.P., the Registrant issued 7,470,600
shares of the Registrant's Series A Convertible Participating Preferred Stock in
exchange for 7,470,600 shares of the Registrant's common stock held by the
Watkins Trust.



    (2) On January 31, 2000, in connection with and upon the merger of the
Registrant with FP-WJ Acquisition Corp. ("FP-WJ") pursuant to the Agreement and
Plan of Merger dated October 25, 1999, by and between the Registrant and FP-WJ,
each of the 38,297,870 issued and outstanding shares of common stock of FP-WJ
became a share of the Registrant's common stock and each of the 7,470,600 issued
and outstanding shares of the Registrant's Series A Convertible Participating
Preferred Stock became a share of the Registrant's common stock.


    (3) Pursuant to the WJ Communications, Inc. 2000 Stock Incentive Plan
adopted January 31, 2000, the Registrant has granted 75,000 options to Charles
E. Robinson, and has granted 60,000 options to Christopher B. Paisley, both
directors of the Registrant, and 15,183,144 options to officers and other
employees of the Registrant, each such option entitling the holder thereof, once
such option vests, to purchase one share of common stock for $1.37 (subject to
adjustment). 23,331 of these options have been exercised by employees of the
Registrant.

    (4) Pursuant to a Management Subscription Agreement, dated January 31, 2000,
by and between the Registrant and Malcolm J. Caraballo, Thomas R. Kritzer and
Ralph E. Hoover, Jr., (a) Mr. Caraballo purchased 1,108,296 shares of common
stock for $1,519,289.40 in cash, (b) Mr. Kritzer purchased 378,629 shares of
common stock for $519,036.58 in cash, and (c) Mr. Hoover purchased 72,948 shares
of common stock for $100,000.04 in cash.

    (5) Pursuant to subscription agreements, dated as of April 7, 2000 and
June 26, 2000, between the Registrant and certain employees of the Registrant,
said employees purchased an aggregate of 3,539,288 shares of common stock for
$5,050,367 in cash.

    (6) Pursuant to a Subscription Agreement, dated as of February 1, 2000, by
and between the Registrant and Darryl Quan, Mr. Quan purchased 488,336 shares of
Common Stock for $669,426.58 in cash.

    (7) Pursuant to a Subscription Agreement, dated as of February 1, 2000, by
and between the Registrant and Michael Cordano, Mr. Cordano purchased 37,500
shares of Common Stock for $51,406.25 in cash.

    (8) Pursuant to a Stock Purchase Agreement, dated as of July 25, 2000 by and
between the Registrant and Cisco Systems, Inc., Cisco Systems purchased 551,471
shares of Series A Preferred Stock for $7,500,005.60 in cash.

    (9) Pursuant to a Stock Purchase Agreement, dated as of July 25, 2000 by and
between the Registrant and a financial investor, the financial investor
purchased 367,647 shares of Series A Preferred Stock for $4,999,999.20 in cash.

    The sales described in this Item 15 were made in reliance upon the exemption
from registration set forth in Section 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. The foregoing transactions
did not involve a distribution or public offering. Except as set forth above, no
underwriters were engaged in connection with the foregoing issuances of
securities, and no commissions or discounts were paid.

                                      II-2
<PAGE>
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

    (A)    EXHIBITS


<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           TITLE
---------------------   -----
<C>                     <S>
         1.1            Form of Underwriting Agreement

         2.1            Agreement and Plan of Merger, dated October 25, 1999, by and
                        between FP-WJ Acquisition Corp. and the Registrant**

         3.1            Certificate of Incorporation of the Registrant+

         3.2            By-Laws of the Registrant+

         4.1            Specimen of Common Stock Certificate*

         4.2            Shareholders' Agreement, dated as of January 31, 2000, by
                        and among the Registrant, the parties listed on the
                        signature pages thereto and certain stockholders of the
                        Registrant+

         4.3            Investor's Rights Agreement, dated as of July 25, 2000, by
                        and between the Registrant and Cisco Systems, Inc.+

         4.4            Investor's Rights Agreement, dated as of July 25, 2000, by
                        and between the Registrant and Investor International
                        (Cayman) Limited+

         4.5            Co-Sale/Redemption Rights Agreement, dated as of July 25,
                        2000, by and among Fox Paine and affiliates, Cisco Systems,
                        Inc. and the Registrant+

         4.6            Co-Sale/Redemption Rights Agreement, dated as of July 25,
                        2000, by and among Fox Paine and affiliates, Investor
                        International (Cayman) Limited and the Registrant+

         5.1            Opinion of Wachtell, Lipton, Rosen & Katz (including
                        consent)+

        10.1            Credit Agreement, dated as of January 31, 2000, by and among
                        the Registrant and Canadian Imperial Bank of Commerce, BT
                        Commercial Corporation, IBM Credit Corporation, CIBC World
                        Markets Corp. and certain other lenders listed on the
                        signature pages thereto+

        10.2            First Amendment, dated as of March 21, 2000, to the Credit
                        Agreement listed as Exhibit 10.1+

        10.3            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Malcolm J. Caraballo+

        10.4            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Thomas R. Kritzer+

        10.5            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Ralph E. Hoover, Jr.+

        10.6            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Rainer N. Growitz+

        10.7            Employment Agreement, dated as of June 26, 2000, by and
                        between the Registrant and William T. Freeman+

        10.8            WJ Communications, Inc. 2000 Stock Incentive Plan+

        10.9            Lease (Phase I) dated March 24, 2000, by and between the
                        Registrant and 401 River Oaks, LLC+

        10.10           Lease (Phase II) dated March 24, 2000, by and between the
                        Registrant and 401 River Oaks, LLC+

        10.11           Lease and Agreement between the Registrant and Morrco
                        Properties Company dated October 31, 1975***
</TABLE>


                                      II-3
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           TITLE
---------------------   -----
<C>                     <S>
        10.12           Assignment of Lease Agreement, dated as of December 30,
                        1997, by and between the Registrant and Taylor Woodrow
                        Property Company, Inc.****

        10.13           Agreement for Option to Amend Sublease, Amendment of
                        Sublease and Joint Escrow Instructions, dated as of
                        March 6, 2000, by and between the Registrant and 3333
                        Hillview Associates, LLC+

        10.14           First Amendment, dated as of March 15, 2000 to the Agreement
                        for Option to Amend Sublease, Amendment of Sublease and
                        Joint Escrow Instructions listed at Exhibit 10.13+

        10.15           Second Amendment, dated as of March 22, 2000 to the
                        Agreement for Option to Amend Sublease, Amendment of
                        Sublease and Joint Escrow Instructions listed at
                        Exhibit 10.13+

        10.16           Third Amendment, dated as of March 29, 2000 to the Agreement
                        for Option to Amend Sublease, Amendment of Sublease and
                        Joint Escrow Instructions listed at Exhibit 10.13+

        10.17           Management Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Fox Paine & Company, LLC+

        16.1            Letter re Change in Certifying Accountant from Deloitte &
                        Touche LLP

        23.1            Consent of Arthur Andersen LLP, Independent Public
                        Accountants

        23.2            Consent of Deloitte & Touche LLP, Independent Auditors

        23.3            Consent of Wachtell, Lipton, Rosen & Katz (included in
                        Exhibit No. 5.1)+

        24.1            Power of Attorney+

        27.1            Financial Data Schedule+
</TABLE>

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


   * Filed as an exhibit to the Registrant's Form 8-A filed on August 14, 2000.


  ** Filed as an exhibit to the Registrant's Form 8-K filed on October 28, 1999,
     Commission File No. 1-5631.

 *** Filed as an exhibit to the Registrant's Form 10-K for the year ended 1976,
     Commission File No. 1-5631.

**** Filed as an exhibit to the Registrant's Form 10-K for the year ended
     December 31, 1997, Commission File No. 1-5631.

   + Previously filed.

    (B)    FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
SCHEDULE                                                        PAGE
--------                                                      --------
<S>                                                           <C>
II -- Valuation and Qualifying Accounts.....................    S-3
</TABLE>

    Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

    The undersigned Registrant hereby undertakes:

    (1) That for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or

                                      II-4
<PAGE>
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of
this Registration Statement as of the time it was declared effective.

    (2) That for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.

    (3) To provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to permit prompt delivery to each
purchaser.

    (4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

                                      II-5
<PAGE>
                                   SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto,
State of California, on the 15th day of August 2000.


                                          WJ COMMUNICATIONS, INC.
                                          /s/ MALCOLM J. CARABALLO
                                          --------------------------------------

                                          Malcolm J. Caraballo
                                          President and Chief Executive Officer

    Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:


<TABLE>
<CAPTION>
                SIGNATURE                                    TITLE                         DATE
                ---------                                    -----                         ----
<C>                                         <S>                                       <C>
         /s/ MALCOLM J. CARABALLO           President and Chief Executive Officer
    ---------------------------------         (principal executive officer),          August 15, 2000
           Malcolm J. Caraballo               Director

                    *
    ---------------------------------       Chief Financial Officer (principal        August 15, 2000
            William T. Freeman                financial officer)

                    *
    ---------------------------------                      Controller                 August 15, 2000
             David R. Pulvino

                    *
    ---------------------------------                Chairman of the Board            August 15, 2000
           W. Dexter Paine, III

                    *
    ---------------------------------                       Director                  August 15, 2000
               Saul A. Fox

                    *
    ---------------------------------                       Director                  August 15, 2000
             Jason B. Hurwitz

                    *
    ---------------------------------                       Director                  August 15, 2000
              Wray T. Thorn
</TABLE>


                                      II-6
<PAGE>


<TABLE>
<CAPTION>
                SIGNATURE                                    TITLE                         DATE
                ---------                                    -----                         ----
<C>                                         <S>                                       <C>
                    *
    ---------------------------------                       Director                  August 15, 2000
           Charles E. Robinson

                    *
    ---------------------------------                       Director                  August 15, 2000
             James R. Kroner

                    *
    ---------------------------------                       Director                  August 15, 2000
            J. Thomas Bentley

                    *
    ---------------------------------                       Director                  August 15, 2000
          Christopher B. Paisley
</TABLE>


<TABLE>
<S>   <C>                                         <C>                                   <C>
*By:           /s/ MALCOLM J. CARABALLO
             ----------------------------
                 Malcolm J. Caraballo
                   ATTORNEY-IN-FACT
</TABLE>

                                      II-7
<PAGE>
    After the reincorporation, the stock split, and other matters as discussed
in Note 14 to WJ Communications, Inc.'s consolidated financial statements, we
expect to be in a position to render the following audit report:

                                          ARTHUR ANDERSEN LLP

San Jose, California
May 24, 2000

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To WJ Communications, Inc.

    We have audited, in accordance with generally accepted auditing standards,
the financial statements of WJ Communications, Inc. as of December 31, 1999 and
for the year then ended included in this Registration Statement and have issued
our report thereon dated May 24, 2000 (except with respect to the matters in
Note 14 as to which the date is          , 2000). Our audit was made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The accompanying schedule is the responsibility of the Company's
management and is presented for the purpose of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth herein in relation
to the basic financial statements taken as a whole.

                                          ARTHUR ANDERSEN LLP

San Jose, California
May 24, 2000

                                      S-1
<PAGE>
             INDEPENDENT AUDITORS' REPORT OF DELOITTE & TOUCHE LLP

The Board of Directors and Stockholders
WJ Communications, Inc.:

    We have audited the consolidated financial statements of WJ Communications,
Inc. and subsidiaries (the "Company") as of December 31, 1998 and for each of
the two years in the period then ended, and have issued our report thereon dated
January 31, 2000 (included elsewhere in this registration statement). Our audits
also included the consolidated financial statement schedule for December 31,
1997 and 1998 listed in Item 16(B)(II) of this Registration Statement. The
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP
San Jose, California
January 31, 2000

                                      S-2
<PAGE>
                    WJ COMMUNICATIONS, INC. AND SUBSIDIARIES
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   BALANCE AT    CHARGED TO
                                                  BEGINNING OF   COSTS AND                  BALANCE AT
                  DESCRIPTION                        PERIOD       EXPENSES    DEDUCTIONS   END OF PERIOD
                  -----------                     ------------   ----------   ----------   -------------
<S>                                               <C>            <C>          <C>          <C>
Year Ended December 31, 1997
  Allowance for doubtful accounts...............      $500          $ --         $ --          $500
Year Ended December 31, 1998
  Allowance for doubtful accounts...............      $500          $ --         $ --          $500
Year Ended December 31, 1999
  Allowance for doubtful accounts...............      $500          $  8         $  4          $504
Six months ended June 30, 2000
  Allowance for doubtful accounts (unaudited)...      $504          $146         $ --          $650
</TABLE>

                                      S-3
<PAGE>
                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
---------------------   ------------------------------------------------------------
<C>                     <S>
         1.1            Form of Underwriting Agreement

         2.1            Agreement and Plan of Merger, dated October 25, 1999, by and
                        between FP-WJ Acquisition Corp. and the Registrant**

         3.1            Certificate of Incorporation of the Registrant+

         3.2            By-Laws of the Registrant+

         4.1            Specimen of Common Stock Certificate*

         4.2            Shareholders' Agreement, dated as of January 31, 2000, by
                        and among the Registrant, the parties listed on the
                        signature pages thereto and certain stockholders of the
                        Registrant+

         4.3            Investor's Rights Agreement, dated as of July 25, 2000, by
                        and between the Registrant and Cisco Systems, Inc.+

         4.4            Investor's Rights Agreement, dated as of July 25, 2000, by
                        and between the Registrant and Investor International
                        (Cayman) Limited+

         4.5            Co-Sale/Redemption Rights Agreement, dated as of July 25,
                        2000, by and among Fox Paine and affiliates, Cisco Systems,
                        Inc. and the Registrant+

         4.6            Co-Sale/Redemption Rights Agreement, dated as of July 25,
                        2000, by and among Fox Paine and affiliates, Investor
                        International (Cayman) Limited and the Registrant+

         5.1            Opinion of Wachtell, Lipton, Rosen & Katz (including
                        consent)+

        10.1            Credit Agreement, dated as of January 31, 2000, by and among
                        the Registrant and Canadian Imperial Bank of Commerce, BT
                        Commercial Corporation, IBM Credit Corporation, CIBC World
                        Markets Corp. and certain other lenders listed on the
                        signature pages thereto+

        10.2            First Amendment, dated as of March 21, 2000, to the Credit
                        Agreement listed as Exhibit 10.1+

        10.3            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Malcolm J. Caraballo+

        10.4            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Thomas R. Kritzer+

        10.5            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Ralph E. Hoover, Jr.+

        10.6            Employment Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Rainer N. Growitz+

        10.7            Employment Agreement, dated as of June 26, 2000, by and
                        between the Registrant and William T. Freeman+

        10.8            WJ Communications, Inc. 2000 Stock Incentive Plan+

        10.9            Lease (Phase I) dated March 24, 2000, by and between the
                        Registrant and 401 River Oaks, LLC+

        10.10           Lease (Phase II) dated March 24, 2000, by and between the
                        Registrant and 401 River Oaks, LLC+

        10.11           Lease and Agreement between the Registrant and Morrco
                        Properties Company dated October 31, 1975***

        10.12           Assignment of Lease Agreement, dated as of December 30,
                        1997, by and between the Registrant and Taylor Woodrow
                        Property Company, Inc.****
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
---------------------   ------------------------------------------------------------
<C>                     <S>
        10.13           Agreement for Option to Amend Sublease, Amendment of
                        Sublease and Joint Escrow Instructions, dated as of
                        March 6, 2000, by and between the Registrant and 3333
                        Hillview Associates, LLC+

        10.14           First Amendment, dated as of March 15, 2000 to the Agreement
                        for Option to Amend Sublease, Amendment of Sublease and
                        Joint Escrow Instructions listed at Exhibit 10.13+

        10.15           Second Amendment, dated as of March 22, 2000 to the
                        Agreement for Option to Amend Sublease, Amendment of
                        Sublease and Joint Escrow Instructions listed at
                        Exhibit 10.13+

        10.16           Third Amendment, dated as of March 29, 2000 to the Agreement
                        for Option to Amend Sublease, Amendment of Sublease and
                        Joint Escrow Instructions listed at Exhibit 10.13+

        10.17           Management Agreement, dated as of January 31, 2000, by and
                        between the Registrant and Fox Paine & Company, LLC+

        16.1            Letter re Change in Certifying Accountant from Deloitte &
                        Touche LLP

        23.1            Consent of Arthur Andersen LLP, Independent Public
                        Accountants

        23.2            Consent of Deloitte & Touche LLP, Independent Auditors

        23.3            Consent of Wachtell, Lipton, Rosen & Katz (included in
                        Exhibit No. 5.1)+

        24.1            Power of Attorney+

        27.1            Financial Data Schedule+
</TABLE>

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


   * Filed as an exhibit to the Registrant's Form 8-A filed on August 14, 2000.


  ** Filed as an exhibit to the Registrant's Form 8-K filed on October 28, 1999,
     Commission File No. 1-5631.

 *** Filed as an exhibit to the Registrant's Form 10-K for the year ended 1976,
     Commission File No. 1-5631.

**** Filed as an exhibit to the Registrant's Form 10-K for the year ended
     December 31, 1997, Commission File No. 1-5631.

   + Previously filed.